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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Caribbean Cigar Company
(Name of Issuer)
Common Stock, Par Value $.001 Per Share
(Title of Class of Securities)
141834 10 1
(CUSIP Number)
Stephen B. Selbst, Esq.
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, N.Y. 10036
(212)704-0100
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
August 8, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |X|.
Check the following box if a fee is being paid with the statement |_| (A fee is
not required only if the reporting person (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
(Page 1 of 5 Pages)
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SCHEDULE 13D
<TABLE>
<CAPTION>
- -------------------------------------------------------- -----------------------------------------------------
CUSIP No. 141834 10 1 Page 2 of 5 Pages
- -------------------------------------------------------- -----------------------------------------------------
<S> <C>
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1 NAME OF REPORTING PERSONS: Michael Risley ###-##-####
Kevin Doyle ###-##-####
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
--------- -------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS (2)(d) or (e) |X|
--------- -------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
Risley: United States of America
Doyle: United States of America
------------------------------------- -------- ------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY Michael Risley - 538,650
OWNED BY Kevin Doyle - 1,823,750
EACH
REPORTING
PERSON
WITH
-------- ------------------------------------------------------------------------------------
8 SHARED VOTING POWER
None
-------- ------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
Michael Risley - 538,650
Kevin Doyle - 1,823,750
---------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
--------- -------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Michael Risley - 538,650
Kevin Doyle - 1,810,750
--------- -------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_|
--------- -------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
46.08%
--------- -------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
Michael Risley - IN
Kevin Doyle - 00
--------- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 13D
Item 1. Security and Issuer.
This statement relates to shares of the common stock, par value $.01 per
share (the "Common Stock"), of Caribbean Cigar Company (the "Issuer"). The
Issuer's principal executive offices are located at 6265 SW 8th Street, Miami,
Florida 33144.
Item 2. Identity and Background.
This statement is being filed by Michael Risley ("Risley") and Kevin Doyle
("Doyle"). Mr. Risley and Mr. Doyle may be deemed to be a group within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Act").
Mr. Risley's business address is 1050 Sevilla Avenue, Coral Gables, Florida
33134. His present principal occupation is financial consultant. Mr. Risley is
self-employed. During the last five years, Mr. Risley has not been (1) convicted
in any criminal proceedings or (2) a party to any civil or administrative
proceeding, except that on March 22, 1993, Mr. Risley had a default judgment
entered against him by the National Association of Securities Dealers, Inc.
("NASD") for failure to respond to a complaint alleging violations of the NASD's
Rules of Fair Practice that purportedly occurred in 1990. In the default
judgment, Mr. Risley was barred from associating with any member firm of the
NASD and fined $45,000. Mr. Risley is seeking to have the NASD's default
judgment vacated.
Mr. Doyle's business address is 6255 SW 8th Street, Miami, Florida 33144.
His present principal occupation is president and chief executive officer of the
Issuer, whose address is 6255 SW 8th Street, Miami, Florida 33144. During the
last five years, Mr. Doyle has not been party to any criminal, civil or
administrative proceeding.
Item 3. Source and Amount of Funds or Other Consideration.
Mr. Risley used personal funds in the amount of $538.65 to acquire his
shares of Common Stock of the Issuer. As previously disclosed in the Issuer's
Registration Statement on Form SB-2 filed with the Securities and Exchange
Commission on August 13, 1996, Mr. Doyle's shares of Common Stock were issued to
him in exchange for the assets and liabilities of a predecessor to the Issuer.
Item 4. Purpose of Transaction.
Mr. Risley and Mr. Doyle each acquired their shares of Common Stock of the
Issuer for investment purposes. As holders, in the aggregate, of more than 45%
of the Common Stock of the Issuer, Mr. Risley and Mr. Doyle seek to insure that
the Issuer is operated in a manner that is most beneficial to all of its
shareholders and to maximize shareholder value. Mr. Risley and Mr. Doyle may, as
the opportunity arises, purchase additional shares of Common Stock of the
Issuer.
Commencing in May 1997 and from time to time thereafter, Mr. Risley and Mr.
