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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of April 1, 1997,
by and among Caribbean Cigar Company, a Florida corporation ("Cigar"); Caribbean
AWC Corporation, a Delaware corporation wholly-owned by Cigar (the "Purchaser");
American Case & Luggage Co. d/b/a American Western Cigar Co., an Ohio
corporation (the "Company"); Xxxxxxxx X. Xxxxxxx ("Xxxxxxx"); and Xxxxxx X.
Xxxxxx, Xx. ("Xxxxxx").
WHEREAS, the Company is engaged in the business of marketing and
selling certain cigars (the "Cigar Business"); and
WHEREAS, the Purchaser desires to purchase the assets used by the
Company in the Cigar Business and to assume those of the Company's ongoing
obligations relating to the Cigar Business as are expressly set forth in this
Agreement; and
WHEREAS, the Company desires to sell the assets relating to the
Cigar Business to the Purchaser as provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter contained, the parties to this Agreement hereby agree as
follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Sale and Purchase of Assets. On the terms and subject to the
conditions set forth in this Agreement, the Company shall sell, convey, assign,
transfer and deliver to the Purchaser at the Closing, the Cigar Business Assets,
as defined in Section 1.2 of this Agreement, in exchange for the Purchase Price,
as defined in Section 1.4 of this Agreement and the assumption of the
Liabilities as defined in Section 1.3 of this Agreement.
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1.2 Cigar Business Assets. For purposes of this Agreement, the term "Cigar
Business Assets" shall mean only those assets of the Company which are owned by
the Company as of the Closing Date and are specifically set forth on Exhibit A
to this Agreement.
1.3 Liabilities. For purposes of this Agreement, the term "Liabilities"
shall mean only those liabilities and obligations of the Company as are
specifically set forth on Exhibit B to this Agreement.
1.4 Purchase Price . The total purchase price (the "Purchase Price") for
the acquisition of the Cigar Business Assets shall be Two Hundred Thirty-Seven
Thousand Dollars ($237,000), of which One Hundred Eight-Seven Thousand Dollars
($187,000) shall be paid by certified check at the Closing and Fifty Thousand
Dollars ($50,000) shall be paid in the form of a demand promissory note, in the
form attached hereto as Exhibit C.
1.5 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Esanu Katsky Xxxxxx
& Siger in New York City, New York, at 10:00 a.m. local time on April 17, 1997,
or such other date as the parties shall mutually agree (April 18, 1997 or such
mutually agreeable later date referred to in this Agreement as, the "Closing
Date").
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY,
XXXXXXX AND XXXXXX
The Company, Xxxxxxx and Xxxxxx each represent and warrant to the
Purchaser that the statements contained in this Article II are true and correct
as of the date of this Agreement, except as set forth in the disclosure schedule
attached hereto (the "Disclosure Schedule"). The representations and warranties
of the Company, Xxxxxxx and Xxxxxx contained herein shall survive the Closing
and the consummation of the transactions contemplated hereby and shall not be
affected by any examination made by or on behalf of the Purchaser or the
knowledge of any of the Purchaser's officers, directors, stockholders, employees
or agent. The Disclosure Schedule shall be initialed by each of Xxxxxxx and
Xxxxxx, individually and on behalf of the Company, and by officers of Cigar and
the Purchaser, and shall be arranged in paragraphs corresponding to the numbered
and lettered paragraphs contained in this Article II, and the disclosures in any
paragraph of the Disclosure Schedule shall qualify only the corresponding
paragraph of this Article II.
2.1 Title to Assets. The Company is the owner of all right, title and
interest (legal and beneficial) in and to the Cigar Business Assets, free and
clear of all Liens. As used in this Agreement, the term "Liens" shall mean any
security interests, liens, pledges, claims, charges, escrows, encumbrances,
options, rights of first refusal, mortgages, indentures, and security or other
agreements, arrangements, contracts, commitments, understandings or obligations,
no matter how arising, whether written or oral, relating in any way to credit or
the borrowing of money and any claim of right arising out of any marital
relationship.
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2.2 Capacity, Validity and Organization.
(a) The Company is a corporation, duly organized, validly existing
and in good standing under the laws of the state of Ohio and has full power and
authority to carry on its business and to own or lease all of its properties and
assets as and in the places such business is now conducted.
(b) The Company has the full power, capacity and authority necessary
to enter into and perform its obligations under this Agreement and any related
agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. This Agreement has been, and any related
agreement to which the Company is a party will be, when executed and delivered,
duly executed and delivered by the Company. This Agreement constitutes, and each
related agreement will constitute when executed and delivered, the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms and all necessary shareholder and director approval,
relating to the execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement has been duly and validly taken.
(c) All of the issued and outstanding shares of capital stock of the
Company are owned by Xxxxxxx Xxxxxxx and Xxxx Xxxxxx (collectively, the
"Shareholders"), are not subject to any Liens, and are duly and validly
authorized and issued, fully-paid and non-assessable.
(d) The Company is not insolvent, and neither the execution of this
Agreement nor the performance of its terms will render the Company insolvent.
2.3 Qualification. The Company is duly qualified or licensed to transact
business as a foreign corporation in good standing in the jurisdictions listed
in Section 2.3 of the Disclosure
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Schedule, and the character of its assets or the nature of its business do not
require such qualification or licensing in any other jurisdiction, except where
the failure to be so qualified would not have a material adverse effect on the
business and financial condition of the Company. Complete and correct copies of
the Articles of Incorporation, and all amendments thereto, (certified by the
Secretary of State of the State of Ohio) are attached hereto as part of Section
2.3 of the Disclosure Schedule.
2.4 Noncontravention. The execution and delivery by the Company of this
Agreement and the agreements and instruments provided for herein and the
consummation by the Company of the transactions contemplated hereby and thereby
will not, with or without the giving of notice or the passage of time or both,
(a) violate the provisions of any law, rule or regulation applicable to the
Company; (b) violate the provisions of the Articles of Incorporation or
Regulations of the Company; (c) violate any judgment, decree, order or award of
any court, governmental body or arbitrator applicable to the Company; or (d) (i)
conflict with or result in the breach or termination of any term or provision
of, (ii) constitute a default under, (iii) require any consent under, (iv) cause
any acceleration under, or (v) cause the creation of any Lien upon the Company's
assets pursuant to, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or by which the Company or any of its
assets is bound.
2.5 Tax Matters.
(a) The Company has filed all Tax Returns (as defined below) that it
has at any time been required to file prior to December 31, 1996, all such Tax
Returns were correct and complete in all material respects when filed and the
Company has paid all Taxes (as defined below) that are shown to be due on any
such Tax Return. The Company has no actual or potential liability
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for any obligation with respect to Taxes of any taxpayer (including without
limitation any affiliated group of corporations or other entities that included
the Company during a prior period) other than the Company. All Taxes that the
Company is or was required by law to withhold or collect have been duly withheld
or collected and, to the extent required, have been paid to the proper
governmental entity, or are being contested by appropriate proceedings with
appropriate reserves or deposits having been made. For purposes of this
Agreement, the term "Taxes" shall mean all taxes, charges, fees, levies or other
similar assessments or liabilities, including without limitation income, gross
receipts, ad valorem, premium, value-added, excise, real property, personal
property, sales, use, transfer, withholding, employment, payroll and franchise
taxes imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States of America or any such state, local or foreign government (each of the
United States of America, any state, local or foreign government, and any agency
or other political subdivision of the United States of America or any state,
local or foreign government referred to in this Agreement as a "Governmental
Entity"), and any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any Taxes or any
contest or dispute thereof. For purposes of this Agreement, the term "Tax
Returns" shall mean all reports, returns, declarations, statements, or other
information required to be reported to or filed with a taxing authority in
connection with Taxes.
(b) The Company has delivered to the Purchaser complete and correct
copies of all (i) federal income Tax Returns, (ii) examination reports and (iii)
statements of deficiencies assessed against or agreed to by the Company since
December 31, 1993. No examination or audit of any Tax Return of the Company by
any Governmental Entity is currently in progress or, to the
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knowledge of the Company, pending, or threatened. The Company has not waived any
statute of limitations with respect to Taxes or agreed to an extension of time
with respect to any Tax assessment or deficiency.
(c) The Company is not a "consenting company" withing the meaning of
Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
and none of the assets of the Company are subject to an election under Section
341(f) of the Code. The Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The
Company is not a party to any allocation or sharing agreement relating to Taxes.
(d) The Company has never been a member of an "affiliated group" of
corporations (within the meaning of Section 1504 of the Code). The Company has
not made an election under Treasury Regulation Section 1.1502-20(g). The Company
has not been required to make a basis reduction pursuant to Treasury Regulation
Section 1.1502-20(b) or Treasury Regulation Section 1.337(d)-2(b).]
