EXCLUSIVE DISTRIBUTION AND LICENSING AGREEMENT
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1. PARTIES:
A. Agro Comercial Fumageira, S.A. and ▇▇▇▇▇▇▇▇▇ Charutos e
Cigarrilhas Ltda., respectively, a corporation and a limited liability company
registered in the State of Bahia under the laws of the Federal Republic of
Brazil (collectively, the "▇▇▇▇▇▇▇▇▇ Group").
B. U.S. Cigar Distributors, Inc. ("U.S. Cigar") has its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇.
2. PRODUCTS:
The ▇▇▇▇▇▇▇▇▇ Group is engaged in the production, brokering
and manufacture of tobacco leaf, cigars, cigarillos and other tobacco products
(the "Products).
3. EXCLUSIVE TERRITORY:
A. Exclusive Territory. The ▇▇▇▇▇▇▇▇▇ Group hereby grants to
U.S. Cigar the exclusive right and all exclusive licenses and use of trademarks
necessary to develop and distribute the Products and all products developed by
the ▇▇▇▇▇▇▇▇▇ Group during the term of this Agreement, in the Exclusive
Territory described as follows: the United States, Canada and Mexico (the
"Exclusive Territory"). For as long as this Agreement shall continue, the
▇▇▇▇▇▇▇▇▇ Group shall not appoint another distributor for all or any part of the
Exclusive Territory. It is understood by the parties that the rights granted
herein do not constitute an assignment of any trademark.
B. Options for Additional Exclusive Territories. The ▇▇▇▇▇▇▇▇▇
Group hereby grants to U.S. Cigar an option, said option to last for a period of
five (5) years from the date of this Agreement, to purchase from the ▇▇▇▇▇▇▇▇▇
Group the rights to Central America, the Caribbean, Russia and other parts of
Europe, excluding Germany and Switzerland, as additional exclusive territories
(the "Additional Exclusive Territories").
C. Nonexclusive Territories. During the term of this
Agreement, U.S. Cigar may sell Products in Central America, the Caribbean,
Russia and other parts of Europe, excluding Germany and Switzerland on a
nonexclusive basis.
4. TERM:
The term of the distribution and licensing agreement shall be
ten years with an automatic five-year extension during which time the parties
will negotiate an additional renewal term of ten years. Notice to terminate this
agreement at the end of the automatic five year extension period must be given
by either party not earlier than the end of the tenth year and not later than 30
months thereafter. In the event of notice of termination hereunder, both parties
agree to negotiate the additional renewal term set forth herein in good faith
and both parties will continue to honor their obligations under the agreement.
In the event that no notice of termination is given hereunder the agreement
shall be automatically extended for an additional renewal period of ten (10)
years beginning at the end of the five (5) year extension.
5. CONSIDERATION:
The consideration which U.S. Cigar shall pay to the ▇▇▇▇▇▇▇▇▇
Group for the rights granted to it herein shall be as follows:
A. 550,000 shares of Preferred Stock of U.S. Cigar plus 20% of
the outstanding common stock of U.S. Cigar. The Preferred Stock shall contain
the following terms and conditions: valuation-$5.00 per share; each share of
Preferred Stock shall be convertible into one share of common stock for a period
of three years from the date that the U.S. Cigar is listed on either the New
York Stock Exchange, the American Stock Exchange or the Small Cap Issues listing
or National Market System of the National Association of Securities Dealers
Automated Quotation System (the "Listing Date") and in the event that the
Listing Date does not occur within two years from the date of this Agreement,
then four (4) years from the date of this Agreement; shall have the same
dividend rights and voting rights as the common stock; and shall have no
liquidation preference.
B. L.F. Partners, Inc. ("LFP") shall grant to the ▇▇▇▇▇▇▇▇▇
Group an option to purchase 1,925,000 shares of the common stock of U.S. Cigar
from LFP beginning one year from the date of this Agreement for $.25 per share
and after the effective date of an initial public offering of U.S. Cigar, and an
option to purchase 1,925,000 shares of the common stock of U.S. Cigar from LFP
for $.325 per share, pursuant to the terms and conditions of Stock Option
Agreement No. 3.
C. The consideration for the exercise of the options for the
Additional Exclusive Territory shall be as follows:
(i) Central America - the higher of $750,000 or an amount
determined by an evaluation provided by an independent expert agreed upon by the
parties hereto.
