Exhibit 10.1
SHAREHOLDERS AGREEMENT
IN EVENT OF SHAREHOLDER DEATH
This Shareholders Agreement (this "Agreement") dated May, 18, 2005 is
by and among HIA, Inc. (the "Company") and Xxxx X. Xxxxxxx, Xxxx X.This
Shareholders Agreement (this "Agreement") dated May, 18, 2005 is
Xxxxxxx and Xxx Xxxxxxxx (collectively, the "Shareholders" and each
individually a "Shareholder").
RECITALS
Each Shareholder owns shares of common stock in the Company (together
with the shares of common stock in the Company hereafter acquired by
each Shareholder, the "Shares").
The Shareholders and the Company each desire to (i) impose restrictions
on the transfer of the Shares, (ii) provide a method for purchasing the
Shares of a deceased Shareholder and (iii) make provision for the adequate
financing of such purchase.
AGREEMENT
Accordingly, in consideration of the premises, and for good and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Shareholders and the Company agree as follows:
Section 1. General Conditions on Transfers.
No transfer of Shares shall be effective unless all of the
conditions set forth below are satisfied:
(a) Unless waived by the Company, the transferor delivers to the
Company an opinion of counsel for the transferor satisfactory in
form and substance to the Company to the effect that the transfer
of the Shares is in compliance with the applicable federal and state
securities laws, and a statement of the transferee in form and
substance satisfactory to the Company making appropriate
representations and warranties in respect to compliance with the
applicable federal and state securities laws and as to any other
matter reasonably required by the Company;
(b) The transferee signs and delivers to the Company an agreement
to be bound by this Agreement, which shall be reasonably
satisfactory in form and substance to the Company; and
(c) The transfer is in compliance with the other provisions of this
Agreement.
Section 2. Security Interest.
Any sale of Shares upon foreclosure of a security interest shall be
subject to all of the provisions of this Agreement applicable to any
transfer, but the secured party shall be entitled to perform the
obligations of the owner of the Shares in connection with any such
sale.
Section 3. Purchase of Stock.
Upon the death of any Shareholder, the remaining Shareholders shall
purchase, and the executor, administrator, surviving spouse, or other
legal representative of the deceased Shareholder's estate (the "Legal
Representative") shall sell, the Shares owned by the deceased
Shareholder at the time of his death (the "Deceased's Shares"), on the
terms and conditions set forth herein.
Section 4. Life Insurance.
(a) In order to fund a purchase of Shares upon the death of a
Shareholder, each Shareholder has purchased the following life
insurance policies on the lives of the other two Shareholders from
various life insurance companies which are indicated below,
(together with any policies subsequently issued on the lives of
any of the Shareholders to replace any of the policies described
below or issued in addition to the policies described below in the
furtherance of this Agreement, the "Policies"). The existing
Policies are as follows:
Policy
Owner Number Amount Insured Insurance Company
Xxxx X.Xxxxxxx 6717975 $2,500,000 Xxxx X.Xxxxxxx Ohio National Life
Xxxx X.Xxxxxxx XP5506183 $2,150,000 Xxx Xxxxxxxx Xxxxxxxxx Pilot
Xxxx X.Xxxxxxx JP5506179 $2,000,000 Xxxx X.Xxxxxxx Jefferson Pilot
Xxxx X.Xxxxxxx XP5432644 $2,150,000 Xxx Xxxxxxxx Jefferson Pilot
Xxx Xxxxxxxx JP5505710 $2,000,000 Xxxx X.Xxxxxxx Jefferson Pilot
Xxx Xxxxxxxx 6716401 $2,500,000 Xxxx X.Xxxxxxx Ohio National Life
(b) Each Shareholder is the owner and beneficiary of the Policies
set forth next to his name above and during the term of this
Agreement shall maintain such Policies free and clear of any liens,
claims, encumbrances and other rights of third parties. Each
Shareholder shall be responsible to make timely payment of a
portion of each premium due on each Policy in an amount equal to
such premium divided by the number of insured Shareholders living
on the due date of such premium; provided, however, that if such
premium is for a Policy insuring a deceased Shareholder for a time
period prior to such Shareholder's death, the estate of such
deceased Shareholder shall make timely payment of such
Shareholder's portion of such premium. Upon request by an insured
Shareholder, each other Shareholder shall furnish satisfactory
proof of all such payments. In the event any Shareholder or the
estate of a deceased Shareholder shall for any reason fail to pay
any such amounts when due, each other Shareholder shall have the
right to pay such amount and shall be entitled to reimbursement
for any amounts so paid. Any refund issued on a premium shall be
shared equally among the Shareholders and, if applicable, the
estate of any deceased Shareholder.