2.6 Intellectual Property.
(a) The Company owns or has the right to use all Intellectual
Property (as defined below) necessary for the operation of its business as
presently conducted or which is material and used in the operation of its
business. Each item of Intellectual Property owned by or used in the operation
of the business of the Company is set forth on Schedule 2.6(d) to this Agreement
and is a Cigar Business Asset. After the closing, each item of Intellectual
Property will be owned or available for use by the Purchaser on identical terms
and conditions applicable to the Company immediately preceding the Closing. The
Company has taken all reasonable measures to protect the
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proprietary nature of each material item of Intellectual Property, and to
maintain in confidence all trade secrets and confidential information, that it
owns or uses. To the knowledge of the Company, no other person or entity has any
rights to any material item of Intellectual Property owned or used by the
Company and no other person or entity is infringing, violating or
misappropriating any material item of the Intellectual Property that the Company
owns or uses. The Company has made available to the Purchaser complete and
correct copies of all other written documentation evidencing ownership of, and
any claims or disputes relating to, each material item of Intellectual Property.
For purposes of this Agreement the term "Intellectual Property" means all (i)
patents, patent applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, reexamination, utility, model,
certificate of invention and design patents, patent applications, registrations
and applications for registrations; (ii) copyrights, trademarks, service marks,
trade names and registrations and applications for registration thereof; (iii)
mask works and registrations and applications for registration thereof; (iv)
computer software, data and documentation; (v) trade secrets and confidential
business information, whether patentable or unpatentable and whether or not
reduced to practice, (vi) proprietary know-how, manufacturing and production
processes and techniques, research and development information, copyrightable
works, financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and information;
and (vii) other proprietary rights relating to any of the foregoing.
(b) The Company has not received any complaint, claim or notice
alleging that the ownership or use of the Intellectual Property by the Company
is an infringement, violation or misappropriation of the Intellectual Property
or that the Company has abandoned use or any rights at any time to the
Intellectual Property.
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(c) The Company has not licensed, sublicensed or granted any rights
to any third party with respect to any of the Company's interests in the
Intellectual Property.
(d) Section 2.6(d) of the Disclosure Schedule identifies each
material item of Intellectual Property used as of the date hereof in the
operation of the business of the Company that is owned by a party other than the
Company, and the license or agreement pursuant to which the Company uses such
Intellectual Property.
(e) The Company has supplied the Purchaser with correct and complete
copies of all licenses or agreements referred to in Section 2.6(d) of the
Disclosure Schedule. Each such license or agreement is legal, valid, binding,
enforceable and in full force and effect; each such license or agreement may be
assigned to the Purchaser pursuant to the terms of this Agreement without
constituting a breach of such license or agreement; each such license or
agreement will continue to be legal, valid, binding, enforceable and in full
force and effect immediately following the Closing in accordance with the terms
thereof as in effect prior to the Closing; and, to the Company's knowledge, no
party to any such license or agreement is in material breach or default, and no
event has occurred which with notice or lapse of time or both would constitute a
material breach or default or permit termination, modification or acceleration
thereunder.
2.7 Accounts Receivable. All of the accounts receivable of the Company as
of the Closing Date were created in the ordinary course of the Company's
business, and to the best knowledge of the Company, are collectible in the face
amount thereof within 90 days of the date of invoice.
2.8 Liabilities. All of the Liabilities were incurred in the ordinary
course of the Company's business, and the Company received fair value in
exchange therefor.
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2.9 Contracts.
(a) Section 2.9 of the Disclosure Schedule lists each contract,
agreement or commitment (written or oral) that has not previously been
terminated in accordance with the terms thereof and to which the Company is a
party as of the date hereof that is material to the Company or its business,
including without limitation (i) any contract, agreement or commitment providing
for (or which could provide for) the payment by the Company of an aggregate
amount in excess of $25,000; (ii) any contract, agreement or commitment
concerning confidentiality or non-competition; (iii) any contract, agreement or
commitment with any stockholder or employee of the Company; (iv) any lease or
sublease of real estate; (v) any contract, agreement or commitment with any
distributors or resellers of the Company's products; (vi) any arrangement
involving any holder of Company securities; and (vii) any arrangement under
which the consequences of default or termination could have a material adverse
effect on the assets, business, financial condition or results of operations of
the Company (collectively, the "Contracts").
(b) The Company has previously delivered to the Purchaser a complete
and accurate copy of each Contract. Each Contract is a valid and binding
agreement between the Company and the other party or parties thereto and the
rights and obligations of each such Contract may be assigned by the Company to
the Purchaser, and assumed by the Purchaser, without causing a default or breach
of any thereof. No material default or breach by the Company or, to the
Company's knowledge, any other party thereto exists under any of the Contracts
and none will arise solely by virtue of the transactions contemplated by this
Agreement.
(c) The Company has no outstanding contracts or commitments with its
officers, employees, agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers that
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are not cancelable by the Company on notice of not longer than 30 days and
without liability, penalty or premium.
(d) The Company has no collective bargaining or employment
agreement, or agreements with any labor union or organization, nor any
agreements that contain any severance, retirement or termination pay liabilities
or obligations and the Company has not been formally or informally advised of
any proposed attempts to organize any of the Company's employees.
(e) The Company has no bonus, deferred compensation, profit sharing,
stock purchase, stock option or retirement arrangement, whether legally binding
or not, and the Company is not presently paying any pension, deferred
compensation or retirement allowance to anyone. The Company has no employee
benefit plans, as that term is defined in Section 3(3) of the Employee
Retirement Security Act of 1974, as amended.
(f) The Company has made no payments or commissions or provided any
benefits to others in connection with any sales or proposed sales by the
Company, except to employees of the Company or sales representatives or
distributors regularly engaged by the Company to promote the sale of its
products and services. None of such employees or sales representatives or
distributors are employed or engaged as a consultant, advisor, purchasing
representative, employee, officer, director or otherwise, whether paid or
unpaid, by any customer or proposed customer or by any government or
governmental agency or body of any kind and description or by any other person,
firm or corporation or hold political office or position (whether or not paid)
with any government or governmental agency or body or receive remuneration for
services rendered from any person, firm or corporation other than the Company.
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(g) The Company has not given any power of attorney to any person,
firm or corporation for any purpose whatsoever.
(h) The Company is not restricted by any agreement from carrying on
its business in any location.
(i) The Disclosure Schedule sets forth a list of all insurance
policies and bonds currently in force with respect to the Company and its
business, property and assets, copies of which have previously been delivered to
the Purchaser. Such policies and bonds are maintained in such amounts and
against such risks as prudent business management would deem advisable to
protect its assets and properties.
2.10 Claims and Legal Proceedings. There are no claims, actions, suits,
arbitrations, proceedings or investigations pending (or, to the knowledge of the
Company, threatened) against the Company, and there are no outstanding court
orders, court decrees, or court stipulations to which the Company is a party or
by which any of its assets are bound, any of which would (a) impair this
Agreement or affect the transactions contemplated hereby, (b) materially
restrict the present business properties, operations, prospects, assets,
revenues or condition (financial or otherwise) of the Company, or (c)
individually or in the aggregate, have a material adverse effect or materially
impair or preclude the Company's ability to consummate the transactions
contemplated by this Agreement. The Company has no reason to believe that any
such claim, action, suit, arbitration, proceeding or investigation may be
brought against the Company.
2.11 Legal Compliance. To the Company's knowledge, the Company and the
conduct and operations of its business, are in compliance with all of the laws
(including rules and regulations thereunder) of any governmental entity which
are applicable to the Company's business.
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2.12 Brokers' Fees. The Company has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
2.13 Disclosure. No representation or warranty by the Company, Xxxxxxx or
Xxxxxx contained in this Agreement, and no statement contained in the Disclosure
Schedule or any other document, certificate or other instrument delivered by or
to be delivered by or on behalf of the Company, Xxxxxxx or Xxxxxx pursuant to
this Agreement, contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND CIGAR
The Purchaser and Cigar each represent and warrant to the Company that:
3.1 Organization. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with the
corporate power and authority to carry on its business and to own, lease and
operate its assets. Cigar is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida, with the corporate
power and authority to carry on its business and to own, lease and operate its
assets.
3.2 Authorization. The execution and delivery by the Purchaser and Cigar
of this Agreement and the agreements and the instruments provided for herein and
the consummation by the Purchaser and Cigar of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action
on the part of the Purchaser and Cigar. This Agreement
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and such agreements and instruments constitute the valid and binding obligations
of the Purchaser and Cigar, enforceable against the Purchaser and Cigar in
accordance with their terms.
3.3 Noncontravention. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state securities laws, the
execution and delivery by the Purchaser and Cigar of this Agreement and the
agreements and instruments provided for herein and the consummation by the
Purchaser and Cigar of the transactions contemplated hereby and thereby, will
not, with or without the giving of notice or the passage of time or both, (a)
violate the provisions of any law, rule or regulation applicable to the
Purchaser and Cigar; (b) violate the provisions of the charter or By-laws of the
Purchaser or Cigar; (c) violate any judgment, decree, order or award of any
court, governmental body or arbitrator applicable to the Purchaser or Cigar; or
(d) (i) conflict with or result in the breach or termination of any term or
provision of, (ii) constitute a default under, (iii) require any consent under,
(iv) cause any acceleration under, or (v) cause the creation of any lien, charge
or encumbrance upon the Purchaser's or Cigar's assets pursuant to, any
indenture, mortgage, deed of trust or other agreement to which the Purchaser or
Cigar, as the case may be, is a party or by which the Purchaser or Cigar or any
of their assets are bound.
