ENDORSEMENT AGREEMENT
This Endorsement Agreement ("Agreement") is made as of May 1st, 1997 by
and between ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") and PREMIUM CIGARS INTERNATIONAL, LTD.
(the "Company").
WHEREAS, the Company desires to secure certain services by Luyendyk
related to the endorsement of the Company and its products; and
WHEREAS, Luyendyk desires to provide such services to the Company in
exchange for the issuance of common stock of the Company and other
consideration;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. Term of Agreement. The term of this agreement ("Term") shall begin
on the date of execution as set forth above and shall terminate one (1) year
from the date of this Agreement.
2. Display of Company Logo on Racing Helmet. Luyendyk will attach a
self- adhesive logo no smaller than 2" x 4" and no larger than 3" x 6" provided
by the Company to any and all racing helmets that he wears in any Indy Racing
League race or any other race he participates in during the Term. Such logo
shall be prominently placed so as to enhance visibility and media exposure.
3. Endorsement Appearances. Luyendyk agrees to make himself available
for endorsement appearances ("Appearances") on behalf of the Company during the
term of this Agreement upon twenty (20) days' prior notice by telephone or in
writing. Such Appearances shall include, but not be limited to trade shows and
investor/broker-dealer presentations related to the public offering of the
Company's shares and each Appearance shall be for a minimum of three (3) hours
per day of the Appearance event. Luyendyk agrees to sign autographs at such
Appearances and to provide, at the Company's expense, sufficient quantities of
photographs of himself to autograph which do not contain an endorsement of any
other company or product. If the Appearance requires that Luyendyk travel, the
Company will provide Luyendyk with first class airfare to and from the
Appearance, first class hotel accommodations, necessary expenses and
transportation for the duration of the Appearance.
4. Restrictions on Competition and Competitive Endorsements. Luyendyk
shall represent and endorse the Company and its related product lines and no
other company, entity or person which competes with the Company in the business
of cigar distribution. Luyendyk may, however, appear in the entertainment, news
or information portion of any radio, television or other entertainment program
or event regardless of sponsorship. Luyendyk covenants that he shall not during
the term of this Agreement and for a period of one (1) year from the expiration
of the Term of this Agreement or from the date of his or the Company's
termination of the Agreement, directly or indirectly, either as an endorser,
principal, partner, shareholder, joint venturer, officer, director, consultant,
member, employee or otherwise, own any interest in,
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manage, control, participate in, consult with, render services for, or in any
manner engage in or endorse any business or product competing, directly or
indirectly, with the business or products of the Company in any state of the
United States or foreign country in which the Company is conducting business on
the date of such expiration of Term or termination. At any time and from time to
time, each party agrees, at its expense, to take action and to execute and
deliver documents as may be reasonably necessary to effectuate the purposes of
this Covenant.
5. Issuance of Stock; Vesting Schedule. Subject to the acceptance of a
subscription agreement acceptable to the Board of Directors of the Company
relating to Luyendyk's status as an "accredited investor" as that term is
defined in Regulation D promulgated under the Securities Act of 1933, as amended
(the "Securities Act") and subject to the availability of a valid exemption from
registration under such Act, the Company shall issue to Luyendyk Five Thousand
(5,000) shares of restricted common stock ("Shares") of the Company under the
following terms:
a. Restricted Securities; Registration; Lock-Up. The Shares
have not been registered under the Act or any state securities laws in
reliance on exemptions therefrom and when acquired must be held by
Luyendyk indefinitely and may not be resold unless the Shares have been
registered under the Act and any applicable state securities laws in
connection with a subsequent distribution or unless such a resale is
exempt from such registration requirements. The Shares shall bear a
legend in a form acceptable to the Company which reflects the
restricted nature of such shares. If the Company offers or grants any
rights to any holder of shares of its outstanding Common Stock,
including, but not limited to shares held by certain persons which may
be referred to as "founders," to register such shares under the Act,
the Company shall also offer or grant to Luyendyk the identical
registration rights offered to any such person. The Company is
otherwise under no obligation to register the Shares or to comply with
any applicable securities law exemption with respect to any of the
Shares and is not obligated to effect any transfer of Shares of its
securities owned by Luyendyk on its books if such transfer would in the
Company's good faith opinion cause a violation of any applicable law.
