EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement is made and entered into as of January 29, 1998, by
and among WINDSOR CAPITAL CORP., a Delaware corporation (the "PURCHASER"), and
BOYNTON TOBACCONISTS, INC., a Florida corporation (the "COMPANY").
PRELIMINARY STATEMENTS:
A. The Company is a South Florida retailer of cigars, other tobacco
products and accessories, candy and writing instruments, with its principal
place of business in Boca Raton, Florida.
B. This Agreement contemplates a tax free merger of the Company with and
into the Purchaser in a reorganization pursuant to Sections 368(a)(1)(A) of the
Code, whereby the Company Shareholder will receive capital stock in the
Purchaser in exchange for his capital stock in the Company.
AGREEMENT:
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINED TERMS. In addition to terms defined elsewhere in this
Agreement, the following terms when used in this Agreement, unless the context
otherwise requires, have the meanings indicated, which meanings are applicable
to both the singular and plural forms:
"ACCOUNTS RECEIVABLE" means all accounts, instruments, drafts,
acceptances and other forms of receivables relating to the business of the
Company and the Subsidiaries, and all rights earned under the Company's and the
Subsidiaries' contracts to sell goods or render services, together with all
guaranties and related securities, all right, title and interest in the related
merchandise, including the right of stoppage in transit, and all proceeds from
the above.
"ACCRUED LIABILITIES" means all accrued liabilities of the Company
in the categories of "current liabilities" set forth on the Most Recent Balance
Sheet.
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"AFFILIATE" as to any Person means any Person (a "CONTROLLING
PERSON") which, directly or indirectly, through one or more intermediaries,
controls the subject Person or any Person which is controlled by or is under
common control with a Controlling Person. For purposes of this definition,
"CONTROL" (including the correlative terms "CONTROLLING", "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH"), as to any Person, means possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AFFILIATED GROUP" means any affiliated group within the meaning of
Section 1504 of the Code.
"AGREEMENT" means this Agreement and Plan of Merger, together with
all exhibits and schedules contemplated hereby.
"ARTICLES OF MERGER" is defined in Section 2.1.3 hereof.
"AUDITED FINANCIAL STATEMENTS" is defined in Section 4.7 hereof.
"AUTHORITY" means any national, federal, state, provincial or local
governmental regulatory agency, commission, bureau or authority, whether
domestic or foreign.
"CERTIFICATE OF MERGER" is defined in Section 2.1.2 hereof.
"CLOSING" is defined in Section 2.6 hereof.
"CLOSING DATE" means the third business day following the day on
which the last to be received of all authorizations, approvals, and consents
that are conditions to the consummation of the transactions contemplated hereby
have been obtained, or any other date that the Purchaser and the Company agree
to in writing.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"COMPANY" means Boynton Tobacconists, Inc., and, to the extent the
context may require, any or all of the direct and indirect, past and present,
Subsidiaries of the Company.
"COMPANY COMMON STOCK" is defined in Section 2.3.1 hereof.
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"COMPANY SHAREHOLDER" means Xxxx X. Xxxx, the sole shareholder of
the Company.
"COMPANY SHAREHOLDER AGREEMENT" is defined in Article 8 hereof.
"CONFIDENTIAL INFORMATION" means any data or other information
pertaining to the financial condition, results of operations, business or
products of the Purchaser, the Company and the Subsidiaries that is not already
generally available to the public.
"DELAWARE ACT" means the Delaware General Corporation Law.
"DISTRIBUTION" is defined in Section 2.5.1 hereof.
"EFFECTIVE TIME" is defined in Section 2.1.2 hereof.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).
"EMPLOYMENT AGREEMENTS" is defined in Section 6.1.10 hereof.
"ENVIRONMENTAL, HEALTH AND SAFETY LAW" means (a) the Federal Water
Pollution Control Act, (b) the Federal Resource Conservation and Recovery Act of
1976, (c) the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, and (d) the Occupational Safety and Health Act of 1970, each as
amended, together with all other Laws of federal, state, local and foreign
Authorities concerning pollution or protection of the environment, public health
and safety or employee health and safety, including Laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
chemical, industrial, hazardous or toxic materials or wastes into ambient air,
surface water, ground water or lands or otherwise relating to
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the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or chemical, industrial,
hazardous or toxic wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations promulgated thereunder.
"FINANCIAL STATEMENTS" is defined in Section 4.7 hereof.
"FLORIDA ACT" means the Florida Business Corporation Law.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time, consistently applied.
"IRS" means the Internal Revenue Service.
"INVENTORY" means all of the Company's and the Subsidiaries'
inventories, including without limitation, raw materials, work in process,
finished goods, packaging goods, trims, accessories and other like items.
"KNOWLEDGE" means (a) when applied to the Company or the
Company Shareholder, the actual knowledge (after reasonable
investigation) of Xxxx X. Xxxx, and (b) when applied to the
Purchaser, the actual knowledge, after reasonable investigation, of
Xxxx X. Xxxxxxxxx and/or Xxx X. Xxxx.
"LAW" means any law, statute, rule or regulation, and any judgment
or order of any court or Authority, whether domestic or foreign.
"LIEN" means any lien, charge, claim, restriction, mortgage,
security interest, pledge or encumbrance of any kind whatsoever.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets, properties, results of operations, financial condition or
prospects of the Company and the Subsidiaries, taken as a whole, or of the
Purchaser, as the case may be.
"MATERIAL CONTRACT" means any agreement, contract or commitment
which involves or may involve consideration of more than $5,000 in any single
year or $10,000 in the aggregate or which cannot be terminated without liability
to the Company or any Subsidiary or to the Purchaser, as the case may be, upon
less than 30 days' written notice.
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"MEMORANDUM" means the November 10, 1997, Confidential Private
Offering Memorandum of Woodfield.
"MERGER" is defined in Section 2.1.1 hereof.
"MOST RECENT BALANCE SHEET" is defined in Section 4.7 hereof.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section
3(37).
"OPINION OF PURCHASER'S COUNSEL" means the opinion of Macaulay,
Zorrilla & Xxxxx, P.A., counsel to the Purchaser, dated as of the Closing Date,
addressed to the Company and in form and substance reasonably satisfactory to
the Company.
"OPINION OF COUNSEL TO THE COMPANY AND THE COMPANY SHAREHOLDER"
means the opinion of Xxxxx, McClosky, Smith, Xxxxxxxx & Xxxxxxx, P.A., counsel
to the Company and the Company Shareholder, dated as of the Closing Date,
addressed to the Purchaser and in form and substance reasonably satisfactory to
the Purchaser.
"PERMITS" means all licenses, franchises, permits, orders,
approvals, registrations, authorizations, and qualification filings with all
Authorities and all industry or non-governmental self-regulatory organizations
required in connection with the operation of the businesses of the Company and
the Subsidiaries.
"PERSON" means any natural person, corporation, unincorporated
organization, limited liability company, partnership, association, joint-stock
company, joint venture, trust or government, or any agency or political
subdivision of any government.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PURCHASER" is defined in the preamble hereto.
"PURCHASER COMMON STOCK" is defined in Section 2.3.1 hereof.
"REPRESENTATIVE" means, as to any Person, the Person's officers,
directors, partners, employees, agents, attorneys, accountants, lenders or
prospective lenders, affiliates and other representatives.
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"RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"SECURITIES RESTRICTIONS" means restrictions imposed on the transfer
of securities by applicable federal and state securities Laws.
"SHAREHOLDER LOAN" means the $968,821 principal amount of debt owed
by the Company to the Company Shareholder.
"SUBSIDIARIES" means Galleria Tobacconists, Inc., Sawgrass
Tobacconists, Inc., Gardens Tobacconists, Inc., The Falls Tobacconists, Inc.,
and Town Center Tobacconists, Inc., each a Florida corporation.
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"TAXES" means all federal, state, local and foreign taxes
(including, without limitation, income or profits taxes, premium taxes, excise
taxes, sales taxes, use taxes, gross receipts taxes, franchise taxes, ad valorem
taxes, severance taxes, capital levy taxes, transfer taxes, value added taxes,
employment and payroll-related taxes, property taxes, business license taxes,
occupation taxes, import duties and other governmental charges and assessments),
of any kind whatsoever, including interest, additions to tax and penalties.
"WOODFIELD" means Woodfield Enterprises, Inc., a Florida corporation
which merged into the Purchaser on December 31, 1997.
