FIRST AMENDMENT TO DISTRIBUTION AGREEMENT
THIS FIRST AMENDMENT TO DISTRIBUTION AGREEMENT dated April 25th, 1997 (the
"Agreement") is made and entered into on this 25th day of April, 1997, by and
between U.S. Cigar Distributors, Inc., a Florida corporation ("U.S. Cigar"), and
Xxxxxxx International, Inc., a Delaware corporation ("Xxxxxxx").
Paragraph 1 of the Agreement is hereby modified as follows:
1. Engagement of Distributor
U.S. Cigar hereby grants to Xxxxxxx the exclusive right to distribute Xxx
Xxxx brand cigars (the "Products") in the territory, as hereinafter described,
for a term of 24 months (the "Initial Term") with an automatic 24 month
extension, unless notice of termination is given by either party on or before
the 18th month of the Initial Term, provided the performance standards set forth
herein are met (the "Term"). It is understood by the parties that the rights
granted herein do not constitute an assignment of any trademark, trade name or
copyright. In the event that Xxxxxxx elects not to sell any Product hereunder,
U.S. Cigar shall have the right to distribute such Product in the territory as
hereinafter described. The parties shall agree within ninety (90) days of the
date of this Agreement on the other brands (and flavorings within such brands),
if any, that Xxxxxxx shall have an exclusive right to distribute hereunder.
Paragraphs 3. A and B of the Agreement are hereby modified as follows:
A. On or before October 31 of each year, Xxxxxxx and U.S. Cigar shall agree
on an annual sales forecast (the "Annual Sales Forecast") for the succeeding
calendar year of the Term containing sales projections for each Product on a
monthly basis. The Annual Sales Forecast may be revised by Xxxxxxx by up to 50%
for any month(s) during the Term upon thirty (30) days prior written notice to
U.S. Cigar, provided that Xxxxxxx shall exercise commercially reasonable efforts
to sell the total amount of Products included in the Annual Sales Forecast. The
Annual Sales Forecast for the remainder of 1997 shall be provided within ninety
(90) days of the date of this Agreement.
B. On or before October 31 of each year, Xxxxxxx and U.S. Cigar shall agree
on a production and delivery schedule (the "Annual Production and Delivery
Schedule") for the succeeding calendar year of the Term containing production
and delivery schedules for each Product on a monthly basis. The Annual
Production and Delivery Schedule may be revised by U.S. Cigar by up to 50% for
any month(s) during the Term upon thirty(30) days prior written notice to
Xxxxxxx, provided that U.S. Cigar shall exercise commercially reasonable efforts
to produce and deliver the total amount of Products included in the Annual
Production and Delivery Schedule. The Annual Production and Delivery Schedule
for the remainder of 1997 shall be provided within ninety (90) days of the date
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
official seal this ____ day of April, 1997.
Signed and sealed in the U.S. Cigar Distributors, Inc.,
presence of:
-----------------------------
By: /s/ Xxxx X. Xxxx, Xx.
----------------------------- -----------------------------
Xxxx X. Xxxx, Xx., President
Xxxxxxx International, Inc.
-----------------------------
/s/ By: /s/ J. Xxxxxx Xxxx, III
----------------------------- -------------------------------
J. Xxxxxx Xxxx, III, Executive
Vice President
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U.S. Cigar Distributors,
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxx 00000
Tel: 000.000.0000 Fax 000.000.0000
Pricing Schedule for the balance of 1997 on sales to XXXXXXX INTERNATIONAL, INC.
Exhibit C--Pricing Forecast
Product Presentation Current Price New Price
(see notes) 10/01/97
-------------------------------------------------------------------------------------------------------
Xxx Xxxx/Long Filler Petit Lonsdale 25/box 1.08 1.172
5x5 cartons 1.08 1.172
Xxxxxxxxx 25/box 1.28 1.389
4x5 cartons 1.28 1.389
Double Corona 25/box 1.48 1.606
3x5 cartons 1.48 1.606
Robusto 25/box 1.26 1.367
3x5 cartons 1.26 1.367
Short Filler Small Cigars 10x5 0.26 0.282
Half Coronas 50 box 0.50 0.543
5x5 cartons 0.50 0.543
Slim Panatelas 50 box 0.57 0.618
5x5 cartons 0.57 0.618
Palomitas: Classic 20x10's 0.134 0.145
ctns.
