AMENDED AND RESTATED
PRIVATE LABEL MANUFACTURING AGREEMENT
This Amended and Restated Private Label Manufacturing Agreement (this
"Agreement") is made and entered into as of the 27th day of April, 1997, by and
between FUENTE CIGAR LTD., a corporation organized under the laws of the Turks
and Caicos Islands and having its principal headquarters in Santiago, Dominican
Republic (the "Manufacturer"), and ASHTON DISTRIBUTORS, INC., a corporation
organized under the laws of the State of Pennsylvania U.S.A., ant having its
principal headquarters in Philadelphia, Pennsylvania, U.S.A. (the "Purchaser").
RECITALS:
WHEREAS, on September 1, 1993 the parties hereto entered into a Private
Label Manufacturing Agreement (the "Original PLMA");
WHEREAS, the parties hereto desire to amend the Original PLMA, and
believe that such amendment can best be made by amending and restating the
Original PLMA in its entirety;
WHEREAS, the Manufacturer is engaged in the manufacture and sale of
cigars in the Dominican Republic, and has a legal residence under the laws of
the Dominican Republic in the City of Xxxxxxxx, Dominican Republic;
WHEREAS, the Manufacturer has expertise in the development, design and
manufacture of hand-made and machine~made cigars, and as a result of such
expertise, Manufacturer has developed and designed, with the approval of the
Purchaser, tobacco blends used in certain hand-made cigars distributed and sold
by the Purchaser under various trademarks owned by or licensed to the Purchaser
(herein collectively referred to as the "Products," as further defined in
paragraph 2 hereof);
WHEREAS, the Purchaser has sales and marketing expertise, and has
determined that substantial markets exist throughout the world for the sale of
the Products, and as a result, the Purchaser desires the Manufacturer to commit
substantial resources to the manufacture of large quantities of cigars for the
Purchaser, as futher described herein; and
WHEREAS, in order to fulfill its obligation to meet the Purchaser's
demand for the Products, the Manufacturer has been required and will continue to
be required: (i) to make substantial expenditures in order to maintain, improve
and expand its present Dominican Republic manufacturing facilities and to lease
and/or purchase additional manufacturing facilities; (ii) to purchase
substantial quantities
of raw materials in the form of tobacco, cellophane, paper, and wood products;
(iii) to store, treat and age substantial quantities of tobacco that will be
used to make the Products; and (iv) to make substantial investments in overhead,
labor, training, and related areas in order to continue to supply the Products
to the Purchaser.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties hereto, the parties
hereto agree as follows:
1 AMENDMENT AND COMPLETE RESTATEMENT.
This Agreement constitutes an amendment and complete restatement of the
Original PLMA, and supersedes such Original PLMA with respect to all matters
related hereto arising on or after the date of this Agreement
2 EXCLUSIVE MANUFACTURING ARRANGEMENT.
During the term of this Agreement, the Manufacturer shall manufacture
for and sell its entire output of the Products (as defined in the immediately
succeeding sentence) exclusively to the Purchaser, upon the terms and conditions
described in this Agreement. For purposes of this Agreement, the term "Products"
shall mean all cigars bearing the "Ashton" trademark, all other cigars described
on Exhibit A hereto, and any such other cigars as the parties hereto may
mutually agree in writing in the future. During the term of this Agreement, the
Purchaser agrees that, so long as the Manufacturer fulfills the Guaranteed
Production commitment described in paragraph 3.1 hereof and the Manufacturer
uses its best reasonable efforts for additional production as set forth in
paragraph 3.2 hereof, the Purchaser shall not manufacture, contract for the
manufacture of, and/or purchase cigars bearing any trademark (whether registered
or unregistered) used in connection with the Products from any source other than
the Manufacturer.
3 PRODUCTION AND PURCHASING COMMITMENTS.
3.1 Guaranteed Production. The Manufacturer hereby guarantees to
produce and sell at least five million (5,000,000) individual cigars (the
"Guaranteed Production") to the Purchaser during each one (1) year term hereof.
The Guaranteed Production may consist of any combination of:
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3.1.1 Products sold to the Purchaser pursuant to this Agreement;
and/or
3.1.2 cigars manufactured by the Manufacturer under trademarks
owned by the Manufacturer and sold to the Purchaser by the Manufacturer or by
any other entity in which Xxxxxx X. Xxxxxx and/or Xxxxxx X. Xxxxxx and/or
Xxxxxxx X. Xxxxxx and/or J. Xxxxx Xxxxxx, individually or any combination
thereof, directly or indirectly exercise voting control and control over all
material aspects of the management and business operations of such entity. In
addition, unless otherwise mutually agreed by the parties, in order to be
counted as part of the Guaranteed Production, all cigars described in this
paragraph 3.1.2 must be hand made in the Dominican Republic, and be of a quality
at least equal to the lowest quality Product manufactured hereunder, excluding
seconds, close outs and other off-price special or discounted Products. In
addition, in order to be counted as part of the Guaranteed Production, cigars
referenced herein which are purchased from entities other than the Manufacturer
must be sold to the Purchaser at a price not higher than the price charged by
such entity to its most favored customer for similar goods sold on similar terms
and in similar quantities to the cigars sold to the Purchaser. In the event of
an Ownership Shift (as defined in paragraph 20.1 hereof), this paragraph 31.2 is
augmented by paragraph 20.4 hereof.
Although no assurance is given by the Manufacturer as to the exact proportion of
any brand or size of cigar that will be sold as part of the Guaranteed
Production, it is the intent of the parties that the Guaranteed Production will
be composed of a variety of various brands, size and price ranges of cigars, and
that such variety shall be determined in accordance with paragraph 8 hereof.
3.2 Best Reasonable Efforts for Additional Production. The Manufacturer
shall use its best reasonable efforts, consistent with its current and
applicable business practices, to produce and sell to the Purchaser such
additional Products as the Purchaser may reasonably request from time to time,
in addition to any Products included in the Guaranteed Production.
3.3 Best Reasonable Efforts Obligation to Purchase. The Purchaser shall
use its best reasonable efforts, consistent with its current and applicable
business practices, to purchase the Guaranteed Production. Notwithstanding the
foregoing, upon submission of a purchase order and acceptance of such purchase
order by the Manufacturer pursuant to paragraph 10.2 hereof, the Purchaser shall
be obligated to purchase the quantity and type of cigars referenced in such
purchase order and to pay the amount owing with respect to such purchase order,
all in accortance with the terms and conditions contained in this Agreement.
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4 RIGHT OF FIRST REFUSAL; PRODUCTION OF OTHER CIGARS.
4.1 Right of First Refusal. The Purchaser agrees, understands and
acknowledges that, during the term of this Agreement, the Manufacturer shall
have a right of first refusal to exclusively manufacture for the Purchaser any
cigars developed by or for the Purchaser that bear the "Ashton" trademark or
that bear the same trademark as any other Product (as such term is defined at
such time), as well as any cigars that, with the written consent of the
Purchaser, may be developed (all or in part) by the Manufacturer for the
Purchaser (each being herein referred to as a "New Product" and collectively as
the "New Products"). If the Purchaser itself desires to manufacture a new cigar
that is a "New Product," as defined herein, or the Purchaser desires to cause a
New Product to be manufactured for the Purchaser, the Purchaser xxxXx first
serve notice, in accordance with paragraph 29.4 hereof, to that effect upon the
Manufacturer, providing full and adequate description of the New Product
(including the price to be paid by Purchaser for said manufacture) to enable the
Manufacturer to determine whether the Manufacturer wishes to manufacture the New
Product. The Manufacturer shall exercise its right of first refusal to
manufacture the New Product by giving notice to the Purchaser within thirty (30)
days after receipt by the Manufacturer of the Purchaser's notice. If the
Manufacturer shall fail to give written notice to exercise its right to
manufacture the New Product within such thirty (30) day period or if earlier the
Manufacturer shall advise the Purchaser in writing that the Manufacturer waives
its right to manufacture the New Product, then the Purchaser shall have the
right to negotiate the manufacture of the New Product with third parties or to
manufacture the New Product itself and such New Product shall cease to be
subject to this Agreement; provided, however, that the Purchaser shall not in
fact engage another person to manufacture the New Product for a price more than
the price previously offered to the Manufacturer without first offering the
Manufacturer the right to manufacture at the same price and upon the same terms
as offered such other person. In carrying out the intent of the immediately
preceding sentence, the same procedure as specified hereinabove shall again be
followed, except that the written notice served upon the Manufacturer shall
specify the name and address of the person whom the Purchaser proposes to engage
to manufacture the New Product and the price and terms offered to such person.