1.2 OTHER DEFINITIONAL PROVISIONS
1.2.1 Unless otherwise defined herein, all terms defined in this
Agreement shall have the defined meanings when used in any certificate, report,
agreement or other document made or delivered pursuant hereto.
1.2.2 The words "HEREOF", "HEREIN", "HEREUNDER" and "HERETO" and
similar words when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
1.2.3 Whenever from the context it appears appropriate, each term
stated in either the singular or the plural shall include the singular and the
plural.
1.2.4 The term "INCLUDING" and other words of inclusion used herein
shall not be construed as terms of limitation, and references to "included"
matters shall be regarded as non-exclusive, non-characterizing enumerations.
ARTICLE 2
THE MERGER; MERGER CONSIDERATION; CLOSING
2.1 MANNER OF MERGER.
2.1.1 In accordance with this Agreement and with the provisions of
the Delaware Act and the Florida Act, at the Effective Time the Company will be
merged with and into the Purchaser (the "MERGER") and the Purchaser, as the
surviving corporation in the Merger (hereinafter sometimes referred to as the
"SURVIVING CORPORATION") (a) will continue its corporate existence under the
laws of the State of Delaware, and (b) will succeed to all rights, assets,
liabilities and obligations of the Company in
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accordance with the Delaware Act. The separate corporate existence of the
Company shall terminate at the Effective Time.
2.1.2 The Merger will become effective at the time of the filing of
an appropriate certificate of merger (the "CERTIFICATE OF MERGER") with the
Secretary of State of the State of Delaware in accordance with Section 252 of
the Delaware Act. The Certificate of Merger will be filed as soon as practicable
after the Closing. The date and time when the Merger becomes effective are
referred to herein as the "EFFECTIVE TIME".
2.1.3 Promptly after the filing of the Certificate of Merger with
the Secretary of State of Delaware in accordance with Section 2.1.1 hereof, the
Purchaser will file appropriate articles of merger (the "ARTICLES OF MERGER")
with the Secretary of State of the State of Florida in accordance with Section
607.1105 of the Florida Act.
2.2 ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS.
2.2.1 The Certificate of Incorporation of the Purchaser in effect at
and as of the Effective Time will remain the Certificate of Incorporation of the
Surviving Corporation after the Effective Time, and thereafter may be amended in
accordance with its terms and as provided by applicable law.
2.2.2 The bylaws of the Purchaser in effect at and as of the
Effective Time will remain the bylaws of the Surviving Corporation after the
Effective Time, and thereafter may be amended in accordance with their terms and
as provided by applicable law.
2.2.3 The directors and officers of the Purchaser at and as of the
Effective Time will remain the directors and officers of the Surviving
Corporation after the Effective Time, each to hold office in accordance with the
Certificate of Incorporation and bylaws of the Surviving Corporation.
2.3 CONVERSION OF SHARES.
2.3.1 At and as of the Effective Time, the 500 shares of common
stock, par value $1.00 per share, of the Company (the "COMPANY COMMON STOCK")
issued and outstanding immediately prior to the Effective Time will, by reason
of the Merger and without any action by the holder thereof, be converted into
the right to receive the number of shares of common stock, par value $.001 per
share, of the Purchaser (the "PURCHASER COMMON STOCK"), equal to 2,600,000
divided by the average of the mean of the closing bid and asked prices of the
Purchaser Common Stock on the National
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Association of Securities Dealers OTC Bulletin Board for the two days before and
the two days after the date of the public announcement of the Merger (the
"PURCHASER COMMON STOCK PRICE"). Such announcement shall occur on the morning of
the first business day after the Closing.
2.3.2 At and as of the Effective Time, each share of Company Common
Stock held in the treasury of the Company immediately prior to the Effective
Time will, by reason of the Merger and without any action by the Company, be
automatically canceled and retired and cease to exist, and no cash or securities
or other property will be payable in respect thereof.
2.3.3 Each share of the Purchaser Common Stock validly issued and
outstanding immediately prior to the Effective Time will remain issued and
outstanding.
2.3.4 No share of Company Common Stock will be deemed to be
outstanding or to have any rights other than those set forth above in Section
2.3.1 after the Effective Time.
2.4 MERGER CONSIDERATION; SURRENDER OF CERTIFICATES.
2.4.1 Five business days after the Closing, the Purchaser will
deliver a stock certificate(s), issued in the name of the Company Shareholder,
representing the number of shares of Purchaser Common Stock issuable to him
pursuant to Section 2.3.1 (the "MERGER SHARES"). The Merger Shares shall be
subject to a one-year "lock-up" as set forth in the Company Shareholder
Agreement. The number of Merger Shares may be adjusted as set forth in Section
2.5.3 hereof.
2.4.2 At the Closing, the Company Shareholder will surrender to the
Purchaser a certificate(s) that, immediately prior to the Effective Time,
represented all of the then issued and outstanding shares of Company Common
Stock. The Purchaser will xxxx all stock certificates delivered by the Company
Shareholder pursuant to this Section 2.4.2 to indicate their cancellation.
2.5 ADDITIONAL TRANSACTIONS.
2.5.1 At the Closing, the Purchaser shall cause to be paid to the
Company Shareholder by wire transfer of immediately available funds to the
Company counsel's trust account $968,821 representing payment in full of the
Shareholder Loan. In addition, on the day of Closing, the Company Shareholder
shall cause the Company to pay him any difference between the Company's
estimated taxable income from May 1, 1997 through the Closing date and the
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distributions previously received by the Company Shareholder with respect to
such income (collectively, the "DISTRIBUTION").
2.5.2 At the Closing, the Purchaser shall (i) pay by wire transfer
of immediately available funds to the Company counsel's trust account for the
benefit of Xxxxxxx Xxxxx the principal balance of the Company's debt to Xxxxxxx
Xxxxx plus accrued interest thereon to the date of payment (the "XXXXXXX XXXXX
DEBT") and (ii) obtain the release of the Company Shareholder's guaranty and
collateral securing the Xxxxxxx Xxxxx Debt.
2.5.3 (a) As soon as practicable after the Closing, the Company
Shareholder shall cause to be prepared a balance sheet (the "CLOSING BALANCE
SHEET") of the Company as of the close of business on the day immediately
preceding the Closing Date. The Closing Balance Sheet shall be prepared in
accordance with GAAP (except for deviations from GAAP consistent with the Most
Recent Balance Sheet) applied in a manner consistent with those used in the
preparation of the Financial Statements, shall provide for the application of
normal period-end and year-end type adjustments and shall be submitted to the
Purchaser as soon as practicable after completion and in all events within 30
days after the Closing Date. The Purchaser and its authorized representatives,
at the Purchaser's expense, shall have the right to review the Closing Balance
Sheet, attend the taking of the physical inventory of the Company and perform
other audit and review procedures with respect to the preparation of the Closing
Balance Sheet. The Purchaser shall provide such cooperation and access as the
Company Shareholder shall reasonably require to prepare the Closing Balance
Sheet. The reasonable costs and expenses of preparing the Closing Balance Sheet
shall be borne by the Purchaser.
(b) The Purchaser shall be deemed to have
accepted the Closing Balance Sheet unless, within 30 days after delivery thereof
to the Purchaser, it gives written notice to the Company Shareholder of its
objection to any item therein. In the event the Purchaser gives such written
notice of objection, and the parties have been unable to resolve such dispute by
the date 10 days after delivery of such notice of objection, either party may
require that such dispute be resolved by arbitration under the rules, but not
under the jurisdiction of, the American Arbitration Association, by one
arbitrator (the "ARBITRATOR") who shall be a certified public accountant
reasonably acceptable to the parties and who shall agree to render his decision
within 45 days after submission of the dispute to him. The Arbitrator shall have
access to all documents and facilities necessary to perform his function as
arbitrator. The Arbitrator's determination with respect to any dispute shall be
final and binding upon the parties hereto. The
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Purchaser and the Company Shareholder shall each pay one-half of the fees and
expenses of the Arbitrator for such services.