50's box " "
Cherry 20x10's " "
ctns
50's box " "
Clove 20x10's " "
ctns.
50's box " "
Sub-Total Palomitas
-------------------------------------------------------------------------------------------------------
Notes: Current prices agree with discussions held with Xxxxxxx as to the
Distribution Agreement and prices. The forecast beyond June 1997 is subject to
review as to unit volume, product mix, and pricing forecast for October 1st,
1997. This price would hold for at least 90 days.
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made and entered into on
this 25th day of April, 1997, by and between U.S. Cigar Distributors, Inc., a
Florida corporation ("U.S. Cigar"), and Xxxxxxx International, Inc., a Delaware
corporation ("Xxxxxxx").
RECITALS:
A. U.S. Cigar is engaged in the distribution of tobacco leaf, cigars,
cigarillos and other tobacco products and is the exclusive distributor in the
United States, Canada and Mexico for certain of these products produced,
brokered and manufactured by Agro Comercial Fumageira, S.A. and Xxxxxxxxx
Charutos e Cigarrilhas Ltda., Salvador, Bahia, Brazil (collectively, the
"Xxxxxxxxx Group").
B. The parties hereto wish to enter into an exclusive distribution
agreement.
NOW, THEREFORE, the parties agree as follows:
1. ENGAGEMENT OF DISTRIBUTOR
U.S. Cigar hereby grants to Xxxxxxx the exclusive right to distribute Xxx
Xxxx brand cigars (the "Products") in the territory, as hereinafter described,
for a term of 24 months (the "Initial Term") with an automatic 24 month
extension, unless notice of termination is given by either party on or before
the 18th month of the Initial Term, provided the performance standards set forth
herein are met (the "Term"). It is understood by the parties that the rights
granted herein do not constitute an assignment of any trademark, trade name or
copyright. In the event that Xxxxxxx elects not to sell any Product hereunder,
U.S. Cigar shall have the right to distribute such Product in the territory as
hereinafter described.
2. TERRITORY
The exclusive territory shall consist of the United States only (the
"Territory").
3. SALES FORECAST AND MINIMUM SALES
A. On or before October 31 of each year, Xxxxxxx and U.S. Cigar shall agree
on an annual sales forecast (the "Annual Sales Forecast") for the succeeding
calendar year of the Term containing sales projections for each Product on a
monthly basis. The Annual Sales Forecast may be revised by Xxxxxxx by up to 50%
for any month(s) during the Term upon thirty (30) days prior written notice to
U.S. Cigar, provided that Xxxxxxx shall exercise commercially reasonable efforts
to sell the total amount of Products included in the Annual Sales Forecast. The
Annual Sales Forecast for the remainder of 1997 is attached hereto as Exhibit A.
B. On or before October 31 of each year, Xxxxxxx and U.S. Cigar shall agree
on a production and delivery schedule (the "Annual Production and Delivery
Schedule") for the succeeding calendar year of the Term containing production
and delivery schedules for each Product on a monthly basis. The Annual
Production and Delivery Schedule may be revised by U.S. Cigar by up to 50% for
any month(s) during the Term upon thirty (30) days prior written notice to
Xxxxxxx, provided that U.S. Cigar shall exercise commercially reasonable efforts
to produce and deliver the total amount of Products included in the Annual
Production and Delivery Schedule. The Annual Production and Delivery Schedule
for the remainder of 1997 is attached hereto as Exhibit B.
C. Subject to the Subparagraphs A and B herein, prevailing market
conditions and Xxxxxxx'x sales of the Products, Xxxxxxx intends to purchase
Products from U.S. Cigar having an aggregate invoice value, exclusive of freight
and taxes, but before any discounts or allowances, of up to $225,000.00 per
month during the Term.