Luyendyk additionally agrees that, in accord with the "lock-up period"
applicable to the holders of all of the Company's outstanding shares,
he will not resell the shares for a period of eighteen (18) months from
the commencement date of the Company's initial public offering, without
the prior approval of the underwriter of such initial public offering.
b. Forfeiture of Stock upon Default. Upon any Event of Default
as defined in Section 5 of this Agreement, Luyendyk shall forfeit and
surrender to the Company that portion of the Shares which have not
vested pursuant to the schedule set forth in Section 4.c. Upon such
forfeiture, Luyendyk agrees to deliver his certificate for the entire
amount of the Shares to facilitate the recertification of those Shares
which are not forfeited.
c. Issuance; Vesting. The Company shall issue a certificate
for the Shares in Luyendyk's name and deliver such certificate to
Luyendyk within fifteen (15) days of the
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execution of this Agreement and the acceptance of a subscription
agreement by the Board of Directors. The Shares shall "vest" and not be
subject to the forfeiture provisions of subsection 4.c. above, upon the
following schedule:
Months Total
After Cumulative
Agreement Shares
Executed Vested
-------- ------
2 1,000
3 2,000
4 3,000
5 4,000
6 5,000
6. Default and Termination. A party to this Agreement which is not in
Default as hereinafter defined (the "non-defaulting Party") shall have the right
to terminate this Agreement upon written notice to the other party (the
"Defaulting Party") upon the occurrence ("Default") of one or more of the
following conditions ("Event of Default") of this Agreement: (a) if a party
fails to perform any material covenant, agreement or other obligation under this
Agreement; or (b) any warranty or representation made by such party is found to
be materially false; or (c) in the case of Luyendyk, if in the Company's
reasonable determination, Luyendyk has engaged in or made or is accused of or
portrayed by the media as engaging in or making any activity or statement,
whether criminal or otherwise, which negatively reflects upon Luyendyk's public
reputation or which negatively affects the reputation of the Company and its
products.
7. Warranties of Luyendyk. Luyendyk represents that
a. he is not under any disability, restriction or prohibition,
whether contractual or otherwise, with respect to his ability to
execute this Agreement and perform its terms and conditions.
b. he owns the rights to his racing helmet and that he has the
right and power to place the Company's logo on such helmet and perform
the obligations of paragraph 2 hereof.
8. Warranties of the Company. The Company warrants that:
a. neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby
or thereby will be in violation of any provision of any charter, bylaw,
contract, mortgage, indenture, order, injunction, statute, rule or
regulation applicable to the Company.
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b. the issuance of the Purchased Shares and the performance by
the Company of all of its other obligations under this Agreement have
been duly authorized by all necessary corporate action of the Company.
9. Notices. Any notice to any party under this Agreement shall be in
writing, shall be effective on the earlier of (i) the date when received by such
party if delivered personally or by facsimile, or (ii) the date which is three
days after mailing (postage prepaid) by certified or registered mail, return
receipt requested, to the following address of such party, or to such other
address as shall have previously been specified in writing by such party to all
parties hereto:
a. If to Luyendyk:
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(facsimile): _______________
with a copy to:
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(facsimile): _______________
b. If to the Company:
Premium Cigars International, Ltd.
▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Centre, Suite B-252
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
10. Additional Acts and Documents. Each party hereto agrees to do all
such things and take all such actions, and to make, execute and deliver such
other documents and
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instruments, as shall be reasonably requested to carry out the provisions,
intent and purpose of this Agreement.