(c) Within 31 days after delivery of the
Closing Balance Sheet to the Purchaser pursuant to Section 2.5.3(a) hereof, or
if disputed, within 10 days after the final resolution of such dispute:
(i) if the inventory plus cash (after the
Distribution) of the Company determined from the Closing Balance Sheet exceeds
the Company's Accrued Liabilities other than the Shareholder Loan plus accrued
interest thereon, then the Purchaser shall immediately pay such excess up to a
maximum of $259,000 to the Company Shareholder in Purchaser Common Stock valued
at the Purchaser Common Stock Price calculated pursuant to Section 2.3.1 above
(which shares shall be deemed Merger Shares); and
(ii) if the Company's Accrued Liabilities (other
than the Shareholder Loan plus accrued interest thereon) exceed the inventory
plus cash (after the Distribution) determined from the Closing Balance Sheet,
then the Company Shareholder shall immediately pay such excess up to a maximum
of $259,000 to the Purchaser by surrendering certificates for the appropriate
number of shares of Purchaser Common Stock valued at the Purchaser Common Stock
Price.
(d) To the extent that the Company's actual
taxable income since May 1, 1997, is different from the estimated amount
utilized for purposes of the distribution, then the Company Shareholder shall
immediately reimburse the Purchaser for the excess amount of the Distribution or
the Purchaser shall immediately pay to the Company Shareholder a supplemental
distribution, as appropriate, and the number of Merger Shares issuable to the
Company Shareholder shall be immediately adjusted as appropriate in accordance
with the change in the Company's cash. Notwithstanding anything to the contrary
contained herein, for the purposes of this Article the amount of the Company's
cash as of the close of business on the day before the Closing shall include,
but not be limited to, all the Company's deposits and prepayments as of such
time.
(e) within five business days after the
Closing date, the Purchaser shall pay all of the Company's accounts payable
which were past due as of the Closing date.
2.6 CLOSING. Subject to the fulfillment or waiver of the conditions
precedent set forth in Article 6 hereof, the closing of the transactions
contemplated hereby (the "CLOSING") will take
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place at the offices of Xxxxx, McClosky, Smith, Xxxxxxxx & Xxxxxxx, P.A., in
Fort Lauderdale, Florida, at 2:00 P.M. on the Closing Date. Except as otherwise
provided herein, all proceedings to be taken and all documents to be executed at
the Closing will be deemed to have been taken, delivered and executed
simultaneously, and no proceeding will be deemed taken nor documents deemed
executed or delivered until all have been taken, delivered and executed.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
In order to induce the Company to enter into this Agreement and to
consummate the transactions contemplated hereby, the Purchaser represents and
warrants to the Company as follows:
3.1 ORGANIZATION AND STANDING. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Purchaser has all requisite corporate right, power and authority
to enter into this Agreement, the Company Shareholder Agreement, the Employment
Agreements, and all other agreements contemplated herein and therein (as
applicable) (collectively, the "ACQUISITION AGREEMENTS") and to consummate the
transactions contemplated hereby and thereby. Copies of the Certificate of
Incorporation and bylaws of the Purchaser and all amendments thereto as in
effect on the date hereof have been delivered to the Company and are complete
and correct as of the date hereof.
3.2 AUTHORIZATION OF AGREEMENT AND RELATED DOCUMENTS. The execution,
delivery and performance of this Agreement and the other Acquisition Agreements
(as applicable) by the Purchaser and the consummation by it of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
requisite corporate action and this Agreement constitutes, and the other
Acquisition Agreements, when executed and delivered by the Purchaser will
constitute, the legal, valid and binding obligations of the Purchaser
enforceable against it in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, moratorium, fraudulent conveyance
and other similar Laws affecting creditors' rights generally and by general
principles of equity.
3.3 NO VIOLATION OR CONFLICT. The execution and delivery of this Agreement
and the other Acquisition Agreements by the Purchaser and the consummation by it
of the transactions contemplated hereby and thereby, and compliance by it with
the provisions hereof and
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thereof, (a) does not and will not violate or conflict with any provision of Law
or any writ, order or decree of any court or Authority, or any term or provision
of the Certificate of Incorporation or bylaws of the Purchaser, and (b) does not
and will not, with or without the passage of time or the giving of notice or
both, result in the breach of, or constitute a default or require any consent
under, or result in the creation of any Lien upon any property or assets of the
Purchaser pursuant to, any instrument or agreement to which it is a party or by
which it or its properties may be bound or affected.
3.4 CONSENT OR APPROVAL OF AUTHORITIES. Other than in connection with the
Delaware Act or the Florida Act, no consent, approval or authorization of, or
registration, qualification, designation, declaration or filing with, any
Authority is required in connection with the execution, delivery or performance
by the Purchaser of this Agreement and the other Acquisition Agreements, or any
other agreement, instrument or document contemplated hereby or thereby or the
consummation by the Purchaser of the transactions contemplated hereby or
thereby.
3.5 LITIGATION. There are no actions, suits, claims or proceedings pending
or, to the Knowledge of the Purchaser, threatened against or involving the
Purchaser or any of its assets or properties, before any court or arbitration
tribunal or by or before any Authority that question the validity of this
Agreement, seek to prohibit, enjoin or otherwise challenge the consummation of
the transactions contemplated hereby, or which, individually or in the
aggregate, could have a material adverse effect on the Purchaser. There are no
outstanding orders, judgments, injunctions, stipulations, awards or decrees of
any Authority, court or arbitration tribunal against the Purchaser or any of its
assets or properties which prohibit or enjoin the consummation of the
transactions contemplated hereby.
3.6 BROKERS. The Purchaser has not employed any broker or finder, nor has
it incurred nor will it incur any broker's, finder's or similar fees,
commissions or expenses payable by the Purchaser in connection with the
transactions contemplated by this Agreement.
3.7 SUBSIDIARIES. The Purchaser has no Subsidiaries.
3.8 CAPITALIZATION OF PURCHASER. The Purchaser's authorized capital stock
consists solely of 25,000,000 shares of Purchaser Common Stock, of which
7,745,000 shares are issued and outstanding, and 10,000,000 shares of preferred
stock, $.01 par value per share, none of which are issued and outstanding. No
shares of Purchaser
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Common Stock are treasury shares. All of the issued and outstanding shares of
capital stock of the Purchaser are duly authorized, validly issued, fully paid
and nonassessable, and were not issued in violation of the preemptive rights of
any person or any applicable agreement or Law. All of the shares of Purchaser
Common Stock to be issued in the Merger have been duly authorized and, upon
consummation of the Merger, will be validly issued, fully paid and
nonassessable.
3.9 RIGHTS; WARRANTS OR OPTIONS; DIVIDENDS. Except as set forth on
Schedule 3.9 hereto, there are no outstanding subscriptions, warrants, options
or, except for this Agreement, other agreements or rights of any kind to
purchase or otherwise receive or be issued, or securities or obligations of any
kind convertible into, any shares of capital stock of or any other security of
the Purchaser; there is no outstanding contract or other agreement of the
Purchaser or any other Person to purchase, redeem or otherwise acquire any
outstanding shares of the capital stock of the Purchaser, or securities or
obligations of any kind convertible into any shares of the capital stock of the
Purchaser; there are no dividends or distributions which have accrued or been
declared but are unpaid on the capital stock of the Purchaser; and there are no
outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the Purchaser.
3.10 FINANCIAL STATEMENTS. The Purchaser has delivered to the Company
copies of (a) the unaudited balance sheet (the "MOST RECENT PURCHASER BALANCE
SHEET") and the related statement of income of the Purchaser for the 12 months
ended December 31, 1997, and (b) the audited balance sheet as of December 31,
1996, and related statements of income and cash flow of Woodfield for the fiscal
year ended December 31, 1996. The foregoing financial statements (collectively,
the "PURCHASER FINANCIAL STATEMENTS") (i) are complete and correct in all
material respects and have been prepared in accordance with the books and
records of the Purchaser and Woodfield, (ii) present fairly the financial
condition of the Purchaser and Woodfield and the results of their respective
operations at such dates and for the periods then ended, and (iii) except as set
forth on Schedule 3.10 hereto, have been prepared in accordance with GAAP.
3.11 UNDISCLOSED LIABILITIES. Except as and to the extent reflected on the
Most Recent Purchaser Balance Sheet or as disclosed on Schedule 3.11 hereto, the
Purchaser has no liabilities, commitments or obligations of any nature, whether
absolute, accrued, contingent or otherwise, other than those incurred in the
ordinary course of business consistent with past practice since the date of the
Most Recent Purchaser Balance Sheet.
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3.12 TITLE TO PERSONAL PROPERTY AND CONDITION OF ASSETS.