Doyle have had discussions with certain officers and directors of the Issuer and
other shareholders of the Issuer regarding the composition of the Board of
Directors of the Issuer and the current executive officers of the Issuer. Until
August 8, 1997, Mr. Risley and Mr. Doyle were conducting such discussions as
individual shareholders, and were not acting as a group for purposes of Section
13(d)(3) of the Act. However, Mr. Risley and Mr. Doyle may be deemed to have
formed a group on August 8, 1997. No understandings or agreements have been
reached to date as a result of any such discussions,
(Page 3 of 5 Pages)
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and neither Mr. Risley nor Mr. Doyle have made any determination whether to
pursue any specific plan or proposal with respect to the Board of Directors or
the executive officers of the Issuer.
Other than as described above, as of the date hereof, neither Mr. Risley
nor Mr. Doyle has made any proposals to the Issuer which would result in (i)
acquisition by any person of additional securities of the issuer, or the
disposition of securities of the Issuer; (ii) any extraordinary corporate
transaction, such as a merger, reorganization or liquidation involving the
Issuer or any of its subsidiaries; (iii) any sale or transfer of a material
amount of assets of the Issuer or any of its subsidiaries; (iv) any change in
the present Board of Directors or executive officers of the Issuer; (v) any
material change in the present capitalization or dividend policy of the Issuer;
(vi) any other material change in the Issuer's business or corporate structure;
(vii) any change in the Issuer's charter, by-laws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Issuer by any person; (viii) causing a class of securities of the Issuer to be
delisted from a national securities exchange; (ix) causing a class of securities
of the Issuer to become eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934; or (x) any action
similar to any of those enumerated above.
Mr. Risley and Mr. Doyle intend to review their investment in the Issuer
after the date hereof, and from time to time, in light of the Issuer's
operations, prospects, business development and competitive and strategic
matters. After such review, Mr. Risley and Mr. Doyle may change their intention
with respect to proposing one or more actions to enhance shareholder value or to
effect a change of control of the Issuer, including one or more of the matters
described in clauses (i) through (x) above.
Item 5. Interest in Securities of the Issuer.
Mr. Risley owns 538,650 shares of Common Stock of the Issuer. Mr. Risley
has sole voting and dispositive power with respect to such shares of Common
Stock. On July 28, 1997, Mr. Risley transferred 11,000 shares of Common Stock to
Charles Spina and 8,600 shares of Common Stock to Tony Kamen, in each case in
settlement of obligations owed by Mr. Risley to such individuals.
Mr. Doyle owns 1,823,750 shares of Common Stock of the Issuer. Except as
described in Item 6 below, Mr. Doyle has sole voting and dispositive power with
respect to such shares of Common Stock. Mr. Doyle disclaims any beneficial
ownership in any shares of Common Stock owned by Mr. Risley.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
785,113 shares of Common Stock owned by Mr. Doyle are pledged to DB/LRT,
Ltd., an unafilliated entity, to secure a loan to Mr. Doyle in the principal
amount of $750,000.
Except as described in the prior paragraph, neither Mr. Risley nor Mr.
Doyle has contracts, arrangements, understandings or relationships (legal or
otherwise) with respect to the common stock of the Issuer. Except as disclosed
in this Item 6, none of the Common Stock owned by Mr. Risley or Mr. Doyle is
pledged or otherwise subject to a contingency, the occurrence of which would
give another person voting or investment power over the Common Stock of the
Issuer.
Item 7. Material to be Filed as Exhibits.
Pledge Agreement dated as of February 12, 1997 between Kevin and Brenda
Doyle and DB/LRT, Ltd.
(Page 4 of 5 Pages)
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SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, each
of the undersigned hereby certifies that the information set forth in this
statement is true, complete and correct.
August 14, 1997
----------------------
Michael Risley
----------------------
Kevin Doyle
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STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made and entered into as
of this 12th day of February, 1997, by and between Kevin Doyle, residing in the
State of Florida ("Pledgor"), and DB/LRT, Ltd., a Florida limited partnership
("Pledgee") and joined in by White & Case as Escrow Agent ("Escrow Agent")
pursuant to that certain escrow agreement from White and Case to Pledgor and
Pledgee dated as of February 12, l997 (the "Escrow Letter").