The Manufacturer's failure to give written notice of exercise of its right to
manufacture the New Product within such thirty (30) day period or is written
advice that it waives its right to do so, as provided herein, shall not
constitute a waiver of the Manufacturer's right of first refusal to exclusively
manufacture additional New Products developed by or for the Purchaser from time
to time.
4.2 Production of "Other Cigars." The Purchaser expressly understands
and acknowledges that the Manufacturer has been and continues to be engaged in
the business of manufacturing and selling hand-made and machine-made cigars
either than the Products (the "Other Cigars"), both under its own trademarks and
pursuant to other private label manufacturing agreements, and that the
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Manufacturer, in its sole and absolute discretion, will continue to manufacture
and sell the Other Cigars. The Purchaser agrees, understands, and acknowledges
that the terms and conditions of this Agreement do not prohibit, limit or in any
way affect the Manufacturer's right to continue to manufacture and sell the
Other Cigars and/or to engage in such other business activities as deemed
appropriate by the Manufacturer in its sole discretion from time to tune.
Moreover, the Purchaser acknowledges and agrees that the Manufacturer's best
reasonable efforts production commitment in paragraph 3.2 hereof is to be
interpreted in light of the Manufacturer's continued right to produce the Other
Cigars.
5 HOLTS CIGAR COMPANY.
The Manufacturer expressly understands and acknowledges that the
Purchaser's affiliate, Holts Cigar Company ("Holts") has been engaged in the
business of selling hand-made cigars, machine-made cigars and products in
addition to the Products, and that Holts, in its sole and absolute discretion,
will continue to engage in these activities and any future related activities so
long as such activities do not involve the manufacture of the Products. Subject
to the foregoing, the Manufacturer agrees, understands, and acknowledges that
the terms and conditions contained in this Agreement do not prohibit, limit or
in any way affect Holts' right to continue to engage in such activities and/or
to engage in such other business activities as deemed appropriate by Holts in
its sole discretion from time to time. The Manufacturer further expressly
understands and acknowledges that the Purchaser may enter into a business
combination with Xxxx'x and that upon the consummation of any such transaction,
the new or surviving entity shall have the same rights and liberties as Xxxx'x
as set forth in the foregoing sentences, notwithstanding any such business
combination.
6 MANUFACTURING PROCESS
The Manufacturer shall have the exclusive right, in its sole and
absolute discretion, to determine the extent and nature of the manufacturing
process associated with the Products, and, subject to the Purchaser's right of
brand selection described in paragraph 8 hereof, to determine the nature, grade
and overall composition of the Products, provided that the Purchaser shall have
the right to approve the quality and workmanship of the Products resulting from
such manufacturing process. The Manufacturer agrees to manufacture the Products
substantially in compliance with the specifications set forth in Exhibit A
hereto; however, the Purchaser understands and acknowledges that the
Manufacturer may be required to modify the manufacturing process in response to
certain market and other external non-market conditions, including, but not
limited to, tobacco shortages caused by tobacco scarcity, price increases or
other factors such as diseases
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or embargoes, and the Purchaser approves of such modifications; provided,
however, that the Manufacturer may not make any modifications to the
manufacturing process or materials that would materially change the quality,
workmanship, appearance, taste or aroma of the Products without the Purchaser's
prior written consent, which consent shall not be unreasonably withheld. The
Purchaser acknowledges that the Products are an agricultural-based product, and
that variations in the appearance, taste and aroma of the Products will occur,
due to the natural variations in the appearance, taste and aroma of annual
tobacco crops. Variations in the Products due to the natural variation of the
tobacco crops shall not constitute "material" changes that would require the
approval of the Purchaser hereunder.
7 OWNERSHIP OF BLENDS.
The Purchaser expressly understands and acknowledges that the
Manufacturer has expended considerable resources in connection with the
development of the tobacco blends that are used in the manufacture of the
Products and that the Manufacturer has the right to register, under the laws of
the Dominican Republic or under the laws of any other jurisdiction, its legal
ownership of all proprietary information associated with such blends and that
the Manufacturer has taken appropriate steps to maintain the confidentiality of
such proprietary information. The Purchaser expressly agrees, understands and
acknowledges that the Manufacturer holds title to and is the owner of all
proprietary information associated with such blends and that the Purchaser shall
not exercise any ownership rights over such blends. Notwithstanding the
foregoing, the Manufacturer represents, warrants and covenants that following
termination of this Agreement it will not, directly or indirectly, market,
advertise, sell, compare, or in any manner use the "Ashton" or "Holts" names or
marks or the names or marks of any other Product manufactured hereunder in any
way to compare, contrast or relate to any products manufactured by the
Manufacturer and/or sold by the Manufacturer. In addition, the Manufacturer
expressly understands, acknowledges and agrees that following any termination of
this Agreement the Purchaser shall have the right to have cigars manufactured by
other manufacturers, which cigars may be similar in all respects to the Products
hereunder, and may contain similar blends as the Products, provided however that
the Purchaser shall not disclose any Confidential Information (as defined in
paragraph 19 hereof) in developing such other cigars.
8 SELECTION OF BRANDS.
The Purchaser shall have the right to advise the Manufacturer of the
Purchaser's desired proportion of specified brands and sizes of brands of the
Products by giving the Manufacturer written or oral notice of the approximate
number of each desired brand and size, and the Manufacturer xxxXx use its best
reasonable efforts to fulfill me Purchaser's desired brand and size selection.
The Purchaser acknowledges that its desired proportion of different brands and
size will be limited by the availability of tobacco. In addition, the Purchaser
acknowledges that, due to the manufacturing and aging process used to produce
the Products, changes in the desired proportion of brands and sizes may take a
year or more to be reflected in shipments to the Purchaser.
9 PURCHASE PRICES.
The purchase prices to be charged by the Manufacturer to the Purchaser
for the Products shall be paid in United States Dollars and shall initially be
in the amounts set forth on Exhibit 8 attached hereto (the "Purchase Prices").
However, because the parties hereto cannot accurately predict the actual cost of
manufacturing the Products during the entire term of this Agreement, the
Manufacturer expressly reserves the right to change the Purchase Prices charged
to the Purchaser for the Products; provided, however, the net invoice price
increase charged to the Purchaser for each shipment of the Products shall be no
greater, on a per thousand cigar basis, than the net invoice price increase
charged by the Manufacturer during the same time to any other similarly situated
United States-based importer (including affiliates of the Manufacturer) who
purchase products manufactured by the Manufacturer or any of its affiliates,
similar to the nature, grade and style of the Products. The Purchaser expressly
agrees, understands and acknowledges that it shall be bound by the terms and
conditions of this Agreement even though the Purchase Price of the Products may
change from time to time in accordance with this paragraph. Changes in the
Purchase Price may be made by the Manufacturer at any time, so long as the
Manufacturer provides the Purchaser with at least thirty (30) days' prior
written notice announcing such changes or in such other form as the Manufacturer
and the Purchaser may mutually agree, and changes in the Purchase Price shalI
become effective as of the date specified in such notice. In any event, the
parties hereto expressly agree, understand and acknowledge that the Purchase
Price shall be changed by an amount equal to any significant increase or
decrease, as the case may be, in (i) any taxes and charges which are now, or may
hereafter be, levied, imposed or charged upon the Manufacturer and associated
with or related to the Products (whether by federal, state, municipal or other
public authority, and whether domestic or foreign); (ii) any freight and
transportation costs associated with or related to the Products and borne by the
Manufacturer; and (iii) any customs
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duties (whether domestic or foreign) associated with or related to the Products
and borne by the Manufacturer.