3.12.1 Except for Inventory disposed of in the ordinary course of
business consistent with past practice since the date of the Most Recent
Purchaser Balance Sheet, (a) the Purchaser has good and valid title to all of
the tangible personal property and assets which are used in the operation of its
business and which it owns or purports to own, and (b) valid leasehold interests
in all leases of tangible personal property which it leases or purports to
lease, free and clear of any Liens, other than Liens or imperfections of title
that (i) relate to immaterial properties or assets or otherwise would not,
individually or in the aggregate, have a Material Adverse Effect, or (ii) are
disclosed on Schedule 3.12 hereto. Substantially all of the tangible personal
property and assets of the Purchaser are in good operating condition and repair,
normal wear and tear excepted.
3.12.2 The Purchaser enjoys peaceful and undisturbed possession
under all of the leases of personal property under which it is operating. All of
the leases are valid, subsisting and in full force and effect and there are no
existing defaults, or events which with the passage of time or the giving of
notice, or both, would constitute defaults by the Purchaser or, to the Knowledge
of the Purchaser, by any other party thereto, except for defaults, if any, which
would not, individually or in the aggregate, have a Material Adverse Effect.
3.13 REAL PROPERTY.
3.13.1 The Purchaser does not own any real property, beneficially or
of record. Schedule 3.13 hereto lists all real property leased, subleased or
otherwise occupied by the Purchaser indicating the nature of its interest
therein and identifying the lessor thereof. To the Knowledge of the Purchaser,
the Purchaser has valid leasehold interests in all leases of real property which
it leases or purports to lease, free and clear of any Liens or imperfections of
title other than Liens or imperfections of title that are disclosed on Schedule
3.13 hereto.
3.13.2 Except as set forth on Schedule 3.13, the Purchaser enjoys
peaceful and undisturbed possession under all of the real property leases under
which it is operating, and all such leases are valid, subsisting and in full
force and effect and there are no existing defaults, or events which with the
passage of time or the giving of notice, or both, would constitute defaults by
the lessee or, to the Knowledge of the Purchaser, by any other party thereto,
except for defaults, if any, which would not have a Material Adverse Effect.
15
3.13.3 To the Knowledge of the Purchaser, there are no pending
condemnation, expropriation, eminent domain or similar proceedings affecting all
or any portion of such real property and, to the knowledge of the Purchaser, no
such proceedings are contemplated.
3.14 PERMITS; COMPLIANCE WITH LAW. The Purchaser holds and is in compliance
with all Permits and, to the Knowledge of the Purchaser, is in compliance with
all requirements of Law, except for any violation or failure to so hold or
comply which would not have a Material Adverse Effect. Except as disclosed on
Schedule 3.14, no notice, citation, summons or order has been received by the
Purchaser, no complaint has been filed, no penalty has been assessed and no
investigation, proceeding or review is pending or, to the Knowledge of the
Purchaser, threatened (a) with respect to any alleged violation by the Purchaser
of any Law or Permit, or (b) with respect to any alleged failure by the
Purchaser to have any Permit.
3.15 ENVIRONMENTAL MATTERS.
3.15.1 Except as disclosed on Schedule 3.15 hereto, the Purchaser
has no liability (nor has it handled or disposed of any substance, arranged for
the disposal of any substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property or facility in any
manner that could form the basis for any future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against the Purchaser
giving rise to any liability) (a) for damage to the atmosphere or any site,
location or body of water (surface or subsurface), or (b) for any reason under
any Environmental, Health and Safety Law.
3.15.2 Except as disclosed on Schedule 3.15, no notice, citation,
summons or order has been received by the Purchaser and no complaint has been
filed and no penalty has been assessed or, to the Knowledge of the Purchaser,
threatened by any Authority with respect to (a) any alleged violation by the
Purchaser of any Environmental, Health and Safety Law, or (b) any alleged
failure by the Purchaser to have any Permit required under any Environmental,
Health and Safety Law in connection with its business.
3.15.3 The Purchaser has not transported any substance or arranged
for the transportation of any substance to any location which is listed on the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability
Act of 1980, as amended.
16
3.16 INTELLECTUAL PROPERTY. "Simply Cigars" is the Purchaser's trade name
(the "PURCHASER TRADE NAME"). To the Knowledge of the Purchaser: (a) no claims
have been asserted by any third person in connection with the use by the
Purchaser of the Purchaser Trade Name; (b) to the Knowledge of the Purchaser, no
third persons are infringing upon any of the rights of the Purchaser to the
Purchaser Trade Name; and (c) the use by the Purchaser of the Purchaser Trade
Name does not infringe on the rights of any third persons.
3.17 MATERIAL CONTRACTS. Schedule 3.17 contains a list of all Material
Contracts not specifically described elsewhere in this Agreement or the
Schedules hereto to which the Purchaser is a party. All of the Material
Contracts are valid and binding and in full force and effect and there are no
defaults thereunder or events which with notice or the passage of time would
constitute a default by the Purchaser or, to the Knowledge of the Purchaser, by
any other party thereto, except for defaults and events as to which requisite
waivers or consents have been obtained or other defaults or failures to be valid
and binding which would not, individually or in the aggregate, have a Material
Adverse Effect.
3.18 TRANSACTIONS WITH AFFILIATES. Except as disclosed on Schedule 3.18
hereto, (a) since the date of the Most Recent Purchaser Balance Sheet, the
Purchaser has not entered into any Material Contract or engaged in any other
material transaction with any Affiliate of the Purchaser, (b) no Affiliate of
the Purchaser has any interest in any property, real or personal, tangible or
intangible, used in or pertaining to the business of the Purchaser, and (c) the
Purchaser is not indebted to any of its Affiliates.
17
3.19 PREVIOUS MERGER. The merger of Woodfield into the Purchaser was
consummated on December 31, 1997, pursuant to the Agreement and Plan of Merger
dated as of December 18, 1997, between Woodfield and the Purchaser and the
Certificate and Articles of Merger filed with the Delaware and Florida
Secretaries of State, respectively, on December 31, 1997, (collectively, the
"WOODFIELD MERGER DOCUMENTS"). All information regarding Woodfield and the
Purchaser which is set forth in the Memorandum and the Woodfield Merger
Documents is true and correct in all material respects. True and correct copies
of the Memorandum and Woodfield Merger Documents have been delivered to the
Company.
3.20 NO MATERIAL ADVERSE CHANGE. Since December 31, 1997, there has not
been any material adverse change in the financial condition of the Purchaser.
3.21 TAX-FREE REORGANIZATION.
3.21.1 Purchaser has no plan or intention to reacquire any of its
stock issued in the Merger.
3.21.2 Purchaser has no plan or intention to liquidate Purchaser; to
sell or otherwise dispose of the Company Common Stock; or to sell or otherwise
dispose of any of the assets of the Company acquired in the Merger, except for
dispositions made in the ordinary course of business or transfers described in
Section 368(a)(2)(C) of the Internal Revenue Code.
3.21.3 After the Merger, Purchaser intends to continue the historic
business of the Company or use a significant portion of the Company's business
assets in a business.
3.21.4 Purchaser is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
3.21.5 The Purchaser will pay its own expenses incurred in
connection with the Merger.
3.22 FULL DISCLOSURE. The representations and warranties of the Purchaser
contained in this Agreement do not contain any untrue statement of a material
fact.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
18
In order to induce the Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, the Company represents and
warrants to the Purchaser as follows:
4.1 ORGANIZATION AND STANDING. Each of the Company and the Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida, and each has all requisite corporate right, power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby.
4.2 AUTHORITY TO DO BUSINESS. Each of the Company and the Subsidiaries has
all requisite corporate power and authority to own, lease and operate its
respective properties and to conduct its respective business in the manner now
conducted and is duly licensed or qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the nature of
its properties and assets or the conduct of its business requires it to be so
licensed or qualified, except where the failure to be in good standing or to be
duly licensed or qualified to do business would not have a Material Adverse
Effect. Schedule 4.2 hereto lists each jurisdiction in which each of the Company
and the Subsidiaries is licensed or qualified to do business as a foreign
corporation.
4.3 ARTICLES OF INCORPORATION AND BYLAWS; CORPORATE RECORDS. Copies of the
Articles of Incorporation and bylaws (or equivalent documents) of each of the
Company and the Subsidiaries, together with all amendments thereto as in effect
on the date hereof, have been delivered to the Purchaser and are complete and
correct as of the date hereof. The corporate minutes and stock transfer records
of each of the Company and the Subsidiaries are contained in the relevant minute
books or separate stock transfer records, all of which have been made available
to the Purchaser and are complete and correct as of the date hereof.