BACKGROUND:
A. Pledgor, and his wife, Brenda Doyle (Pledgor and his wife are
collectively referred to as the "Doyles"), and Deering Bay Associates, Inc.
("Deering Bay") have entered into that certain Purchase Agreement, dated
October 1, 1996 (the "Purchase Agreement") whereby Deering Bay agreed to sell
and the Doyles agreed to purchase Lot 1A in Block 2, in Deering Bay Estates, as
recorded in Plat Book 143, Page 80 of the Public Records of Dade County, Florida
(the "Property").
B. In order to fund the purchase of the Property, the Doyles have requested
of Pledgee and Pledgee has granted to the Doyles, a loan in the amount of
$750,000 (the "Loan").
C. In consideration of the Loan, the Doyles have executed and delivered a
certain Promissory Note (the "Note"), dated as of the date hereof, in the
principal amount of the Loan made by Pledgee to the Doyles.
D. The payment and other performance of such Note is secured, in part, by a
Mortgage and Security Agreement (the "Mortgage"), and Security Agreement (the
"Security Agreement"), each executed by the Doyles in favor of Pledgee and
delivered concurrently herewith.
E. Pledgor is the legal, record, and beneficial owner of 1,800,000 shares
of the issued and outstanding common stock of Caribbean Cigars Company, a
Florida corporation (the "Company"), $.001 par value per share.
G. In order to further secure the Doyles' obligations under the Note, and
subject to the terms of this Agreement, Pledgee is requiring, as a condition to
acceptance of the Note, that Pledgor pledge to Pledgee 500,000 shares of the
common stock of the Company, as more specifically described in Schedule 1
attached hereto (the "Shares," which term shall include any other shares of the
Company's stock hereafter pledged or to be pledged by Pledgor to Pledgee under
this Agreement).
H. Pledgor has agreed to execute and deliver to Pledgee this Agreement and
the Shares for the purpose of making the Pledge.
<PAGE>
TERMS
In consideration of the foregoing and the agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Pledge and Grant of Security Interest. Pledgor hereby transfers, pledges
and delivers in pledge to Pledgee the Shares, such Shares being represented by
the stock certificates listed on Schedule I attached hereto, along with blank
stock powers in respect of the Shares, duly endorsed, as collateral security for
the payment and other performance of the Note. The Shares have been delivered
to, and shall be held, subject to the terms of this Agreement and the Escrow
Letter, by Escrow Agent.
2. Maintenance of Pledged Value. As of the close of business on February 7,
1997, which is three (3) business days prior to the date hereof, the price per
share of the Shares as quoted on the NASDAQ Small-Cap Issues Quotation System
was 11 and 1/8, and the aggregate value of the Shares, calculated at such price
was $5,562,500 (the "Pledged Value"). The parties acknowledge and agree that it
is the intent of the parties to maintain the value of the Shares pledged to
Pledgee in an amount not less than the Pledged Value. The Pledged Value shall be
maintained as follows:
2.1. First 120-Day Period. One hundred twenty (120) days after the
date hereof (the "First Period"), the average closing price per Share over such
period (the "120-day Average") multiplied by 500,000 (the "First Period Value")
shall be compared to the Pledged Value. If the difference between such First
Period Value and the Pledged Value exceeds Five Hundred Fifty-Six Thousand
Dollars ($556,000), then the number of Shares pledged under this Agreement (the
"Pledged Number") shall be increased or decreased as the case may be, subject to
the terms of this Agreement, so that the aggregate value of such Shares equals
the Pledged Value.
2.2. Subsequent 120 Day Periods. For each one hundred twenty (120) day
period following the First Period until all amounts due under the Note have been
fully paid (each a "Subsequent Period"), the 120-Day Average, multiplied by the
Pledged Number applicable to the respective Subsequent Period (the "120-day
Value"), shall be compared to the Pledged Value. If the difference between such
120-Day Value and the Pledged Value exceeds Five Hundred Fifty-Six Thousand
Dollars ($556,000), then the Pledged Number shall be increased or decreased, as
the case may be, so that the aggregate value of such Shares equals the Pledged
Value. Notwithstanding any provision of Section 2.1 or this Section 2.2 to the
contrary, the Pledged Number of Shares shall never be less than 400,000.
