EXHIBIT 10.10
CONTRIBUTION AGREEMENT
June __, 1997
Board of Directors
800-JR Cigar, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
1. Contributions. Each of the undersigned (each a "Subscriber" and
collectively the "Subscribers") desires to subscribe to the number of shares of
common stock, par value $.01 per share ("Common Stock"), of 800-JR Cigar, Inc.,
a Delaware corporation (the "Company"), set forth opposite such Subscriber's
name on attached Schedule A ("Company Shares"), and in exchange therefor
contribute to the Company the number of shares of capital stock ("Constituent
Entities Shares") of each of the corporations (each a "Constituent Entity" and
collectively the "Constituent Entities") set forth opposite such Subscriber's
name on attached Schedule B, all upon the terms and subject to the conditions
hereinafter set forth. It is intended that the contributions by the Subscribers
of the Constituent Entities Shares to be contributed by the Subscribers to the
Company, which will occur in connection with an initial public offering by the
Company of shares of Common Stock (the "Offering"), constitute tax-free capital
contributions under Section 351 of the Internal Revenue Code of 1986, as
amended, (the "Code").
2. Closing. The consummation of the contributions contemplated hereby (the
"Closing") shall occur on a date (the "Closing Date") to be specified by the
parties, which shall be no later than the fifth business day after satisfaction
of the latest to occur of the conditions set forth in Section 6 at the offices
of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
unless another date or place is agreed to in writing by each of the parties
hereto. At the Closing, the Company shall deliver to each Subscriber
certificates for the Company Shares to be issued to such Subscriber as set forth
on attached Schedule A against receipt of certificates for the Constituent
Entities Shares to be contributed by such Subscriber as set forth on attached
Schedule B duly endorsed or accompanied by duly executed stock powers,
transferring ownership to the Company of the Constituent Entities Shares to be
contributed by such Subscriber to the Company.
3. Representations and Warranties.
(a) Representations and Warranties of the Subscribers. Each
Subscriber severally and not jointly hereby represents and warrants to the
Company that such Subscriber:
(i) (x) owns the Constituent Entities Shares to be contributed by
such Subscriber to the Company free and clear of any lien, claim, security
interest or other encumbrance, including, without limitation, any
restriction on transfer and (y) has the full legal right, and any approval
required by law to contribute, transfer and deliver to the Company such
Constituent Entities Shares in the manner provided in this Agreement, and
upon delivery to the Company of the certificates for such Constituent
Entities Shares hereunder, the Company will acquire valid title to such
Constituent Entities Shares free and clear of any lien, claim, security
interest or other encumbrance.
(ii) (x) is acquiring the Company Shares to be issued to such
Subscriber for such Subscriber's own account for investment and not with a
view to the distribution thereof or with any present intention of selling
any thereof, (x) has been informed by the Company that the Company Shares
to be issued to such Subscriber have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and understands
that such Company Shares must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration
is available and (z) is fully aware of the restrictions on disposing of
the Company Shares resulting from the provisions of the Securities Act and
the General Rules and Regulations of the Securities and Exchange
Commission (the "Commission") thereunder (including, without limitation,
Rule 144), and understands that, except as provided in Sections 4 and 5,
the Company is under no obligation to effect compliance with Regulation A
or any other exemption or to register the Company Shares to be issued to
such Subscriber.
(b) Representations and Warranties of the Company. The Company
represents and warrants to each Subscriber that the Company Shares to be
issued by the Company and delivered to each Subscriber hereunder have been
duly authorized and, when issued, delivered in the manner set forth in
this Agreement, will be validly issued, fully paid and nonassessable.
4. Certain Agreements.
(a) Tax Agreement. At or prior to the Closing, each of the
Subscribers and the Company shall, and the Company shall cause the
Constituent Entities to, enter into the Tax Agreement attached hereto as
Exhibit A.
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(b) Transferability. Prior to any sale, transfer, pledge or other
disposition of any Company Shares, each Subscriber shall give written
notice to the Company of such proposed sale, transfer, pledge or other
disposition and as to the circumstances thereof. Promptly upon receiving
such notice, the Company shall obtain from the Company's counsel and, if
the Company at its option so requests, such Subscriber will obtain from
such Subscriber's counsel and deliver to the Company, as promptly as
practicable, an opinion as to whether the proposed sale, transfer, pledge
or disposition may be effected without registration of such Company Shares
under the Securities Act. If in the opinion of each such counsel such
sale, transfer, pledge or disposition may be made in the manner described
in the notice thereof in compliance with applicable Federal and state
securities laws, such Subscriber may make such sale, transfer, pledge or
disposition. If either counsel shall fail to render an opinion to such
effect, such Subscriber shall not make such sale, transfer, pledge or
disposition unless and until registration of such Company Shares under the
Securities Act has become effective or is no longer required in the
opinion of the respective counsel.
