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CUSIP No. 141834 10 1 Page 12 of 17
EXHIBIT C
EXECUTION COPY
AGREEMENT
THIS AGREEMENT is made the 31st day of March, 1998, by and among CARIBBEAN
CIGAR COMPANY, a Florida corporation (the "Company"), Xxxxxx X. Xxxxxxx, having
an address at ________________________________________ ("Xxxxxxx"), Xxxxx Xxxxx,
having an address at 0000 X.X. 00xx Xxxxxx, Xxxxx, Xxxxxxx 00000 (" Xxxxx") and
each of the other directors of the Company.
RECITALS:
A. WHEREAS Xxxxxxx has knowledge and experience in general management and
raising capital;
B. WHEREAS the Company, following due deliberation by its Board of
Directors, and the Stockholders believe it would benefit the Company and the
Stockholders if Xxxxxxx became Chairman and Chief Executive Officer of the
Company and assisted the Company in raising capital on the terms set forth
herein;
NOW, THEREFORE, in consideration of the premises and the material covenants
and conditions contained herein, the Company, the Stockholders and Xxxxxxx agree
as follows:
1. Appointment as Chairman and President/Chief Executive Officer.
(a) Effective upon the execution and delivery of this Agreement, Xxxxx
shall resign as Chairman and President/Chief Executive Officer ("CEO") of the
Company, and the Company shall elect Xxxxxxx as Chairman and President/CEO. For
the fiscal year beginning April 1, (i) 1998, Xxxxxxx shall be paid an annual
salary of $78,000, commencing July 1, 1998, and (ii) 1999, Xxxxxxx shall be paid
an annual salary of $156,000. In connection therewith, Xxxxxxx shall enter into
an employment agreement in form, scope and substance satisfactory to Xxxxxxx and
the Company.
(b) As promptly as practicable following the execution and delivery of
this Agreement, the Company will make all necessary filings with the Securities
and Exchange Commission (the "Commission") in connection with Xxxxxxx'x election
as Chairman and President/CEO. Until the Company shall have received gross
proceeds of at least $1,000,000 from the sale of the Private Placement Shares
(as hereinafter defined), Xxxxxxx agrees that the Company's primary business
shall remain the manufacturing, sale and distribution of cigars.
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2. Agreements Relating to Xxxxx.
(a) Xxxxx and the Company shall enter into an employment agreement
(the "Xxxxx Employment Agreement") in form, scope and substance reasonably
satisfactory to Xxxxx and Company. The Xxxxx Employment Agreement shall (i) be
for a term of two years, and shall automatically renew for one year periods,
unless terminated for cause, (ii) provide for a base salary of $156,000 and
(iii) entitle Xxxxx to participate in or receive the same benefits he presently
receives. Xxxxx'x title shall be Executive Vice President/Founder.
(b) Concurrently with the execution and delivery of this Agreement,
Xxxxx and Xxxxxxx shall enter into an agreement in form, scope and substance
satisfactory to Xxxxx and Xxxxxxx (i) prohibiting Xxxxx from selling or
transferring any shares of common stock, par value $0.001 per share (the "Common
Stock") of the Company, which Xxxxx currently owns for a period of one year
after the date of such agreement without the prior written consent of Xxxxxxx
and (ii) granting Xxxxxxx the right for two years to vote any shares of the
Company's Common Stock owned by Xxxxx as of the date of such agreement or
hereafter acquired by Xxxxx.
3. Additional Capital.
(a) Concurrently with the execution and delivery of this Agreement,
the Company agrees to sell to Xxxxxxx 1,250,000 shares of Common Stock at a
price of $0.40 per share (the "Initial Shares"). Xxxxxxx shall pay for such
shares by executing and delivering to the Company a note, payable 18 months
following the date of this Agreement in the amount of $500,000 (the "First Stock
Note"). Until the First Stock Note has been paid in full, the Initial Shares
shall be pledged to the Company pursuant to a pledge agreement in form and
substance reasonably satisfactory to the Company and Xxxxxxx.
(b) Subject to the approval of the Company's stockholders, the Company
agrees to sell to Xxxxxxx an additional 1,250,000 shares of Common Stock at a
price of $0.40 per share (the "Additional Shares"). Xxxxxxx shall pay for the
Additional Shares by executing and delivering to the Company a note, payable 18
months following the date of this agreement in the amount of $500,000 (the
"Second Stock Note"). Until the Second Stock Note has been paid in full, the
Additional Shares shall be pledged to the Company pursuant to a pledge agreement
in form and substance reasonably satisfactory to the Company and Xxxxxxx.
(c) Xxxxxxx may at any time or from time to time prepay the First
Stock Note or the Second Stock Note without premium or penalty. Upon any such
prepayment, the Company shall release from the applicable pledge a number of
shares of Initial Shares or Additional Shares equal to the amount of such
prepayment divided by $.40.
(d) Promptly following the executing and delivery of this Agreement,
but in any event pursuant to an exemption from registration under the Act, the
Company shall use its
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best efforts to sell no less than 2,500,000 shares of the Common Stock at a
price of not less than $0.40 per share (the "Private Placement Shares"). Xxxxxxx
agrees that he or any entity designated by him and reasonably acceptable to the
Company (the "Guarantor") will purchase not less than 625,000 of the Private
Placement Shares, provided, however, that the obligation of the Guarantor
hereunder shall not exceed $250,000. Xxxxxxx agrees that the net proceeds from
the sale of the Private Placement Shares shall be used in the Company's cigar
business.