11. Attorney Fees. In the event suit is brought (or arbitration
instituted) or an attorney is retained by any party to this Agreement to enforce
the terms of this Agreement or to collect any money due hereunder, or to collect
money damages for breach hereof, the prevailing party shall be entitled to
recover, in addition to any other remedy, reimbursement for reasonable attorney
fees, court costs, costs of investigation and other related expenses incurred in
connection therewith.
12. Successors and Assigns. None of the rights or obligations under
this Agreement shall be assignable without the prior consent of all of the
parties. Any assignment without such consent shall be void. Subject to this
restriction, this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors in interest and assigns.
13. Counterparts. This Agreement may be executed in any number of
counterparts, all such counterparts shall be deemed to constitute one and the
same instrument and each of said counterparts shall be deemed an original
hereof.
14. Time. Time is of the essence of this Agreement and each and every
provision hereof. Any extension of time granted for the performance of any duty
under this Agreement shall not be considered an extension of time for the
performance of any other duty under this Agreement.
15. Waiver. Failure of any party to exercise any right or option
arising out of a breach of this Agreement shall not be deemed a waiver of any
right or option with respect to any subsequent or different breach, or the
continuance of any existing breach after demand for strict performance.
16. Integration Clause; Oral Modification. This Agreement represents
the entire agreement of the parties with respect to the subject matter hereof,
and all agreements entered into prior hereto are revoked and superseded by this
Agreement, and no representations warranties, inducements or oral agreements
have been made by any of the parties except as expressly set forth herein or in
other contemporaneous Written agreements. This Agreement may not be changed,
modified or rescinded except in writing, signed by all parties hereto, and any
attempt at oral modification of this Agreement shall be void and of no effect.
17. Captions. Captions and paragraph headings used herein are for
convenience only and are not a party of this Agreement and shall not be deemed
to limit or alter any provisions hereof and shall not be deemed relevant in
construing this Agreement.
18. Governing Law. This Agreement shall be deemed to be made under, and
shall be construed in accordance with and shall be governed by, the laws of the
State of Arizona, and (subject to any provision in this Agreement providing for
mandatory arbitration) suit to enforce
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any provision of this Agreement or to obtain any remedy with respect hereto may
be brought in Superior Court, Maricopa County, Arizona, and for this purpose
each party hereby expressly and irrevocably consents to the jurisdiction of said
court.
19. Arbitration. In the event any dispute or controversy arising out of
this Agreement cannot be settled by the parties, such controversy or dispute
shall be submitted to arbitration in Phoenix, Arizona, and for this purpose each
party hereby expressly consents to such arbitration in such place. In the event
the parties cannot mutually agree upon an arbitrator to settle their dispute or
controversy within fifteen (15) days after written demand from either party to
do so, a single arbitrator shall be selected pursuant to the then-existing rules
and regulations of the American Arbitration Association governing commercial
transactions. The decision of the arbitrator (including without limitation the
award of attorney fees and costs to the prevailing party) shall be binding upon
the parties hereto for all purposes, and judgment to enforce any such binding
decision may be entered in Superior Court, Maricopa County, Arizona (and for
this purpose each party hereby expressly and irrevocably consents to the
jurisdiction of said court). At the request of either party, arbitration
proceedings shall be conducted in the upmost secrecy. In such case, all
documents, testimony and records shall be received, heard and maintained by the
arbitrator in secrecy, available for inspection only by either party and by
their attorneys and experts who shall agree, in advance and in writing, to
receive all such information in secrecy. In all other respects, the arbitrator
shall conduct all proceedings pursuant to the Uniform Arbitration Act as adopted
in the State of Arizona and the then existing rules and regulations of the
American Arbitration Association governing commercial transactions to the extent
such rules and regulations are not inconsistent with such Act or this Agreement.
Executed effective as of the date first written above.
"Luyendyk"
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
"COMPANY"
PREMIUM CIGARS INTERNATIONAL, LTD.
By:
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Its:
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