2.3 Adjustment of Shares Pledged and Held. The Pledged Number shall be
increased or decreased in accordance with the provisions of Sections 2.1 and 2.2
as follows:
2.3.1 If the Pledged Number is to be increased, then Pledgor
shall deliver to the Escrow Agent, within ten (10) days of the end of the First
Period, or any Subsequent Period, as the case may be, the number of additional
shares of the common stock of the Company required to be pledged in conformance
with Sections 2.1 and 2.2 (such additional
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shares shall thereupon be included within the definition of "Shares"), along
with an appropriate stock power executed in blank with respect to such
additional shares.
2.3.2 If the Pledged Number is to be reduced, then Pledgee and
the Escrow Agent, within ten (10) days of the end of the First Period, or any
Subsequent Period, as the case may be, shall return to Pledgor the number of
shares required to be returned to Pledgor in conformance with Sections 2.1 and
2.2 (the returned shares shall then be excluded from the definition of "Shares"
and the remaining shares pledged hereunder shall be referred to as the
"Shares"). Notwithstanding the foregoing sentence, if substitute share
certificates are required to be issued, in order for Pledgee and Escrow Agent to
return some of the Shares to Pledgor and thereafter maintain the Pledged Number
to be held by Escrow Agent, Pledgor shall simultaneously with the return of any
shares to Pledgor, deliver to Escrow Agent such additional share certificates
and corresponding stock powers executed in blank as shall be necessary to
maintain the required Pledged Number.
3. Rights of Parties with Respect to the Shares.
3.1 Rights. So long as there is no Event of Default under the Note,
which has not been cured or waived as provided therein, Pledgor shall be
entitled to vote the Shares and Additional Shares (as defined below), if any,
and to give consents, waivers and ratifications with respect thereto and to
otherwise act and be entitled to all benefits as though they were the outright
owner of the Shares and Additional Shares; provided, however, that no vote of
Pledgor shall be cast, or consent, waiver or ratification given or action taken
which would violate any provision of the Purchase Agreement, this Agreement, the
Note, or any other document, instrument or agreement executed and delivered by
Pledgor in connection herewith or therewith; and further provided, subject to
the provisions of Section 3 above, that the Pledge hereunder shall be deemed to
encompass any and all (i) additional shares added to maintain the Pledged Value,
if any, (ii) non-cash payments, dividends and distributions made by the Company
in respect of the Shares and Additional Shares, if any, and (iii) new,
substituted or additional shares of stock of the Company issued to Pledgor by
the Company by reason of any stock dividend, distribution, reclassification,
readjustment, merger, stock split or other change declared by or made in the
capital structure of the Company with respect to any of the Shares pledged
hereunder (collectively, "Additional Shares"). All certificates representing any
such Additional Shares shall be delivered to Pledgee, along with blank stock
powers duly endorsed, as additional collateral security hereunder and shall be
held by Pledgee in accordance with the terms hereof.
3.2 No Registration. Pledgee understands that the Shares represented
by the certificates listed on Schedule 1 have not been registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws,
and were issued in reliance upon exemptions from the Act and such state
securities laws. The Shares may not be sold or otherwise transferred unless (i)
such securities have been registered under the Act and any applicable state
securities laws; or (ii) counsel to the Pledgee has rendered an opinion
reasonably acceptable to the Company that such registration is not required.
3.3. Lock-up Agreement. Pledgee understands that the Shares are
subject to, and may not be sold or otherwise transferred except in accordance
with a "Lock-Up Letter"
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dated July 30, 1996, and attached hereto as Exhibit A, by and between the
Pledgor and Barron Chase Securities, Inc.
3.4 No Transfer. Pledgor may not transfer any and all of the Shares
and Additional Shares pledged to Pledgee hereunder.
3.5 Non-encumbrance Agreement. In addition to the Shares at any time
pledged hereunder, Pledgor shall at all times solely own and maintain at least
fifty thousand (50,000) of the other shares of the common stock of the Company
(the "Other Stock"), free and clear from any pledge, lien, security interest,
charge, option, restriction or other encumbrance (collectively, "Liens"), except
those created by this Agreement, the Lock-up Agreement and applicable securities
laws.
