Exhibit 2
GENERAL ASSIGNMENT FOR THE BENEFIT OF CREDITORS
THE GENERAL ASSIGNMENT FOR THE BENEFIT OF CREDITORS is made
This 12 day of March, 2002, by and between XXXXXXXX & XXXX INTERNATIONAL,
INCORPORATED, located at 00000 Xxxxxxx Xx, Xxxx of Industry, State of
California, with Federal Tax Identification Number 00-0000000, hereinafter
referred to as "Assignor," and XXXXX X. XXXXXXXX, acting as Assignee for the
Benefit of Creditors of Xxxxxxxx & King International, Incorporated, a
California Corporation, located at 00000 Xxxxxxx Xxxx., 0xx Xxxxx, Xxxxxxx Xxxx,
XX 00000, hereinafter referred to as "Assignee."
WITNESSETH: Whereas Assignor is indebted to various persons,
corporations and other entities, and is unable to pay its debts in full, and has
decided to discontinue its business, and is desirous of transferring its
property to an assignee for the benefit of creditors so that the property so
transferred may be expeditiously liquidated and the proceeds thereof be fairly
distributed to its creditors without any preference or priority, except such
priority as established and permitted by applicable law;
NOW, THEREFORE, in consideration of Assignor's existing indebtedness to
its creditors, the covenants and agreements to be performed by Assignee and
other consideration, receipt of which is hereby acknowledged, it is hereby
AGREED:
1. TRANSFER OF ASSETS. Assignor hereby assigns, grants, conveys,
transfer and set over to Assignee all personal property and assets, whatsoever
and wheresoever situated, which currently exist and are used in connection with
the operation of Assignor's business, and which assets include, but are not
limited to all personal property and any interest therein not
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exempt from execution, including all that certain stock of merchandise, store
furniture and fixtures, inventory, machinery, book accounts, books, bills,
accounts receivable, deposits, other prepaid expenses, tobacco stamps, cash on
hand, cash in bank, patents, copyrights, trademarks and trade names, good will,
insurance policies, tax refunds, rebates, general intangibles, insurance refunds
and claims, non-competition agreements with Xxx Xxxxxxxxxxx and Xxxx Xxxxxx, and
choses in action that are legally assignable, together with the proceeds of any
non-assignable choses in action that may hereafter be recovered or received by
the Assignor. Further, this general assignment specifically includes all claims
for refunds or abatement of all excess taxes heretofore or hereafter assessed
against or collected from the Assignor by the United States or any of its
departments or agencies, any state or local taxing authority and the Assignor
agrees to sign and execute a power of attorney or other such document(s) as
required to enable Assignee to file and prosecute, compromise and/or settle all
such claims before the respective taxing authority. Assignor agrees to endorse
any refund checks relating to the prior operations of said Assignor's business
and to deliver such checks immediately to Assignee.
2. LEASES AND LEASEHOLD INTERESTS. This General Assignment includes
all leases and leasehold interests in any asset of the Assignor; however should
the Assignee determine that said lease or leasehold interest is of no value to
the estate, then said interest is thereby relinquished without further liability
or obligation to the Assignee.
3. UNION CONTRACTS. Any contract or agreement between the Assignor and
any Labor or Trade Union remains in force as between the Assignor and the
respective Union,
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however the Assignee is not bound to the terms of said contract unless the
Assignee specifically so agrees in writing at the time of the acceptance of
this general assignment.
4. FORWARDING OF MAIL. Assignor authorizes the forwarding of its mail
by the U.S. Postal Service as directed by Assignee.
5. WARRANTIES OF ASSIGNOR. Assignor understands that pursuant to
California Code of Civil Proceduress.1802(c), Assignor shall proved the
Assignee, at the time of making the assignment, a list of:
a. creditors, equity holders, and any other parties in
interest, which shall include the names, addresses, cities, states, and ZIP
codes for each person together with any amount of the person's anticipated claim
in the assignment proceedings. The schedule (Exhibit A) is to be signed under
penalty of perjury by the Assignor's representative.
b. all accounts receivable along with complete name, address,
ZIP code and full amount owed along with all pertinent copies of invoices,
shipping records and proof of delivery. The schedule (Exhibit B) is to be signed
under penalty of perjury by the Assignor's representative.