(e) As promptly as possible following the execution and delivery of
this Agreement, the Company shall offer its existing creditors known as the
"Bridge Note" holders the opportunity to convert the unpaid principal amounts of
and all accrued but unpaid interest on such Bridge Notes into shares of Common
Stock at a price of $0.40 per share.
4. Further Corporate Action
(a) The Company agrees to take all necessary corporate action to
authorize and approve the sale of the Initial Shares, the Additional Shares and
the Private Placement Shares and the conversion of the Bridge Notes into Common
Stock. Such actions shall include, without limitation (i) making any necessary
filings with the Commission, (ii) holding a meeting of its stockholders to
approve the sale of the Initial Shares, the Additional Shares and the Private
Placement Shares, and (iii) seeking stockholder approval to increase the number
of authorized shares of Common Stock to 25,000,000 shares.
(b) At such time as the Company shall have received not less than
$1,000,000 from the sale of the Private Placement Shares, each of the directors
of the Company as to the date hereof agrees to resign as a director, and Xxxxxxx
shall have the right to designate new directors (the "New Directors") to fill
the vacancies created thereby.
5. Representations, Warranties and Covenants of Xxxxxxx. Xxxxxxx
represents and warrants:
(a) Xxxxxxx is an "accredited investor" within the meaning of Rule 501
promulgated under the Act, and has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits
and the risks of this investment. Xxxxxxx is acquiring the Initial Shares, the
Additional Shares and any Private Placement Shares he may acquire (collectively,
the "Securities") for his own account for investment purposes only and not with
a view to the distribution or resale thereof. Xxxxxxx will not sell or transfer
any of the Securities in violation of applicable federal, state or foreign
securities laws. Xxxxxxx agrees not to sell any of the Securities for at least
one year following the date of this Agreement.
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(b) Prior to the purchase of the Securities, Xxxxxxx had the
opportunity to ask questions and receive answers from the Company and its
representatives concerning the Company and the terms and conditions of the sale
of the Securities.
(c) In connection with the acquisition by Xxxxxxx of the Securities,
Xxxxxxx acknowledges that he has received, read, understands and is familiar
with:
(i) the Company's Annual report (Form 10-KSB) filed with the
Commission for the fiscal year ended March 31, 1997; and
(ii) Quarterly Reports (Form 10-KSB) filed with the Commission for
the quarters ended June 30, 1997 (as amended), September 30, 1997 and December
31, 1997.
Xxxxxxx further acknowledges that, except (i) for the projections and other
financial information provided to Xxxxxxx by the Company, (ii) as set forth in
this Agreement and (iii) such reports and other public information statements
made available to Xxxxxxx by the Company, no representations or warranties have
been made to Xxxxxxx or Xxxxxxx'x advisors by the Company, or by any person
acting on behalf of the Company, with respect to the offer or sale of the
Securities and/or the economic, tax, or any other aspects or consequences of a
purchase of the Securities and/or the investment made thereby. Further, Xxxxxxx
has not relied upon any information concerning the Company, written or oral,
other than (i) the projections and other financial information provided to
Xxxxxxx by the Company, (ii) that contained in this Agreement and (iii) the
aforementioned reports and public information statements.
(d) Xxxxxxx acknowledges that any Securities issued to him pursuant to
this Agreement will be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "Act"), and will bear a legend
restricting their transferability in accordance with the Act.
6. Additional Employment Agreements. As promptly as practicable
following the date of this Agreement, the Company shall enter into employment
agreements with Xxxxxx X. Xxxxxxxx, Xxxxxx Xxxx and any executive sales staff
hired with Xxxxxx Xxxx.
7. Retention of Professionals. The Company shall retain Ernst & Young
as the independent auditors for the Company (if such firm will accept the
engagement) and the law firm of Holland & Knight as its outside legal counsel
(provide such firm can advise the Company that it can accept the engagement
without having conflicts of interest). In the event that either of such firms
cannot act for the Company for any reason, or Xxxxxxx determines not to engage
either firm, Xxxxxxx shall have the right to designate the legal counsel and
independent auditors for the Company.
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8. Further Assurances. The parties hereto agree to negotiate in good
faith to agree on the terms of, and to execute and deliver, any and all such
further instruments and documents that are contemplated by this Agreement, but
which are drafted and/or negotiated as of the date hereof, all with a view to
providing each party to this with the full benefits thereof.
9. Headings. The headings of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF FLORIDA. THIS AGREEMENT MAY NOT BE CHANGED ORALLY BUT ONLY BY AN
AGREEMENT IN WRITING SIGNED BY THE PARTY AGAINST WHOM ENFORCEMENT OF ANY WAIVER,
CHANGE, MODIFICATION OR DISCHARGE IS SOUGHT.
11. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CARIBBEAN CIGAR COMPANY
By: /s/ Xxxxx Xxxxx
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Title: President
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/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx,
as a director of the Company
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/s/ Xxxxxx Xxxxxxxxx
---------------------------------------------
Xxxxxx Xxxxxxxxx,
as a director of the Company
/s/ Xxxxxxx Xxxxxxxxxx
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Xxxxxxx Xxxxxxxxxx,
as a director of the Company