Each certificate representing any of the Company Shares or
representing any shares issued in payment or distribution of any stock
dividend thereon, or split-up thereof, and each certificate, issued upon
any transfer or exchange of any such certificate, shall bear the following
legend unless, in the opinion of the Company's counsel, such legend is no
longer necessary to assure compliance with the Securities Act:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares have been
acquired for investment and may not be pledged or hypothecated, and
may not be sold or transferred, in the absence of an effective
Registration Statement for the shares under the Securities Act of
1933 or an opinion of counsel to the Company that registration is
not required under the Securities Act of 1933."
The Company will enter appropriate stop-transfer orders on any register or
records maintained by or on behalf of the Company with respect to the
Company Shares to insure that the Company Shares are not transferred
except in accordance with this Agreement.
(c) Information; Public Filings. If at any time the Common Stock is
required to be registered under Section 12(b) or Section 12(g), whichever
is applicable, of the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), then thereafter the Company will:
(i) maintain effective a registration statement (containing such
information and documents as the Commission shall specify and otherwise
complying with the Securities Exchange Act), under Section 12(b) or
Section 12(g), whichever is applicable, of the Securities Exchange Act,
with respect to the Common Stock, and the
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Company will file as required such information, documents and reports as
the Commission may require or prescribe for companies whose stock has
been registered pursuant to such Section 12(b) or Section 12(g),
whichever is applicable; and
(ii) upon the request of any holder of Company Shares, make
whatever other filings with the Commission, or otherwise make generally
available to the public such financial and other information, as any such
holder may deem reasonably necessary or desirable in order to enable such
holder to be permitted to sell Company Shares pursuant to the provisions
of Rule 144.
5. Registration Rights. If, at any time following the first anniversary of
the Closing Date, the Company shall determine to register any other shares of
Common Stock under the Securities Act for its own account (other than on Form
S-4 or Form S-8 or a comparable form), the Company will, at its expense:
(a) furnish prompt written notice thereof to each holder of the
Company Shares, and
(b) include among the securities which it then registers and
qualifies, all of the Company Shares specified in a written request or
requests, made within 10 days after the giving of such written notice by
the Company, from any holder or holders of any of the Company Shares,
provided, however, that (i) if and to the extent that any such holder or
holders shall at the time have no present intention of selling or
distributing any of such Company Shares, the Company shall be obligated to
effect such registration, qualification or compliance with respect to such
holder's or holders' Company Shares only if and to the extent, in each
case, that such registration, qualification or compliance is at the time
permitted by the applicable statute or the rules and regulations thereunder
or the practices of the governmental authority concerned, (ii) if and to
the extent that, in the opinion of the Company's counsel, the holder or
holders thereof may sell or dispose of their Company Shares without
registration under the Securities Act, the Company shall not be obligated
to register the same, and (iii) if, in the reasonable opinion of the
prospective underwriters, the inclusion in the Registration Statement by
the holder or holders of any Company Shares would be detrimental to the
prospective offering, the Company may reduce the number of Company Shares
of each holder to be so included in proportion to their relative holdings
of Company Shares.
In the case of each registration, qualification or compliance pursuant
to this Section 5, the Company will keep the holders of all of the Company
Shares being registered advised in writing as to the initiation of
proceedings for such registration, qualification and compliance and as to
the completion thereof, and will advise any such holder, upon request, of
the progress of such proceedings. The Company will pay all of the costs
incident to such registration, qualification and compliance, except
underwriting discounts, registration or filing fees and other expenses
computed on the basis of the
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number of the shares of Common Stock or the aggregate value thereof being
registered. Each holder of the Company Shares being registered shall pay
that proportion of all such discounts, fees and expenses relating to the
Company Shares being registered that the number of the Company Shares of
such holder being registered bears to the total number of shares of Common
Stock being registered. At the expense of the Company, the Company will
keep such registration, qualification and compliance effective for a period
of 90 days by such action as may be necessary or appropriate, including,
without limitation, the filing of post-effective amendments and supplements
to any registration statement or prospectus necessary to keep the
registration correct and to permit the sale or distribution of the Company
Shares not theretofore sold or distributed, and further qualification under
any applicable blue sky or other state securities law to permit such sale
or distribution, all as requested by the holders.
