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EXHIBIT 99.2
AGREEMENT
THIS AGREEMENT, dated as of the 14th day of August, 1998, by and
between FINOVA CAPITAL CORPORATION, having a place of business located at 111
West 40th Street, New York, New York 10018 ("FINOVA") and Caribbean Cigar
Company, Precision Mold, Inc., Caribbean AWC Corporation, Caribbean Cigar
Company (Cayman) Limited, having a place of business located at 8305 N.W. 27th
Street, Miami, Florida 33122 (collectively, the "Borrower").
WHEREAS, the Borrower and FINOVA entered into that certain Security
Agreement, dated August 28, 1997 (the "Security Agreement"); and
WHEREAS, the Borrower and FINOVA entered into a Forbearance Agreement
dated July 10, 1998 (the "Original Forbearance"), which Original Forbearance is
incorporated herein by reference and modified only as expressly set forth
herein; and
WHEREAS, the Borrower remains obligated to FINOVA for the monies
borrowed under the Security Agreement and otherwise; and
WHEREAS, certain defaults exist under the Security Agreement and
Original Forebearance; and
WHEREAS, as of this date, the Borrower is obligated to FINOVA in the
approximate amount of $1,356,000, together with interest thereon at the interest
rate set forth in the Security Agreement plus FINOVA's costs and expenses,
including but not limited to legal fees, costs and disbursements and any and all
additional advances made by FINOVA, including advances made to protect FINOVA's
collateral (collectively "Obligations") which Obligations are owing by Borrower
to FINOVA without claim, deduction, defense or offset; and
WHEREAS, the Borrower and FINOVA have agreed that FINOVA shall make no
further advances to Borrower and have also agreed to terms by which Borrower
shall repay the Obligations to FINOVA; and
WHEREAS, the Borrower has requested that FINOVA forbear in commencing
any action against the Borrower under or pursuant to the Security Agreement or
the Original Forbearance for the Obligations owing to FINOVA and FINOVA is
willing to forbear pursuant to the terms and conditions contained in this
Agreement; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. All of the above recitals are hereby incorporated by reference
and made a part of this Agreement.
2. Ron Jenkins shall execute the Unconditional Personal Guaranty
of Collection, a copy of which is attached hereto as Exhibit A (the "Jenkins
Guaranty").
3. In consideration for the Jenkin's Guaranty, FINOVA agrees to
accept, in satisfaction of the Obligations, the amount of $1,000,000 ("Reduced
Amount") provided there is no default hereunder. Interest shall accrue on the
balance of the Reduced Amount
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("Interest") at one point above the prime rate charged by Citibank (as such
prime rate may be adjusted from time to time), with such Interest to be added to
and included in the Final Payment (as such term is hereafter defined). In the
event of any default in payment hereunder, Borrower shall immediately be
obligated to pay the full amount of the Obligations (not the Reduced Amount)
plus Interest on the Obligation, less any installment (as such term is hereafter
defined) actually received by FINOVA.
4. Borrower shall repay the Reduced Amount in weekly installments
in the amount of $16,000 (each an "Installment") commencing on Wednesday, August
19, 1998, and continuing on each Wednesday thereafter (each a "Payment Date")
through and including August 18, 1999, at which time the remaining balance of
the Reduced Amount shall be paid in full to FINOVA together with all interest
owing and/or accrued (the "Final Payment"). In the event any Payment Date shall
occur on any legal holidays wherein the banks in the State of Tennessee, Florida
or New York are closed, such Payment Date shall be the first business day
following such legal holiday.
5. Each Installment and the Final Payment shall be paid to FINOVA
via wire transfer, as follows:
ABA No. 021000021
Chase Manhattan Bank
1411 Broadway
New York, New York 10018
Account No. 129-0-60290
FINOVA Capital Corporation
111 West 40th Street
New York, New York 10018
Re: Caribbean Cigar Company
6. (a) During the Forbearance Period (as hereinafter defined),
FINOVA agrees to forbear in commencing any action upon the Security Agreement or
the Original Forbearance for the Obligations provided an Event of Default has
not occurred: (i) under this Agreement (as such term is hereafter defined); (ii)
under the Security Agreement; or (ii) under the Original Forbearance.
(b) The Forbearance Period shall mean the period from the date
hereof until the "Termination Date", which Termination Date shall be the earlier
of: (i) receipt by FINOVA of payment in full of the Reduced Amount (together
with all interest thereon); (ii) immediately upon an Event of Default under this
Agreement (as such term is hereafter defined); or (iii) August 18, 1999.
7. An Event of Default under this Agreement shall mean the
following: (a) the failure of the Borrower to observe, or timely comply with, or
perform any covenant or term contained in this Agreement or the Security
Agreement except for the defaults existing as of the date of this Agreement; (b)
the failure of the Borrower to timely pay FINOVA any Installment or the Final
Payment when due under this Agreement; (c) should any warranty or representation
made by the Borrower in this Agreement or the Security Agreement be untrue in
any material respect as of the date hereof; (d) should any financial statement
or report provided by Borrower or Guarantor in connection with this Agreement be
materially false or misleading; or (e) should the Borrower become a debtor in
any bankruptcy
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proceeding or admit in writing that it is unable to pay its debts as they
mature, it being specifically agreed that in the event of any such bankruptcy
proceeding, FINOVA shall not be required to deliver any release of its
collateral unless and until it is paid the entire proceeds from the sale of such
collateral.