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(ii) The Caribbean - the higher of $750,000 or an amount
determined by an evaluation provided by an independent expert agreed upon by the
parties hereto.
(iii) Europe - an amount determined by an evaluation
provided by an independent expert agreed upon by the parties hereto.
(iv) Russia - an amount determined by an evaluation
provided by an independent expert agreed upon by the parties hereto.
6. ORDERS AND ACCOUNTS:
A. The ▇▇▇▇▇▇▇▇▇ Group agrees that the prices which the
▇▇▇▇▇▇▇▇▇ Group charges to U.S. Cigar for the Products shall not be in excess of
the lowest prices which the ▇▇▇▇▇▇▇▇▇ Group charges to other distributors.
Notwithstanding, it is the intention of the parties hereto that the prices
charged hereunder will be comparable to the prices which other companies charge
to its distributors for similar tobacco products. The prices charged by the
▇▇▇▇▇▇▇▇▇ Group will be changed in response to market conditions upon giving at
least 90 days notice to U.S. Cigar or notice may be waived by mutual consent.
B. The selling price charged by U.S. Cigar for the Products
require the approval of the ▇▇▇▇▇▇▇▇▇ Group, the approval of which shall not be
unreasonably withheld. Such selling price shall take into consideration such
factors as market conditions and competitive pricing.
C. Payment for Products by U.S. Cigar is to be made in United
States currency.
D. The ▇▇▇▇▇▇▇▇▇ Group shall furnish to U.S. Cigar information
on all inquiries and leads on Products originating in the Exclusive Territory;
information on orders, invoices, changes, quotations, complaints, cancellations
and similar data which is helpful to U.S. Cigar; information on delivery dates
and other important details which may affect the processing and completion of an
order; information on new products, changes or deletions of products;
information on competition and their techniques.
7. QUALITY OF PRODUCTS; RESPONSIBILITIES:
A. All responsibilities regarding the quality of products
shall be set forth in sales agreements between U.S. Cigar and its customers (the
"Sales Agreements"). All Sales Agreements shall require the approval of the
▇▇▇▇▇▇▇▇▇ Group, the approval of which shall not be unreasonably withheld.
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B. Notwithstanding that which is contained in Subparagraph A
herein, the following responsibilities shall govern as between the ▇▇▇▇▇▇▇▇▇
Group and U.S. Cigar:
(i) Tobacco leaf Products: Generally, the ▇▇▇▇▇▇▇▇▇ Group
shall be responsible for the quality, sorting, bailing and packaging of tobacco
leaf Products. It is agreed that most shipments of tobacco leaf Products shall
be made directly from the ▇▇▇▇▇▇▇▇▇ Group to U.S. Cigar's customer. In the event
that U.S. Cigar receives such shipment of Products, the ▇▇▇▇▇▇▇▇▇ Group and U.S.
Cigar shall be bound by the same terms and conditions contained in the Sales
Agreements as if U.S. Cigar was a customer. In the event of a dispute regarding
the quality of tobacco leaf Products with a customer, such dispute shall be
handled by the ▇▇▇▇▇▇▇▇▇ Group until such time that the ▇▇▇▇▇▇▇▇▇ Group and U.S.
Cigar determine that U.S. Cigar has the expertise to handle such matters.
(ii) Cigar Products: Generally, the ▇▇▇▇▇▇▇▇▇ Group shall
be responsible for the quality of cigar Products. In the event of a dispute
regarding the quality of cigar Products with a customer, such dispute shall be
handled by the ▇▇▇▇▇▇▇▇▇ Group until such time that the ▇▇▇▇▇▇▇▇▇ Group and U.S.
Cigar determine that U.S. Cigar has the expertise to handle such matters. In the
event of a dispute with a customer regarding damage to the cigar Products as a
result of transportation or other non quality damage, such dispute shall be
handled by U.S. Cigar unless the value of the cigar Products in dispute is more
than $5000.00 or represents more than 5% of the shipment of such cigar Products,
then the ▇▇▇▇▇▇▇▇▇ Group shall handle such dispute.
(iii) U.S. Cigar shall notify the ▇▇▇▇▇▇▇▇▇ Group in the
event that U.S. Cigar is notified by any of its customers of a quality dispute
of any Product.