10 PLACEMENT AND ACCEPTANCE OF PURCHASE ORDERS.
10.1 Priority. The terms and conditions set forth in this Agreement
shall apply to all purchases of the Products by the Purchaser from the
Manufacturer, and shall supersede any conflicting provisions contained in any of
the Purchaser's purchase orders or any other business forms provided by the
Purchaser or the Manufacturer (unless such purchase orders or any other business
forms are in writing, signed by both parties hereto, and expressly provide that
such conflicting provisions contained therein are intended by the parties hereto
to supersede the terms and conditions of this Agreement).
10.2 Placement of Orders; Purchase Order Acceptance. All orders for
Products must be submitted to the Manufacturer in writing. Standing purchase
orders may be submitted. Purchase orders submitted to the Manufacturer shall
only be deemed accepted upon issuance of a written acceptance by the
Manufacturer, or in lieu thereof, upon shipment of the Products referenced
therein.
10.3 Refusal and Revocation of Purchase Orders. Provided the
Manufacturer is in compliance with its obligations under paragraph 3.1 hereof,
the Manufacturer shall not be obligated to accept any purchase order from the
Purchaser for Products that, using its best reasonable efforts as required under
paragraph 3.2 hereof, the Manufacturer reasonably believes it cannot fill. In
addition, the Manufacturer may, in its sole discretion, and in addition to any
other remedies described in this Agreement, refuse to accept any purchase order,
revoke acceptance of any purchase order or refuse to deliver or delay shipment
of any previously-accepted purchase order, if the Purchaser becomes delinquent
in the payment of any of its obligations hereunder, or is in breach of any
material provision or condition of this Agreement. The revocation of acceptance,
refusal to deliver or delay of any shipment of the Products by the Manufacturer
under this paragraph 10.3 shall not be construed as a termination or breach of
this Agreement by the Manufacturer.
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11 FILING OUR PURCHASE ORDERS AND SHIPPING TERMS.
11.1 Filling of Purchase Orders.
11.1.1 The Manufacturer shall not be liable to the Purchaser or
any other person for any damages, direct, consequential or otherwise, or lost
profits from the Manufacturer's failure to fill any purchase orders, or for
delays in filling purchase orders, or for any errors in filling any such
purchase orders. Subject to the Manufacturer's commitment as to the Guaranteed
Production, if orders for all cigars (including the Manufacturer's own
trademarked cigars) received by the Manufacturer from all sources, including the
Purchaser, exceed the Manufacturer's inventory and/or work in process associated
with such cigars, the Manufacturer shall allocate availability on a basis that
the Manufacturer deems equitable or necessary, in its sole and absolute
discretion.
11.1.2 The Manufacturer may, in its sole and absolute discretion,
make partial shipments of the Purchaser's purchase orders, which shipments shall
be separately invoiced and each such separate invoice shall be paid when such
separate invoice becomes due regardless of whether the balance of the shipment
has been made or invoices for the balance of the shipment have been rendered.
Delay in delivery of any portion of a purchase order shall not relieve the
Purchaser of its obligation to accept the remaining deliveries of the Products.
11.1.3 Shipping Terms. Unless otherwise agreed to by the parties
in writing, beneficial and legal title to possession and control over, and risk
of loss and damage to, all Products shall pass to the Purchaser, or to such
financing institution or other parties as may have been designated in writing by
the Purchaser, F.O.B Santiago, Dominican Republic. For purposes of this
paragraph, the term "F.O.B." shall have the meaning ascribed thereto in
INCOTERMS (1990 version) and all amendments and revisions thereto, as published
by the International Chamber of Commerce, Paris, France.
12 INSPECTION.
The Purchaser shall have twenty (20) days from the date of delivery of
the Products to the shipping destination to inspect the Products or to cause its
agent to conduct such inspection. The Purchaser shall bear all costs and
expenses associated with inspection of the Products. Nonconforming Products may
be returned to the Manufacturer pursuant to the procedure set forth in paragraph
13 hereof. Once the Purchaser (or its agent) has completed its inspection
of the Products and found them to be satisfactory, or the Purchaser has waived
its inspection rights with respect to such Products, or the twenty (20) day time
period specified herein has passed without notification from the Purchaser to
the Manufacturer that the Products are
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nonconforming, as the case may be, the Purchaser shall not be entitled to return
the Products or seek the remedies otherwise available under paragraph 13 hereof.
13 RETURNS.
If, upon inspection, the Purchaser believes Products to be
nonconforming, the Purchaser shall notify the Manufacturer, and shall ship the
nonconforming Products to the location designated by the Manufacturer.
Nonconforming Products will be repaired, replaced or credit will be issued to
the Purchaser, in the Manufacturer's discretion, within twenty (20) days from
the date on which the Manufacturer received the Products claimed to be
nonconforming. The Manufacturer's acceptance of any Products so returned shall
not be deemed an admission that the Products are nonconforming, and, if the
Manufacturer determines that any such returned Products are not nonconforming,
such returned Products will be reshipped to the Purchaser at the Purchaser's
expense and the Purchaser will be charged for all of the shipping charges
incurred by the Manufacturer (including the costs previously assumed by the
Manufacturer for shipping such returned Products to the Manufacturer as well as
the costs of shipping such returned Products back to the Purchaser). The
Purchaser expressly waives its rights to consequential or incidental damages
relating to nonconforming Products.
14 PAYMENT TERMS.
Unless otherwise agreed in writing by the parties hereto, or except as
otherwise expressly provided in this Agreement, the Purchaser shall pay each
invoice generated by the Manufacturer in connection with the sale of the
Products within sixty (60) days from the date of such invoice. In the event the
Purchaser fails to pay any invoice within such sixty (60) day period, the
Manufacturer shall grant an additional five (5) day cure period in which the
Purchaser may make payment of such invoice. The Manufacturer agrees that the
number of days given to the Purchaser in which to pay each invoice shall be not
less than the number of days the Manufacturer grants to its most favored
private label manufacturing customers, excluding any of the Manufacturer's
private label manufacturing arrangements that existed prior to the date of this
Agreement. In the event the Purchaser fails to pay any invoice within the time
period specified in this paragraph 14, the Purchaser shall be in default of its
obligations to the Manufacturer, as described in paragraph 25.1 hereof, and the
Manufacturer shall have the right to terminate this Agreement. No
extension of these terms shall be penmitted without the Manufacturer's prior
written consent, which consent may be withheld in the Manufacturer's sole
discretion. Payment for the Products purchased by the Purchaser shall be in
United States dollars, and shall be made by electronic wire transfer or by
corporate check. Payments shall be made to the Manufacturer's address set forth
in paragraph 29.4
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hereof or to such place as shall be designated in writing from time to time by
the Manufacturer. If the Manufacturer instructs the Purchaser to send payment to
any U.S. bank, or the Manufacturer deposits the payment in any U.S. bank,
receipt of any check, draft or other commercial paper by the Manufacturer shall
not constitute payment in full until the funds representing the full amount due
and owing have fully cleared all banking channels. However, if the Manufacturer
instructs the Purchaser to send payment to any non-U.S. bank, or the
Manufacturer deposits the Purchaser's payment in any non-U.S. bank, receipt of
the check, draft of other commercial paper by the Manufacturer shall constitute
payment, provided full funds are available with respect to such check, draft or
other commercial paper at the time such check, draft or commercial paper
ultimately clears all banking channels.
