DISTRIBUTORSHIP AGREEMENT
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This Distributorship Agreement ("Agreement") is entered into this ____
day of October, 1997 between Cigar Gone Corporation, a Delaware corporation aka:
Irvine Breath Products, Inc., a Delaware corporation (collectively "Cigar
Gone"), and Premium Cigars International, Ltd., an Arizona corporation
("Distributor"). Cigar Gone and Distributor shall also be referred to as the
"Parties".
RECITALS
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WHEREAS, Cigar Gone is engaged in the production and sale of breath
cleansers, which are marketed under the tradenames "Cigar Gone Breath Cleanser"
and "Coffee Gone Breath Cleanser", hereinafter referred to as the "Breath
Cleansers";
WHEREAS, Cigar Gone has designed a mini pack to hold eight (8) capsules
of Breath Cleanser (the "Mini-Pack"), a display box to hold thirty-six (36)
Mini-Pack (the "Display Box") and bottles to hold fifty (50) capsules of Cigar
Gone Breath Cleanser ("CG Bottle");
WHEREAS, collectively, the Cigar Gone Breath Cleanser, the Coffee Gone
Breath Cleanser, the Mini-Pack; the Display Box; the CG Bottle; and any of the
breath products which may be developed by Cigar Gone are herein referred to as
the "Product" or "Products";
WHEREAS, Distributor desires to become the Master Distributor (as that
term is defined herein) of the Product in the United States and Canada (the
"Distribution Area");
WHEREAS, Distributor desires to receive and Cigar Gone desires to grant
to Distributor the right to serve as the Master Distributor of the Products in
the Distribution Area;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Cigar Gone and Distributor agree
as follows:
1. Right to Sell. Cigar Gone grants to Distributor the right to serve
as "Master Distributor" for the Product. "Master Distributor", for the purpose
of this Agreement, shall be defined as the exclusive purchaser of the Product
for the resale of such Product in the Distribution Area, including without
limitation, those stores, chains, and retail outlets set forth on Exhibit "A"
attached hereto. The Master Distributor shall have the authority to
* Confidential portions omitted and filed
separately with the Commission.
enter into sub-distributorships with other persons or entities in the
Distribution Area for the retail or wholesale of the Product (e.g., McLane and
Core-Xxxx). During the term of this Agreement, Cigar Gone agrees not to enter
into any distributorship agreements for the sale of the Product in the
Distribution Area (as defined above) other than through Distributor. During the
term of this Agreement, Cigar Gone or any entity in which Cigar Gone has an
ownership interest further agrees not to purchase, sell, distribute or deal in
cigar products or breath products which are similar to or compete, directly or
indirectly, with the Product within the Distribution Area. During the term of
this Agreement, Distributor agrees not to purchase, sell, distribute or deal in
breath products which are similar to or directly compete with the Cigar Gone
Product in the Distribution Area.
*
2. Marketing Efforts. The Distributor intends to attach the Product to
the humidors it distributes to various retail outlets and shall make such
efforts as it deems appropriate, in its sole discretion, to market the Product
to retailers. Distributor agrees not to sell or deliver any of the Products
outside of the Distribution Area or deliver any of the Products for resale or
use outside of the Distribution Area without first obtaining Cigar Gone's prior
written consent, which consent shall not be unreasonably withheld or delayed.
Should Cigar Gone desire to sell the Product to any foreign distributors, Cigar
Gone shall give ten (10) days written notice to Distributor prior to entering
into any agreement. Distributor shall have the option to distribute to any such
foreign destinations on terms to be agreed to by the Parties. Cigar Gone shall
forward to Distributor any retail or distributorship leads which Cigar Gone may
receive in order that Distributor may pursue such leads, and Cigar Gone will
forward to Distributor all contacts made in the Distribution Area which may
benefit Distributor.
It is understood that Cigar Gone will continue to market for sale its
Products to potential customers, provided that Cigar Gone shall not arrange
sales for less than the suggested retail or wholesale prices as set forth in
Paragraph 9, and that all sales are subject to the final approval of
Distributor. Cigar Gone shall immediately deliver invoices for any such sales to
Distributor for distribution. All sales commissions from the sales of the
Products created by Cigar Gone's personnel or agents shall be the sole
responsibility of Cigar Gone, and all sales commissions from the sales of the
Products created by Distributor's personnel or agents shall be the sole
responsibility of Distributor.