(iv) The ▇▇▇▇▇▇▇▇▇ Group shall notify U.S. Cigar in the
event that the ▇▇▇▇▇▇▇▇▇ Group is notified by any of its customers of a quality
dispute of any Product.
C. U.S. Cigar shall obtain product liability insurance in a
reasonable amount.
8. SUBDISTRIBUTORSHIPS IN EXCLUSIVE TERRITORY:
U.S. Cigar shall have the right, but not the obligation to
establish subdistributorships in the Exclusive Territory. In the event that U.S.
Cigar establishes such subdistributorships, the consent of the ▇▇▇▇▇▇▇▇▇ Group
shall be required, the consent of which shall not be unreasonably withheld.
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9. TRADEMARKS:
A. The ▇▇▇▇▇▇▇▇▇ Group hereby grants to U.S. Cigar a
continuing license during the term of this Agreement, to use the ▇▇▇▇▇▇▇▇▇ name
and the names of ▇▇▇▇▇▇▇▇▇ family members and the trademarks which will be
agreed upon within 90 days of this Agreement, which U.S. Cigar will require to
sell the Products, with the right for U.S. Cigar to permit U.S. Cigar's
subdistributors to use the trademarks in the normal course of business, and all
trademarks and trade names acquired for use only with the Products, in
connection with the advertising, merchandising, promotion, sale and distribution
of the Products, until the termination of this Agreement in accordance with the
terms hereof (hereinafter referred to as the "Trademarks"). The license granted
hereunder shall be an exclusive license for U.S. Cigar to use the Trademarks in
order to advertise, market and sell the Products in the Exclusive Territory. For
purposes of this Agreement, the term "Products" shall include all existing and
any future Products as defined herein. This grant shall cover all brand names,
designs, logos and family names (with the family history and traditions)
associated with the Trademarks. It is understood by the parties that the rights
granted herein do not constitute an assignment of any trademark.
B. Any new Trademarks applied for Products shall be applied by
U.S. Cigar on behalf of the ▇▇▇▇▇▇▇▇▇ Group at the ▇▇▇▇▇▇▇▇▇ Group's sole
expense and such Trademark shall be immediately licensed to U.S. Cigar when
obtained.
C. The ▇▇▇▇▇▇▇▇▇ Group represents and warrants that:
(i) The ▇▇▇▇▇▇▇▇▇ Group owns or holds rights to use the
intellectual property rights (e.g., trademarks and tradenames) (the
"Intellectual Property Rights") in connection with the Products and the right to
manufacture, market, distribute and sell the Products.
(ii) The licensing of the Intellectual Property Rights
contained herein will not infringe on the Intellectual Property Rights or
contracts rights of any third party.
(iii) The rights licensed to U.S. Cigar hereunder are
subject to no prior assignments, sales or encumbrances that would prevent U.S.
Cigar from freely performing under this Agreement.
D. U.S. Cigar acknowledges that the Trademarks are the sole
property of the ▇▇▇▇▇▇▇▇▇ Group, that the registration of such names or terms
shall remain the sole worldwide right of the ▇▇▇▇▇▇▇▇▇ Group and that U.S. Cigar
has not acquired any right, title or interest in these names or terms other than
those specifically granted by this Agreement.
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E. In the event of any adjudication of bankruptcy or of
insolvency under any statute for the relief of debtors or the appointment of a
receiver by a court of competent jurisdiction, or the assignment for the benefit
of creditors or levy of execution directly involving U.S. Cigar, this licensing
agreement contained herein shall thereupon terminate forthwith.
F. Trademark Applications:
(i) The ▇▇▇▇▇▇▇▇▇ Group shall use its best efforts to
maintain the Trademarks and maintain the Trademarks at its expense. U.S. Cigar
shall cooperate fully with the efforts of the ▇▇▇▇▇▇▇▇▇ Group to maintain the
Trademarks, which efforts shall be at the ▇▇▇▇▇▇▇▇▇ Group's expense. The
Trademarks shall be in the ▇▇▇▇▇▇▇▇▇ Group's name or such other name as the
▇▇▇▇▇▇▇▇▇ Group deems appropriate, so long as ownership remains in the ▇▇▇▇▇▇▇▇▇
Group. At the ▇▇▇▇▇▇▇▇▇ Group's request, U.S. Cigar shall execute all such
documents as are reasonably necessary or expedient to aid the ▇▇▇▇▇▇▇▇▇ Group in
maintaining the Trademarks.