4. Events of Default.
4.1 The breach by Pledgor of any representation, warranty, covenant or
other provision set forth in this Agreement which is not cured within ten (10)
business days after receipt of notice specifying the alleged default in
reasonable detail, or an Event of Default under the Note, which has not been
cured or waived as provided therein, shall, without notice or demand on Pledgor,
constitute an Event of Default under this Agreement.
4.2 If an Event of Default should occur and be continuing, then, upon
giving ten (10) days prior written notice to Pledgor of its intention to
exercise its rights under this Agreement, Pledgee shall thereafter be entitled
to require Escrow Agent to deliver the Shares and corresponding stock powers to
Pledgee and Pledgee shall have, in addition to all other rights and remedies
available to Pledgee at law, in equity or under this Agreement, the rights and
remedies of a secured party under the Uniform Commercial Code of Florida, as the
same shall be in effect at the time of the occurrence of the Event of Default
(the "UCC"), all such remedies being to the maximum extent permissible
cumulative and nonexclusive, and Pledgee may:
4.2.1 vote any or all of the Shares and Additional Shares, and
give all consents, waivers and ratifications with respect thereto and otherwise
act as though they were the outright owners thereof, Pledgor hereby irrevocably
constituting and appointing Pledgee (or its representatives or permitted
assigns) their proxy and attorney-in-fact, with full power of substitution so to
do;
4.2.2 have the sole right to receive any and all dividends and
other distributions of any kind with respect to any or all of the Shares and
Additional Shares, such dividends and distributions to be received by the
Pledgee in accordance with the amount owed to Pledgee pursuant to this Agreement
and the Note; and/or
4.2.3 exercise any and all rights of collection, conversion or
exchange, and any and all other rights, privileges, options or powers of Pledgor
pertaining or relating to the Shares and Additional Shares, if any, such rights
to be exercised by Pledgee in accordance with the amount owed to Pledgee
pursuant to this Agreement and the Note, provided, however that no shares may be
sold until November 30, 1997 and thereafter, so long as Kevin Doyle is the
President or Chief Executive Officer, or otherwise an "affiliate" of the
Company, as such
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term is defined under the Act, the number of Shares subject to foreclosure of
Pledgee's security interests, or a secured party sale under this Section 4.2
shall not exceed 50,000 in any three-month period. Notwithstanding the
foregoing, upon the occurrence of an Event of Default, on one or more occasions
the Pledgor may, in its sole discretion, require by written notice to the
Pledgee that Pledgee sell upon such terms and conditions as Pledgor shall state
(to the extent that market or other conditions permit such sale on such terms
and conditions) all or part of the Shares and Additional Shares for cash;
provided, however, the Pledgee and the Escrow Agent shall not be required to
incur any cost or liability (matured or contingent) in connection therewith,
except for reasonable costs of sale, which shall be deducted from the proceeds
thereof. Pledgor hereby irrevocably constitutes and appoints Pledgee (or its
representatives or assigns) its proxy and attorney-in-fact with full power of
substitution so to do, although Pledgee shall not have any duty to exercise any
such rights, privileges, options or powers or to sell or to otherwise realize
upon any of the Shares or Additional Shares, if any, as hereinafter authorized,
or to preserve the same, and Pledgee shall not be responsible for any failure to
do so or delay in so doing.