3.4 Statements True and Correct. No representation or warranty made by the
Purchaser or Cigar, nor any statement, certificate or instrument furnished or to
be furnished to the Company pursuant to this Agreement or any other document,
agreement or instrument referred to herein or therein, taken as a whole,
contains or will contain any untrue statement of fact or omits or will omit to
state a fact necessary to make the statements contained therein, taken as a
whole, not misleading.
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ARTICLE IV
COVENANTS
4.1 Commercially Reasonable Efforts. Each of the parties shall use
commercially reasonable efforts to take all actions and to do all things
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement.
4.2 Waivers, etc. Each of the parties shall use commercially reasonable
efforts to obtain, at its expense, and to reasonably cooperate with the other
parties hereto to obtain all such waivers, permits, consents, approvals or other
authorizations from third parties and Governmental Entities as may be necessary
or desirable in connection with the consummation by it or them, as the case may
be, of the transactions contemplated by this Agreement.
4.3 Operation of Business. Except as specifically provided in this
Agreement, during the period from the date of this Agreement to the closing
date, the Company shall conduct its operations in the ordinary course of
business and in compliance with all applicable laws and regulations and, to the
extent consistent therewith, use all reasonable efforts to preserve intact its
current business organization, keep its physical assets in good working
condition, keep available the services of its current officers and employees and
preserve its relationships with customers, suppliers and others having business
dealings with the Company to the end that its goodwill and ongoing business
shall not be impaired in any material respect. Without limiting the generality
of the foregoing, prior to the Closing Date, the Company shall not, without the
written consent of the Purchaser:
(a) Enter into any agreements to purchase or sell any capital assets
or enter into agreements or commitments with respect to the purchase or sale of
capital equipment;
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(b) Incur any Liens (whether consensual or involuntary) with respect
to the Cigar Business Assets;
(c) Fail to take such action as may be necessary to insure
compliance with the provisions of the laws of the state of Ohio or any other
jurisdiction in which the Company does business;
(d) Acquire, sell, lease, encumber or dispose of any assets, other
than purchases, sales and leases of assets in the ordinary course of business;
(e) Pay any material obligation or liability other than in the
ordinary course of business;
(f) Except for tobacco inventory loans to Taru Martani, enter into,
assume or become bound or obligated by any agreement, contract or commitment,
whether or not reduced to writing (each a "Company Agreement") or extend or
modify the terms of any presently existing Company Agreement which directly or
indirectly (i) involves (or could involve) the payment of more than $25,000,
(ii) increases the compensation of any employee of the Company except in the
ordinary course of business and consistent with past practice, or (iii) involves
any payment or obligation to any affiliate of the Company of more than $5,000;
(g) Sell, assign, transfer or license any material Intellectual
Property; or
(i) Take or omit to take any action that would constitute a material
violation of or default under, or waive any material rights under, any Contract.
4.4 Full Access. The Company, Xxxxxxx and Xxxxxx shall cause the Company
to permit representatives of the Purchaser to have full access at all reasonable
times to all premises, properties, financial, tax and accounting records,
contracts, other records and documents (including without
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limitation those relating to capital stock, corporate minute books, employee
benefit plans and intellectual property rights), and personnel, of or pertaining
to the Company and to make copies and extracts of all such writings.
4.5 Notice of Breach.
(a) The Company, Xxxxxxx and Xxxxxx shall deliver to the Purchaser
written notice of any event or development promptly after discovery thereof that
would (i) render any statement, representation or warranty of the Company,
Xxxxxxx or Xxxxxx in this Agreement (including the Disclosure Schedule)
inaccurate or incomplete in any material respect, or (ii) constitute or result
in a breach by the Company, Xxxxxxx or Xxxxxx of, or a failure by any of them to
comply with, any agreement or covenant in this Agreement applicable to such
party.
(b) The Purchaser shall deliver to the Company written notice of any
event or development promptly after discovery thereof that would (i) render any
statement, representation or warranty of the Purchaser or Cigar in this
Agreement inaccurate or incomplete in any material respect, or (ii) constitute
or result in a breach by the Purchaser or Cigar of, or a failure by the
Purchaser or Cigar to comply with, any agreement or covenant in this Agreement
applicable to such party.
(c) No such disclosure under this Section 4.5 shall be deemed to
avoid or cure any such misrepresentation or breach.
4.6 Exclusivity. The Company shall cause the Company, its officers,
directors, employees, representatives and agents not to, directly or indirectly,
(a) encourage, solicit, initiate, engage or participate in discussions or
negotiations with any person or entity (other than the Purchaser or Cigar)
concerning any merger, consolidation, sale of material assets, tender offer,
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recapitalization, accumulation of capital stock of the Company, proxy
solicitation or other business combination (collectively, "Business
Combination") involving the Company or (b) provide any non-public information
concerning the business, properties or assets of the Company to any person or
entity (other than the Purchaser or Cigar) in connection with any proposed
Business Combination. The Company shall immediately notify the Purchaser of, and
shall disclose to the Purchaser the details of, any inquiries or discussions of
the nature described in the preceding sentence.
4.7 Transaction Expenses. Each of the Purchaser and the Company shall be
solely responsible for the costs and expenses, including, without limitation,
legal fees and expenses and accounting fees and expenses, incurred by it in
connection with the transactions contemplated by this Agreement.
4.8 Taru Martani to Purchase Molds; Xxxxxx to Guarantee Purchase. It is
the intention of the parties that Taru Martani will purchase the cigar molds set
forth in Exhibit A from the Purchaser for a price equal to the price paid by the
Purchaser to the Company for the cigar molds and that the Purchaser will use its
best efforts to enter into an agreement with Taru Martani to that effect. If
Taru Martani does not so purchase the cigar molds from the Purchaser within one
year from the date of this Agreement, Xxxxxx shall purchase the cigar molds from
the Purchaser for a price equal to the price paid by the Purchaser for such
cigar molds, including the cost of freight and any duties incurred in shipping
the Cigar Molds to Taru Martani.
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ARTICLE V
CONDITIONS TO CONSUMMATION OF SALE
5.1 Conditions to Each Party's Obligations. The respective obligations of
each Party to consummate the transactions contemplated by this Agreement are
subject to the satisfaction of the following conditions:
(a) No action, suit or proceeding shall be pending wherein an
unfavorable judgment, order, decree, stipulation or injunction would (i) prevent
consummation of any of the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation or (iii) affect adversely the right of the Purchaser to
own, operate or control any of the assets and operations of the Company
following the Closing Date, and no such judgment, order, decree, stipulation or
injunction shall be in effect.
(b) Each party shall have obtained all of the waivers, permits,
consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, necessary to their respective performance of
this Agreement and the transactions contemplated hereby, except (i) for any
waivers, permits, consents, approvals, other authorizations, registrations,
filings or notices which if not obtained or effected would not have a material
adverse effect on the ability of the Purchaser to use the Cigar Business Assets
in substantially the same manner as they were used prior to the date hereof and
(ii) for the contract between the Company and Taru Martani (the "Taru Martani
Contract") attached hereto as Exhibit 5.1(b); provided however, that the
Company, Xxxxxxx and Xxxxxx shall each use their best efforts to cause Taru
Martani to agree to an assignment of the Company's rights and obligations under
the Taru Martani Contract to the Purchaser as promptly as practicable following
the execution of this Agreement.
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20
5.2 Conditions to Obligations of the Purchaser and Cigar. The obligation
of the Purchaser and Cigar to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following additional conditions:
(a) the representations and warranties of the Company, Xxxxxxx and
Xxxxxx set forth in Article II shall be true and correct when made on the date
hereof and as of the Closing Date;
(b) the Company shall have performed or complied with the agreements
and covenants required to be performed or complied with by it under this
Agreement as of or prior to the Closing Date;
(c) the Company shall have delivered to the Purchaser a certificate
to the effect that each of the conditions specified in clauses (a) and (b) of
Section 5.1 and clauses (a) and (b) of this Section 5.2 are satisfied; and
(d) the Purchaser and Cigar shall have received from Xxxxxxx,
Muething & Xxxxxxx, P.L.L., counsel to the Company, Xxxxxxx and Xxxxxx, an
opinion in the form attached hereto as Exhibit D, addressed to the Purchaser and
Cigar, dated as of the Closing Date and in form and substance reasonably
satisfactory to the Purchaser and Cigar.