Distributor and Cigar Gone will cooperate with advertising done in
trade, consumer, in-house advertising programs and radio or TV ads. The
respective costs for each party and all other terms relating to advertising
shall be agreed to in writing by both parties prior to either party entering
into any commitments.
Upon the invitation of Distributor and approval of Cigar Gone, Cigar
Gone may work with and join Distributor in shows, conventions, events or parties
that include Cigar Gone's
* Confidential portions omitted and filed
separately with the Commission.
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Products. Cigar Gone will also name Distributor as its "Exclusive Distributor"
in any stories created by its publicist Xxxxx Xxxxxxx and Associates.
3. Packaging. Cigar Gone will supply top quality soft gelcaps to
Distributor in either the Mini-Packs or the CG Bottles. Cigar Gone will supply
high quality foil packs for the Breath Cleansers. In conjunction with the
Mini-Packs, Cigar Gone shall supply Display Boxes for holding the Mini-Packs,
along with self-adhesive clip strips, of the same quality as those supplied to
Distributor's Phoenix office on October 22, 1997.
*
Cigar Gone shall give Distributor 30 days written notice prior to
implementing any change in the Products or the packaging of the Products. Any
changes in the count or quality of the Display Boxes or any change in the
contents or quality of the Products shall be subject to Distributor's prior
written approval.
4. Independent Contractor. This Agreement shall in no way be construed
to constitute the Distributor as an agent or employee of Cigar Gone for any
purpose whatsoever, the Distributor being an independent contractor engaged by
Cigar Gone to perform the services set forth herein.
5. Term. Subject to the terms set forth in paragraphs 11 and 12 herein,
the term of this Agreement shall be for two (2) years from the date hereof and
shall automatically be renewed annually for three (3) one year period unless
thirty (30) days prior to the expiration of the applicable term one party
notifies the other party in writing that it intends to terminate this Agreement.
6. Purchase Price. During the term of this Agreement, Distributor shall
pay to Cigar Gone a purchase price per Mini-Pack and per CG Bottle, as set forth
in Exhibit "B" hereto (the "Purchase Price"). Clipstrips shall be provided to
Distributor at no cost to Distributor as necessary to provide marketing racks
for Distributor's humidors.
7. *
8. Customer Billing. Distributor will handle all billing of
Distributor's and Cigar Gone's sales orders, except for the sale to those
exempted entities pursuant to paragraph 2. The terms and conditions of billing
will be COD to single stores that are not credit-approved and COD charges will
be billed to stores, net ten to multiple stores currently doing business with
Cigar Gone and 30 days to all other distributors or chains that have supplied
credit applications to Distributor and are approved by Distributor. Any term in
excess of 30 days must be approved by both Parties. All Products purchased by
Distributor or any customer of Distributor or Cigar Gone will be on a Cigar Gone
guaranteed sale basis unless otherwise stated on the purchase order.
* Confidential portions omitted and filed
separately with the Commission.
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9. Suggested Pricing. The minimum suggested retail and wholesale prices
are set forth below:
Retail Wholesale
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Mini-Pack $0.99 per pack *
CG Bottle $4.98 per bottle *
*
10. Purchase Requirements. Distributor shall order from Cigar Gone as
much of the Product as it deems appropriate in its sole discretion, and Cigar
Gone shall provide sufficient amounts of the product to satisfy Distributor's
distribution requirements. Cigar Gone and Distributor specifically agree that
Distributor shall have no minimum purchase requirement.
11. Delivery. Delivery will be made to Distributor at 00000 Xxxxx 00xx
Xxx, Xxxxx 0, Xxxxxxxxxx, Xxxxxxx 00000, or at such other destinations within
the Distribution Area which Distributor may designate from time to time.
Delivery designations will be limited to Seattle, Vancouver, Scottsdale and
CanAm. Cigar Gone shall fill all orders and deliver the Product by a reliable
common carrier, at Cigar Gone's sole expense, within ten (10) days from the
receipt of Distributors' orders.