4.3 Transfer to Pledgee. Upon the occurrence of any Event of Default,
Pledgee may, as permitted by Section 9-505 of the UCC, take unto itself and
direct the transfer agent of the Company to transfer the Shares and Additional
Shares, if any, into the name of Pledgee on the Company's books in partial or
complete satisfaction of the Note, such transfers to be made to the Pledgee in
accordance with the amount owed pursuant to this Agreement and the Note; or, at
Pledgee's election, sell in a commercially reasonably manner, to any bona fide
prospective purchasers, assign and deliver in whole, or, from time to time, any
part of the Shares or Additional Shares, if any, at any broker's board or at any
private or public sale, with or without demand, advertisement or notice (except
as may be required by applicable law) of the time or place of sale or
adjournment thereof, or otherwise, for cash, for credit or for other property,
for immediate or future delivery, and for such price or prices and on such terms
as Pledgee, in its uncontrolled discretion, may determine, Pledgor hereby
waiving and releasing any and all right of redemption, whether before or after
the sale hereunder, and Pledgee may, to the extent not prohibited by applicable
law, bid for and purchase the whole or any part of the Shares or Additional
Shares, if any, so sold free from any such right or equity of redemption, may
make payment on account thereof as herein provided, and, upon compliance with
the terms of sale, Pledgee may hold, return or dispose of the Shares and
Additional Shares, if any, without further accountability therefor. In case of
any sale to Pledgee of the Shares and any Additional Shares, Pledgee shall be
entitled, for the purpose of making payment therefor, to use any amount owed by
Pledgor under the Note or any related obligation, and to be credited on account
of such purchase price with the portion of such net proceeds that shall be
applicable to the payment of and shall be credited upon, the amounts so used.
Pledgee shall have no duty or obligation to Pledgor, their representatives or
assigns, to effect, or cause to be effected, the registration or qualification
thereof under any applicable blue sky or other state securities laws or
otherwise to take any steps necessary for public sale of the Shares or
Additional Shares.
4.4 Authorization. Pledgor hereby authorizes and directs the Company
to act upon any reasonable instruction of Pledgee given in furtherance of, and
in conformance with Pledgee's rights under this Section 4. This Agreement shall
constitute sufficient authorization for the Company, its officers, employees and
agents to act upon any such direction of Pledgee purported to be given under
this Agreement in connection with the Shares. The Company, its
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officers, employees and agents may act upon any such instruction which they in
good faith believes to be properly given by Pledgee in accordance with Pledgee's
rights under this Agreement without obligation to inquire as to the
circumstances specific to any such direction, and such officers, employees and
agents shall be, and hereby are, relieved of any and all liability to Pledgor in
connection therewith.
5. Use of Proceeds. Pledgee shall apply the proceeds of any sale of the
whole or any part of the Shares and Additional Shares, or any dividends or
distributions received thereon, after deducting all reasonable out-of-pocket
documented costs and expenses (i) incurred by Pledgee in connection with the
enforcement of this Agreement or the Note and/or the prosecution or defense of
any proceeding relating thereto (provided the Pledgee prevails and including but
not limited to reasonable attorneys' fees and expenses) and (ii) of the
collection, sale and delivery of the Shares and any Additional Shares
(including, without limitation, reasonable attorneys' fees and expenses)
incurred by Pledgee in connection with such sale, to the payment of the portion
of the Note then outstanding, the application as between Pledgee, the Note and
between principal and interest due Pledgee to be made to the Pledgee in
accordance with the amounts owed pursuant to this Agreement and the Note, and,
upon payment by the Pledgor in full of the Note to Pledgee, Pledgee shall within
ten (10) days thereafter pay over or cause to be paid over any balance of such
proceeds to Pledgor.
6. Termination and Return of Pledged Shares. Upon payment in full of the
Note and all other obligations of Pledgor to Pledgee, this Agreement shall
terminate and within ten (10) days thereafter, Pledgee shall be return, at
Pledgor's expense, such of the Shares and Additional Shares as have not
theretofore been duly transferred into the name of Pledgor or sold pursuant to
the provisions hereof. Pledgor and Pledgee each agree to execute and deliver all
such instruments and agreements as may be necessary to accomplish the foregoing.