15 THIRD PARTY DISTRIBUTORSHIPS; SHIPMENT SERVICES.
15.1 Notification as to Distributors. The parties hereto understand and
acknowledge that the Purchaser may, from time to time, desire to enter into
distribution relationships with various third parties who are engaged in the
business of distributing cigar and tobacco products, under which the Purchaser
may grant such distributors exclusive, nonexclusive, or other types of
distribution rights to distribute and sell the Products in specified
territories, as agreed upon by the Purchaser and such distributors from time to
time (herein referred to as collectively as the "Distributors" or individually
as a "Distributor"). The Purchaser agrees to provide written notification to the
Manufacturer of the appointment, termination, and/or modification of any such
agreements pertaining to the Distributors promptly following such appointment,
termination and/or modification, as the case may be.
15.2 Shipping and Billing Services. The parties hereto understand and
acknowledge that the Purchaser may from time to time request the Manufacturer to
(i) directly ship Products to a Distributor, (ii) directly render invoices on
behalf of the Purchaser for the Products shipped by the Manufacturer to a
Distributor, (iii) receive payment in respect of such invoices, (iv) remit
payment to the Purchaser of the amounts so collected by the Manufacturer after
the Manufacturer deducts the cost of the Products shipped on behalf of the
Purchaser to a Distributor, and (v) handle the preparation of associated
documentation pertaining to the matters described in (i)-(iv) herein. Whenever
the Purchaser makes such a request, the Manufacturer shall have the right but
not the obligation to handle the services described in (i) through (v) above.
Furthermore, the Manufacturer may make any such agreement to handle such
services subject to such conditions as the Manufacturer may impose in its sole
discretion including without limitation, an agreement by the Purchaser (1) to
pay a reasonable servicing fee, (2) to directly receive, review, and approve a
Distributor's purchase order associated with the shipment of the Products
described herein prior to the acceptance of such purchase
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order by the Purchaser, and (3) to be obligated to the Manufacturer in respect
of the Purchase Price for any Products shipped pursuant to this paragraph and in
respect of the applicable servicing fee imposed in connection with such
services. Any agreement as to the foregoing shall be treated as a part of this
Agreement. Therefore, failure of a Distributor to comply with the payment terms
as described in paragraph 14 of this Agreement in connection with an invoice
issued by the Manufacturer on behalf of the Purchaser for the Products shipped
by the Manufacturer to a Distributor or any other default of the Distributor of
the terms and conditions of this Agreement (as applicable), shall be treated as
the failure of the Purchaser to comply with such payment terms and/or such other
terms and conditions of this Agreement, and as a result the Purchaser shall be
deemed in default of this Agreement.
15.3 Status as Independent Agent. Without limiting the generality of
the foregoing, the Purchaser agrees, understands, and acknowledges that in
connection with the activities described in this paragraph 15, the Manufacturer
shall serve as an independent agent acting solely on behalf of the Purchaser
wish respect to the rendering of the services described herein. Nothing
contained in this paragraph 15 or any other provision of this Agreement shall be
construed to constitute the Purchaser as a partner, legal representative,
dependent agent or a joint venturer of the Manufacturer, nor shall either party
have any authority to bind the other in any respect, or assume or create any
obligation whatsoever, express or implied, on behalf of or in the name of the
other party, it being intended that each shall remain an independent contractor
responsible for each party's own actions.
15.4 Liabilitv and Indemnification. The Purchaser agrees that in
connection with the Manufacturer's services described in this paragraph 15, the
Manufacturer shall have no liability to the Purchaser, the Distributors or other
third parties whatsoever for the rendering of such services so long as the
Manufacturer does not engage in activities which constitute gross negligence or
willful misconduct. The Purchaser agrees to indemnify, defend and hold the
Manufacturer its officers, directors, employees, agents, successors, and assigns
harmless against any and all claims, losses, costs, liabilities, damages,
judgments, or related expenses, including attorneys' and paralegals' fees and
other costs of legal defense, whether direct or indirect, that they, or any
one or more of them, may sustain or incur as a result of (i) any acts or
omissions of the Purchaser or any of the Distributors arising out of the
arrangements described in this paragraph 15, or (ii) any acts of omissions of
the Manufacturer arising out of the Manufacturer's performance of the services
described in this paragraph 15, with the exception of any acts or omissions that
constitute gross negligence or willful misconduct of the Manufacturer.
15.5 Limited Extended Payment Terms. Notwithstanding the usual and
customary payment terms contained in paragraph 14 of this Agreement, the
Manufacturer, with respect to sales made through certain specifically identified
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Distributors, may, upon request from the Purchaser, but in the Manufacturer's
sole and absolute discretion and without any obligation to do so, agree to
modified payment terms, which modified payment terms shall not be applicable and
effective unless and until such terms are set forth in a separate written
instrument signed by both parties hereto. Such modification of the payment terms
shall be applicable only if such written instrument, specifically designates (i)
the Distributor to which the modified payment terms will apply and (ii) the
modified terms applicable to such Distributor. The Manufacturer may at any time
and from time to time, and in its sole and absolute discretion, discontinue the
modified payment terms for any or all of such designated Distributors by
notifying the Purchaser in writing of such discontinuation; provided, however,
such discontinuation shall not apply to any purchase orders that, at the time of
the Purchaser's receipt of such written notice, the Manufacturer has accepted in
accordance with the terms and conditions of this Agreement.
16 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Manufacturer the
following:
16.1 Organization and Standing. The Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Pennsylvania, with full corporate power and authority to carry on its businesses
as they are now being conducted.
16.2 Authoritv Relative to this Agreement. The execution of this
Agreement by the Purchaser and the delivery of this Agreement and the Exhibits
hereto to the Manufacturer have been duly authorized by the Purchaser, and no
further action is necessary by the Purchaser to make this Agreement and the
Exhibits hereto valid and binding upon the Purchaser and enforceable against the
Purchaser in accordance with the terms hereof or to carry out the transactions
contemplated hereby. Ihe execution, delivery, and performance of this Agreement
and the Exhibits hereto by the Purchaser shall not (i) constitute a breach or a
violation of the Articles of Incorporation or by-laws of the Purchaser or any
law, rule or regulation, agreement, indenture, deed of trust, mortgage, loan
agreement, or any other instrument to which the Purchaser is a party or by which
it is bound; (ii) constitute a violation of any order, judgment, or decree to
which the Purchaser is a party or by which any of the assets or properties of
the Purchaser is bound or affected; or (iii) result in the creation of any lien,
charge, encumbrance upon the assets or properties of the Purchaser, except as
otherwise provided herein.
16.3 Approvals and Consents. No consent, approval, or authorization
is required to be obtained by the Purchaser in connection with the execution or
13
delivery of this Agreement by the Purchaser or the consummation by the
Purchaser of the transactions contemplated hereby.
17 REPRESENTATIONS AND WARRANTIES OF THIS MANUFACTURER.
The Manufacturer hereby represents and warrants to the Purchaser the
following:
17.1 Organization and Standing. The Manufacturer is a corporation duly
organized, validly existing, and in good standing under the laws of the Turks &
Caicos Islands, with full corporate power and authority to carry on its
businesses as they are now being conducted. The Manufacturer is duly qualified
to conduct its business in the Dominican Republic and has full power and
authority to fulfill its obligations under this Agreement.
17.2 Authoritv Relative to this Agreement. The execution of this
Agreement by the Manufacturer and the delivery of this Agreement to the
Manufacturer has been duly authorized by the Manufacturer, and no further action
is necessary by the Manufacturer to make this Agreement valid and binding upon
the Manufacturer and enforceable against the Manufacturer in accordance with the
terms hereof or to carry out the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement by the Manufacturer shall
not (i) constitute a breach or a violation of the Articles of Incorporation or
by-laws of the Manufacturer or of any law, rule or regulation, agreement,
indenture, deed of trust, mortgage, loan agreement, or any other instrument to
which the Manufacturer is a party or by which it is bound; (ii) constitute a
violation of any order, judgment, or decree to which the Manufacturer is a party
or by which any of the assets or properties of the Manufacturer is bound or
affected; or (iii) result in the creation of any lien, charge, encumbrance upon
the assets or properties of the Manufacturer, except as otherwise provided
herein.
