Since 2015, Brad Warrington has been interested in selling his minority stake in Rocky Patel Premium Cigars, Inc. Unlike most assets, Warrington’s stake in the company cannot be simply sold to whoever he wants at whatever price he wants, at least not until after certain conditions have been met. Warrington and Rocky Patel—the company’s ceo—have been going back and forth about the sale and its details, unable to come to a resolution. Now the dispute is in not one, but two different courts.

Warrington, a former neighbor of Rocky Patel, owns 6.05 percent of the company; he is the single largest shareholder outside of Patel, who owns 93.3 percent of the company according to court documents. Warrington’s shares date back to 1998, when Patel, Phil S. Zanghi III, and other investors were shareholders in Indian Tabac Trading Co., the precursor company to Rocky Patel Premium Cigars, Inc. Over the years, Patel has bought out other shareholders leaving Warrington and Patel’s family members—Nish Patel and Nimish Desai—as the only other shareholders.

In a July 13, 2020 letter to Patel, Warrington said that he was willing to sell his share for $7 million. His letter also mentioned that Patel previously offered $900,000 and $1.5 million for his shares at various times. Warrington’s letter also alludes to other allegations such as “minority shareholder rights violations, breech (sic) of fiduciary responsibility” and “possible criminal charges.”

Eleven months later—on June 18, 2021—an attorney representing Warrington informed Patel that Warrington had found a buyer to sell his shares for $7.59 million through a special purpose vehicle. In court filings, Patel believes neither that Warrington’s share in the company is worth $7+ million nor that the offer Warrington claims to have received is legitimate.

While the two parties disagree about how much Warrington’s share is worth, the issue is more complicated than a simple transaction. The parties are subject to a Buy Sell Agreement, signed in 1998, that outlines how the shareholders of the company could go about selling their stakes.

Neither side is disputing the validity of the Buy Sell Agreement, but they do differ regarding whether Warrington has followed the process outlined in the agreement. Patel’s argument largely centers around two specific parts of the 1998 agreement:

2.01 Notice of Proposed Transfer. Any Stockholder who desires to sell or transfer all or any part of the shares of common stock of the Corporation standing in his or its name shall notify the proposed transferee of the terms of Section 1.01 of this Agreement and shall give written notice (“Section 2.01 Notice”) thereof to the Corporation. The Section 2.01 Notice shall specify the number of shares to be disposed of, the name of the proposed transferee, and the amount and terms of the consideration to be received for the shares. Upon receipt of the Section 2.01 Notice, the Corporation shall immediately forward such notice to the other stocholders and specify the date on which it received such notice.
2.02 Corporation’s Option to Purchase. The Corporation shall have an option to purchase all or any part of the common stock of a Stockholder desiring to sell at the lesser of the price (including the terms) specified in the Section 2.01 Notice, or the price specified in Article 4 and upon the terms provided in Article 5. The Corporation shall have 30 days after the receipt of such written notice to exercise its option. It shall exercise the option by giving written notice of such exercise to the selling Stockholder and all of the other Stockholders. It shall deliver to the selling Stockholder either the full payment or the down payment and evidence of the balance of the purchase price provided for in the Section 2.01 Notice or Article 5, as appropriate, against delivery of the shares by the selling Stockholder pursuant to Section 6.01 herof.

Per Article 4, both the selling stockholder and the corporation (or other stockholders) are to each choose a qualified appraiser to determine the value of the shares. If the value of the higher appraisal is within 110 percent of the lower appraisal, the valuation will be the average price of the two appraisals. If the higher valuation is more than 110 percent of the lower price, a third appraiser is chosen and the two appraisals that are closest in value to one another will be used to create an average, which is then the value of the shares.

In short, even if Warrington receives an offer for his shares at a certain price, Warrington cannot sell those shares unless both the company and the other shareholders pass on buying Warrington’s stake at a price determined either by appraisers or the various parties coming to an external agreement to bypass the Buy Sell Agreement.

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Update (Feb. 11, 2022) — Rocky Patel has provided the following statement:

After many months of deliberations and failed negotiations with a minority shareholder in RPPC I decided to file an action for declaratory relief in the state court of Florida. The minority shareholder’s claims and demands were unreasonable and not based on real economic principles. RPPC made an offer that was fair and reasonable based on sound valuations from two independent accounting experts. Currently, the premium cigar industry faces major threats. Anti-smoking regulations, increased taxation and FDA regulations. Most importantly, the pending egregious, overreaching and burdensome regulations pose a major threat to our industry. As proposed these regulations are so alarming that it could destroy much of our cottage industry. In light of all the facts I have acted fairly and in good faith. I certainly did not want to choose the path towards litigation. However, I will not succumb to unreasonable demands, threats, pressure or a shakedown through false allegations.

Per a November 2021 complaint filed by Rocky Patel Premium Cigars, Inc. against Warrington in Florida’s 12th Circuit Court—a state court—Patel’s position is that Warrington’s attempts to sell his shares to the special purpose vehicle are not compliant with the terms of the Buy Sell Agreement. Specifically: Warrington has not provided adequate information about the purchaser, Warrington has not disclosed the terms of the offer, and Warrington never commissioned an independent appraisal. For its part, Rocky Patel Premium Cigars, Inc. claims it commissioned an appraisal.