4.4 SUBSIDIARIES. Schedule 4.4 hereto lists each corporation, partnership,
joint venture, firm, association or business enterprise in which the Company has
a direct or indirect equity interest, by stock ownership or otherwise, and sets
forth the jurisdiction of organization, capitalization and equity ownership of
each Subsidiary.
4.5 CAPITALIZATION. The Company's authorized capital stock consists solely
of 500 shares of Company Common Stock, all of which are issued and outstanding
in the name of the Company Shareholder. No shares of Company Common Stock are
treasury shares. The authorized and issued and outstanding capital stock of the
Subsidiaries are set forth on Schedule 4.4 hereto. All of the
19
issued and outstanding shares of capital stock of the Company and the
Subsidiaries are duly authorized, validly issued, fully paid and nonassessable,
and were not issued in violation of the preemptive rights of any person or any
applicable agreement or Law.
20
4.6 RIGHTS; WARRANTS OR OPTIONS; DIVIDENDS. Except as set forth on
Schedule 4.6 hereto, there are no outstanding subscriptions, warrants, options
or, except for this Agreement, other agreements or rights of any kind to
purchase or otherwise receive or be issued, or securities or obligations of any
kind convertible into, any shares of capital stock of or any other security of
the Company or any of the Subsidiaries; there is no outstanding contract or
other agreement of the Company, any Subsidiary or any other Person to purchase,
redeem or otherwise acquire any outstanding shares of the capital stock of the
Company or any Subsidiary, or securities or obligations of any kind convertible
into any shares of the capital stock of the Company or any Subsidiary; there are
no dividends or distributions which have accrued or been declared but are unpaid
on the capital stock of the Company or any Subsidiary; and there are no
outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the Company or any Subsidiary.
4.7 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser
copies of (a) the consolidated unaudited balance sheet (the "MOST RECENT BALANCE
SHEET") and the related consolidated statement of income of the Company and the
Subsidiaries for the eight months ended December 31, 1997, and (b) the Company's
consolidated audited balance sheets as of April 30, 1997 and 1996, and related
statements of income and cash flow of the Company and Subsidiaries for the
fiscal year ended April 30, 1997 and 1996. (The financial statements described
in clause (b) above are collectively referred to as the "AUDITED FINANCIAL
STATEMENTS"). The foregoing financial statements (collectively, the "FINANCIAL
STATEMENTS") (i) are complete and correct in all material respects and have been
prepared in accordance with the books and records of the Company and the
Subsidiaries, (ii) present fairly the financial condition of the Company and the
Subsidiaries and the results of their operations at such dates and for the
periods then ended, and (iii) except as set forth on Schedule 4.7 hereto, have
been prepared in accordance with GAAP.
4.8 UNDISCLOSED LIABILITIES. Except as and to the extent reflected on the
Most Recent Balance Sheet or as disclosed on Schedule 4.8 hereto, neither the
Company nor any Subsidiary has any liabilities, commitments or obligations of
any nature, whether absolute, accrued, contingent or otherwise, other than those
incurred in the ordinary course of business consistent with past practice since
the date of the Most Recent Balance Sheet.
4.9 TITLE TO PERSONAL PROPERTY AND CONDITION OF ASSETS.
21
4.9.1 Except for Inventory disposed of in the ordinary course of
business consistent with past practice since the date of the Most Recent Balance
Sheet and Distribution, (a) each of the Company and the Subsidiaries has good
and valid title to all of the tangible personal property and assets which are
used in the operation of its business and which it owns or purports to own, and
(b) valid leasehold interests in all leases of tangible personal property which
it leases or purports to lease, free and clear of any Liens, other than Liens or
imperfections of title that (i) relate to immaterial properties or assets or
otherwise would not, individually or in the aggregate, have a Material Adverse
Effect, or (ii) are disclosed on Schedule 4.9 hereto. Substantially all of the
tangible personal property and assets of the Company and the Subsidiaries are in
good operating condition and repair, normal wear and tear excepted.
4.9.2 Each of the Company and the Subsidiaries enjoys peaceful and
undisturbed possession under all of the leases of personal property under which
it is operating. All of the leases are valid, subsisting and in full force and
effect and there are no existing defaults, or events which with the passage of
time or the giving of notice, or both, would constitute defaults by any of the
Company and the Subsidiaries or, to the Knowledge of the Company, by any other
party thereto, except for defaults, if any, which would not, individually or in
the aggregate, have a Material Adverse Effect.
4.10 REAL PROPERTY.
4.10.1 Neither the Company nor any Subsidiary owns any real
property, beneficially or of record. Schedule 4.10 hereto lists all real
property leased, subleased or otherwise occupied by each of the Company and the
Subsidiaries indicating the nature of its interest therein and identifying the
lessor thereof. To the Knowledge of the Company, it has valid leasehold
interests in all leases of real property which it leases or purports to lease,
free and clear of any Liens or imperfections of title other than Liens or
imperfections of title that are disclosed on Schedule 4.10 hereto.
4.10.2 Except as set forth on Schedule 4.10, each of the Company and
the Subsidiaries enjoys peaceful and undisturbed possession under all of the
real property leases under which it is operating, and all such leases are valid,
subsisting and in full force and effect and there are no existing defaults, or
events which with the passage of time or the giving of notice, or both, would
constitute defaults by the lessee or, to the Knowledge of the Company, by any
other party thereto, except for defaults, if any, which would not have a
Material Adverse Effect.
22
4.10.3 To the Knowledge of the Company, there are no pending
condemnation, expropriation, eminent domain or similar proceedings affecting all
or any portion of such real property and, to the knowledge of the Company, no
such proceedings are contemplated.
4.11 INSURANCE. Schedule 4.11 hereto lists all insurance policies providing
insurance coverage of any nature to any of the Company and the Subsidiaries. All
of these policies are in full force and effect and all premiums due and payable
in respect thereof have been paid. The Company and the Subsidiaries have
complied with the provisions of the policies, and the policies are sufficient
for compliance with all requirements of Law and agreements to which the Company
or any Subsidiary is a party, except where the failure to comply, individually
or in the aggregate, would not have a Material Adverse Effect. Since the
respective dates of the policies, no notice of cancellation or non-renewal with
respect to any policy has been received by the Company or any Subsidiary.
4.12 LABOR RELATIONS. Except as disclosed on Schedule 4.12 hereto, neither
the Company nor any Subsidiary is a party to or otherwise bound by any labor or
collective bargaining agreement. Except as disclosed on Schedule 4.12 hereto, as
of the date hereof (a) neither the Company nor any Subsidiary is involved in or,
to the Knowledge of the Company, threatened with any labor dispute, strike,
slowdown, work stoppage, grievance, unfair labor practice charge, arbitration,
suit or administrative proceeding relating to labor matters involving its
employees, (b) there are no actions, proceedings or claims pending or, to the
Knowledge of the Company, threatened against the Company or any Subsidiary under
any Laws relating to employment, including any provisions thereof relating to
wages, hours, collective bargaining, withholding or the payment of social
security or other Taxes, and (c) neither the Company nor any Subsidiary has
conducted negotiations with respect to any future contract with or commitment to
any labor union or association and, to the Knowledge of the Company, there are
no current or threatened attempts to organize or establish any labor union or
association or employee association with respect to the Company or any
Subsidiary.
4.13 PERMITS; COMPLIANCE WITH LAW. Each of the Company and the Subsidiaries
holds and is in compliance with all Permits and, to the Knowledge of the
Company, is in compliance with all requirements of Law, except for any violation
or failure to so hold or comply which would not have a Material Adverse Effect.
Except as disclosed on Schedule 4.13, no notice, citation, summons or order has
been received by the Company or any Subsidiary, no
23
complaint has been filed, no penalty has been assessed and no investigation,
proceeding or review is pending or, to the Knowledge of the Company, threatened
(a) with respect to any alleged violation by the Company or any Subsidiary of
any Law or Permit, or (b) with respect to any alleged failure by the Company or
any Subsidiary to have any Permit. Notwithstanding anything to the contrary
herein, no representation or warranty is made in this Agreement or otherwise as
to the transferability, or the effect of the Merger on, the occupational
licenses, tobacco sales licenses or the Florida Lottery permits of the Company
and the Subsidiaries.