17.3 Approvals and Consents. No consent, approval, or authorization is
required to be obtained by the Manufacturer in connection with the execution or
delivery of this Agreement by the Manufacturer or the consummation by the
Manufacturer of the transactions contemplated hereby.
17.4 Trade Name. The Manufacturer operates under the trade name
"Tabacalera A. Fuente & Cia." Notwithstanding the use of such tradename, the
Manufacturer owns all right, title and interest in and to, or is the lessor of,
the assets utilized in the manufacturing business that is the subject of this
Agreement, including without limitation the tobacco, molds, equipment, plant and
facilities.
14
18 COMPLIANCE WITH LAWS.
The Purchaser represents and warrants that all of the Products
purchased by the Purchaser from the Manufacturer are for resale in the ordinary
course of the Purchaser's business and that the Purchaser will comply with
applicable laws relating to the collection and/or payment by the Purchaser of
value-added, sales, use, excise, customs, duties, and all other similar taxes
applicable to all such resale transactions, as well as all export or other
applicable restrictions on the sale of the Products. The Purchaser understands
and agrees that the Manufacturer, under no circumstances, has the duty or
obligation to collect or pay the taxes recited in the preceding sentence of this
paragraph. The Purchaser agrees to indemnify, defend and hold the Manufacturer
its officers, directors, employees, agents, successors, and assigns harmless
against any and all claims, losses, costs, liabilities, judgments, damages, or
related expenses, including attorneys' and paralegals' fees and other costs of
legal defense, whether direct or indirect, that they, or any of one or more of
them, may sustain or incur as a result of the Purchaser's failure to comply with
this paragraph 18.
19 CONFIDENTIALITY.
19.1 In General. The parties hereto hereby acknowledge that, in
connection with the business relationship that they have had or may in the
future have, they have been and will be exposed to and have access to certain
information with respect to each other's business operations that has not been
publicly disclosed and is not a matter of common knowledge (collectively, the
"Confidential Information"). Each of the parties agrees that it shall not, nor
shall any of its affiliates, including the agents, directors and officers
thereof, without prior written consent of the other party, at any time, in any
fashion, form or manner, either intentionally or otherwise, directly or
indirectly, divulge, disclose or communicate any of the Confidential Information
provided to such party by the other party to any third person, partnership,
joint venture, company, corporation, entity or other organization or use such
Confidential Information other than in connection with the business transactions
entered into between the parties to this Agreement, unless such Confidential
Information is used pursuant to a separate license or agreement between the
parties to this Agreement authorzing such use or unless and until such
Confidential Information is or was (i) publicly available or otherwise in the
public domain; (ii) rightfully obtained from any third party without
restrictions and without breach of this Agreement; or (iii) disclosed pursuant
to judicial action or governmental regulations or other requirements, but then
only if the disclosing party notified the other party prior to such disclosure
and reasonably cooperated with the other party in the event the other party
elected to legally contest and avoid such disclosure.
15
19.2 Effect of Ownership Shift.
19.2.1 In the event of an Ownership Shift (as defined in
paragraph 20.1 hereof), the provisions of paragraph 19.1 hereof shall cease to
apply, and the provisions of this paragraph 19.2.2 shall apply to the parties.
19.2.2 The parties hereto hereby acknowledge that, in
connection with the business relationship that they have had or may in the
future have, they have been and will be exposed to and have access to certain
information with respect to each other's business operations that has not been
publicly disclosed and is not a matter of common knowledge. To the extent such
information is labelled, whether electronically or in writing, as "confidential"
or is otherwise indicated electronically or in writing to be of a private or
proprietary nature, such information shall be considered "Confidential
Information" hereunder. Each of the parties agrees that it shall not, nor shall
any of its affiliates, including the agents, directors and officers thereof,
without prior written consent of the other party, at any time, in any fashion,
form or manner, either intentionally or otherwise, directly or indirectly,
divulge, disclose or communicate any of the Confidential Information provided to
such party by the other party to any third person, partnership, joint venture,
company, corporation, entity or other organization or use such Confidential
Information other than in connection with the business transactions entered into
between the parties to this Agreement, unless such Confidential Information is
used pursuant to a separate license or agreement between the parties to this
Agreement authorizing such use or unless and until such Confidential Information
is or was (i) publicly available or otherwise in the public domain; (ii)
rightfully obtained from any third party without restrictions and without breach
of this Agreement; or (iii) disclosed pursuant to judicial action or
governmental regulations or other requirements, but then only if the disclosing
party notified the other party prior to such disclosure and reasonably
cooperated with the other party in the event the other party elected to legally
contest and avoid such disclosure.
19.2.3 The parties hereto agree that any information disclosed
prior to an Ownership Shift and deemed to be "Confidential Information" under
the terms of paragraph 19.1 hereof shall continue to be considered "Confidential
Information" and preserved as such after an Ownership Shift, even if such
information does not meet the requirements of paragraph 19.2.
20 OWNERSHIP SHIFT.
20.1 Existence and Notice of Ownership Shift. An "Ownership
Shift" shall occur if at any time Xxxxxx X. Xxxxxx and/or Xxxxxx X. Xxxxxx
and/or Xxxxxxx X.
16
Xxxxxx, individually or any combination thereof, no longer directly or
indirectly exercise voting control over the Manufacturer and control over all
material aspects of the management and business operations of the Manufacturer.
The Manufacturer shall provide the Purchaser with written notice of the
Ownership Shift. The remaining provisions of this paragraph 20 shall apply upon
the occurrence of an Ownership Shift.
20.2 Amendment of Manufacturer's Production Commitments. Effective as
of the date of the Ownership Shift, the production commitments of the
Manufacturer set forth in paragraph 3 hereof shall be terminated and the
production commitments set forth in this paragraph 20.2 shall apply. The
Manufacturer shall be obligated to produce and sell to the Purchaser the lesser
of:
20.2.1 the quantity of Products requested by the Purchaser
pursuant to purchase orders submitted in compliance with paragraph 10 hereof; or
20.2.2 the quantity of Products that equals to the average of
the immediateIy preceding three (3) year's sales of Products from the
Manufacturer to the Purchaser (or to any successor, new or surviving entity in
the event the Purchaser participates in a business combination) (the "New
Guaranteed Production") for the remaining term of this Agreement. Provided,
however, that the New Guaranteed Production shall not be less than five million
(5,000,000) Products. In addition, beginning in the second year after the
occurrence of the Ownership Shift, the New Guaranteed Production shall be
automatically increased by five percent (5%) per year.
20.3 Amendment of Confidentiality Obligations. In addition to the other
provisions of this paragraph 20, upon the occurrence of an Ownership Shift, the
terms of paragraph 19.2 hereof shall apply.
20.4 Clarification of Purchasing Price for Fuente-branded Products. If
an Ownership Shift occurs, then in order to be counted as part of the Guaranteed
Production, Fuente-branded cigars which are purchased directly from Manufacturer
must be sold to the Purchaser at a price not higher than the price charged by
the Manufacturer to its most favored customer for similar goods sold on similar
terms and in similar quantities to the Fuente-branded cigars sold to the
Purchaser.
20.5 Right of Termination. In addition to the other provisions of this
paragraph 20, effective as of the date of the Ownership Shift, the Purchaser
shall have the right, upon delivery of one (1) year's prior written notice to
the Manufacturer, to terminate this Agreement without further cause.
20.6 Clarification Regarding Application of this Paragraph. This
paragraph shall not apply in the event that Xxxxxx X. Xxxxxx and Xxxxxx X.