5.3 Conditions to Obligations of the Company. The obligation of the
Company to consummate the transactions contemplated by this Agreement is subject
to the satisfaction of the following additional conditions:
(a) the representations and warranties of the Purchaser and Cigar
set forth in Article III shall be true and correct when made on the date hereof
and as of the Closing Date;
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21
(b) the Purchaser and Cigar shall have performed or complied with
its agreements and covenants required to be performed or complied with under
this Agreement as of or prior to the Closing Date;
(c) the Purchaser and Cigar shall have delivered to the Company a
certificate to the effect that each of the conditions specified in clauses (a)
and (b) (insofar as it relates to actions, suits or proceedings pending against
the Purchaser or Cigar) of Section 5.1 and clauses (a) and (b) of this Section
5.3 is satisfied;
(d) the Company shall have received from Esanu Katsky Xxxxxx &
Siger, counsel to the Purchaser, an opinion with respect to the matters set
forth in Exhibit E attached hereto, addressed to the Company, dated as of the
Closing Date and in form and substance reasonably satisfactory to the Company.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Company, Xxxxxxx and Xxxxxx. Each of the
Company, Xxxxxxx and Xxxxxx (the Company, Xxxxxxx and Xxxxxx referred to
collectively as, the "Indemnitors") shall indemnify the Purchaser and Cigar in
respect of, and hold the Purchaser and Cigar harmless against, any and all
liabilities, monetary damages, fines, fees, penalties, losses and expenses
(including without limitation amounts paid in settlement, interest, court costs,
reasonable costs of investigators, reasonable fees and expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation) incurred or suffered by the Purchaser or Cigar, as the case may be
(such liabilities, monetary damages, fines, fees, penalties, losses and expenses
referred to as "Damages"):
-21-
22
(a) Resulting from any misrepresentation or breach of warranty of
the Company, Xxxxxxx or Xxxxxx contained in this Agreement;
(b) Resulting from any failure of the Company to have contractual or
legal authority to enter into this Agreement, or any omission by the Company,
Xxxxxxx or Xxxxxx that would render this Agreement invalid or not binding on the
Company, Xxxxxxx or Xxxxxx, as the case may be.
6.2 Indemnification by the Purchaser and Cigar
Each of the Purchaser and Cigar shall indemnify the Company, Xxxxxxx
and Xxxxxx in respect of and hold the Company, Xxxxxxx and Xxxxxx harmless
against, any and all Damages:
(a) Resulting from any misrepresentation or breach of warranty by
the Purchaser or Cigar contained in this Agreement; or
(b) Resulting from any failure of the Purchaser or Cigar to have
contractual or legal authority to enter into this Agreement, or any omission by
them that would render this Agreement invalid or not binding on the Purchaser or
Cigar, as the case may be.
6.3 Method of Asserting Claims
(a) If a third party asserts that the Purchaser or Cigar is liable
to such third party for a monetary or other obligation which may result in
Damages for which the Purchaser may be entitled to indemnification pursuant to
this Article VI, and the Purchaser or Cigar, as the case may be, reasonably
determines that it has a valid business reason to fulfill such obligation, then
(i) the Purchaser or Cigar, as the case may be, shall be entitled to satisfy
such obligation, after prior notice to and consent from the Indemnitors, (ii)
the Purchaser or Cigar, as the case may be, may make a claim for indemnification
pursuant to this Article VI, and (iii) the Indemnitors shall reimburse the
-22-
23
Purchaser or Cigar, as the case may be, for any such Damages for which it is
entitled to indemnification pursuant to this Article VI.
(b) The Purchaser or Cigar on the one hand, or the Company, Xxxxxxx
and Xxxxxx on the other hand shall give prompt written notice to the
indemnifying parties of the commencement of any action, suit or proceeding
relating to a third party claim for which indemnification pursuant to this
Article VI may be sought. Within 20 days after delivery of such notification,
the indemnifying parties may, upon written notice thereof to each of the
indemnified parties, assume control of the defense of such action, suit or
proceeding with counsel reasonably satisfactory to the indemnified parties,
provided that the indemnifying parties acknowledge in writing to each of the
indemnified parties that any Damages that may be assessed against the
indemnified parties in connection with such action, suit or proceeding
constitute Damages for which the indemnified parties are entitled to
indemnification pursuant to this Article VI. If the indemnifying parties do not
so assume control of such defense, the indemnified parties shall control such
defense. The party not controlling such defense may participate therein at its
own expense; provided that if the indemnifying parties assume control of such
defense and independent counsel to the indemnified parties renders a written
opinion to the effect that any of the indemnifying parties and the indemnified
parties have conflicting interests with respect to the defense of such action,
suit or proceeding, the reasonable fees and expenses of counsel to the
indemnified parties shall be considered "Damages" for purposes of this
Agreement. The party controlling such defense shall keep the other party advised
of the status of such action, suit or proceeding and the defense thereof and
shall consider in good faith recommendations made by the other party with
respect thereto. The parties controlling defense of the action shall not agree
to any settlement of such action, suit or
-23-
24
proceeding without the prior written consent of the other parties, which consent
shall not be unreasonably withheld.
ARTICLE VII
TERMINATION
7.1 Termination of Agreement. This Agreement and the transactions
contemplated by this Agreement may be terminated at any time prior to the
Closing Date by any of the parties hereto in its sole discretion.
7.2 Effect of Termination. If any party terminates this Agreement pursuant
to Section 7.1, all obligations of the parties hereunder shall terminate without
any liability of any party to any other party (except (i) with respect to the
Purchaser or Cigar, any willful breach of this Agreement by the Purchaser or
Cigar and (ii) with respect to the Company, Xxxxxxx and Xxxxxx, any willful
breach of this Agreement by the Company, Xxxxxxx or Xxxxxx).
ARTICLE VIII
MISCELLANEOUS
8.1 Press Releases and Announcements. Neither the Purchaser or Cigar on
the one hand nor the Company, Xxxxxx or Xxxxxxx, on the other, shall issue or
approve any press release or any public disclosure or announcement, whether oral
or written, relating to the subject matter of this Agreement without the prior
written approval of the other; provided, however, that Cigar may make any public
disclosure it believes in good faith is required by law or regulation.
8.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
-24-
25
8.3 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Purchaser, Cigar and the
Company concerning the subject matter hereof and supersedes any prior
understandings, agreements or representations among the parties, written or
oral, that may have related in any way to the subject matter hereof.
8.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of such
party's rights, interests, or obligations hereunder without the prior written
approval of the other parties.
8.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, demand, claim, or
other communication hereunder shall be deemed duly delivered two business days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one business day after it is sent via a reputable nationwide
overnight courier service, in each case to the intended recipient as set forth
below:
If to the Company, Xxxxxxx or Xxxxxx:
000 Xxxx XxXxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx.
-25-
26
with a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxx, Xxxxxxxx & Xxxxxxx, P.L.L.
1800 Provident Tower
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
If to the Purchaser or Cigar:
Caribbean Cigar Company
0000 X.X. 0xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxx
with a copy to:
Xxxx Xxxxxxxx, Esq.
Esanu Katsky Xxxxxx & Siger
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Any party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Florida.
-26-
27
8.9 Amendments and Waivers. The parties may mutually amend any provision
of this Agreement at any time prior to the Closing; provided, however, that any
amendment shall be subject to the restrictions contained under applicable state
corporate law. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by each of the parties. No waiver
by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
8.10 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
8.11 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
-27-
28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
AMERICAN CASE & LUGGAGE CO.
D/B/A AMERICAN WESTERN CIGAR CO.
By: /s/ Xxxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
/s/ Xxxxxxxx X. Xxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxx, Xx.
--------------------------------------
Xxxxxx X. Xxxxxx, Xx.
CARIBBEAN AWC CORPORATION
By: /s/ Xxxxxx Xxxx
----------------------------------
Name: Xxxxxx X. Xxxx
Title: Secretary and Treasurer
CARIBBEAN CIGAR COMPANY
By: /s/ Xxxxxx Xxxx
-----------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Financial Officer
-28-
29
EXHIBIT A
Tobacco Inventory at Taru Martani
-Nicaraguan $ 42,400.00
-Connecticut 72,800.00
-----------
Total $115,200.00
Less: Adjustment 37,000.00
-----------
Total 78,200.00
Cigar Molds (Indemnity for Mold from Xxxx) 72,000.00
CU Cigar Bands 2,900.00
Trademark 18,800.00
Cash Advance on Discounted Invoices 16,400.00
Cigar Inventory (in Cincinnati) 48,700.00
-----------
Total Due $237,000.00
/s/ Xxxxxxxx X. Xxxxxxx
30
EXHIBIT B
Liabilities and Obligations of American Case & Luggage Co.
d/b/a American Western Cigar Co.
NONE.
/s/ Xxxxxxxx X. Xxxxxxx
31
EXHIBIT C
Demand Promissory Note
Attached hereto is a Form of Demand Promissory Note
/s/ Xxxxxxxx X. Xxxxxxx
32
NA- $50,000
Miami, Florida
April 17, 1997
CARIBBEAN CIGAR COMPANY
Promissory Note
FOR VALUE RECEIVED, Caribbean Cigar Company, a Florida corporation (the
"Company"), hereby promises to pay to the order of _________________________
(the "Holder"), on or after June 30, 1997, on demand, the principal sum of fifty
thousand dollars ($50,000), along with interest accrued thereon subsequent to
June 30, 1997. Interest on the unpaid principal amount of this Note (subsequent
to June 30, 1997) shall be calculated at the rate of ten percent (10%) per annum
and shall be computed on the basis of a 360-day year and 30-day month. Interest
shall be paid quarterly, on the last day of each September, December, March, and
June of each year, commencing on September 30, 1997. If any payment is due on a
date on which banks in the State of New York are authorized to be closed, such
payment shall be due on the next day which is not a date on which such banks are
authorized to be closed. No demand rights shall be available under this Note
prior to June 30, 1997. No interest shall accrue under this Note prior to June
30, 1997; provided, however, that, upon demand by the Holder, as provided
herein, if the Company fails to pay this Note in full within five (5) business
days, then interest shall be due from the date hereof.