4.14 LITIGATION. Except as disclosed on Schedule 4.14, there are no
actions, suits, claims or proceedings pending or, to the Knowledge of the
Company, threatened against or involving the Company or any Subsidiary, or any
of their assets or properties, before any court or arbitration tribunal or by or
before any Authority that (a) if adversely determined, would, individually or in
the aggregate, have a Material Adverse Effect, or (b) question the validity of
this Agreement or seek to prohibit, enjoin or otherwise challenge the
consummation of the transactions contemplated hereby. There are no outstanding
orders, judgments, injunctions, stipulations, awards or decrees of any
Authority, court or arbitration tribunal against the Company or any Subsidiary,
or any of their assets or properties which prohibit or enjoin the consummation
of the transactions contemplated hereby.
4.15 LIST OF ACCOUNTS. Schedule 4.15 lists all bank, investment and
securities accounts, and all safe deposit boxes, maintained by the Company and
the Subsidiaries and the persons authorized to draw thereon or make withdrawals
therefrom or, in the case of safe deposit boxes, with access thereto.
4.16 LIST OF PERSONNEL. The Company Shareholder is the only officer,
director or employee of the Company and the Subsidiaries whose total
compensation during the fiscal year ended April 30, 1997, exceeded $50,000.
Schedule 4.16 sets forth all commitments or agreements by the Company or any
Subsidiary to increase the wages or salaries or modify the conditions or terms
of employment of any of its employees, except for commitments to or agreements
with employees which are immaterial individually and in the aggregate and which
have been made in the ordinary course of business consistent with past practice.
4.17 EMPLOYEE BENEFIT PLANS; ERISA.
4.17.1 Neither the Company nor any Subsidiary maintains or
contributes to any Employee Benefit Plan that is in effect as of the date of
this Agreement.
24
4.17.2 The Company had a Defined Benefit Plan that was terminated
over ten years ago. Notwithstanding anything to the contrary in this Agreement,
no representation or warranty is made as to that Plan.
4.18 ABSENCE OF CHANGES. Except as otherwise disclosed on Schedule 4.18
hereto, since the date of the Most Recent Balance Sheet (a) the businesses of
the Company and the Subsidiaries have been operated only in the ordinary course
except for the Distribution and except for any deviation therefrom that would
not have a Material Adverse Effect, (b) there has been no material adverse
change in the business, assets, properties, results of operations, financial
condition or prospects of the Company or any Subsidiary, and (c) there has been
no damage to or destruction of any of the physical plant or other assets of the
Company or any Subsidiary having a book value, individually or in the aggregate,
greater than $10,000 (whether or not covered by insurance) or that would, after
taking into account any insurance recoveries payable in respect thereof, have a
Material Adverse Effect.
4.19 TAX MATTERS.
4.19.1 Except as disclosed on Schedule 4.19, (a) All Tax Returns
required to be filed with respect to the business and assets of each of the
Company and the Subsidiaries have been duly and timely (within any applicable
extension periods) filed with the appropriate governmental agencies in all
jurisdictions in which those Returns are required to be filed, (b) all of the
Returns as filed are correct and complete in all material respects, and (c) all
Taxes (including estimated Taxes) due and payable by each of the Company and the
Subsidiaries have been paid.
4.19.2 The unpaid Taxes of the Company and the Subsidiaries (a) did
not, as of the date of the Most Recent Balance Sheet, exceed the reserve for Tax
liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and tax income) disclosed on the face of the
Most Recent Balance Sheet, and (b) do not exceed that reserve as adjusted for
the passage of time through the Closing Date in accordance with the past custom
of the Company and the Subsidiaries in filing their Tax Returns.
4.19.3 Except as provided on Schedule 4.19, there is no claim or
assessment pending or, to the Knowledge of the Company, threatened against the
Company or any Subsidiary for any alleged deficiency in Taxes.
25
4.19.4 Neither the Company nor any Subsidiary has (a) filed any
consent to the application of Section 341(f) of the Code, (b) executed a waiver
or consent extending any statute of limitations for the assessment or collection
of any Taxes which remains outstanding, (c) applied for a ruling relating to
Taxes, (d) entered into a closing agreement with any Tax Authority, or (e) filed
an election under Section 338(g) or 338(h)(10) of the Code or caused a deemed
election under Section 338(e) of the Code.
4.19.5 Except as disclosed on Schedule 4.19, no Tax Return of the
Company or any Subsidiary has been audited by any Tax Authority at any time
since January 1, 1987.
4.19.6 Neither the Company nor any Subsidiary is a party to any
agreement providing for the allocation or sharing of Taxes.
4.19.7 Neither the Company nor any Subsidiary has been a member of
an Affiliated Group filing a consolidated federal income Tax Return except that
the Company and the Subsidiaries are an Affiliated Group.
4.20 ENVIRONMENTAL MATTERS.
4.20.1 Except as disclosed on Schedule 4.20 hereto, neither the
Company nor any Subsidiary has any liability (nor has it handled or disposed of
any substance, arranged for the disposal of any substance, exposed any employee
or other individual to any substance or condition, or owned or operated any
property or facility in any manner that could form the basis for any future
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against the Company or any Subsidiary giving rise to any liability) (a)
for damage to the atmosphere or any site, location or body of water (surface or
subsurface), or (b) for any reason under any Environmental, Health and Safety
Law.
4.20.2 Except as disclosed on Schedule 4.20, no notice, citation,
summons or order has been received by the Company or any Subsidiary and no
complaint has been filed and no penalty has been assessed or, to the Knowledge
of the Company, threatened by any Authority with respect to (a) any alleged
violation by the Company or any Subsidiary of any Environmental, Health and
Safety Law, or (b) any alleged failure by the Company or any Subsidiary to have
any Permit required under any Environmental, Health and Safety Law in connection
with its respective business.
4.20.3 Neither the Company nor any Subsidiary has transported any
substance or arranged for the transportation of any
26
substance to any location which is listed on the National Priorities List under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended.
4.21 INTELLECTUAL PROPERTY. "Smokers Gallery" is the Company's trade name
(the "TRADE NAME"). To the Knowledge of the Company, (a) no claims have been
asserted by any third person in connection with the use by the Company or any
Subsidiary of the Trade Name , (b) to the Knowledge of the Company, no third
persons are infringing upon any of the rights of the Company or any Subsidiary
to the Trade Name, and (c) the use by the Company and the Subsidiaries of the
Trade Name does not infringe on the rights of any third persons.
4.22 MATERIAL CONTRACTS. Schedule 4.22 contains a list of all Material
Contracts not specifically described elsewhere in this Agreement or the
Schedules hereto to which the Company or any Subsidiary is a party. All of the
Material Contracts are valid and binding and in full force and effect and there
are no defaults thereunder or events which with notice or the passage of time
would constitute a default by the Company or any Subsidiary or, to the Knowledge
of the Company, by any other party thereto, except for defaults and events as to
which requisite waivers or consents have been obtained or other defaults or
failures to be valid and binding which would not, individually or in the
aggregate, have a Material Adverse Effect.
4.23 TRANSACTIONS WITH AFFILIATES. Except for distributions to the Company
Shareholder of the Company's taxable income since May 1, 1997, and except for
any transactions, interests and indebtedness among the Company and the
Subsidiaries (a) since the date of the Most Recent Balance Sheet, neither the
Company nor any Subsidiary has entered into any Material Contract or engaged in
any other material transaction with the Company Shareholder or any Affiliate of
the Company Shareholder, (b) no Affiliate of the Company Shareholder has any
interest in any property, real or personal, tangible or intangible, used in or
pertaining to the business of the Company or any Subsidiary, and (c) neither the
Company nor any Subsidiary is indebted to the Company Shareholder or any of his
Affiliates.
4.24 POWERS OF ATTORNEY. Except as disclosed on Schedule 4.24 hereto,
neither the Company nor any Subsidiary has granted any power of attorney to any
Person for any purpose whatsoever, which power of attorney is currently in
force.
4.25 SUPPLIERS. Schedule 4.25 hereto contains a complete and accurate list
of the names and addresses of the 10 largest (by
27
sales volume) suppliers of the Company and the Subsidiaries for the calendar
year ended December 31, 1997, and for the calendar year ended December 31, 1996.
Except as set forth on Schedule 4.25, neither the Company nor any Subsidiary has
lost any supplier, or any group of suppliers, which accounted for more than 5%
of the aggregate purchases by the Company and the Subsidiaries, taken as a
whole, during the last 12 months.