Xxxxxx cease to own
17
any stock in the Manufacturer, and Xxxxxxx X. Xxxxxx becomes the only one of the
three Fuente family members named herein to own stock in the Manufacturer.
However, in such event, the provisions of paragraph 26.4 shall apply.
21 TRADEMARK INFRINGEMENT.
The Purchaser warrants and covenants that it is the exclusive licensee
of the trademark rights associated with the Products and that the companies
identified on Exhibit C hereto are the sole and exclusive owners of the entire
and unencumbered right, title and interest in and to the trademarks identified
on Exhibit C hereto. The Purchaser undertakes to indemnify, defend and hold the
Manufacturer, its officers, directors, employees, agents, successors, and
assigns harmless from any and all claims, losses, costs, liabilities, damages,
judgments, or expenses of whatever form or nature, including attorneys' fees and
paralegals' fees and other costs of legal defense, whether direct or indirect,
that they or any one or more may sustain or incur as a result of any alleged
infringement or claim of infringement of such trademark or such other rights
relating to the manufacture, distribution, sale or use of the Products, and to
defend, upon the request of the Manufacturer, at the Purchaser's own expense,
any action which may be brought against the Manufacturer, its suppliers,
venders, or assigns under any alleged infringement or claim of infringement
pertaining to such trademark or such other rights relating to the manufacture,
distribution, sale or use of the Products. As used in this paragraph 21, the
term "claim" includes, without limitation, any claim for temporary or permanent
injunctive relief in any action for such infringement of trademark or other
rights.
22 CLOSING.
The closing of the transactions contemplated by this Agreement shall
occur at the time and date this Agreement (and the Exhibits hereto) is executed
and delivered by the parties hereto. The closing may be held by telecopy, with
counterpart execution pages circulated and signed by telecopy, followed within a
reasonable period of time by original (inked) signature pages.
23 FORCE MAJEURE.
23.1 Scope of Governance. In the event that performance by either party
of any of its obligations under this Agreement is precluded or adversely and
materially affected because of the occurrence of any event, unforeseen
development, or contingency beyond the control of such party (and "Unforseen
Event"), the rights and obligations of the parties hereto shall be governed by
this paragraph 23.
18
23.2 Definitions. For purposes of this Agreement, an "Unforseen Event"
shall include, but shall not be limited to, the following: war, declared or
undeclared, revolution, insurrection, counter-revolution, isolated instances of
violence, fire, flood, tempest, interruption of transportation facilities,
riots, civil commotion, strikes, labor disputes, labor slowdowns, lockouts (or
other labor disputes affecting the parties hereto, other manufacturers or
suppliers), freight embargoes or transportation delays, shortages of labor,
inability to secure materials, supplies or power at reasonable prices or on
account of shortages, acts of God, including (but not limited to) lightning,
severe weather, earthquakes, hurricanes, or other acts of nature, acts of the
public enemy, inflation beyond the expected rate of the country to which the
event, development, or contingency pertains, prohibition of import or export of
the Products (or any components thereof), governmental orders, regulations,
restrictions, and all other similar causes.
23.3 Limited Excusal of Performance; Termination. Except as otherwise
provided herein, the affected party shall be excused from any failure to perform
under the terms and conditions of this Agreement to the extent such failure is
directly or indirectly caused by an Unforeseen Event. Any suspension of
performance by reason of this provision shall be limited to the period during
which the Unforeseen Event exists, and such suspension shall not extend or in
any manner affect the running of the time period provided for in this Agreement.
If performance by either party hereunder is suspended as a result of an
Unforseen Event for a period of one hundred and eighty (180) days or more, the
other party hereto shall, upon furnishing not less than thirty (30) days written
notice to non-performing party, have the right to terminate this Agreement.
Notwithstanding the foregoing, the Purchaser shall not, as a result of any of
the foregoing causes, be relieved or excused from paying the Manufacturer any
monies owed under this Agreement.
23.4 Best Reasonable Efforts to Make Up of Shortfall. In the event the
Manufacturer is affected by an Unforseen Event, and this Agreement is not
terminated in accordance with paragraph 23.3 hereof, the Manufacturer shall use
its best reasonable efforts to make up any shortfall in production caused by
such Unforseen Event within twelve (12) months after the resumption of
production hereunder. Similarly, in the event the Purchaser is affected by an
Unforseen Event, and this Agreement is not terminated in accordance with
paragraph 23.3 hereof, the Purchaser shall use its best reasonable efforts to
make up any shortfall in orders for Products caused by such Unforseen Event
within twelve (12) months after the resumption of purchasing hereunder.
19
24 TERM.
Except as otherwise provided in this Agreement, the term of this
Agreement shall begin as of May 1, 1997 (the "Commencement Date") and shall
continue for a ten (10) year term ending April 30, 2007; provided however, that
on May 1, 2005 and on each fifth-year anniversary of such date thereafter (i.e.
May 1, 2010, May 1, 2015, etc.; the "Renewal Date"), the term of this Agreement
shall automatically be extended for an additional five (5) year term unless
either party gives the other written notice of termination of this Agreement on
or before the Renewal Date. If notice of termination is given on or before a
Renewal Date, the term of this Agreement shall not be further extended and this
Agreement shall terminate at the end of the then applicabIe ten (10) or five (5)
year term, unless earlier terminated as otherwise expressly provided for herein.
For example, the initial term of this Agreement begins on May 1, 1997 and ends
on April 30, 2007. The first Renewal Date is May 1, 2005. If no notice of
termination is sent by either party on or before May 1, 2005, the term of this
Agreement will automatically extend for an additional five (5) years, from May
1, 2007 until April 30, 2012, with the next Renewal Date occurring on May 1,
2010. However, if notice of termination is given by either party on or before
May 1, 2005, then this Agreement will not be renewed, and will expire on April
30, 2007.
25 TERMINATION OF THIS AGREEMENT BY THE MANUFACTURER.
The Manufacturer shall have the right, in addition to all other
remedies it may have at law or in equity, to terminate this Agreement and all
rights herein upon not less than thirty (30) days' written notice to the
Purchaser with respect to any monetary default, unless otherwise designated
herein, and upon not less than sixty (60) days written notice with respect to
any non-monetary default, unless otherwise designated herein, provided: (i) the
Manufacturer is in compliance with this Agreement in all material respects; (ii)
any one or more of the events of default set forth below shall occur with
respect to the Purchaser; and (iii) the Purchaser does not fully cure such
default to the satisfaction of the Manufacturer within the applicable thirty
(30) or sixty (60) day notice period or demonstrate to the satisfaction of the
Manufacturer that the Purchaser is actively and diligently pursuing such a cure
and has a substantial likelihood of promptly effecting such cure. Any notice of
default issued by the Manufacturer hereunder shal1 specify the nature of the
default which has caused such notice to be issued. The events of default are:
25.1 If the Purchaser shall fail to pay the Manufacturer any monies or
fees when due;
25.2 If the Purchaser fails to comply with any other material terms or
conditions of this Agreement;
20
25.3 As set forth in paragraph 23.3 regarding a continuing force
majeure event.
25.4 Termination effective immediately, if a receiver, liquidator or
trustee of the Purchaser, or as to any material portion of its business, is
appointed by court order and such order remains in effect for more than thirty
(30) days; or the Purchaser is adjudicated bankrupt or insolvent; or any
material portion of the business of the Purchaser is sequestered by court order
and such order remains in effect for more than thirty (30) days; or a petition
is filed against the Purchaser under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, or liquidation law
of any jurisdiction, whether now or hereafter in effect, and is not dismissed
within thirty (30) days after such filing; or
25.5 Termination effective immediately, if the Purchaser files a
petition in voluntary bankruptcy or seeks relief under any provision of any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution, or liquidation law of any jurisdiction, whether now or hereafter in
effect, or consents to the filing of any petition against it under such law.