(c) Each Policy shall require the insurance company to give notice
to each Shareholder of any failure to pay any premium when due or
any cancellation of such Policy. Within sixty (60) days after the
date of this Agreement and within ten (10) days after the renewal
date of each Policy, each Shareholder shall provide to each other
Shareholder a certificate of coverage or other reasonably
satisfactory evidence of compliance with this Section 6. In
connection with the purchase of insurance by a Shareholder on the
life of any other Shareholder, each insured Shareholder agrees to
cooperate with the insuring Shareholder in meeting all requirements
imposed by the insurer necessary to the issuance of such insurance.
Section 5. Insured's Option to Repurchase Policy.
Each surviving Shareholder shall have the right to purchase any Policy
on his life from(a) the estate of a deceased Shareholder within 30 days
after the Legal Representative of the deceased Shareholder has qualified
to administer the estate, or (b) the other surviving Shareholders (i)
within 30 days after such Shareholder transfers his Shares in accordance
with Sections 1, 2 and 3 or (ii) within 30 days after this Agreement
terminates under Section 15, by paying to such party an amount equal to
the [interpolated terminal reserve of such Policy plus the unearned portion
of any premiums which shall have been paid thereon determined in the manner
required under Treas. Reg. '25.2512 6 or any successor provision.]
Section 6. Death of Any Shareholder.
(a) Upon the death of any Shareholder, each surviving Shareholder
as beneficiary shall file a claim with the insurance company under
the Policy issued with respect to the deceased Shareholder and
shall collect the proceeds of such Policy (the "Proceeds
(b) The Deceased's Shares shall be purchased from the Legal
Representative of the deceased Shareholder's estate as follows:
(1) No later than ten days after all
of the Proceeds with respect to such deceased Shareholder have been
received by the surviving Shareholders, each surviving such Shareholder
shall purchase a portion of the Deceased's Shares equal to the amount of
Proceeds received by such Shareholder divided by the Purchase Price
determined in Section 7.
(2) If the aggregate number of the
Deceased's Shares is less than the aggregate number of the Deceased's
Shares that all of the surviving Shareholders are entitled to purchase,
the number of the Deceased's Shares that each surviving Shareholder shall
purchase shall be reduced equally until the aggregate number of the
Deceased's Shares that the surviving Shareholders shall purchase equals the
aggregate number of the Deceased's Shares. The surplus Proceeds shall
remain the property of the respective insuring Shareholder.
(3) If the aggregate number of the
Deceased's Shares is greater than the aggregate number of the Deceased's
Shares that the surviving Shareholders shall purchase with proceeds from
insurance policies under Section 4 (a), the Company or the surviving
Shareholders shall have the option to purchase from the deceased
Shareholder's estate that number of the Deceased's Shares remaining after
the purchase by each of the surviving Shareholders under Section 4 for an
amount equal to the Purchase Price determined in Section 7 multiplied by
the number of such remaining Shares. The company shall use the net proceeds
of any key-man insurance policy covering the deceased shareholder's life,
to first pay for any remaining shares. If the Company and/or the surviving
Shareholders shall agree to purchase the remaining shares, they have
the option to pay the deceased Shareholder's estate for those Shares in
120 monthly installments, the first such installment to be paid sixty
days from the date of death of the Shareholder. Such installments
shall be represented by a promissory note (the "Note") that shall bear
interest at the rate of 6% per year. The Note shall contain a
provision that in case of a failure to pay a monthly payment within 30
days of such payment's due date, Deceased's Legal Representative shall
shall send Notice of non-payment to The Company, and the company shall
have ten days to bring payments then due. Thirty days after notice of
non-payment has been sent and no payments received by Deceased's
Estate, the Company shall return Deceased's Shares to the Deceased's
Estate. The Company and/or the surviving Shareholders shall have the
right at any time to accelerate the payment of the Note without
penalty. The company shall have a first right of refusal to purchase
the remaining shares, if the original option to purchase is not
exercised within 5 years from the date of the stockholders death.