4. ORDERS AND ACCOUNTS
A. All orders shall be taken at U.S. Cigar's export billing price as set
forth on a price list as hereinafter described on terms then in effect, FOB,
Salvador, Brazil or such other location specified by U.S. Cigar. Freight and
insurance charges prepaid by U.S. Cigar may, at its option, be included in the
price or billed separately to Xxxxxxx. All orders must be signed by Xxxxxxx or
its duly authorized agent.
B. On or before October 31 of each year, Xxxxxxx and U.S. Cigar shall agree
on a list of prices that U.S. Cigar will charge Xxxxxxx for the Products (the
"Price List") for the succeeding calendar year. The Price List may be changed by
U.S. Cigar only upon the giving of at least ninety (90) days prior written
notice to Xxxxxxx or upon the waiver of receipt of such notice by Xxxxxxx. The
Price List for the remainder of 1997 is attached hereto as Exhibit C.
C. The selling price charged by Xxxxxxx for the Products to its customers
shall be at its sole discretion.
D. All invoices from U.S. Cigar to Xxxxxxx shall be paid in United States
currency.
E. U.S. Cigar warrants and represents that all Products sold shall be free
of defects, whether apparent or latent. Xxxxxxx shall be entitled to return all
defective Products for either a full credit or replacement, including all
freight charges, if Xxxxxxx gives written notice of the defect to U.S. Cigar
within seven (7) days of receipt of the Products in the case of an apparent
defect or within seven (7) days of discovery in the case of a latent defect.
F. All orders shall be filled by U.S. Cigar 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 Xxxxxxx. Such
interruption of deliveries,
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however, shall not invalidate the remainder of this Agreement but upon removal
of the cause of the interruption, deliveries shall be as before.
5. PROMOTION OF PRODUCTS:
A. U.S. Cigar and Xxxxxxx shall jointly develop an overall marketing
strategy for the Products, taking into consideration the availability of the
Products and the market requirements in the Territory; develop a marketing
campaign and shall produce advertising and promotional material. U.S. Cigar and
Xxxxxxx shall share all costs associated with such promotional expenses equally.
The marketing campaign and the related expenditures shall require the approval
of U.S. Cigar, the approval of which shall not be unreasonably withheld.
B. All packaging shall contain a statement that the cigar(s) was
manufactured by Xxxxxxxxx Charutos e Cigarrilhas Ltda., Bahia, Brazil.
6. NAME AND TRADEMARKS
A. All trademarks, trade names, and copyrights granted or applied for in
connection with the Products are and shall remain the sole property of the
Xxxxxxxxx Group or U.S. Cigar. Xxxxxxx will not by its operations hereunder
acquire any right, title or interest thereto. Xxxxxxx shall not alter or remove
any trade name, trademark or other identification marks, symbols or labels from
the Products.
B. Use of the trademarks, trade names, and copyrights on any sales
promotion, advertising, stationery or other media produced by or for Xxxxxxx may
only be done with the express written consent of U.S. Cigar.
X. Xxxxxxx will not, by its operations hereunder, acquire any right, title
or interest in any blend of tobacco used in any Product or in any blend of
tobacco formulated or developed by either Xxxxxxx or U.S. Cigar and used in any
Product hereunder.
7. EXPENSES:
Except as set forth in this Agreement, each party shall pay all of its own
expenses in connection with this Agreement.
8. CONFIDENTIALITY
Xxxxxxx hereby agrees to keep confidential all knowledge, techniques,
information of any related sort and agrees not to reveal any information to
anyone concerning knowledge which Xxxxxxx has derived from its relationship with
U.S. Cigar.
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9. INDEMNIFICATION
A. U.S. Cigar shall indemnify Xxxxxxx, and hold Xxxxxxx 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.
X. Xxxxxxx 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 Xxxxxxx'x 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.
10. ASSIGNMENT
This Agreement is personal to the parties hereto and may not be assigned by
Xxxxxxx, in whole or in part, without the prior written consent of U.S. Cigar.
Change of ownership of more than 25% of the outstanding common shares of Xxxxxxx
or merger of Xxxxxxx shall constitute an assignment hereunder.