26 TERMINATION OF THIS AGREEMENT BY THE PURCHASER.
The Purchaser shall have the right, in addition to all other remedies
it may have at law or in equity, to terminate this Agreement and all rights
herein upon not less than thirty (30) days' written notice to the Manufacturer
with respect to any monetary default, unless otherwise designated herein, and
upon not less than sixty (60) days written notice with respect to any
non-monetary default, unless otherwise designated herein, provided: (i) the
Purchaser is in compliance with this Agreement in all material respects; (ii)
any one or more of the events of default set forth below shall occur with
respect to the Manufacturer; and to the Manufacturer does not fully cure such
default to the satisfaction of the Purchaser within the applicable thirty (30)
or sixty (60) day notice period or demonstrate to the satisfaction of the
Purchaser that the Manufacturer is actively and diligently pursuing such a cure
and has a substantial likelihood of promptly effecting such cure. Any notice of
default issued by the Purchaser hereunder shall specify the nature of the
default which has caused such notice to be issued. The events of default are:
26.1 If the Manufacturer fails to comply with any material terms or
conditions of this Agreement; or
26.2 As set forth in paragraph 20.3 regarding an Ownership Shift; or
21
26.3 As set forth in paragraph 23.3 regarding a continuing force
majeure event.
26.4 If Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx should both directly and
beneficially cease to own stock in the Manufacturer during the term of this
Agreement, the Purchaser shall have the right, for a period of three (3) years
following the date on which Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx both cease to
own any such stock, to terminate this Agreement upon ninety (90) days' prior
written notice. The right of termination set forth in this paragraph 26.4 shall
automatically expire, if not exercised, three (3) years after the date on which
Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx both cease to own any stock in the
Manufacturer, as described herein.
27 EFFECT OF EXPIRATION OR TERMINATION OF THIS AGREEMENT.
27.1 No Release. This Agreement shall terminate and expire
automatically, unless termination has occurred earlier as a result of a
specified default hereunder, on the date specified in the notice of termination.
Any termination of this Agreement, whether due to expiration or an earlier
termination, shall not release a party from payment of any damages sustained by
the other party, from payment of any obligations accrued hereunder, or from
performance of its obligations under the provisions of this Agreement relating
to termination, subject to and limited by the terms of this Agreement.
27.2 Acceleration of Invoices. Upon the expiration or termination of
this Agreement for any reason, whether by reason of default, lapse of time or
other cause, the due date of all invoices for the Products shall automatically
be accelerated so that they shall become due and payable as of the effective
date of the termination, even if longer terms had been provided previously. Any
termination of this Agreement, excluding termination with two (2) years' prior
notice under paragraph 24 hereof by either party, shall give the Manufacturer
the right to cancel all orders of unshipped Products.
27.3 Compensation for Certain Costs. Upon expiration or termination of
this Agreement, the Purchaser shall reimburse the Manufacturer for the
Manufacturer's out-of-pocket cost of all unused cigar labels, boxes and other
unique items that bear the trademarks associated with the Products, and the
Manufacturer shall either destroy such goods or ship such goods to the
Purchaser, in the Purchaser's discretion and at the Purchaser's cost.
22
28 DISCLAIMER.
The Manufacturer makes no warranty that the Products are merchantable
or fit for any particular purpose or fit for any other purpose. The sole
responsibility of the Manufacturer shall be that it will manufacture the
Products substantially in compliance with the description set forth in Exhibit A
attached hereto, which manufacturing process may be changed from time to time in
accordance with paragraph 6 hereof, and the Manufacturer agrees that the
Products will be free from defects in material and workmanship. This warranty is
expressly made in lieu of any and all warranties and the sole liability of the
Manufacturer shall be to repair, replace or credit the Purchaser for any
Products not in conformity with such specifications (as provided in paragraph 13
hereof), and the Purchaser expressly and absolutely waives any rights that it
may have for consequential or incidental damages. Except for directly related
acts of gross negligence of the Manufacturer, the Purchaser agrees, warrants,
and covenant that it shall be solely responsible for compliance with all
federal, state, and local laws (whether such laws are of the United States of
America or other foreign jurisdictions) and regulations pertaining distribution,
marketing and sale of the Products, and without limiting the general
indemnification obligation of the Purchaser as described in paragraph 29.12
hereof, that the Purchaser shall indemnify, defend and hold the Manufacturer,
its officers, directors, employees, agents, successors and assigns harmless from
any and all claims, losses, costs, liabilities, damages, judgments, or related
expenses, including attorneys' and paralegals' fees and other costs of legal
defense, whether direct or indirect, that they or any one or more may sustain or
incur as a result to the Purchaser's failure to comply with such laws and
regulations.
THE MANUFACTURER MAKES NO INDEMNITY, REPRESENTATION OR WARRANTY, EITHER
EXPRESSED OR IMPLIED, WITH RESPECT TO THE PRODUCTS, EXCEPT FOR THE WARRANT
EXPRESSLY SET FORTH IN THIS PARAGRAPH 28, AND IN NO EVENT SHALL THE MANUFACTURER
BE LIABLE TO THE PURCHASER FOR SPECIAL OR CONSEQUENTIAL DAMAGES EXPRESSLY
PROVIDED HEREIN.
29 GENERAL PROVISIONS.
29.1 Survival of Representations; Warranties Etc. Each of the parties
to this Agreement covenants and agrees that its representations, warranties,
covenants, statements, and agreements contained in this Agreement and the
Exhibits hereto and any document delivered in connection herewith shall survive
the May 1, 1997 effective date of this Agreement (as specified in paragraph 1
hereof), and shall remain in effect during the term of this Agreement.
Paragraphs 7, 19, 21, 27, 29.1, 29.12, 29.13 and 29.14 hereof shall survive the
termination or expiration of this Agreement.
23
29.2 Construction. This Agreement is intended by the parties hereto as
a final expression of their agreement as a complete and exclusive statement of
the subject matter of this Agreement. No course of prior dealings between the
parties and no usage of trade shall be relevant or admissible to supplement,
explain or vary any of the terms of this Agreement. Acceptance of, or
acquiescence in, a course of performance rendered under this or any prior
agreement shall not be relevant or admissible to determine the meaning of this
Agreement even though the accepting or acquiescing party has knowledge of the
nature of the performance and an opportunity to make objection. No
representations, understandings, or agreements have been made or relied upon in
making this Agreement other than those specifically set forth herein.
29.3 Merchant Status. The Manufacturer and the Purchaser represent to
each other that they are merchants with respect to the Products. No agent,
employee, or representative of the Purchaser has made, or has any authority to
bind the Manufacturer by, any warranty, representation, or affirmation
concerning the Products. The Purchaser acknowledges that no such affirmation,
warranty or representation has been made, none has been relied upon, and none
forms the basis of this Agreement.
29.4 Notices and Consents. All notices, consents, acceptances and any
other communication required herein shall be in writing and shall be deemed
delivered upon receipt, if delivered in person; upon transmission, if sent by
electronic means (i.e. telecopy or e-mail), with electronic confirmation of
receipt, or four (4) days after posting, if sent by recognized international
expedited delivery service. No notices, consents etc may be sent by mail, due to
the unreliability of the Dominican Republic mail service. All notices, etc.
shall be sent to the parties at their respective addresses set forth below (or
at such other address for a party as shall be specified by notice given
hereunder):
If to Purchaser: Ashton Distributors, Inc.
Attn: Xxxxxx X. Xxxxx, President
0000 Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy: 000-000-0000
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxxxx Xxxx, Xxxxx 0
Xxxxxxxxx, XX 00000
Telecopy: 000-000-0000
24
If to Manufacturer: Xxxxxx X. Xxxxxx, President
Xxxxxx Xxxxx Xxx.
Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxx Xxxxxxxx
Telecopy: 000-000-0000
With a copy to: Xxxxxxx X. Xxxxx, Xx., Esquire
Sharp, Xxxxx & Xxxxxxxx, P.A.