7. Waiver of Rights. Pledgor will not at any time claim or take the benefit
of any appraisal, valuation, stay, extension, moratorium or redemption law, now
or hereafter in force in order to prevent or delay the enforcement of this
Agreement or the absolute sale of all or any portion of the Shares or any
Additional Shares, and for themselves and all who may claim under them, Pledgor
hereby waives (i) the benefit of all such laws, (ii) the right to have all or
any portion of the Shares or Additional Shares marshalled upon any foreclosure
hereof, and (iii) demand, presentment and protest, and notice of demand,
presentment, protest, nonpayment or dishonor with respect to this Agreement and
the Note. Pledgor hereby consents to any extension or postponement of the time
of payment, and agrees that any court having jurisdiction over this Agreement
may order the sale of all or any portion of the Shares or Additional Shares as
an entirety, subject to the provisions of Section 4.2 and 4.3. Any sale of, or
the granting of options to purchase, or any other realization upon, all or any
portion of the Shares or Additional Shares under Section 4 hereof, shall operate
to divest all right, title, interest, claim and demand, either at law or in
equity, of Pledgor in and to the Shares and Additional Shares, if any, so sold,
optioned or realized upon, and shall be a perpetual bar both in law and in
equity against Pledgor and all persons claiming or attempting to claim the
Shares or Additional Shares so sold, optioned or realized upon, or any part
thereof, from, through and under Pledgor. Pledgee's prior recourse to all or any
part of the Shares and Additional Shares shall not constitute a condition of any
demand, suit or proceeding for payment or collection under the Note.
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8. Representations, Warranties and Covenants. Pledgor represents and
warrants to Pledgee and covenants with Pledgee that:
8.1. Ownership. Pledgor owns and will continue to own the Shares and
the Other Stock free and clear of any Liens, except for Liens created by this
Agreement, the Lock-up Agreement and applicable securities laws, and in the
event any Additional Shares are issued by the Company, will own and will
continue to own such Additional Shares free and clear of any Liens except for
those created by this Agreement, the Lock-up Agreement and applicable securities
laws. Pledgor has full power, authority and legal right to pledge all of the
Shares pursuant to this Agreement; all of the Shares have been duly and validity
issued, are fully paid and nonassessable; assuming that Escrow Agent (or after
an Event of Default Escrow Agent or Pledgee) holds and continues to hold all of
the Shares as agent for Pledgee under this Agreement and the Escrow Agreement,
this Agreement creates, as security for the Loan, a valid and enforceable
perfected first priority Lien on all of the Shares in favor of the Pledgee; and
no consent, filing, recording or registration is required to perfect the Lien
purported to be created by this Agreement.
8.2. Duplicate or Replacement Certificates. Pledgor shall not cause or
permit to be issued any duplicate or replacement certificates in substitution
for the Shares, Additional Shares or Other Stock, if any, without the prior
written consent of Pledgee.
9. Further Assurances. Pledgor agrees to take all such further action and
will furnish to Pledgee all such documents and instruments as Pledgee may
reasonably request in order to effectuate the purposes of this Agreement and to
secure the rights of Pledgee hereunder.
10. Exoneration of Pledgee. Under no circumstances shall Pledgee be deemed
to assume any responsibility for or obligation or duty with respect to all or
any part of the Shares and Additional Shares, if any, of any nature or kind, or
any matter or proceedings arising out of or relating thereto except any breach
of this Agreement by Pledgee, but the same shall be at Pledgor's sole risk at
all times. Pledgee shall not be required to take any action of any kind to
collect, preserve or protect his or the Pledgor's rights in the Shares and any
Additional Shares, or against other parties. Pledgee shall also only be required
to treat the Shares with the same care as is expressly required by Article 9 of
the Florida Uniform Commercial Code and use reasonable efforts to maximize
proceeds of the sale of the Shares upon a default; provided, however, that, if
at any time when the Pledgee shall determine to exercise its right to sell all
or any of the Shares, such Shares or those Shares to be sold shall not, for any
reason whatsoever, be effectively registered under the Act, the Pledgee may, in
its sole and absolute discretion, sell such Shares or part thereof by private
sale in such manner and under such circumstances as Pledgee may deem necessary
or advisable in order that such sale may legally be effected without such
registration and in the event of any such sale, the Pledgee shall incur no
responsibility or liability other than as may be imposed by applicable law for
selling all or any of the Shares at a price which the Pledgee, in its sole and
absolute discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until after registration under the Act.
Except as provided to the contrary in this Agreement, Pledgor hereby releases
Pledgee (absent gross negligence or willful misconduct of Pledgee) from any
claims, causes of action and demands at any time
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<PAGE>
arising out of or with respect to the use of the Shares and any Additional
Shares and/or actions taken or omitted to be taken by Pledgee with respect
thereto.