Payments of principal and interest shall be made in lawful money of the
United States of American against presentment of this Note. This Note shall be
transferable and negotiable at any time by the holder of this Note.
The Company may prepay this Note at any time or from time to time without
payment of any penalty or premium, provided that accrued interest is paid to the
date of such prepayment; and provided, further, that no partial prepayment shall
be in an amount less than twenty percent (20%) of the initial principal amount
of this Note.
This Note shall be governed by the laws of the State of New York
applicable to agreements executed and to be performed wholly within such State.
The Company consents to the exclusive jurisdiction of the United States District
Court for the Southern District of New York and Supreme Court of the State of
New York in the County of New York in any action relating to or arising out of
this Note.
IN WITNESS WHEREOF, the Company has executed this Note on the date and
year first aforesaid.
CARIBBEAN CIGAR COMPANY
By:__________________________________
Xxxxxx X. Xxxx, Chief Financial Officer
33
EXHIBIT D
Opinion of Xxxxxxx, Muething & Xxxxxxx, P.L.L.
Attached hereto is a Form of Opinion Letter
/s/ Xxxxxxxx X. Xxxxxxx
34
Letterhead of Xxxxxxx, Xxxxxxxx & Xxxxxxx, P.L.L.
April 17, 1997
Caribbean AWC Corporation
0000 X.X. 0xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Caribbean Cigar Company
0000 X.X. 0xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Gentlemen:
We have acted as counsel for American Case & Luggage Corp., an Ohio
corporation ("Seller"), in connection with the negotiation, execution and
delivery of the Asset Purchase Agreement dated as of April 1, 1997 (the
"Purchase Agreement") among Seller, Caribbean Cigar Company ("Cigar"), Caribbean
AWC Corporation ("Purchaser"), Xxxxxxxx X. Xxxxxxx ("Xxxxxxx") and Xxxxxx X.
Xxxxxx, Xx. ("Xxxxxx"), providing for the purchase of certain assets of the
Seller. This opinion is being delivered to you pursuant to Section 5.2(d) of the
Purchase Agreement. Capitalized terms not otherwise defined herein shall have
the meanings respectively ascribed thereto in the Purchase Agreement.
In rendering the opinions set forth herein, we have examined the
following documents (collectively the "Transaction Documents"):
1. The Purchase Agreement;
2. The Consulting Agreement dated as of April 1, 1997 between Cigar
and Xxxxxx; and
3. The Consulting Agreement dated as of April 1, 1997 between Cigar
and Xxxxxxx.
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
instruments and public records, have made such inquiries of the officers and
representatives of Seller and have investigated such matters of law as we have
deemed relevant or necessary as the basis for such opinions.
35
Caribbean AWC Corporation
Caribbean Cigar Company
Page 2
April 17, 1997
We have (without any investigation or independent confirmation)
relied upon, and assumed the accuracy of, the responses to such inquiries and
such certificates, corporate records and other documents with respect to factual
matters. In addition, we have assumed the genuineness and authenticity of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to authentic original documents of all documents submitted to us as
copies, the accuracy, completeness and authenticity of certificates of public
officials, and the due authorization, execution and delivery of all documents by
the Purchaser and Cigar. We have also assumed that the documents to which
Purchaser and/or Cigar are parties are binding upon and enforceable against each
of them.
Whenever this opinion refers to matters within our "knowledge,"
"known to us" or of which we "know," such reference is limited to (1) the actual
knowledge of the attorneys in our firm who have been actively involved in the
representation of Seller in connection with the Transaction Documents and
Related Documents (defined below), and (2) facts represented to us in
certificates of officers of Seller (the "Certificates").
Wherever we have stated that we have assumed any matter, it is
intended to indicate that we assume such matter without making any factual,
legal or other inquiry or investigation concerning such matter. Nothing has come
to our attention that would lead us to believe that our assumptions are not
justified.
We are admitted to practice only in the State of Ohio and do not
hold ourselves out as being conversant with, and therefore express no opinion
with respect to, the laws of any jurisdiction other than the federal laws of the
United States of America and the laws of the State of Ohio.
Based solely on the review described above and the foregoing
limitations and qualifications, it is our opinion that:
1. Seller is a corporation organized, validly existing and in good
standing under the laws of the State of Ohio. To the best of our knowledge,
Seller is duly qualified to do business and is in good standing as a foreign
corporation in each state or other jurisdiction in which failure to be so
licensed or qualified would have a material adverse effect.
2. Seller has the corporate power, authority and legal right to own
its properties, to carry on its business as now being conducted, and to execute,
deliver and perform its obligations under the Transaction Documents and under
any agreements related thereto or required to be executed and delivered by
Seller pursuant to the terms of the Transaction Documents or such related
documents (the "Related Documents"). The execution, delivery and performance of
the Transaction Documents and Related Documents by Seller have been duly
authorized by all necessary corporate action of Seller and each Transaction
Document and each Related Document has been duly executed and delivered and
constitutes the legal, valid and binding obligation of Seller enforceable
against Seller in accordance with its terms.
36
Caribbean AWC Corporation
Caribbean Cigar Company
Page 3
April 17, 1997
3. Seller has the right and power to sell, convey, assign, transfer
and deliver the Cigar Business Assets as provided in the Purchase Agreement and,
to the best of our knowledge, there is no mortgage, pledge, lease, lien,
security interest, charge title retention or other security arrangement or any
other encumbrance upon or affecting the Cigar Business Assets, except as set
forth on the Disclosure Schedules.
4. The execution, delivery and performance by Seller of the
Transaction Documents and the Related Documents and the consummation of the
transactions contemplated thereby, will not result in any violation of the
Articles of Incorporation or Code of Regulations of Seller, any applicable
statute, law or regulation, or order or decree of any court or governmental
authority, or, to the best of our knowledge, conflict with, result in a breach
or termination of, constitute a default under, or result in the creation of any
lien, charge, encumbrance or restriction on any of the Cigar Business Assets
under any material agreement or other instrument to which Seller is a party.
5. To the best of our knowledge, there is no action, proceeding,
suit or investigation pending or threatened against Seller which may have a
material adverse effect on Seller's ability to convey the Cigar Business Assets
to the Buyer.
Each of the foregoing opinions is subject to the following
qualifications:
(a) All opinions, to the extent that they relate to the
enforceability of any agreement or obligation or to the legality, validity and
enforceability of any rights and remedies provided in the Transaction Documents
or the Related Documents are subject and qualified by exceptions provided by
bankruptcy, insolvency, reorganization, receivership, moratorium, assignment for
the benefit of creditors' laws or similar laws now or hereafter in effect
affecting the validity, legality and binding effect and enforceability of
creditors' rights generally, including, without limitation, the effect of
statutory or other laws regarding fraudulent conveyances or preferential
transfers.
(b) The availability of any equitable remedies for the enforcement
of any provision of the Transaction Documents or Related Documents may be
subject to the discretion of the court before which any proceeding for the
enforcement of such provision may be brought.
(c) We express no opinion as to the enforceability of any provision
of the Transaction Documents or the Related Documents providing for the recovery
of attorneys' fees or other costs of collection.
(d) We express no opinion as to the enforceability of any provision
for indemnification insofar as such indemnification would violate public policy
or federal or state securities laws.
(e) We express no opinion with respect to any provisions for
submission to jurisdiction and the related waivers of defense to such
jurisdiction or with respect to liquidated damages provisions.
37
Caribbean AWC Corporation
Caribbean Cigar Company
Page 4
April 17, 1997
This opinion letter speaks only as of its date, and we specifically
disclaim any obligation to update or revise this opinion as circumstances of
fact or law change. Our opinions set forth herein are strictly limited to the
matters expressly set forth, and no other opinions are to be implied.
This opinion letter is given for your benefit and may not be relied
upon by any other person or entity without our prior written consent.
Very truly yours,
XXXXXXX, XXXXXXXX & XXXXXXX, P.L.L.
By:_____________________________________
Xxxxxx X. Xxxxxxx
jsm
38
EXHIBIT E
Form of Opinion of Esanu Katsky Xxxxxx & Siger
Attached hereto is a Form of Opinion Letter
/s/ Xxxxxxxx X. Xxxxxxx
39
Letterhead of Esanu Katsky Xxxxxx & Siger
April 17, 1997
American Case & Luggage Co. 03059-004
d/b/a American Western Cigar Co.
000 Xxxx XxXxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Re: Caribbean Cigar Company
Gentlemen:
We have acted as counsel to Caribbean Cigar Company, a Florida
corporation ("CCC"), in connection with the Asset Purchase Agreement by and
among CCC; Caribbean AWC Corporation, a Delaware corporation wholly-owned by CCC
("AWC"); American Case & Luggage Co. d/b/a/ American Western Cigar Co., an Ohio
corporation; Xxxxxxxx X. Xxxxxxx ("Xxxxxxx"); and Xxxxxx X. Xxxxxx, Xx.