Distributor will warehouse the Products in a climate controlled
building. Distributor will ship the Products to all of its clients and to any of
Cigar Gone's clients, via UPS, FEDEX, or any other shipping service of
Distributor's choice, within ten (10 days of any customer order. Shipping
charges will be billed to the customer unless other prior arrangements have been
negotiated. In any event when the customer does no pay shipping, Distributor
will reach an agreement in writing with Cigar Gone for the payment of shipping
costs prior to shipping.
12. Risk of Loss; Insurance. The risk of loss during transit, delivery
and storage of the Products shall be borne by Cigar Gone. Cigar Gone, at its
expense, shall secure and maintain comprehensive general liability insurance for
the full value of all Products shipped to Distributor by Cigar Gone during the
period of shipment. Distributor shall be named as an additional insured on all
policies of insurance purchased by Cigar Gone for such purposes.
13. Termination Upon Notice. Both parties shall have the absolute right
to terminate this Agreement upon delivery of written notice to the other party
one hundred twenty (120) days prior to termination.
14. Default by Cigar Gone - Early Termination of This Agreement. Cigar
Gone shall be in default, and Distributor shall have the right to terminate this
Agreement, in the event that one or more of the following events shall occur:
* Confidential portions omitted and filed
separately with the Commission.
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(a) Cigar Gone makes an assignment for the benefit of
creditors, or a receiver, trustee in bankruptcy, or similar officer is
appointed to take charge of all or any part of Cigar Gone's property or
business;
(b) Cigar Gone is adjudicated bankrupt; or
(c) Cigar Gone neglects or fails to timely deliver any orders
which Distributor may make pursuant to the Agreement or to perform or
observe any of its other covenants or obligations hereunder.
15. Default by Distributor. Early Termination of This Agreement. The
Distributor shall be in default and Cigar Gone shall have the right to terminate
this Agreement if, after notice and expiration of the cure period as provided in
Section 14 below, Distributor has failed to pay Cigar Gone any amounts owing
pursuant to this Agreement.
16. Opportunity to Cure Default. Distributor shall have thirty (30)
days from the date of notice of default to cure any condition creating a
default. If the default pursuant to this section shall be a monetary default,
then all sums due and payable as of the expiration of the cure period shall bear
interest at the rate of twelve percent (12%) per annum until paid.
17. Indemnification. Distributor shall not be liable for, and Cigar
Gone shall indemnify and hold Distributor and its officers, directors,
shareholders, employees, agents harmless from, any loss, damage, expense
(including without limitation attorney fees and expenses) claimed to have
resulted from the use, operation, or performance of the Product or related in
any way to its acquisition, regardless of the form of action.
18. Acts Upon Termination. Upon termination of this Agreement the
parties agree as follows:
(a) Distributor shall immediately cease the advertising and
sale of the Product and its rights as Master Distributor shall cease.
(b) Cigar Gone shall repurchase all of the Product in the
possession of the Distributor or in transit to the Distributor at the
time of termination at the full Purchase Price. Cigar Gone shall
provide, at its expense, for the removal of the Products from the
Distributor's premises.
(c) Cigar Gone, at its option, may ship, deliver or consign
any of the Product to any other person, firm, distributor, or
corporation in the Distribution Area or elsewhere and may cancel all
orders from the Distributor for the Product which may have been placed
prior to the termination.
* Confidential portions omitted and filed
separately with the Commission.
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(d) Cigar Gone may stop in transit and take possession of the
Products shipped to the Distributor which are still in transit.
(e) Cigar Gone shall abide by its obligations pursuant to
Section 16 herein regarding Confidential Information.
Notwithstanding anything contained herein to the contrary, Distributor
shall be allowed to maintain and/or order a quantity of the Product necessary to
fulfill any outstanding orders it may have to retailers or sub-distributors of
the Product at the time of termination.
19. Confidential Information. Both parties recognize that as a result
of this Agreement, both parties have in the past and may in the future develop,
obtain or learn about Confidential Information which is the property of
Distributor or Cigar Gone, or which Distributor or Cigar Gone is under an
obligation to treat as confidential. Both parties agree to use their best
efforts and the utmost diligence to guard, protect and keep confidential said
Confidential Information, and both parties agree that they will not, during or
after the period of this Agreement, use for themselves or others, or divulge to
others any of said Confidential Information which either party may develop,
obtain or learn about during or as a result of this Agreement and the
distribution relationship, unless authorized to do so in writing by the other
party.