4.26 AUTHORIZATION OF AGREEMENT. The execution, delivery and performance of
this Agreement and the other Acquisition Agreements by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly and validly authorized by all requisite corporate action, and this
Agreement constitutes, and the other Acquisition Agreements when executed and
delivered by the Company will constitute, the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as enforceability may be limited by bankruptcy, moratorium,
fraudulent conveyance and other similar Laws affecting creditors' rights
generally and by general principles of equity.
4.27 NO VIOLATION OR CONFLICT. Except as set forth on Schedule 4.27
attached hereto, the execution and delivery of this Agreement and the other
Acquisition Agreements by the Company and the consummation by the Company and
the Subsidiaries of the transactions contemplated hereby and thereby, and
compliance by the Company and the Subsidiaries with the provisions hereof and
thereof, (a) do not and will not violate or conflict with any provision of Law
or any writ, order or decree of any court or Authority, or any term or provision
of the Company's or any Subsidiary's Articles of Incorporation or bylaws (or
equivalent documents), and (b) do not and will not, with or without the passage
of time or the giving of notice or both, result in the breach of, or constitute
a default or require any consent under, or result in the creation of any Lien
upon any property or assets of the Company or any Subsidiary pursuant to, any
instrument or agreement to which the Company or any Subsidiary is a party, or by
which the Company or any Subsidiary or any of their properties may be bound or
affected, except for any of the foregoing that will not have a Material Adverse
Effect.
4.28 CONSENT OR APPROVAL OF AUTHORITIES. Except as set forth on Schedule
4.28, other than in connection with the Delaware Act or the Florida Act, to the
Knowledge of the Company, no consent, approval or authorization of, or
registration, qualification, designation, declaration or filing with, any
Authority is required in connection with the execution, delivery or performance
by the
28
Company or any Subsidiary of this Agreement, the other Acquisition Agreements,
or any other agreement, instrument or document contemplated hereby, or the
consummation by the Company or any Subsidiary of the transactions contemplated
hereby and thereby.
4.29 BROKERS. Neither the Company nor any Subsidiary has employed any
broker or finder and neither the Company nor any Subsidiary has incurred nor
will it incur any broker's, finder's or similar fees, commissions or expenses
payable by the Company or any Subsidiary in connection with the transactions
contemplated hereby.
4.30 FULL DISCLOSURE. The representations and warranties of the Company
contained in this Agreement do not contain any untrue statement of a material
fact.
ARTICLE 5
PRE-CLOSING COVENANTS
[This Article Intentionally Deleted]
29
ARTICLE 6
CONDITIONS TO CLOSING
6.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. All of the obligations of
the Purchaser to consummate the transactions contemplated by this Agreement are
subject to the satisfaction at or prior to the Closing of each of the following
conditions precedent, any one or more of which may be waived by the Purchaser:
6.1.1 Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though made on and as of such
date.
6.1.2 The Company shall have performed and complied in all material
respects with all of the agreements, covenants and obligations required under
this Agreement to be performed or complied with by it prior to or at the
Closing.
6.1.3 The Company shall have delivered to the Purchaser a
certificate, executed by a duly authorized officer of the Company in his
capacity as such, certifying in such detail as the Purchaser may reasonably
request that the conditions specified in Sections 6.1.1 and 6.1.2 have been
fulfilled.
6.1.4 The Company shall have obtained all authorizations, consents,
waivers and approvals from parties to contracts or other agreements to which the
Company or any Subsidiary is a party, or by which the Company or any Subsidiary
is bound, as may be required to be obtained in connection with the consummation
of the transactions contemplated hereby.
6.1.5 All filings that are required to have been made by the Company
or any Subsidiary with any Authority in order to carry out the transactions
contemplated hereby shall have been made, and all authorizations, consents and
approvals from all Authorities required to carry out the transactions
contemplated hereby shall have been received.
6.1.6 There shall be in force no claim, proceeding, action, order or
decree by or before any court or Authority of competent jurisdiction
restraining, enjoining, prohibiting, invalidating or otherwise preventing (or
seeking to prevent) the consummation of the transactions contemplated hereby
excluding any of same brought by the Purchaser or its Affiliates.
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6.1.7 No proceeding in which the Company or any Subsidiary is a
debtor, defendant or party seeking an order for its own relief or reorganization
shall have been brought or be pending by or against such Person under any United
States or state bankruptcy or insolvency Law.
6.1.8 The Purchaser shall have received (a) a certificate of the
Secretary or an Assistant Secretary of the Company as to the incumbency and
signatures of the officers of the Company executing this Agreement, and (b) a
certificate issued by the Secretary of State (or foreign equivalent) of each
jurisdiction where the Company or any Subsidiary is organized and of each
jurisdiction in which the Company or any Subsidiary is qualified as a foreign
corporation, as of a date reasonably acceptable to the Purchaser as to the good
standing thereof in those jurisdictions.
6.1.9 The Purchaser shall have received the Opinion of Counsel to
the Company and the Company Shareholder.
6.1.10 Xxxx X. Xxxx and Xxxx Xxxx shall have entered into employment
agreements with the Purchaser in form and substance reasonably acceptable to the
Purchaser (the "EMPLOYMENT AGREEMENTS").
6.1.11 This Agreement and the transactions contemplated herein shall
have received the approval of the Company's Board of Directors and the holders
of all of the issued and outstanding shares of Company Common Stock and each of
the holders of such Company Stock shall have irrevocably waived any rights which
they may have as dissenting shareholders under applicable Law, and the Company
shall have delivered to the Purchaser a certificate of the Secretary of the
Company in his capacity as such, certifying as to the foregoing matters in such
detail as the Purchaser may reasonably request.
6.1.12 Since the date of the Most Recent Balance Sheet there shall
have been no material adverse change in (or event or circumstance occurring
that, with the passage of time, is reasonably likely to result in a material
adverse change in) the business, assets, properties, results of operations,
financial condition or prospects of the Company or any Subsidiary.
6.1.13 The Company Shareholder shall have entered into the Company
Shareholder Agreement.
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6.1.14 The shareholders of the Purchaser shall have approved the
consummation by the Purchaser of the transactions contemplated hereby.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. All of the obligations of
the Company to consummate the transactions contemplated by this Agreement are
subject to the satisfaction at or prior to the Closing of each of the following
conditions precedent, any one or more of which may be waived by the Company:
6.2.1 Each of the representations and warranties of the Purchaser
contained herein shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though made on and as of such
date.
6.2.2 The Purchaser shall have performed and complied in all
material respects with all of the agreements, covenants and obligations required
under this Agreement to be performed or complied with by it prior to or at the
Closing.
6.2.3 The Purchaser shall have delivered to the Company a
certificate, executed by a duly authorized officer of the Purchaser in his
capacity as such, certifying in such detail as the Company may reasonably
request that the conditions specified in Sections 6.2.1 and 6.2.2 have been
fulfilled.
6.2.4 All filings that are required to have been made by the
Purchaser with any Authority in order to carry out the transactions contemplated
by this Agreement shall have been made, and all authorizations, consents and
approvals from all Authorities required to carry out the transactions
contemplated by this Agreement shall have been received.
6.2.5 There shall be in force no claim, proceeding, action, order or
decree by or before any court or Authority of competent jurisdiction
restraining, enjoining, prohibiting, invalidating or otherwise preventing (or
seeking to prevent) the consummation of the transactions contemplated hereby,
excluding any of same brought by the Company or its Affiliates.
6.2.6 No proceeding in which the Purchaser shall be a debtor,
defendant or party seeking an order for its own relief or reorganization shall
have been brought or be pending by or against such Person under any United
States or state bankruptcy or insolvency Law.
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6.2.7 The Company shall have received (a) a certificate of the
Secretary or an Assistant Secretary of the Purchaser as to the incumbency and
signatures of the officers of the Purchaser executing this Agreement, and (b) a
certificate issued by the Secretary of State of the state of incorporation of
the Purchaser, as of a date reasonably acceptable to the Company, as to the good
standing of the Purchaser in such state.
6.2.8 The Company shall have received the Opinion of Purchaser's
Counsel.
6.2.9 The Purchaser shall have entered into the Employment
Agreements with Xxxx X. Xxxx and Xxxx Xxxx in form and substance reasonably
acceptable to such persons.