11. Expenses; Interest Thereon, Etc. Pledgor hereby agrees to reimburse
Pledgee on demand for all reasonable out-of-pocket documented costs and expenses
(including reasonable attorneys' fees and expenses) incurred by Pledgee,
provided pledgee prevails in connection with the enforcement of this Agreement
or in connection with the prosecution or defense of any proceeding relating
hereto, together with interest on all such costs and expenses from the date
incurred by Pledgee at an annual rate equal to eighteen percent (18%).
12. Miscellaneous.
12.1 Waiver. No failure or delay on the part of Pledgee in excercising
any right, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise or waiver by either party of any right,
power or privilege hereunder preclude any other or further exercise thereof, or
the exercise of any other right, power or privilege. The rights and remedies
herein expressly specified are cumulative and not exclusive of any other rights
or remedies which either party would otherwise have.
12.2. Modification. This Agreement may not be changed, modified or
discharged, in whole or in part, and no right or remedy of either party
hereunder may be waived, unless such change, modification, discharge or waiver
is in writing and duly signed by the other party. Any such change, modification,
discharge or waiver shall be effective only to the extent set forth therein.
12.3. Notices. All notices, demands, requests or other communications
required or permitted to be given under this Agreement shall be deemed to be
properly given only if in writing and if delivered personally, or sent by
overnight courier service, fees prepaid, or mailed by certified or registered
mail, postage prepaid and return receipt requested, to the parties entitled to
receive such notices at the addresses set forth below, or at such other places
as the parties may from time to time designate in writing:
If to Pledgor: Kevin Doyle
____________________________
____________________________
Fax: (___) _________________
With copies to: George Befeler, Esq.
Delgado, Befeler, Starkman & Magolnick
100 Southeast Second Street, Suite 3700
Miami, Florida 33131
Fax: (305) 379-4404
and
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<PAGE>
Eric Kamisher, Esq.
Esanu Katsky Korins & Singer
605 Third Avenue
New York, New York 10158
Fax: (212)953-9899
If to Pledgee: Thomas Steinberg
DB/LRT, Ltd.
667 Madison Avenue, 8th Floor
New York, New York 10021
Fax: (212)545-3040
With copies to: K. Lawrence Gragg, Esq.
White & Case
First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2352
Fax: (305)358-5744
Delivery will be deemed to have occurred upon receipt, or when delivery is
attempted and refused.
12.4 Law. This Agreement and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with the laws of the
State of Florida.
12.5 Captions. The descriptive headings of the Sections hereof have
been inserted for convenience of reference only and do not define or limit the
provisions hereof.
12.6 Severability. If any term or provision of this Agreement shall be
held to be invalid, illegal or unenforceable, the validity of all other terms
and provisions hereof shall in no way be affected thereby, and the Agreement
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term or provision had not been included herein.
12.7 Assignment, Etc. This Agreement shall inure to the benefit of
Pledgee and its representatives and assigns and shall be binding upon Pledgor,
their heirs, representatives and assigns.
12.8 Entire Agreement. This Agreement sets forth the final and entire
agreement of the parties hereto with respect to the subject matter hereof, and
this Agreement supersedes any and all prior agreements among any of the parties
hereto with respect to the subject matter hereof.
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<PAGE>
12.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be considered an original, and all of which,
when taken together, shall be considered a single instrument.
IN WITNESS WHEREOF, Pledgor and Pledgee have caused this Agreement to be
executed and delivered as of the day and year first above written.
WITNESS: PLEDGOR:
/s/ [Illegible] /s/ Kevin Doyle
- -------------------------- --------------------------------------------
Kevin Doyle
- -------------------------
PLEDGEE:
DB/LRT, Ltd., a Florida Limited Partnership
By: DB/LRT, Inc., as General Partner
/s/ [Illegible] By: /s/ Thomas Steinberg
- -------------------------- ---------------------------------------
Thomas Steinberg, Vice-President
/s/ [Illegible]
- --------------------------
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<PAGE>
SCHEDULE I
Shares
------
Issuer Face Value Certificate No.
- ----------------------- ---------- ---------------
Caribbean Cigar Company $.001 CC0195
Total: $__________________
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