6. POWERS AND DUTIES OF ASSIGNEE. Assignee shall have all powers
necessary to marshal and liquidate the estate including but not limited to:
a. To collect any and all accounts receivable and obligations
owing to Assignor. and not otherwise sold by Assignee;
b. To sell or otherwise dispose of all personal property of
Assignor in such manner as Assignee deems best. Assignee shall have the power to
execute any and all documents
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necessary to effectuate the sale of said property arid to convey title to same.
c. To sell or otherwise dispose of all tangible and intangible
personal property of Assignor, including but not limited to all of Assignor's
machinery, equipment, inventory, service or trademarks, trade names, copyrights,
patents, franchises, accounts receivable, causes or choses in action and general
intangibles in such manner as Assignee deems best. Assignee shall have the power
to execute any and all documents necessary to effectuate the sale of this
property and to convey title to same. In this regard, Assignee shall have the
power to employ an auctioneer to appraise said assets and to conduct any public
sale of the assets and to advertise said sale in such manner as Assignee deems
best. Assignee shall have the power to execute bills of sale and any other such
documents necessary to convey title to Assignor's property to any bona fide
buyer.
d. To employ attorneys, accountants and any other additional
personnel to whatever extent may be necessary to administer the assets and
claims of the assignment estate and to assist in the preparation and filing of
any and all State, County or Federal Tax Returns as required:
e. To require all of Assignor's creditors to whom any balance
is owing to submit verified statements to Assignee of said claim(s), pursuant to
California Code of Civil Procedure ss. 1802.
f. To settle any and all claims against or in favor of
Assignor, with the full power to compromise, or, in the Assignee's sole
discretion, to xxx or be sued, and to prosecute or
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defend any claim or claims of any nature whatsoever existing in favor of
Assignor.
g. To open bank accounts in the name of the Assignee or its
nominees or agents and to deposit assigned assets or the proceeds thereof in
such bank accounts and to draw checks thereon and with the further power and
authority to do such acts and execute such papers and documents in connection
with this general assignment as Assignee may deem necessary or advisable. .
h. To conduct the business of the Assignor, should the
Assignee deem such operation proper.
I. To apply the net proceeds arising from the operation of and
liquidation of Assignor's business and assets, in the following priority amounts
as to only and not time of distribution, as follows:
(1) FIRST, to deduct all sums which Assignee may at
its option pay for the discharge of any lien on any of said property and any
indebtedness which under the law is entitled to priority of payment and to
reimburse Assignee as to all costs advanced by the Assignee or any third party
for the preservation of the assignment estate's assets, including the
maintenance and insurance of said assets and, the expenses of any operation.
(2) SECOND, all costs and expenses incidental to the
administration of the assignment estate, including the payment of a reasonable
fee to the Assignee, as that term is hereinafter defined and the payment of
reasonable compensation for the services of attorneys for . the Assignee,
accountants to the Assignee, attorneys to the Assignor for services related
to the
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making of and administration of the general assignment and any other
professionals the Assignee deems necessary to properly administer the assignment
estate.
(3) THIRD, all federal taxes of any nature whatsoever
owing as of the date of this general assignment, or other such claim of any
federal governmental agency as defined under 31 U. S. C.ss.3713, including but
not limited to federal withholding taxes, federal unemployment taxes and any
other federal income, excise, property and employment taxes.
(4) FOURTH, all state, county and municipality taxes
of any nature whatsoever owing as of the date of this general assignment,
including but not limited to employment, property and income taxes.
(5) FIFTH, all monies due employees of the Assignor
entitled to priority as defined under California Code of Civil Procedure ss.1204
and 1204.5 up to the statutory maximum.
(6) SIXTH, with the exception of those classes set
forth above, all distributions to other creditors shall be, within each class,
PRO-RATA in accordance with the terms of each creditor's indebtedness, until all
such debts are paid in full. The Assignee may make interim distributions
whenever the Assignee has accumulated sufficient funds to enable it to make a
reasonable distribution. No distribution shall be in an amount less than
$100,000 (in the aggregate) except the final distribution.