6.2.10 The payment of the Shareholder Loan, the Distribution and the
Xxxxxxx Xxxxx Debt, as well as the release of the Company Shareholder's guaranty
and collateral, pursuant to Section 2.5 shall have occurred.
6.2.11 The Purchaser shall have entered into the Company Shareholder
Agreement.
6.2.12 The Purchaser shall have delivered to the Company a
certificate of the Secretary of the Purchaser in his capacity as such,
certifying in such detail as the Company may reasonably request that the board
of directors of the Purchaser and the shareholders of the Purchaser have
approved the consummation by the Purchaser of the transactions contemplated
hereby.
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 FURTHER ASSURANCES. The parties hereto will deliver, and will cause
the Persons controlled by them to deliver, any and all other instruments or
documents required to be delivered pursuant to, or necessary or proper in order
to give effect to, all of the terms and provisions of this Agreement.
7.2 PUBLICITY. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby will be made without advance
approval thereof by the Purchaser and the Company. The parties will cooperate in
issuing any press release or other public announcement concerning this Agreement
or the transactions contemplated hereby. Whenever practicable, each party shall
furnish to the other party drafts of all press releases or
33
announcements prior to their release. Nothing in this Agreement shall prevent
the Purchaser from making any disclosure which may be required pursuant to the
Securities Act, the Securities Exchange Act or the rules and regulations of the
National Association of Securities Dealers or the Nasdaq Stock Market.
ARTICLE 8
COMPANY SHAREHOLDER; SURVIVAL OF
REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 COMPANY SHAREHOLDER AGREEMENT. Simultaneous herewith, the Purchaser,
the Company and the Company Shareholder are entering into an agreement in the
form attached hereto as Exhibit A (the "COMPANY SHAREHOLDER AGREEMENT"),
pursuant to which, among other things, the Company Shareholder is agreeing to
indemnify the Purchaser against certain Adverse Consequences (as such term is
defined in the Company Shareholder Agreement) and the Purchaser is agreeing to
indemnify the Company Shareholder against certain Adverse Consequences.
8.2 SURVIVAL. All of the representations, warranties, covenants and
agreements of the parties hereto contained in this Agreement shall survive the
date hereof, the Closing Date and the consummation of the transactions
contemplated hereby as and to the extent provided in the Company Shareholder
Agreement.
ARTICLE 9
MODIFICATION, WAIVERS AND TERMINATION
9.1 MODIFICATION. The Purchaser and the Company may, by mutual consent,
upon unanimous shareholder approval, amend, modify or supplement this Agreement
in any manner agreed upon by them in writing at any time.
9.2 WAIVERS. Each party, by an instrument in writing, may extend the time
for or waive the performance of any of the obligations of the other party or
waive compliance by the other party with any of the covenants or conditions
contained herein.
9.3 TERMINATION. This Agreement may be terminated, and the transactions
contemplated hereby abandoned, prior to the Closing as follows:
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9.3.1 by the Purchaser and the Company by mutual written consent at
any time;
9.3.2 by the Purchaser by giving written notice to the Company at
any time if the Closing has not occurred on or before January 30, 1998 (other
than as a result of a breach by the Purchaser of any of its representations,
warranties, covenants or agreements contained herein);
9.3.3 by the Company by giving written notice to the Purchaser at
any time if the Closing has not occurred on or before January 30, 1998 (other
than as a result of a breach by the Company of any of its representations,
warranties, covenants or agreements contained herein); or
9.3.4 by the Purchaser or the Company at any time prior to the
Closing Date if the Closing shall violate any order, decree or judgment of any
court or any Authority having competent jurisdiction.
9.4 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 9.3, all rights and obligations of the parties hereunder shall terminate
without liability of any party or to any other party (except for any liability
of any party then in breach); PROVIDED, HOWEVER, that the provisions of Sections
5.5 and 10.7 and this Section 9.4 shall remain in full force and effect.
ARTICLE 10
MISCELLANEOUS
10.1 NOTICES. Any notices, requests, demands and other communications
required or permitted to be given hereunder or under any agreement or other
document executed in connection herewith must be in writing and, except as
otherwise specified in writing, will be deemed to have been duly given when
personally delivered or upon receipt after deposit in the United States mail, by
certified mail, postage prepaid, return receipt requested, as follows:
If to the Purchaser:
Windsor Capital Corp.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, CEO
35
-- with a copy to --
Macaulay, Zorrilla & Xxxxx, P.A.
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx Xxxxxx Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
If to the Company; or the Company Shareholders:
Boynton Tobacconists, Inc.
0000 Xxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx
-- with a copy to --
Xxxxx, McClosky, Smith, Xxxxxxxx & Xxxxxxx, P.A.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
or to such other addresses or facsimile numbers as either
party hereto may from time to time give notice of (complying as to delivery with
the terms of this Section 10.1) to the other.
10.2 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties hereto and supersedes all prior agreements, understandings,
negotiations and discussions, both written and oral, among the parties hereto
with respect to the subject matter hereof.
10.3 BENEFITS; BINDING EFFECT; ASSIGNMENT. This Agreement is for the
benefit of and binding upon the parties hereto, their respective successors and,
where applicable, assigns. No party may assign this Agreement or any of its
rights, interests or obligations hereunder without the prior approval of the
other party.
10.4 WAIVER. No waiver of any of the provisions of this Agreement will be
deemed to constitute or will constitute a waiver of any other provision hereof
(whether or not similar), nor shall any such waiver constitute a continuing
waiver unless otherwise expressly so provided.
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10.5 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or will be construed, to confer upon or give any Person
other than the parties hereto and their respective successors and assigns any
rights or remedies under or by reason of this Agreement.
10.6 SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses, sections or subsections contained in this Agreement
will not affect the enforceability of the remaining portions of the Agreement or
any part hereof, all of which are inserted conditionally on their being valid in
law and, if any one or more of the words, phrases, sentences, clauses, sections
or subsections contained in this Agreement is declared invalid, this Agreement
will be construed as if the invalid word or words, phrase or phrases, sentence
or sentences, clause or clauses, section or sections, or subsection or
subsections, had not been inserted.
10.7 EXPENSES. All fees, costs and expenses incurred by the Company, the
Subsidiaries or the Company Shareholder in connection with this Agreement and
any of the transactions contemplated hereby (including, but not limited to,
legal fees and expenses) will be borne by the Purchaser up to an aggregate of
$50,000. The Company Shareholder shall pay all such fees, costs and expenses in
excess of $50,000. All fees, costs and expenses incurred by the Purchaser in
connection with this Agreement and any of the transactions contemplated hereby
will be borne by the Purchaser.
10.8 SECTION HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement.
10.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the several parties hereto in separate counterparts, each of
which will be deemed to be one and the same instrument.
10.10 LITIGATION; PREVAILING PARTY. In the event that any party hereto
brings suit for the collection of any damages resulting from, or for the
injunction of any action constituting, a breach of any of the terms or
provisions of this Agreement, then the prevailing party shall be entitled to
recover from the non-prevailing party all reasonable court costs and attorneys'
fees and expenses incurred by the prevailing party in connection with such
litigation at all levels, including fees and expenses incurred prior to the
filing of legal action.
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10.11 REMEDIES CUMULATIVE. Except as set forth in the Company Shareholder
Agreement, no remedy made available by any of the provisions of this Agreement
is intended to be exclusive of any other remedy, and each and every remedy is
cumulative and is in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity.
10.12 EQUITABLE REMEDIES. Each party acknowledges and agrees that the
non-breaching party will not have an adequate remedy at law in the event of any
breach of this Agreement and that, therefore, the non-breaching party shall be
entitled, in addition to any other remedies which may be available to it, to
injunctive and/or other equitable relief to prevent or remedy a breach, with the
posting of any bond in connection therewith being hereby waived.
10.13 GOVERNING LAW. This Agreement will be governed by and construed and
enforced in accordance with the internal laws of the State of Florida.
10.14 SUBSIDIARY PERFORMANCE. To the extent that any provision hereof
requires performance or compliance by a Subsidiary, said provision shall be
deemed to include a requirement that the Company cause such performance or
compliance.
IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
WINDSOR CAPITAL CORP.
By: /s/ XXXX X. XXXXXXXXX
----------------------------------
Xxxx X. Xxxxxxxxx
Chief Executive Officer
BOYNTON TOBACCONISTS, INC.
By: /s/ XXXX X. XXXX
-----------------------------------
Xxxx X. Xxxx
President
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