(4) If any charges, liens or
encumbrances exist with respect to the Deceased's Shares, the buyer(s) of
such Shares may, at its sole option, make payment in full of such charges,
liens and encumbrances to obtain good and marketable title to such Shares,
or assume the deceased Shareholder's obligations with respect to those
charges, liens, or encumbrances and make payments with respect to them in
accordance with the instruments or agreements giving rise to such charges,
liens and encumbrances. Any such payments made to partially or fully
discharge or assume such charges, liens and encumbrances shall serve to
reduce the payments to be made by such buyer to the Legal Representative of
the deceased Shareholder's estate for the purchase of the Deceased's
Shares.
Section 7. Purchase Price.
The purchase price per share upon the death of any shareholder shall be
the greater of $1.75 per share, or seven (7) times the previous fiscal
year's audited profit, before taxes, directors/shareholders incentive
bonuses and profit sharing/401K Company contributions divided by the
outstanding common shares of HIA, Inc. stock, at the end of that fiscal
year.
Section 8. Transfer of Stock.
Upon receipt by the Legal Representative Deceased Shareholder of the
cash and proceeds as provided in Section 6, the Legal Representative
shall properly endorse and deliver the certificates for the respective
number of Shares purchased to each of the surviving Shareholders and
the Company. The estate of the deceased Shareholder shall pay all
United States documentary stamp taxes and all other state and federal
taxes assessed as a result of the sale of the Shares. [Pursuant to
Section 6, paragraph (3), the certificates transferred to the Company
or any surviving Shareholder under this paragraph shall be held by the
time that the full amount of the Note has been paid.]
Section 9. Simultaneous Death.
If all Shareholders die simultaneously or under any circumstances where
it cannot be determined which Shareholder died first, or if the death
of all of the Shareholders occurs within such close proximity that the
death of the remaining Shareholder occurs before the aggregate Purchase
Price for all of the Shares owned by the other Shareholder(s) has been
paid in accordance with this Agreement, then the estate of each
deceased Shareholder shall retain the respective Shares, the Legal
Representatives of the respective estates of the deceased Shareholders
shall collect and retain the Proceeds of the respective Policies and
any payments made with respect to any of the Shares shall be returned
to the estate of the Shareholder that made such payments.
Section 10. Exercise of Rights by Shareholders.
None of the Shareholders shall be entitled to exercise any of the
rights appurtenant to the Policies, such as the right to borrow on the
Policies, change the beneficiary, assign, or any other right or
privilege granted by the terms of the Policies.
Section 11. Terms of Policies to Govern.
The parties hereto expressly recognize that the insurance company
issuing the Policies is not a party to this Agreement and shall not, as
a condition precedent to the exercise of any of the rights granted by
the terms of such Policies, insist on the performance of the terms of
this Agreement. All obligations of the insurance company shall be
limited and governed solely by the terms of the Policies.
Section 12. Termination.
This Agreement shall terminate and the Policies shall be released from
the terms of this Agreement upon the occurrence of any of the following
events:
(a) Insolvency of the Company or its failure to pay its debts as
they mature, the appointment of a receiver for the Company or an
adjudication declaring the Company to be bankrupt;
(b) A merger, consolidation or other reorganization involving the
Company and another entity pursuant to which all the Shares are
exchanged for or converted into shares of stock of another entity
which are unrestricted and readily tradeable on an established
securities market;
(c) Dissolution or the termination of the existence of the Company;
(d) Execution of a written agreement terminating this Agreement by
the Company and each Shareholder;
(e) Execution of a written agreement by any two Shareholders, where
the termination of this Agreement is effective as of the expiration
date of the Policies hereunder;
(f) When there is but one Shareholder bound by the terms of this
Agreement and all of the Deceased's Shares have been purchased in
accordance with this Agreement.