The complaint goes on to argue that the proposed offer is not a “bona fide purchase offer.” (Emphasis quoted, not added.)

But its most important position might simply be that Warrington has not satisfied the Buy Sell Agreements various steps that would even allow him to sell his shares to a third party. Patel’s stance is that Warrington has completed neither the 30-day period by which the Corporation can purchase the stock as outlined in 2.02 nor another 60-day window where another stockholder would be able to purchase the shares. Per Patel’s position, if Patel were to succeed in proving that Warrington has not satisfied the terms outlined in 2.01, 2.02 and 2.03 of the Buy Sell Agreement, then the third party offer is more or less irrelevant as Warrington would not be able to sell to a third party.

November 2021 was not the first filing Patel made in state court regarding the matter. In July 2021, Patel asked the court for a declaratory judgment, a process by which a court can clear up any disagreements or confusion two or more parties have. In this case, Patel asked the state court to clarify whether the corporation has provided Warrington with the required information as outlined by the Buy Sell Agreement and Florida’s state law.

This seems to be in reply to Warrington’s allegations that the corporation has not provided financial documents, regular appraisals and other information.

On Jan. 3, 2022, a different attorney representing Warrington responded to the allegations arguing that the complaint should be dismissed for two different reasons. First, because Warrington is not subject to “personal jurisdiction” in Florida. In short, Warrington argues that Florida laws say that Florida’s courts do not have jurisdiction because Warrington is not engaging in “substantial and not isolated activities in the state of Florida.”

Second, there’s a request for dismissal arguing that the plaintiff failed to “state a cause or action.” In layman’s terms, Warrington is arguing that there are no real disputes of facts or confusion that require a court to clear up. It argues that once Rocky Patel Premium Cigars, Inc. provides the information then there’s no longer a factual dispute. Furthermore, it argues that Warrington followed the process outlined in the Buy Sell Agreement, arguing that the Agreement doesn’t require detailed information about the third-party purchaser.

The next hearing is scheduled for Feb. 18, 2022.


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While Warrington is arguing to one court that Patel’s complaint should be dismissed, he’s gone to a different court system to make allegations of his own.

On Friday, Warrington filed a federal lawsuit against Rocky Patel Premium Cigars, Inc. and Patel in the U.S. District Court for the Middle District of Florida. While many of the details are the same as what’s mentioned in the dispute in state court, Warrington’s lawsuit goes a step further, arguing that the corporation and Patel have engaged in “wrongful conduct associated with the corporation.”

In the complaint, Warrington argues that he has not received any audited financial statements as outlined by the By Sell Agreement, in 25 years of ownership he received a single dividend (in 2010), that Patel has secured interest-free loans from the company for his own personal use, and that Patel has “intentionally obscured or misrepresented the value of the company and Warrington’s shares.”

Warrington argues that while the corporation acknowledged his request to sell his shares pursuant to Section 2.01 in a timely manner, it did not express an interest in purchasing the shares within the required time period. After that, Warrington says he moved forward with selling his shares to a third party and that the corporation has “ignored requests to provide a virtual data room for due diligence and refused to provide the shares or share certificate to the proposed buyer.” Warrington argues that all of this is being done in an effort to delay or prevent the sale of Warrington’s shares. (An attorney representing Patel’s side disputed the claims that the company “ignored requests” in filings made in the case in state court.)

Warrington claims that on Oct. 15, 2021, he entered into a contract with Whitefish Bay SPV for 500 of the 7,010 shares that he owns. He says on Nov. 1, he requested the shares and certificates from Rocky Patel Premium Cigars, Inc. on behalf of Whitefish Bay SPV. Warrington claims the company refused, which “prevent(ed) Warrington from performing his portion of the sale contract.”


In addition, Warrington argues that Patel has breached his fiduciary duties by failing to act in good faith in regard to the corporation’s best interests. These allegations include a lack of dividends from 1996-2010 and “payment of excessive salaries, bonuses, and royalties, along with the provision of personal loans.”

Warrington also alleges that “Rocky knowingly concealed the true value and finances of the corporation. His actions were calculated to oppress Warrington as a minority shareholder, to hide evidence of wrongdoing or mismanagement, to obscure the true value of the company, and to prevent the sale of his shares.”

He also argues that Patel has used his position as majority owner for his own personal benefit including the loans, self-dealing and misuse of company funds. For example, he argues that in 2019, “(Rocky Patel Premium Cigars, Inc.) purchased over $3.5 million worth of tobacco products from Rocky Patel-owned businesses. The same year Rocky Patel-owned businesses purchased more than $300,000 worth of tobacco products from (Rocky Patel Premium Cigars, Inc.)”

Warrington is asking for damages to compensate him for “the violations of his rights and privileges as a shareholder” as well as “punitive damages for the Defendant’s deliberate and malicious conduct relating to minority shareholder oppression.” He has requested a trial by jury.

Warrington, through an email sent by his attorney, declined to comment.

Update (Feb. 11, 2022) — After initially declining to comment, Patel has provided a statement. 

Charlie Minato

I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I handle the editing of our written content, the majority of the technical aspects of the site and work with the rest of our staff on content management, business development and more. I’ve lived in most corners of the country and now entering my second stint in Dallas, Texas. I enjoy boxing, headphones, the Le Mans 24-hour, wearing sweatshirts year-round and gyros. echte liebe.