(7) SEVENTH, any monies (distributions) unclaimed by
creditors ninety days after the final distribution to unsecured creditors (if
any) or the termination of the
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administration of the estate created by this general assignment, shall be
re-distributed to all known unsecured creditors, being those creditors who
cashed their respective dividend checks from .the assignment estate, so long as
any such distribution exceeds one percent of each such creditor's allowed claim.
(8) EIGHTH, the surplus, if any, of the assignment
estate funds, when all debts of the Assignor shall have been paid in full, shall
be paid and transferred to the holders of the equity of said Assignor, as per
the list of equity holders provided with the making of this general assignment.
j. To do and perform any and all other acts necessary and
proper for the liquidation or other disposition of the assets, including but not
limited to abandonment, and the distribution of the proceeds derived therefrom
to Assignor's creditors. .
7. LIABILITY OF ASSIGNEE. .It is understood and agreed that the
Assignee is to assume no personal liability or responsibility for any of its
acts as Assignee herein, but its obligation shall be limited to the performance
of the terms and conditions of the general assignment in good faith and in the
exercise of its best business judgment.
8. WARRANTIES OF ASSIGNOR. Assignor hereby warrants as follows: The
list of creditors (Exhibit A) delivered concurrently herewith to the Assignee
and as required under California Code of Civil Procedure ss. 1802 is complete
and correct as reflected by the books and records of the Assignor, as to the
names of Assignor's creditors,. their addresses and the amounts due them.
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Assignor, through its officers and directors, shall perform any
and all acts reasonably necessary and proper to assist the Assignee in its
orderly liquidation of the Assignor's assets, the collection of any and all
monies owing the Assignor and in the distribution of said monies and proceeds of
asset sales to the Assignor's creditors; PROVIDED, HOWEVER, the officers and
directors of Assignor shall only provide such assistance to the Assignee to the
extent, and on .the condition that, they are reasonably compensated for such
services.
9. POWER OF ATTORNEY. The Assignor, by this general assignment hereby
grants the Assignee a general power of attorney, which power of attorney
specifically includes the right of the Assignee to prosecute any action in the
name of the Assignor as Attorney in Fact.
10. ACCEPTANCE BY ASSIGNEE. By execution of this general assignment,
the Assignee does hereby accept the estate herein created and agrees to
faithfully perform its duties according to the best of the Assignee's skill,
knowledge and ability. It is understood that the Assignee shall receive
reasonable compensation for its services in connection with this estate.
Reasonable compensation is defined to mean: (a) a fee of $50,000 for services
provided in connection with the initial asset sale to Kretek Distributors
Incorporated ("Kretek") should such a sale be consummated, which $50,000 shall
include all fees and costs of Assignee and his professionals in connection with
said initial sale; or (b) in the event the initial sale to Kretek is not
consummated for any reason, the Assignee shall retain the $10,000 non-refundable
deposit from Kretek as reasonable compensation for services rendered in
connection with the efforts of the Assignee and his professionals in connection
with such a sale effort; and (c) the amount of ten
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percent (10%) of each and every dollar generated from the sale or other
DISPOSITION OF ANY assets of the Assignor, or of the assignment estate
including, without limitation, any moneys recovered by the Assignee in
connection with any legal action instituted by the Assignee, but specifically
excluding funds generated in connection with the sale of the assets to Kretek;
and (d) Assignee shall be reimbursed all the Assignee's expenses incurred, other
than through the sale of P & K 's assets to Kretek, as a result of the
administration of the assignment estate from the proceeds generated therefrom. .
1N WITNESS WHEREOF the parties have hereunto acct their hands the day
and year first above written:
XXXXXXX & XXXX INTERNATIONAL, INCORPORATE.,
a California corporation
By: /s/ Xxxxxxx X. Xxxxxx
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as Chief Executive Officer
Attested to by: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
its Secretary
Assignee Acceptance by: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, solely in his capacity as
the Assignee for Benefit of Creditors of
Xxxxxxxx & Xxxx International Incorporated