For the purposes of this Agreement, the term "Confidential Information"
shall include but not be limited to the following: customer lists; financial
statements or financial information in any form; marketing strategies; business
contacts; business plans; computer software, including all rights under licenses
and other contracts relating thereto; all intellectual property including all
patents, trademarks, trademark registration and applications, service marks,
copyrights, trade secrets, proprietary marketing information and know-how; books
and records including lists of customers; credit reports; sales records; price
lists; sales literature; advertising material; manuals; processes; technology;
or any information of whatever nature which gives to Distributor an opportunity
to obtain an advantage over their competitors who do not know or use it. Both
parties acknowledge that Distributor, as a public company, shall provide notice
of this Agreement in press releases and reports filed with the Securities and
Exchange Commission.
Both parties and their officers, directors, shareholders, employees,
representatives and agents agree that they shall not contact directly or
indirectly any of the other party's customers or companies with which the other
party does business, or is affiliated with in any way, or any third parties
which have any direct or indirect business dealings with the other party,
without the prior consent of the other party.
* Confidential portions omitted and filed
separately with the Commission.
6
20. Intellectual Property. Cigar Gone shall retain ownership of all
marks, trademarks and confidential ingredients of the Cigar Gone and Coffee Gone
Breath Cleansers or any other products sold or created by Cigar Gone. However,
Distributor shall have the exclusive right to use any trademarks, or other marks
and intellectual property for the Products in Distributor's advertisements.
21. Notices Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be delivered in person, sent by
telefacsimile or sent by registered mail, charges prepaid, to the parties at the
address or facsimile telephone as set forth on the signature page of the
Agreement and a copy sent to:
Xxxx X. Xxxxxxxxx
Xxxxx, Xxxxxxxxx & Xxxxx, P.C.
0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx X-000
Xxxxxxxxxx, Xxxxxxx 00000
22. Applicable Law. This Agreement shall be construed, interpreted and
enforced in accordance with, and the respective rights and obligations of the
parties shall be governed by, the laws of the State of Arizona, and each party
irrevocably and unconditionally submits to the exclusive jurisdiction and venue
of the courts of Maricopa County, State of Arizona and all courts competent to
hear appeals therefrom.
23. Successors and Assigns. This Agreement shall inure to the benefit
of and shall be binding on and enforceable by the parties and their respective
successors and permitted assigns, as the case may be. Except as provided for
herein, neither party shall have the right to assign its rights hereunder,
without the prior written consent of the other party.
24. Amendment and Waivers. No amendment or waiver of any provision of
this Agreement shall be binding on either party unless consented to in writing
by such party. No waiver of any provision of this Agreement shall constitute a
waiver of any other provision, nor shall any waiver constitute a continuing
waiver unless otherwise provided.
25. Severability. If any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not affect or impair the validity, legality or
enforceability of the remaining provisions hereof and each provision is hereby
declared to be separate, severable and distinct.
26. Attorneys' Fees. In the event of the bringing of any action or suit
by a party hereto against another party hereunder by reason of any breach of any
of the covenants, agreements or provisions on the part of the other party
arising out of this Agreement, then in that event the prevailing party shall be
entitled to have and recover from the other party all costs and expenses of the
action or suit, including attorneys' fees and costs.
* Confidential portions omitted and filed
separately with the Commission.
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27. Execution and Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto as of the date first written above.
"DISTRIBUTOR"
PREMIUM CIGARS INTERNATIONAL, LTD.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Its: CEO / Pres.
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Address:
00000 Xxxxx 00xx Xxx
Xxxxx 0
Xxxxxxxxxx, Xxxxxxx 00000
Fax: 000-0000
"CIGAR GONE"
CIGAR GONE CORPORATION
By: /s/ [illegible]
----------------------------
Its: President
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Address:
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
* Confidential portions omitted and filed
separately with the Commission.
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EXHIBIT A
*
* Confidential portions omitted and filed
separately with the Commission.
9
EXHIBIT B
*
* Confidential portions omitted and filed
separately with the Commission.
10
EXHIBIT C
ADDITIONAL DISTRIBUTORS
*
* Confidential portions omitted and filed
separately with the Commission.
11
EXHIBIT D
Purchase Price
*
* Confidential portions omitted and filed
separately with the Commission.
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