Section 13. Acts Upon Termination.
Upon the termination of this Agreement, each surviving Shareholder
shall surrender his respective certificates of Shares to the Company
and shall be entitled to receive new certificates in lieu thereof for
an equal number of Shares without the endorsement set forth in Section
12.
Section 14. Remedies for Enforcement of Agreement.
The Shareholders and the Company each recognize that irreparable damage
might result from a breach of this Agreement and hereby agree that the
parties to this Agreement shall have the right to an injunction to
prevent any breach of the terms of this Agreement or to specific
performance to enforce compliance with any agreement or covenant
contained herein. Such remedies shall be cumulative and in addition to
any rights or remedies which may otherwise be available to any party by
law.
Section 15. Arbitration.
Except as provided in Section 17, any dispute arising under this
Agreement shall be submitted to binding arbitration in Denver,
Colorado. The arbitration shall be conducted under the auspices of the
Judicial Arbiter Group or another arbitral body selected by the
parties. The prevailing party in any arbitration shall be entitled to
recover, in addition to any other relief awarded by the arbitrator, its
reasonable costs and expenses of preparing for and participating in the
arbitration, including attorneys' fees and arbitrator's fees. If each
party prevails on specific issues in the arbitration, the arbitrator
may allocate the costs incurred by all parties on a basis the
arbitrator deems appropriate.
Section 16. Miscellaneous.
(a) Entire Agreement/Amendment. This Agreement constitutes the
entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of
them, with respect to the transactions and matters contemplated
hereby. This Agreement may be amended only by a writing signed by
the Company and each of the Shareholders.
(b) Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties, their heirs, personal
representatives and permitted assigns.
(c) No Assignment. This Agreement may not be assigned by a party
without the prior written consent of all other parties.
(d) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Colorado
without giving effect to any choice or conflict of laws rule or
provision that would cause the application of the domestic
substantive laws of any other jurisdiction.
(e) Notices. All notices required or permitted to be given or made
pursuant to this Agreement shall be in writing and shall be sent by
facsimile, hand delivery or reputable overnight courier. The
facsimile numbers and addresses of the parties set forth on the
signature page to this Agreement shall be used for the delivery of
notices unless and until a party changes its facsimile number or
address for such purposes by notice to the other parties. Each
such notice shall be effective (i) if given by facsimile, when
transmission of the facsimile is confirmed by the sender's
facsimile machine, (ii) if given by hand delivery, when actually
received, or (iii) if given by reputable overnight courier, one
business day after being delivered to the courier.
(f) 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 but one and the same instrument.
The signatures of the parties on this Agreement may be delivered by
facsimile and any such facsimile signature shall be deemed an
original.
(g) Severability. The invalidity or unenforceability of any term
or provision of this Agreement shall not affect the validity or
enforceability of the remaining terms and provisions hereof.
(h) Headings; Terms. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
Defined terms shall have the meanings specified, applicable to both
singular and plural forms, for all purposes of this Agreement. All
pronouns (and any variation) shall be deemed to refer to the
masculine, feminine or neuter, as the identity of the person may
require. The singular or plural includes the other, as the context
requires or permits. The word include (and any variation) is used
in an illustrative sense rather than a limiting sense. The word
day means a calendar day. All references to "Sections" are to
sections of this Agreement unless indicated otherwise.
IN WITNESS WHEREOF, the parties have caused this Shareholders
Agreement to be executed as of the date first above written.
HIA, Inc.
By:
Name:____________________________________
Title:___________________________________
__/s/XXXX X. XXXXXXX Date: MAY 18, 2005
XXXX X. XXXXXXX
Address:_____________________________________________________________
__/s/XXXX X. XXXXXXX Date: MAY 18, 2005
XXXX X. XXXXXXX
Address:_____________________________________________________________
__/s/XXX XXXXXXXX Date: MAY 18, 0000
XXX XXXXXXXX
Address:_____________________________________________________________