("Xxxxxx"), dated as of April 1, 1997 (the "Asset Purchase Agreement"). The
transaction contemplated by the Asset Purchase Agreement (including the
Consulting Agreement dated as of April 1, 1997 between CCC and Xxxxxx (the
"Xxxxxx Consulting Agreement") and the Consulting Agreement dated as of April 1,
1997 between CCC and Xxxxxxx (the "Xxxxxxx Consulting Agreement")) shall be
referred to herein as the "Transaction".
In this connection, we have examined:
(i) The Asset Purchase Agreement;
(ii) The Xxxxxx Consulting Agreement;
(iii) The Xxxxxxx Consulting Agreement;
(iv) The $50,000 Note to be issued in connection with the closing under
the Transaction;
(v) The form of Warrant associated with the Xxxxxx Consulting Agreement
and the Xxxxxxx Consulting Agreement (the "Form of Warrant");
40
American Case and Luggage Co.
d/b/a American Western Cigar Co.
April 17, 1997
Page 2
(vi) Certified copies of (A) the Amended and Restated Articles of
Incorporation of CCC and (B) the Certificate of Incorporation of
AWC;
(vii) A good standing certificate from the Secretary of State of Florida
as to CCC, dated April 11, 1997;
(viii) A good standing certificate from the Secretary of State of Delaware
as to AWC, dated April 14, 1997;
(ix) Copies of the by-laws and corporate resolutions of CCC certified by
the Secretary of CCC; and
(x) Copies of the by-laws and corporate resolutions of AWC certified by
the Secretary of AWC.
The Asset Purchase Agreement, the Xxxxxx Consulting Agreement, and the
Xxxxxxx Consulting Agreement are referred to herein as the "Transaction
Documents".
This Opinion is governed by and shall be interpreted in accordance with
the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and this Opinion should be read in
conjunction therewith. The terms "knowledge of" or "known to" and words of like
import, as used in this Opinion, shall mean "Actual Knowledge" as such term is
used in the Accord.
In our examination, we have, with your consent, assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as certified,
photocopies (including telecopies) or conformed copies, the authenticity of the
originals of such copies, and the due execution and delivery of all documents
where due execution is a prerequisite to the effectiveness thereof. We have been
furnished with, and with your consent relied upon, certificates of, and/or other
information provided by, CCC and AWC as to certain factual matters. In addition,
we have relied, without independent investigation, upon certificates from public
officials as to the matters set forth in such certificates.
Based upon the foregoing, and subject to the qualifications hereinafter
set forth, we are of the opinion that:
1. CCC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida; AWC is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
41
April 17, 1997
Page 3
2. CCC and AWC have all requisite power and authority to own their
properties; to carry on their businesses as now being conducted; to
execute and deliver the Transaction Documents and other documents
relating to the Transaction; and to consummate the transactions
contemplated by the Transaction Documents.
3. The execution and delivery of the Transaction Documents and other
documents specifically referred to therein relating to the
Transaction, and the consummation of the transactions contemplated
thereby, have been duly authorized by all requisite corporate action
on the part of CCC and AWC.
4. The Transaction Documents and other documents specifically referred
to therein relating to the Transaction have been duly executed and
delivered by CCC and/or AWC, as the case may be, and constitute the
valid and binding obligations of CCC and/or AWC, as the case may be,
enforceable against each of them in accordance with their respective
terms.
5. The Form of Warrants, if and when issued pursuant to the terms of
the Xxxxxx Consulting Agreement and the Xxxxxxx Consulting
Agreement, if duly executed and delivered by CCC, will constitute
the valid and binding obligations of CCC, enforceable against it in
accordance with their respective terms.
The foregoing opinions are qualified by the following:
A. We are admitted to practice in the State of New York and are not
opining as to the law of any other jurisdiction except for (i) CCC's
organization under the Florida Business Corporation Act and (ii)
AWC's organization under the Delaware General Corporation Law. For
purposes of the opinion set forth in the first sentence of paragraph
(1), we are relying entirely upon the good standing certificate
identified as item (vii) on the second page of this opinion; for
purposes of the opinion set forth in the second sentence of
paragraph (1), as to existence and good standing, we are relying
entirely upon the good standing certificate identified as item
(viii) on the second page of this opinion. For purposes of
paragraphs (3) and (4) of this Opinion we are assuming that the
governing law applicable to such instruments is identical to the
laws of the State of New York in all material respects. We express
no opinion as to the enforcement or interpretation by any court,
administrative agency, arbitrator, or other authority of any other
state with respect to the construction, interpretation, legality or
validity of any agreements or as to matters involving choices or
conflicts of law.
B. The enforceability of the rights and remedies of any party to any
agreement against any other party thereto may be subject to
customary principles governing equitable relief
42
American Case and Luggage Co.
d/b/a American Western Cigar Co.
April 17, 1997
Page 4
generally and to any applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance or other laws affecting creditors' rights and
their enforcement generally.
C. No opinion is expressed as to whether any particular provisions of
any agreement will be enforceable by a decree of specific
performance or other equitable relief, or that the enforcement
thereof may not be limited by defenses such as estoppel, waiver and
other equitable considerations.
The opinions expressed in this Opinion are based upon applicable laws,
rules and regulations in effect as of the date hereof, and any change in such
laws, rules or regulations may affect our opinion. We assume no obligation to
advise you of any changes concerning matters discussed herein, whether or not
deemed material, of which we may hereafter become aware. We have not been asked
and we do not render any opinion with respect to any matters except as expressly
set forth above.
This Opinion is being delivered to you pursuant to the Asset Purchase
Agreement, and neither this Opinion nor any part of this Opinion may be
delivered to, used, quoted, or relied upon by any other person or entity or for
any other purpose without, in each instance, our express prior written consent,
except that this Opinion may be included in a list of closing documents and a
closing binder.
Xxxx X. Xxxxxxxx, Esq., who is of counsel to this firm, is a director,
secretary, shareholder, and option holder of CCC.
Very truly yours,
Esanu Katsky Xxxxxx & Siger
43
DISCLOSURE SCHEDULES
TO ASSET PURCHASE AGREEMENT
BY AND AMONG
CARIBBEAN CIGAR COMPANY ("CIGAR"),
CARIBBEAN AWC, CORPORATION ("PURCHASER"),
AMERICAN CASE & LUGGAGE CORP. D/B/A
AMERICAN WESTERN CIGAR (THE "COMPANY"),
XXXXXXXX X. XXXXXXX ("XXXXXXX")
AND
XXXXXX X. XXXXXX, XX. ("XXXXXX")
DATED APRIL 17, 1997
THE DISCLOSURE SCHEDULES ATTACHED HERETO ARE SUBJECT TO THE
FOLLOWING TERMS AND CONDITIONS:
1. THE INTRODUCTORY LANGUAGE AND HEADINGS TO EACH OF THE
DISCLOSURE SCHEDULES ARE INSERTED FOR CONVENIENCE ONLY AND SHALL
NOT CREATE A DIFFERENT STANDARD FOR DISCLOSURE THAN THE LANGUAGE
SET FORTH IN THE ASSET PURCHASE AGREEMENT.
2. THE INCLUSION OF ANY ITEM ON A SCHEDULE, WHICH SCHEDULE REQUIRES A LISTING
OF A "MATERIAL" ITEM OR AN ACTION "NOT IN THE ORDINARY COURSE OF
BUSINESS", IS NOT DEEMED TO BE AN ADMISSION OR REPRESENTATION THAT THE
INCLUDED ITEM IS "MATERIAL" OR IS "NOT IN THE ORDINARY COURSE OF
BUSINESS."
3 . ALL CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED SHALL
HAVE THE MEANING GIVEN TO SUCH TERM IN THE ASSET PURCHASE
AGREEMENT.
4. ANY MATTER DISCLOSED IN ANY SCHEDULE SHALL BE DEEMED DISCLOSED FOR
PURPOSES OF ANY OTHER SCHEDULE IN WHICH IT MAY BE RELEVANT.
44
SCHEDULE 2.1
TITLE TO ASSETS
Except as set forth below, the Company is the owner of all right, title
and interest (legal and beneficial) in and to the Cigar Business Assets, free
and clear of all Liens.
NONE.
45
SCHEDULE 2.2
ORGANIZATION AND QUALIFICATION
(a) The Company is a corporation, duly organized, validly existing and in
good standing under the laws of the state of Ohio and has full power and
authority to carry on its business and to own or lease all of its properties and
assets as and in the places such business is now conducted.
(b) The Company has the full power, capacity and authority necessary to
enter into and perform its obligations under this Agreement and any related
agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. This Agreement has been, and any related
agreement to which the Company is a party, will be when executed and delivered,
duly executed and delivered by the Company. This Agreement constitutes, and each
related agreement will constitute when executed and delivered, the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms and all necessary shareholder and director approval,
relating to the execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement has been duly and validly taken.
(c) Except as set forth below, all of the issued and outstanding shares of
capital stock of the Company are owned by the Shareholders, are not subject to
any Liens, and are duly and validly authorized and issued, fully-paid and
non-assessable.