Each holder of any of the Company Shares being registered shall
furnish to the Company such information regarding such holder and the
distribution of the Company Shares being registered held by such holder as
the Company may request in writing and as shall be required in connection
with any registration, qualification and compliance referred to in this
Section 5.
The Company will furnish to each holder of the Company Shares being
registered such number of prospectuses, offering circulars and other
documents incident to any registration, qualification or compliance
referred to in this Section 5, at the expense of the Company, as such
holders from time to time may reasonably request. The Company will
indemnify each such holder and each underwriter of the Company Shares being
registered against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained therein (or in any
related registration statement, notification or the like) or any omission
(or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
or any violation by the Company of any rule or regulation promulgated under
the Securities Act applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each such holder and each
such underwriter for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action; provided, however, that the Company will not be liable
in any such case to the extent that any such claim, loss, damage or
liability arises out of or is based on any untrue statement or omission
based upon written information furnished to the Company by an instrument
duly executed by such holder or underwriter and stated to be specifically
for use therein.
As a condition of any such registration each of the holders of the
Company Shares being registered will agree (i) if the Company so requests,
to sell all of such Company Shares being registered through an underwriter
or underwriters designated by the
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Company, (ii) if the Company so requests, to delay the sale of the Company
Shares being registered for a period of up to 60 days after the effective
date of such registration, qualification or compliance, and (iii) to
severally indemnify the Company, its directors and officers, each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act, and each
underwriter of the Company Shares being registered, to the extent of the
net proceeds received by each holder from the sale of Company Shares,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of, or in connection with, or based on any untrue
statement (or alleged untrue statement) of a material fact contained in the
prospectus, offering circular or any other document incident to such
registration, qualification or compliance (or in any related registration
statement, notification or the like) or any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary
to make the statement therein not misleading, or any violation by such
holder of any rule or regulation promulgated under the Securities Act or
the Securities Exchange Act applicable to such holder and relating to
action or inaction required of such holder in connection with any such
registration, qualification or compliance, based on any untrue statement or
omission based upon written information furnished to the Company or any
such underwriter by an instrument duly executed by such holder and stated
to be specifically for use therein, and will reimburse the Company, each
such director and officer, each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act, and each underwriter for any legal fees and
expenses or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, based on any untrue statement or omission based upon written
information furnished to the Company or any such underwriter by an
instrument duly executed by such holder and stated to be specifically for
use therein or resulting from any violations by such holder of any rule or
regulation promulgated under the Securities Act or the Securities Exchange
Act.
6. Conditions to Closing.
(a) Conditions to Obligations of the Company. The obligations of the
Company to issue and deliver to the Subscribers the Company Shares to be
issued and delivered hereunder are subject to the fulfillment, at or prior
to the Closing, of each of the following conditions (all or any of which
may be waived in whole or in part by the Company):
(i) Representations and Warranties. Each of the representations
and warranties made by the Subscribers in this Agreement shall be true and
correct in all material respects.
(ii) Performance. Each Subscriber shall have performed and
complied with, in all material respects, each agreement, covenant and
obligation required by this
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Agreement to be so performed or complied with by such Subscriber at or
before the Closing.
(iii) Underwriting Agreement. Each of the Company, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust, the ▇▇▇▇ ▇▇▇▇▇▇▇
Trust, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust and the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust, Wheat,
First Securities, Inc. and ▇.▇. ▇▇▇▇▇▇▇▇ & Co., as representatives of the
several underwriters shall have entered into an underwriting agreement
(the "Underwriting Agreement") relating to the purchase and sale of shares
of Common Stock, and the Underwriters (as defined therein) shall have
purchased and paid for the Firm Securities (as defined therein) pursuant
thereto.
(b) Conditions to Obligations of the Subscribers. The obligations of each
Subscriber to purchase the Company Shares to be purchased by such Subscriber
hereunder are subject to the fulfillment, at or prior to the Closing, of each of
the following conditions (all or any of which may be waived in whole or in part
by the Subscribers):
(i) Representations and Warranties. Each of the representations
and warranties made by the Company in this Agreement shall be true and
correct in all material respects.
(ii) Performance. The Company shall have performed and complied
with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by it at or
before the Closing.