(ii) In the event that the ▇▇▇▇▇▇▇▇▇ Group fails to
perform its obligations under this Paragraph, U.S. Cigar shall have the right,
in addition to any other remedies for such breach, but not the obligation, to
perform such obligations on the ▇▇▇▇▇▇▇▇▇ Group's behalf, at the ▇▇▇▇▇▇▇▇▇
Group's expense, and, as may be required by applicable law, in the ▇▇▇▇▇▇▇▇▇
Group's name. Where necessary and appropriate as determined by the ▇▇▇▇▇▇▇▇▇
Group in its sole discretion, the ▇▇▇▇▇▇▇▇▇ Group shall grant to U.S. Cigar such
powers-of-attorney as may be necessary or convenient for U.S. Cigar to perform
any obligations of U.S. Cigar hereunder, provided however, that if the ▇▇▇▇▇▇▇▇▇
Group does not grant U.S. Cigar a power-of-attorney necessary to perform a
certain obligation of U.S. Cigar hereunder, U.S. Cigar shall be relieved of such
obligation.
G. Third Party Claim.
(i) Each party hereto shall promptly notify the other in
writing of any legal proceeding instituted, or written claim or demand asserted
by any third party of which such party becomes aware, with respect to any
Trademarks infringement which is alleged to result from the Product (a "Third
Party Claim").
(ii) The ▇▇▇▇▇▇▇▇▇ Group shall defend, at its expense, and
indemnify and hold U.S. Cigar harmless against any Third Party Claim which may
arise, and liability, damage, loss, cost or expense U.S. Cigar may suffer or
incur as a result of, or in connection with, such Third Party Claim. U.S. Cigar
shall have the right, at its expense, to be represented by counsel of its own
choice with respect to, and to participate in any defense, negotiation or
settlement of any Third Party Claim. U.S. Cigar shall have the right to approve
any settlement of a Third Party Claim, which approval shall not be unreasonably
withheld or delayed.
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H. Infringement.
Each party shall give notice to the other of any infringement
or possible infringement by a third party of the Trademarks of which it becomes
aware. The ▇▇▇▇▇▇▇▇▇ Group, in its sole discretion, if requested by U.S. Cigar
and after giving reasonable consideration to such request, shall promptly decide
whether or not to institute any legal action against the alleged infringers and
shall promptly notify U.S. Cigar of its decision. U.S. Cigar shall reasonably
cooperate with the ▇▇▇▇▇▇▇▇▇ Group in any legal action taken by the ▇▇▇▇▇▇▇▇▇
Group against any party alleged to be infringing the Trademarks, provided that
the ▇▇▇▇▇▇▇▇▇ Group agrees to reimburse U.S. Cigar for its reasonable costs and
expenses in providing such cooperation. In the event the ▇▇▇▇▇▇▇▇▇ Group does
not institute action or ▇▇▇▇▇ the infringement within 120 days of receipt of
notice from U.S. Cigar requesting such action, U.S. Cigar may institute such
legal action and the ▇▇▇▇▇▇▇▇▇ Group agrees to reimburse U.S. Cigar for its
reasonable costs and expenses in taking such legal action.
10. PROMOTION OF PRODUCTS:
A. U.S. Cigar, with the assistance of the ▇▇▇▇▇▇▇▇▇ Group,
shall develop an overall marketing strategy for U.S. Cigar, taking into
consideration the availability of Products and the market requirements in the
Exclusive Territory. U.S. Cigar, with the assistance of the ▇▇▇▇▇▇▇▇▇ Group,
shall develop a marketing campaign, shall produce advertising and promotional
material and shall participate in industry events, smokers, media advertising
and other industry related promotional efforts in order to sell the Products.
The ▇▇▇▇▇▇▇▇▇ Group and U.S. Cigar shall share all costs associated with such
promotional expenses equally. The marketing campaign and the expenditures shall
require the approval of the ▇▇▇▇▇▇▇▇▇ Group, the approval of which shall not be
unreasonably withheld.
B. The ▇▇▇▇▇▇▇▇▇ Group shall furnish to U.S. Cigar, at no cost
to U.S. Cigar and in reasonable amounts, all catalogs and other material which
the ▇▇▇▇▇▇▇▇▇ Group issues and makes available.