NONE.
(d) The Company is not insolvent, and neither the execution of this
Agreement nor the performance of its terms will render the Company insolvent.
46
SCHEDULE 2.3
QUALIFICATION
The Company is duly qualified or licensed to transact business as a
foreign corporation in good standing in the jurisdictions listed below, and the
character of its assets or the nature of its business do not require such
qualification or licensing in any other jurisdiction, except where the failure
to be so qualified would not have a material adverse effect on the business and
financial condition of the Company.
State Date of Qualification
----- ---------------------
NONE. N/A
Complete and correct copies of the Articles of Incorporation, and all
amendments thereto, (certified by the Secretary of State of the State of Ohio)
are attached hereto.
SEE ATTACHED CERTIFIED ARTICLES OF INCORPORATION
00
XXXXXX XXXXXX XX XXXXXXX,
XXXXX XX XXXX
OFFICE OF THE SECRETARY OF STATE.
I, Xxx Xxxx, do hereby certify that I am the duly elected, qualified and
present acting Secretary of State for the State of Ohio, and as such have
custody of the records of Ohio and Foreign corporations and miscellaneous
filings; that said records show ARTICLES OF INCORPORATION of AMERICAN CASE &
LUGGAGE CO., an Ohio Corporation, Charter No. 567788, were filed on January 20,
1981 recorded on the Records of Incorporation. THE FOREGOING STATEMENT
CONSTITUTES A COMPLETE LIST OF ALL CHARTER DOCUMENTS ON FILE WITH THIS OFFICE.
Said corporation AMERICAN CASE & LUGGAGE CO., an Ohio Corporation, Charter No.
567788, principal location in Cincinnati, County of Xxxxxxxx, incorporated on
January 20, 1981, is currently in GOOD STANDING upon the records of this office.
THE SEAL OF THE WITNESS my hand and official
SECRETARY OF STATE seal at Columbus, Ohio this
OF OHIO 13th day of March, A.D. 1997.
/S/ Xxx Xxxx
Xxx Xxxx
Secretary of State
48
ARTICLES OF INCORPORATION
OF
AMERICAN CASE & LUGGAGE CO.
The undersigned, desiring to form a corporation for profit under Chapter
1701 of the Revised Code of Ohio, does hereby certify:
FIRST The name of said corporation shall be American Case & Luggage Co.
SECOND The place in Ohio where its principal office is to be located is 00
X. 00xx Xxxxxx, Xxxxxxxxxx, Xxxx, 00000, Xxxxxxxx Xxxxxx.
THIRD The purpose for which the corporation is formed is to engage in any
lawful act or activity for which corporations may be formed under
Chapter 1701 of the Ohio Revised Code.
FOURTH The number of shares which the corporation is authorized to have
outstanding is Seven Hundred Fifty (750) Shares of Common Capital
Stock without par value.
FIFTH The amount of stated capital with which the corporation shall begin
business is Five Hundred Dollars ($500.00).
SIXTH The corporation may purchase its own shares when authorized to do so
from time to time by its Board of Directors.
SEVENTH Any meeting of the shareholders may be held within or without the
State of Ohio.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 14th day of
January, 1981.
/s/ Xxxxxxx X. Xxxx
-------------------------------------------------
Xxxxxxx X. Xxxx, Incorporator
49
AMERICAN CASE & LUGGAGE CO.
APPOINTMENT OF STATUTORY AGENT
The undersigned Incorporator of American Case & Luggage Co., hereby
appoints Xxxxxxx X. Xxxx, a natural person resident of the State of Ohio, upon
whom any process, notice of demand required or permitted by statute to be served
upon the corporation may be served. His complete address is 000 Xxxxx Xxxxxxxx
Xxxxxxxx, Xxxxxxxxxx, Xxxx 00000.
/s/ Xxxxxxx X. Xxxx
--------------------------------------------
Xxxxxxx X. Xxxx Incorporator
ACCEPTANCE
Gentlemen:
I hereby accept appointment as agent of your corporation upon whom
process, tax notices or demands may be served.
/s/ Xxxxxxx X. Xxxx
--------------------------------------------
Xxxxxxx X. Xxxx Statutory Agent
50
SCHEDULE 2.4
NONCONTRAVENTION
Except as set forth below, the execution and delivery by the Company of
this Agreement and the agreements and instruments provided for herein and the
consummation by the Company of the transactions contemplated hereby and thereby
will not, with or without the giving of notice or the passage of time or both,
(a) violate the provisions of any law, rule or regulation applicable to the
Company; (b) violate the provisions of the Articles of Incorporation or
Regulations of the Company; (c) violate any judgment, decree, order or award of
any court, governmental body or arbitrator applicable to the Company; or (d) (i)
conflict with or result in the breach or termination of any term or provision
of, (ii) constitute a default under, (iii) require any consent under, (iv) cause
any acceleration under, or (v) cause the creation of any Lien upon the Company's
assets pursuant to, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or by which the Company or any of its
assets is bound.
NONE.
51
SCHEDULE 2.5
TAX MATTERS
(a) Except as set forth below, the Company has filed all Tax Returns that
it has at any time been required to file prior to December 31, 1996, all such
Tax Returns were correct and complete in all material respects when filed and
the Company has paid all Taxes that are shown to be due on any such Tax Return.
Except as set forth below, the Company has no actual or potential liability for
any obligation with respect to Taxes of any taxpayer (including without
limitation any affiliated group of corporations or other entities that included
the Company during a prior period) other than the Company. Except as set forth
below, all taxes that the Company is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper governmental entity, or are being contested by
appropriate proceedings with appropriate reserves or deposits having been made.
NO EXCEPTIONS.
(b) The Company has delivered to the Purchaser complete and correct copies
of all (i) federal income Tax Returns (ii) examination reports, and (iii)
statements of deficiencies assessed against or agreed to by the Company since
December 31, 1993. Except as set forth below, no examination or audit of any Tax
Return of the Company by any Governmental Entity is currently in progress or, to
the knowledge of the Company, pending, or threatened. Except as set forth below,
the Company has not waived any statute of limitations with respect to Taxes or
agreed to an extension of time with respect to any Tax assessment or deficiency.
NO EXCEPTIONS.
(c) The Company is not a "consenting company" within the meaning of
Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
and none of the assets of the Company are subject to an election under Section
341(f) of the Code. The Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The
Company is not a party to any allocation or sharing agreement relating to Taxes.
(d) The Company has never been a member of an "affiliated group" of
corporations (within the meaning of Section 1504 of the Code). The Company has
not made an election under Treasury Regulation Section 1.1502-20(g). The Company
has not been required to make a basis reduction pursuant to Treasury Regulation
Section 1.1502-20(b) or Treasury Regulation Section 1.337(d)-2(b).
52
SCHEDULE 2.6
INTELLECTUAL PROPERTY
(a) Except as set forth below, the Company owns or has the right to use
all Intellectual Property necessary for the operation of its business as
presently conducted or which is material and used in the operation of its
business. Each item of Intellectual Property owned by or used in the operation
of the business of the Company is set forth below and on Exhibit A to the Asset
Purchase Agreement and is a Cigar Business Asset. Except as set forth below,
after the Closing, each item of Intellectual Property will be owned or available
for use by the Purchaser on identical terms and conditions applicable to the
Company immediately preceding the Closing. The Company has taken all reasonable
measures to protect the proprietary nature of each material item of Intellectual
Property, and to maintain in confidence all trade secrets and confidential
information, that it owns or uses. Except as set forth below, to the knowledge
of the Company, no other person or entity has any rights to any material item of
Intellectual Property owned or used by the Company and no other person or entity
is infringing, violating or misappropriating any material item of the
Intellectual Property that the Company owns or uses. The Company has made
available to the Purchaser complete and correct copies of all other written
documentation evidencing ownership of, and any claims or disputes relating to,
each material item of Intellectual Property.
A. THE COMPANY OWNS OR USES THE FOLLOWING INTELLECTUAL PROPERTY:
1. "XXXXXXXXX XXXX", SN NO. 74-713921, FEDERAL TRADEMARK APPLICATION
PUBLISHED FEBRUARY 25,1997; FILED AMENDMENT TO ALLEGED USE UNDER 37 C.F.R. 2.76
THAT WAS RECEIVED BY TRADEMARK OFFICE ON FEBRUARY 28, 1997; NOTICE OF ACCEPTANCE
NOT YET ISSUED BUT NO PROBLEMS ANTICIPATED TO ISSUANCE OF REGISTRATION.
2. "CV", SN NO. 74-713904, FEDERAL TRADEMARK APPLICATION ALLOWED
AUGUST 20, 1996, PUBLISHED MAY 28, 1996, AND NOTICE OF ALLOWANCE OF STATEMENT OF
USE ISSUED APRIL 1, 1997; NO PROBLEMS ANTICIPATED TO ISSUANCE OF REGISTRATION.