8. Upon receipt of the Final Payment FINOVA shall execute and
deliver releases releasing Edward C. Williams, Kevin Doyle and Ron Jenkins from
any and all obligations such individuals have to FINOVA as such obligations
relate to the Borrower.
9. Notwithstanding anything to the contrary in this Agreement or
the Security Agreement or the Original Forbearance:
(a) Borrower shall on or before the fifth day of each
month, deliver to FINOVA monthly inventory and receivable aging reports as of
the last day of the immediately preceding month; and
(b) Borrower shall be free to directly collect its
accounts receivable and to hold same; provided however, that the receivable in
the amount of $105,600 owed to Borrower by Precision Cigar International ("PCI")
evidenced by Borrower's outstanding invoice no. 210770, shall be immediately
paid to FINOVA (as per letter attached) which amount FINOVA shall accept as
payment toward the Reduced Amount; and
(c) FINOVA shall take all actions necessary to allow
Borrower to sell all equipment or products of any kind located at 8305 N.W. 27th
Street, Miami, Florida 33122, for a sale price of $120,000 ("Equipment
Proceeds") with $60,000 of such Equipment Proceeds to be transferred to FINOVA,
if and when such sale is consummated, as payment toward the Reduced Amount; and
(d) FINOVA shall take all actions reasonably requested by
Borrower (and at Borrower's expense) to allow Borrower to sell, if Borrower is
able, all retail stores and assets related to such retail stores ("Retail
Sales") and upon such Retail Sales Borrower will be obligated to transfer to
FINOVA one half of the gross proceeds received from such sales, such payment to
be made upon receipt of the proceeds from such sale of Retail Stores as payment
toward the Reduced Amount with Borrower being entitled to retain the remaining
cash proceeds of any such Retail Sales.
(e) In the event the Borrower defaults (as defined in
paragraph 7 above) on its obligations to FINOVA hereunder, FINOVA shall be
entitled to recover from the Company, in addition to the Obligations and
Interest thereon, its costs and expenses (including its reasonable legal fees
and costs) incurred in connection with the negotiation and preparation of this
Agreement and its recovery of the Obligations.
10. FINOVA acknowledges that the Borrower may be filing a press
release which release will express the restructure of Borrower's Obligations
owing to FINOVA.
11. This Agreement shall be construed under and in accordance with
the laws of the State of New York.
12. This Agreement represents the entire Agreement between FINOVA
and Borrower with all such other agreements between the parties (except the
Security Agreement and any guaranty including the Jenkin's Guaranty) being
merged with this
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Agreement.
13. No executory agreement and no course of dealing between the
Borrower and FINOVA shall be effective to change or modify this Agreement in
whole or in part; nor shall any change, modification or waiver of any rights or
powers of FINOVA be valid or effective unless in writing and signed by an
authorized officer of FINOVA .
FINOVA CAPITAL CORPORATION
By: RAY EICHLER AVP
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Ray Eichler, Assistant Vice President
CARIBBEAN CIGAR COMPANY, PRECISION
MOLD, INC., CARIBBEAN AWC
CORPORATION, CARIBBEAN CIGAR
COMPANY (CAYMAN) LIMITED
By: RON JENKINS
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Ron Jenkins, Executive Vice President
and Chief Operating Officer
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EXHIBIT A
UNCONDITIONAL PERSONAL GUARANTY OF COLLECTION
IN CONSIDERATION, and for the purpose of seeking to induce FINOVA
CAPITAL CORPORATION ("FINOVA") to enter into that certain Agreement dated August
14, 1998 (the "Agreement"), between FINOVA and Caribbean Cigar Company,
Precision Mold, Inc., Caribbean AWC Corporation, Caribbean Cigar Company
(CAYMAN) Limited, (collectively "Caribbean"), Mr. Ron Jenkins (the"Guarantor"),
absolutely and irrevocably guarantees to FINOVA the full and prompt payment of
all amounts due pursuant to the Agreement (not to exceed $1,000,000), and does
hereby agree that if the amounts due pursuant to the Agreement are not timely
paid to FINOVA then upon the sending of notice by FINOVA the Guarantor will
immediately do so. Guarantor waives notice of acceptance, notice of Borrower's
default, notices of presentment, demand, dishonor, protest, and all other
notices whatsoever with respect to the payment of the Borrower's Obligations
guaranteed hereunder.
IN WITNESS WHEREOF, the Guarantor has affixed his hand and seal this
18th day of August, 1998, at Knoxville, Tennessee.
WITNESSES GUARANTOR:
J.D.JENKINS RON JENKINS