C. The ▇▇▇▇▇▇▇▇▇ Group shall make available certain members of
the ▇▇▇▇▇▇▇▇▇ family to make personal appearances on a reasonable basis as
requested by U.S. Cigar in connection with major regional and national events
and smokers held by U.S. Cigar and at major regional and national industry
events at no charge to U.S. Cigar.
D. U.S. Cigar shall keep the ▇▇▇▇▇▇▇▇▇ Group properly advised
and informed as to the general conditions which pertain to or affect the sale of
the Products and provide on a continuous basis to the ▇▇▇▇▇▇▇▇▇ Group market
analyses, sales report breakdowns by
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region, customer and Product, regional analyses, pricing information and any
other data necessary to assist the ▇▇▇▇▇▇▇▇▇ Group for planning purposes.
11. PRODUCTS DEVELOPED BY U.S. CIGAR:
A. U.S. Cigar shall have the right, but not the obligation, to
research, develop, purchase, secure, use, test and secure trademarks for
products not produced or sold by the ▇▇▇▇▇▇▇▇▇ Group, to sell within or outside
the Exclusive Territory. U.S. Cigar does not have to obtain approval of the
▇▇▇▇▇▇▇▇▇ Group if such products are non tobacco products (not made with
tobacco) and do not use any trademarks of the ▇▇▇▇▇▇▇▇▇ Group, the ▇▇▇▇▇▇▇▇▇
name or the names of ▇▇▇▇▇▇▇▇▇ family members as set forth in Paragraph 8. A.
herein, and U.S. Cigar may sell such non tobacco products within or without the
Exclusive Territory. If such products are tobacco products or are non tobacco
products and do use any trademarks of the ▇▇▇▇▇▇▇▇▇ Group, the ▇▇▇▇▇▇▇▇▇ Group
shall review said products for approval to market such product within the
Exclusive Territory and shall separately approve said product for marketing
without the Exclusive Territory. The ▇▇▇▇▇▇▇▇▇ Group may approve said product
for marketing within the Exclusive Territory but not without the Exclusive
Territory. In the event the ▇▇▇▇▇▇▇▇▇ Group approves said products, U.S. Cigar
may sell said products within and/or without the Exclusive Territory, as the
case may be. The approval of the ▇▇▇▇▇▇▇▇▇ Group required herein may not be
arbitrarily withheld. The ▇▇▇▇▇▇▇▇▇ Group shall have thirty days in which to
approve or disapprove a tobacco product hereunder after U.S. Cigar has sent
information to the ▇▇▇▇▇▇▇▇▇ Group regarding the product. In the event that the
▇▇▇▇▇▇▇▇▇ Group does not approve or disapprove the product in writing submitted
by U.S. Cigar within said thirty day period, said product will be deemed to be
approved by the ▇▇▇▇▇▇▇▇▇ Group.
B. The rights to the products hereunder and all trademarks
developed for said products which do not use any present or future trademarks of
the ▇▇▇▇▇▇▇▇▇ Group, the ▇▇▇▇▇▇▇▇▇ name or the names of ▇▇▇▇▇▇▇▇▇ family members
shall be the sole property of U.S. Cigar during the term of this Agreement and
after termination of this Agreement.
12. MINIMUM PRODUCTION AND SALES REQUIREMENTS:
A. U.S. Cigar, in conjunction with the ▇▇▇▇▇▇▇▇▇ Group, will
generate a sales forecast (the "Sales Forecast") for U.S. Cigar for the rolling
twelve (12) month period beginning 90 days from the end of the month that the
forecast is made. The Sales Forecast shall be updated monthly and shall include
sales projections for each Product.
B. The ▇▇▇▇▇▇▇▇▇ Group, in conjunction with U.S. Cigar, will
generate a production and delivery schedule (the "Production
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and Delivery Schedules") for U.S. Cigar for the rolling twelve (12) month period
beginning 90 days from the end of the month that the forecast is made. The
Production and Delivery Schedules shall be updated monthly and shall include
production and delivery projections for each Product.
C. All orders shall be filled by the ▇▇▇▇▇▇▇▇▇ Group with
reasonable promptness except that in the case of fire, riots, strikes,
accidents, acts of God, pests, disease, abnormal climactic conditions or force
majeure which unavoidably stopped the making of deliveries, deliveries may be
canceled or partially canceled as the case may require upon written notice to
U.S. Cigar. Such interruption of deliveries, however, shall not invalidate the
remainder of this Agreement but upon removal of the cause of the interruption,
deliveries shall be as before.