11. AGENCY:
Xxxxxxx is an independent contractor and is not a legal or implied agent of
U.S. Cigar and has no authority to bind the U.S. Cigar as a result of the
relationship created by this Agreement. No acts or assistance given by U.S.
Cigar shall be construed to alter the relationship created by this Agreement.
12. 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. At the option of U.S. Cigar, upon sixty (60) days prior written notice,
if Xxxxxxx shall materially fail to meet any material obligations provided for
in this Agreement and fails to cure such breach within sixty (60) days of
receipt of such notice.
B. At the option of Xxxxxxx, upon sixty (60) days prior written notice, if
U.S. Cigar shall materially fail to meet any material obligations provided for
in this Agreement and fails to cure such breach within sixty (60) days of
receipt of such notice.
C. At the option of U.S. Cigar, upon the insolvency or bankruptcy of
Xxxxxxx, 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 Xxxxxxx'x
business.
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D. In the event that this Agreement is terminated hereunder, Xxxxxxx shall
have the right to sell the Products in its possession in the Exclusive Territory
for a period of three (3) months after the effective date of the termination of
this Agreement.
E. Within three (3) months after the effective date of the termination of
this Agreement, Xxxxxxx shall immediately return to U.S. Cigar at U.S. Cigar's
office or at another location designated by U.S. Cigar and at Xxxxxxx'x expense
all of U.S. Cigar's literature, labels, samples, consignment equipment, if any,
and supplies in Xxxxxxx'x possession. Additionally, U.S. Cigar shall purchase
from Xxxxxxx all Products remaining in Xxxxxxx'x possession at the end of the
three (3) month period for cost plus any shipping and carrying charges incurred
by Xxxxxxx.
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.
13. 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 sent by facsimile with a copy sent by
first class mail; or mailed by registered mail, return receipt requested, with
first class postage prepaid:
To U.S. Cigar: Xxxx X. Xxxx, Xx.
0000 Xxxxxxxx Xx.
Xxxxx Xxxxxx, Xxxxxxx 00000
Facsimile#: (000) 000-0000
With Copy to: Xxxxxxx X. Xxxxxx, Esq.
Merkin & Iglesias
000 Xxxxxxxx Xxx., Xxxxx 000
Xxxxx, Xxxxxxx 00000
Facsimile#: (000) 000-0000
To Xxxxxxx: Xxxxx Xxxxxxxxx
Vice President/General Manager
Xxxxxxx International, Inc.
X.X. Xxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile#: (000) 000-0000
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With Copy to: Xxxxxx X. Xxxxxxxx, Esq.
Schnader, Harrison, Xxxxx & Xxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile#: (000) 000-0000
or to such other address as designated by the recipient, in writing, and
properly sent to the other parties hereto.
14. ARBITRATION
It is agreed by the parties that all disputes concerning this Agreement
which the parties fail to adjust between themselves should be submitted to
arbitration in Miami, Florida. The arbitrators shall be selected and the
arbitration shall be conducted under the Rules of the American Arbitration
Association. Each party shall bear its own expenses, but the arbitrator's fees
and costs shall be borne equally between the parties.
15. 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.
16. MODIFICATION:
This Agreement constitutes the entire Agreement of the parties and may not
be modified, except in writing.
17. GOVERNING LAW:
This Agreement shall be construed and enforced in accordance with the laws
of the State of Florida.
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18. SEPARABILITY:
If any provision of this Agreement in any way contravenes the laws of any
state or jurisdiction, such provision shall be deemed not to be a part of this
Agreement in that jurisdiction, and the parties agree to remain bound by all
remaining provisions.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
official seal this ____ day of April, 1997.
Signed and sealed in the U.S. Cigar Distributors, Inc.,
presence of:
-----------------------------
By: /s/ Xxxx X. Xxxx, Xx.
----------------------------- -----------------------------
Xxxx X. Xxxx, Xx., President
Xxxxxxx International, Inc.
-----------------------------
/s/ By: /s/ J. Xxxxxx Xxxx, III
----------------------------- -------------------------------
J. Xxxxxx Xxxx, III, Executive
Vice President
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