(iii) Underwriting Agreement. Each of the Company, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust, the ▇▇▇▇ ▇▇▇▇▇▇▇
Trust, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust and the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust, Wheat,
First Securities, Inc. and ▇.▇. ▇▇▇▇▇▇▇▇ & Co., as representatives of the
several Underwriters, shall have entered into the Underwriting Agreement
and the Underwriters shall have purchased and paid for the Firm Securities
pursuant thereto.
7. Miscellaneous.
(a) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed
by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
(b) Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to
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the subject matter hereof and is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
(c) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey without regard to
applicable principles of conflicts of law thereof.
(d) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise, without the prior
written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective heirs or successors.
Very truly yours,
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Trust f/b/o ▇▇▇▇▇ ▇▇▇▇▇▇▇,
pursuant to trust agreement dated November 1,
1994, ▇▇▇ ▇▇▇▇▇▇▇, Grantor
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Special Trustee
Trust f/b/o ▇▇▇▇ ▇▇▇▇▇▇▇,
pursuant to trust agreement dated November 1,
1994, ▇▇▇ ▇▇▇▇▇▇▇, Grantor
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Special Trustee
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Trust f/b/o ▇▇▇▇▇ ▇▇▇▇▇▇▇,
pursuant to trust agreement dated November 1,
1994, ▇▇▇ ▇▇▇▇▇▇▇, Grantor
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Special Trustee
Trust f/b/o ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
pursuant to trust agreement dated November 1,
1994, ▇▇▇ ▇▇▇▇▇▇▇, Grantor
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Special Trustee
CONSENTED TO AND AGREED:
800-JR CIGAR, INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
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SCHEDULE A
COMPANY SHARES
Number of Company Shares
Name of Stockholder to be Issued
------------------- ------------------------
▇▇▇ ▇▇▇▇▇▇▇ 4,387,920
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 4,387,920
▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust 131,040
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust 131,040
▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust 131,040
▇▇▇▇ ▇▇▇▇▇▇▇ Trust 131,040
SCHEDULE B
SHARES OF CAPITAL STOCK
OF CONSTITUENT ENTITIES
TO BE CONTRIBUTED
Number of
Class and Par Value of Shares to be
Stockholder Constituent Entity Capital Stock Contributed
----------- ------------------ ------------- -----------
▇▇▇ ▇▇▇▇▇▇▇ ▇.▇ Tobacco of America, Inc. Common Stock, $1.00 par value 100
Cigars by Santa Clara, N.A., Inc. Common Stock, $1.00 par value 100
J.N.R. Grocery Corp. Common Stock, no par value 30
J.R Tobacco NC, Inc. Common Stock, $1.00 par value 100
J&R Tobacco (New Jersey) Corp. Common Stock, no par value 20
J.R Tobacco Company of Michigan, Inc. Common Stock, $1.00 par value ▇▇▇
▇.▇-▇▇▇▇ ▇▇▇▇▇▇, Inc. Common Stock, no par value 100
J.R Tobacco Outlet, Inc. Common Stock, no par value 50
J.R Statesville, Inc. Common Stock, $1.00 par value 52
J R Cigar (DC), Inc. Common Stock, no par value 25
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇.▇ Tobacco of America, Inc. Common Stock, $1.00 par value 100
Cigars by Santa Clara, N.A., Inc. Common Stock, $1.00 par value 100
J.N.R. Grocery Corp. Common Stock, no par value 30
J.R Tobacco NC, Inc. Common Stock, $1.00 par value 100
J&R Tobacco (New Jersey) Corp. Common Stock, no par value 20
J.R Tobacco Company of Michigan, Inc. Common Stock, $1.00 par value ▇▇▇
▇.▇-▇▇▇▇ ▇▇▇▇▇▇, Inc. Common Stock, no par value 100
J.R Tobacco Outlet, Inc. Common Stock, no par value 50
J.R Statesville, Inc. Common Stock, $1.00 par value 52
J R Cigar (DC), Inc. Common Stock, no par value 25
▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust J.R Statesville, Inc. Common Stock, $1.00 par value 24
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust J.R Statesville, Inc. Common Stock, $1.00 par value 24
▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust J.R Statesville, Inc. Common Stock, $1.00 par value 24
▇▇▇▇ ▇▇▇▇▇▇▇ Trust J.R Statesville, Inc. Common Stock, $1.00 par value 24