D. After the first year of the term of this Agreement, the
▇▇▇▇▇▇▇▇▇ Group agrees to supply to U.S. Cigar at least 75% of the Sales
Forecast to U.S. Cigar and U.S. Cigar agrees to purchase at least 75% of the
amount supplied by the ▇▇▇▇▇▇▇▇▇ Group hereunder. The ▇▇▇▇▇▇▇▇▇ Group hereby
agrees to indemnify U.S. Cigar for its failure to supply Products as set forth
herein except for the reasons stated in subparagraph B. hereunder and U.S. Cigar
hereby agrees to indemnify the ▇▇▇▇▇▇▇▇▇ Group for its failure to purchase
Products as set forth herein except for the reasons stated in subparagraph B.
hereunder.
13. REALLOCATION OF ORDERS:
A. In the event that the ▇▇▇▇▇▇▇▇▇ Group receives an order
originating outside the Exclusive Territory and by which shipments of Products
are to be made by the ▇▇▇▇▇▇▇▇▇ Group into the Exclusive Territory, the
▇▇▇▇▇▇▇▇▇ Group shall immediately turn over said order to U.S. Cigar.
B. In the event that U.S. Cigar receives an order originating
inside the Exclusive Territory and by which shipments of Products are to be made
by U.S. Cigar outside the Exclusive Territory, U.S. Cigar shall immediately turn
over said order to the ▇▇▇▇▇▇▇▇▇ Group.
C. In the event that U.S. Cigar exercises its option to
purchase any portion of the Additional Exclusive Territory, this Paragraph 13
shall apply to that exercised portion of the Additional Exclusive Territory.
D. Each party to this Agreement shall use efforts to monitor
the events set forth in this Paragraph 13.
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14. EXPENSES:
Except as set forth in this Agreement, each party shall pay
all of its own expenses in connection with this Agreement.
15. CONFIDENTIALITY:
The parties hereto hereby agree to keep confidential all
knowledge, techniques, information of any related sort and agrees not to reveal
any information to anyone concerning knowledge which each party hereto has
derived from its relationship with the other party hereto.
16. TAXES:
U.S. Cigar shall pay any and all Federal, state, city and
local taxes, fines, penalties and assessments arising out of the operation of
U.S. Cigar's business.
17. AGENCY:
U.S. Cigar is an independent contractor and is not a legal or
implied agent of the ▇▇▇▇▇▇▇▇▇ Group and has no authority to bind the ▇▇▇▇▇▇▇▇▇
Group as a result of the relationship created by this Agreement. No acts or
assistance given by the ▇▇▇▇▇▇▇▇▇ Group shall be construed to alter the
relationship created by this Agreement.
18. INDEMNIFICATION:
A. U.S. Cigar shall indemnify the ▇▇▇▇▇▇▇▇▇ Group, and hold
the ▇▇▇▇▇▇▇▇▇ Group harmless from any claims, demands, liabilities, actions,
suits or proceedings asserted or claimed by third parties and arising out of the
operation of U.S. Cigar's business. This indemnification shall not apply,
however, to any indemnitee whose own act or omission has given rise to any such
claim, demand, liability, action, suit or proceeding.
B. The ▇▇▇▇▇▇▇▇▇ Group shall indemnify U.S. Cigar, and hold
U.S. Cigar harmless from any claims, demands, liabilities, actions, suits or
proceedings asserted or claimed by third parties and arising out of the
operation of the ▇▇▇▇▇▇▇▇▇ Group's business. This indemnification shall not
apply, however, to any indemnitee whose own act or omission has given rise to
any such claim, demand, liability, action, suit or proceeding.
19. CODES AND ORDINANCES:
U.S. Cigar shall be solely responsible for compliance with all
state, municipal and local laws, orders, codes and ordinances applicable to U.S.
Cigar's business.
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20. ASSIGNMENT:
This Agreement may not be assigned by U.S. Cigar without the
prior consent, in writing, of the ▇▇▇▇▇▇▇▇▇ Group, which consent shall not be
unreasonably withheld.
21. WAIVER:
Failure by either party to enforce any of the provisions of
this Agreement shall not constitute a waiver of that party's rights hereunder.