3. "XXXXXXXXX XXXX (WITH TRIANGULAR DESIGN)", SN NO. 75-078744,
FEDERAL TRADEMARK APPLICATION AMENDED BY EXAMINER ON FEBRUARY 13, 1997; FILED
AMENDMENT TO ALLEGED USE UNDER 37 C.F.R. 2.76 THAT WAS RECEIVED BY TRADEMARK
OFFICE ON FEBRUARY 28, 1997; NOTICE OF ACCEPTANCE OF AMENDMENT TO USE ISSUED ON
APRIL 11, 1997; AWAITING FORMAL ALLOWANCE AND PUBLICATION, NO PROBLEMS
ANTICIPATED TO ISSUANCE OF REGISTRATION.
B. XX. XXXXXXXXX XXXX IS A NATURAL PERSON WHO HAS THE RIGHT TO USE HIS OWN
NAME GENERALLY. XX. XXXX HAS CONSENTED IN WRITING TO THE COMPANY'S RIGHT TO USE
HIS NAME.
(b) Except as set forth below, the Company has not received any complaint,
claim or notice alleging that the ownership or use of the Intellectual Property
by the Company is an
53
infringement, violation or misappropriation of the Intellectual Property or that
the Company has abandoned use or any rights at any time to the Intellectual
Property
GROUP XXXXXXXX, A CORPORATION WITH AN ADDRESS OF 0 XXXXXXX XXXX, XXXXXXX,
XXXXXXXXXXX 00000 CLAIMED ON JULY 13, 1995 OWNERSHIP OF THE GRAPHIC DESIGN FOR
XXXXXXXXX XXXX AND ON JULY 14, 1995 FILED A U.S. TRADEMARK APPLICATION FOR THE
XXXX XXXXXXXXX XXXX WHICH WAS SUBSEQUENTLY ABANDONED.
(c) Except as set forth below, the Company has not licensed, sublicensed
or granted any rights to any third party with respect to any of the Company's
interests in the Intellectual Property.
NONE.
(d) Set forth below is each material item of Intellectual Property used as
of the date hereof in the operation of the business of the Company that is owned
by a party other than the Company, and the license or agreement pursuant to
which the Company uses such Intellectual Property.
XX. XXXXXXXXX XXXX IS A NATURAL PERSON WHO HAS THE RIGHT TO USE HIS OWN NAME
GENERALLY. XX. XXXX HAS CONSENTED IN WRITING TO THE COMPANY'S RIGHT TO USE HIS
NAME.
(e) The Company has supplied the Purchaser with correct and complete
copies of all licenses or agreements referred to in Section 2.6(d) of the
Disclosure Schedule. Except as set forth below, each such license or agreement
is legal, valid, binding, enforceable and in full force and effect; each such
license or agreement may be assigned to the Purchaser pursuant to the terms of
this Agreement without constituting a breach of such license or agreement; each
such license or agreement will continue to be legal, valid, binding, enforceable
and in full force and effect immediately following the Closing in accordance
with the terms thereof as in effect prior to the Closing; and except as set
forth below, to the Company's knowledge, no party to any such license or
agreement is in material breach or default, and no event has occurred which with
notice or lapse of time or both would constitute a material breach or default or
permit termination, modification or acceleration thereunder.
NO EXCEPTIONS.
54
SCHEDULE 2.7
ACCOUNTS RECEIVABLE
Except as set forth below, all of the accounts receivable of the Company
as of the Closing Date were created in the ordinary course of the Company's
business, and to the best knowledge of the Company, are collectible in the face
amount thereof within 90 days of the date of invoice.
NONE.
55
SCHEDULE 2.8
LIABILITIES
Except as set forth below, all of the Liabilities were incurred in the
ordinary course of the Company's business, and the Company received fair value
in exchange therefor.
NONE.
56
SCHEDULE 2.9
CONTRACTS
(a) Set forth below is each contract, agreement or commitment (written or
oral) that has not previously been terminated in accordance with the terms
thereof and to which the Company is a party as of the date hereof that is
material to the Company or its business, including without limitation (i) any
contract, agreement or commitment providing for (or which could provide for) the
payment by the Company of an aggregate amount in excess of $25,000; (ii) any
contract, agreement or commitment concerning confidentiality or non-competition;
(iii) any contract, agreement or commitment with any stockholder or employee of
the Company; (iv) any lease or sublease of real estate, (v) any contract,
agreement or commitment with any distributors or resellers of the Company's
products; (vi) any arrangement involving any holder of Company securities; and
(vii) any arrangement under which the consequences of default or termination
could have a material adverse effect on the assets, business, financial
condition or results of operations of the Company.
- EXCLUSIVE SUPPLY AGREEMENT DATED AUGUST 30, 1996 WITH P.D. TARU
MARTANI D.I., YOGYAKARTA, INDONESIA
- DISTRIBUTION AGREEMENT DATED AUGUST 13, 1996 WITH CARIBBEAN CIGAR
COMPANY.
(b) The Company has previously delivered to the Purchaser a complete and
accurate copy of each Contract. Except as set forth below, each Contract is a
valid and binding agreement between the Company and the other party or parties
thereto and the rights and obligations of each such Contract may be assigned by
the Company to the Purchaser, and assumed by the Purchaser, without causing a
default or breach of any thereof. Except as set forth below, no material default
or breach by the Company or, to the Company's knowledge, any other party thereto
exists under any of the Contracts and none will arise solely by virtue of the
transactions contemplated by this Agreement.
NO EXCEPTIONS.
(c) Except as set forth below, the Company has no outstanding contracts or
commitments with its officers, employees, agents, consultants, advisors,
salesmen, sales representatives, distributors or dealers that are not cancelable
by the Company on notice of no longer than 30 days and without liability,
penalty or premium.
NONE.
(d) Except as set forth below, the Company has no collective bargaining or
employment agreement, or agreements with any labor union or organization, nor
any
57
agreements that contain any severance, retirement or termination pay liabilities
or obligations and the Company has not been formally or informally advised of
any proposed attempts to organize any of the Company's employees.
NONE.
(e) Except as set forth below, the Company has no bonus, deferred
compensation, profit sharing, stock purchase, stock option or retirement
arrangement, whether legally binding or not, and the Company is not presently
paying any pension, deferred compensation or retirement allowance to anyone. The
Company has no employee benefit plans, as that term is defined in Section 3(3)
of the Employee Retirement Security Act of 1974, as amended.
NONE.
(f) Except as set forth below, the Company has made no payments or
commissions or provided any benefits to others in connection with any sales or
proposed sales by the Company, except to employees of the Company or sales
representatives or distributors regularly engaged by the Company to promote the
sale of its products and services. Except as set forth below, none of such
employees or sales representatives or distributors are employed or engaged as a
consultant, advisor, purchasing representative, employee, officer, director or
otherwise, whether paid or unpaid, by any customer or proposed customer or by
any government or governmental agency or body of any kind and description or by
any other person, firm or corporation or hold political office or position
(whether or not paid) with any government or governmental agency or body or
receive remuneration for services rendered from any person, firm or corporation
other than the Company.
CHRISTMAS BONUSES PAID TO FACTORY WORKERS, EMPLOYEES OF TARU MARTANI, (NOT
COMPANY) IN YOGYAKARTA, INDONESIA
(g) Except as set forth below, the Company has not given any power of
attorney to any person, firm or corporation for any purpose whatsoever.
NONE.
(h) Except as set forth below, the Company is not restricted by any
agreement from carrying on its business in any location.
NONE.
(i) Set forth below is a list of all insurance policies and bonds
currently in force with respect to the Company and its business, property and
assets, copies of which have previously been delivered to the Purchaser. Except
as set forth below, such policies and bonds are maintained in such amounts and
against such risks as prudent business management
58
would deem advisable to protect its assets and properties.
NONE.
59
SCHEDULE 2.10
CLAIMS AND LEGAL PROCEEDINGS
Except as set forth below, there are no claims, actions, suits,
arbitrations, proceedings or investigations pending (or, to the knowledge of the
Company, threatened) against the Company, and there are no outstanding court
orders, court decrees, or court stipulations to which the Company is a party or
by which any of its assets are bound, any of which should (a) impair this
Agreement or affect the transactions contemplated hereby, (b) materially
restrict the present business properties, operations, prospects, assets,
revenues or condition (financial or otherwise) of the Company or (c)
individually or in the aggregate, have a material adverse effect or materially
impair or preclude the Company's ability to consummate the transactions
contemplated by this Agreement. Except as set forth below, the Company has no
reason to believe that any such claim, action, suit, arbitration, proceeding or
investigation may be brought against the Company.
NONE.
60
SCHEDULE 2.11
LEGAL COMPLIANCE
Except as set forth below, to the Company's knowledge, the Company and the
conduct and operations of its business, are in compliance with all of the laws
(including rules and regulations thereunder) of any governmental entity which
are applicable to the Company's business.
NO EXCEPTIONS.
61
SCHEDULE 2.12
BROKER'S FEES
Except as set forth below, the Company has no liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
NONE.
62
SCHEDULE 2.13
DISCLOSURE
No representation or warranty by the Company, Xxxxxxx or Xxxxxx contained
in this Agreement, and no statement contained in the Disclosure Schedule or any
other document, certificate or other instrument delivered by or to be delivered
by or on behalf of the Company, Xxxxxxx or Xxxxxx pursuant to this Agreement,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading.