22. TERMINATION:
This Agreement shall terminate in the event one of the
following contingencies occurs, but in no event shall such termination relieve
either party of any of its obligations hereunder:
A. If U.S. Cigar shall fail to meet any obligations
provided for in this Agreement
B. At the option of the ▇▇▇▇▇▇▇▇▇ Group, upon the
insolvency or bankruptcy of U.S. Cigar, the making of an assignment for the
benefit of creditors, or the appointment of a receiver or trustee of any part of
the assets of U.S. Cigar's business.
C. At the option of U.S. Cigar, upon the insolvency
or bankruptcy of the ▇▇▇▇▇▇▇▇▇ Group, the making of an assignment for the
benefit of creditors, or the appointment of a receiver or trustee of any part of
the assets of the ▇▇▇▇▇▇▇▇▇ Group's business except that a voluntary family
trust established by the current owners of the ▇▇▇▇▇▇▇▇▇ Group in order to hold
ownership of the ▇▇▇▇▇▇▇▇▇ Group shall constitute an event giving an option to
U.S. Cigar hereunder.
D. In the event that this Agreement is terminated
hereunder, U.S. Cigar shall have the right to sell the Products in its
possession in the Exclusive Territory for a period of six (6) months after the
effective date of the termination of this Agreement. A commission of 10% shall
be paid to U.S. Cigar in the event that any Products are sold by the ▇▇▇▇▇▇▇▇▇
Group or another ▇▇▇▇▇▇▇▇▇ Group U.S. Cigar in the Exclusive Territory during
the six month period after the effective date of the termination of this
Agreement.
E. Within six (6) months after the effective date of
the termination of this Agreement, U.S. Cigar shall immediately return to the
▇▇▇▇▇▇▇▇▇ Group at the ▇▇▇▇▇▇▇▇▇ Group's office or at another location
designated by the ▇▇▇▇▇▇▇▇▇ Group and at ▇▇▇▇▇▇▇▇▇ Group's expense all of
▇▇▇▇▇▇▇▇▇ Group's literature, labels,
11
samples, consignment equipment, if any, and supplies in U.S. Cigar's possession.
Additionally, the ▇▇▇▇▇▇▇▇▇ Group shall purchase from U.S. Cigar all Products
remaining in U.S. Cigar's possession at the end of the six month period for cost
plus any shipping and carrying charges incurred by U.S. Cigar.
F. Unless otherwise provided herein, termination of
this Agreement shall not affect any liability of either party to the other which
accrued prior to the effective date of the termination of this Agreement.
23. NOTICE:
All notices, consents, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given or delivered if delivered personally or mailed by registered mail,
return receipt requested, with first class postage prepaid:
To U.S. Cigar: c/o ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With Copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Merkin, ▇▇▇▇▇ & Iglesias
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To ▇▇▇▇▇▇▇▇▇ Group: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Margem BR 101 Km 223
44.380 - ▇▇▇▇ ▇▇▇ Almas, Bahia
With Copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Al. Campinas, 1070
Sao Paulo, SP 01404-001
24. MODIFICATION:
This Agreement constitutes the entire Agreement of the parties
and may not be modified, except in writing, executed by an authorized officer of
the ▇▇▇▇▇▇▇▇▇ Group.
25. GOVERNING LAW:
This Agreement shall be construed and enforced in accordance
with the laws of the State of Florida.
26. SEPARABILITY:
If any provision of this Agreement in any way contravenes the
laws of any state or jurisdiction, such provision shall be
12
deemed not to be a part of this Agreement in that jurisdiction, and the parties
agree to remain bound by all remaining provisions.
27. ARBITRATION:
Any dispute arising under this Agreement or with regard to its
interpretation shall be submitted for arbitration to the American Arbitration
Association in Miami, Florida in accordance with the rules and regulations of
said Association.
28. SCHEDULE OF AGREEMENTS:
This Agreement must be read in conjunction with a Schedule of
Agreements which sets forth other agreements which are being entered into
simultaneously with this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and official seal this 18th day of December, 1996.
Signed and sealed in the U.S. Cigar Distributors, Inc.,
presence of:
------------------------
------------------------ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇, ▇▇., President
Agro Comercial Fumageira, S.A.
------------------------
------------------------ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇▇ Charutos e Cigarrilhas Ltda.
------------------------
------------------------ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
13