0000 X. Xxxxxxx Xxxx., Xxxxx 000
Xxxxx, Xxxxxxx 00000
Telecopy: 000-000-0000
29.5 Severability of Provisions. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid,
but if any provision of this Agreement shall be prohibited by applicable law,
unenforceable in any jurdisdiction or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition,
unenforceability, or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement, or affecting the
validity or enforceability of such provision in any other jurisdiction.
29.6 Language. The English language text, and American usage thereof,
shall control the interpretation of this Agreement and all writings between the
parties.
29.7 Assignment. Neither this Agreement nor any rights or privileges
hereunder shall be assigned, transferred, shared or divided, by operation of law
or otherwise, in any manner, by either party hereto without the prior written
consent of the other party, which consent may be arbitrarily withheld. Any
purported assignment or transfer not having the written consent of the party
required hereunder to give such consent shall be null and void and shall
constitute a default hereunder. Notwithstanding the foregoing, in the event a
party hereto enters into a business combination with another entity, and upon
consummation of that business combination the current owner of the affected
party, or Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx and/or Xxxxxxx
X. Xxxxxx directly or indirectly, collectively or individually, own a majority
of the voting interests in the surviving entity resulting from the business
combination, the parties hereto agree to consent to the assignment of the
affected party's rights under this Agreement to the surviving entity of such
business combination.
29.8 Paragraph Headings; Plural; Gender Miscellaneous. The paragraph
headings contained herein are for reference only and shall not be considered as
substantive parts of this Agreement. The use of the singular or plural form
shall include the other form and the use of the masculine, feminine or neutered
gender
25
shall include the other gender. The words "hereof," "herein" and "thereunder"
and words of similar import when used in this Agreement, shall refer to this
Agreement as a whole, including all exhibits hereto, and not to any particular
provision of this Agreement unless otherwise specified; all references herein to
paragraphs, sections or exhibits shall refer to paragraphs or sections of this
Agreement or exhibits to this Agreement. The parties hereto acknowledge and
agree that the recitals immediately following the preamble of this Agreement are
true and correct and are incorporated herein as a part of this Agreement.
This Agreement shall be binding upon the parties hereto.
29.9 Entire Agreement; Amendment. This Agreement (including the
exhibits hereto and all documents and papers delivered pursuant hereto and any
written amendments hereof executed by the parties to this Agreement, as
specified herein) constitutes the entire agreement and supersedes all prior
agreements and understandings, oral and written, among the parties hereto with
respect to the subject matter hereof. This Agreement may be amended only by
written agreement executed by all of the parties hereto. Time is of the essence
of this Agreement and each of its provisions, and no extension of any time
period shall be binding upon any of the parties hereto unless expressly provided
herein or in writing and signed by all of the parties hereto.
29.10 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
29.11 Further Assurances. The parties hereto shall execute and deliver,
or cause to be executed and delivered, such additional or further transfers,
assignments, endorsements or other instruments as the other party or its counsel
may reasonably request from time to time for purposes of carry1ng out the
transactions contemplated by this Agreement.
29.12 Indemnification.
29.12.1 The Purchaser agrees to indemnify, defend and hold the
Manufacturer, its officers, directors, employees, agents, successors, and
assigns, harmless against all claims, losses, costs, liabilities, damages,
judgments, or expenses of whatever form or nature, including attorneys' and
paralegals' fees and other costs of legal defense, whether direct or indirect,
that they, or any of them, may sustain or incur as a result of any acts or
omissions of the Purchaser including but not limited to (i) the Purchaser's
material breach of any of the provisions of this Agreement, (ii) the Purchaser's
gross negligence or other tortuous conduct, or (iii) violation by the Purchaser
of any applicable law, regulation or order in the United States of America or
any other applicable law, regulation or order.
26
29.12.2 The Manufacturer agrees to indemnify, defend and hold
the Purchaser, its officers, directors, employees, agents, successors, and
assigns, harmless against all claims, losses, costs, liabilities, damages,
judgments, or expenses of whatever form or nature, including attorneys' and
paralegals' fees and other costs of legal defense, whether direct or indirect,
that they, or any of them, may sustain or incur as a result of any acts or
omissions of the Manufacturer including but not limited to (i) the
Manufacturer's material breach of any of the provisions of this Agreement, (ii)
the Manufacturer's gross negligence or other tortuous conduct, or (iii)
violation by the Manufacturer of any law, regulation or order in the United
States of America that may be applicable to it, or any other applicable law,
regulation or order.
29.13 Remedies. The Purchaser hereby expressly waives any rights that
it may have to specific performance or any other remedies at law other than the
remedies specifically provided for in this Agreement.
29.14 Governing Law; Venue; Process. The validity, construction, and
enforcement of, and the remedies under, this Agreement shall be governed in
accordance with the laws of Florida (except that if any choice of law provision
under Florida law would result in the application of the law of a state or
jurisdiction other than Florida, such provision shall not apply). The parties
hereto expressly acknowledge and agree that the United Nations convention for
the International Sale of Goods shall not apply to this Agreement. The parties
to this Agreement agree that jurisdiction and venue shall properly lie in the
courts of the State of Florida, with respect to any legal proceedings arising
under or connected with this
27
Agreement. The parties further agree that the delivery by courier of any process
shall constitute valid and lawful process against them.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
FUENTE CIGAR LTD.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx, President
the "Manufacturer"
ASHTON DISTRIBUTORS, INC.
By: /s/ Xxxxxx Xxxxx
------------------------------------
Xxxxxx Xxxxx, President
the "Purchaser"
28
LIST OF EXHIBITS
EXHIBIT A - Product Specifications
EXHIBIT B - Purchase Price
EXHIBIT C - Trademark Ownership
EXHIBIT A
Xxxx'x Dominican Bundles
Item Length Ring Packing
-----------------------------------------------------------
Presidente 8 1/2" 52 25
Chairman 7 1/2" 52 25
Xxxxxxxxx 7" 49 25
Rothschild 4 1/2" 50 25
#1 Extra 7" 43 25
Toro 6" 50 25
#4 5 1/2" 43 25
Xxxx'x Classics
Item Length Ring Packing
------------------------------------------------------------
Corona 5 1/2" 44 25
Xxxxxxxxx 7 1/2" 52 25
Lonsdale 6 3/4" 43 25
Gran Corona 6 7/8" 48 25
Robusto 5 1/2" 50 25
Xxxx'x Special Maduro
Item Length Ring Packing
------------------------------------------------------------
Presidente 8 1/2" 52 25
Chairman 7 1/2" 52 25
Xxxxxxxxx 7" 49 25
#1 6 3/4" 43 25
Toro 6" 50 25
#4 5 1/2" 43 25
Page A-1
Ashton
Item Length Ring Packing
------------------------------------------------------------
Xxxxxxxxx 7 1/2" 52 25
Xxxxxxxxx 7 1/2" 52 4
Prime Minister 6 7/8" 48 25
Prime Minister 6 7/8" 48 4
8-9-8 6 1/2" 44 25
8-9-8 6 1/2" 44 5
Magnum 5" 50 25
Magnum 5" 50 4
Double Magnum 6" 50 25
Corona 5 1/3" 44 25
Corona 5 1/3" 44 5
Elegante 6 1/2" 35 25
Panetela 6" 36 25
Panetela 6" 36 5
Cordial 5" 30 25
Cordial 5" 30 5
Ashton Cabinet Select
Item Length Ring Packing
------------------------------------------------------------
#1 9" 52 10
#2 7" 46 20
#3 6" 46 20
#6 5 1/2" 52 25
#7 6 1/4" 52 25
#8 7" 49 25
#10 7 1/2" 52 20
ASHTON AGED MADURO
Item Length Ring Packing
------------------------------------------------------------
#60 7 1/2" 52 25
#50 7" 48 25
#40 6" 50 25
#30 6 3/4" 44 25
#20 5 l/2" 44 25
#10 5" 50 25
Page A-2
EXHIBIT C
Trademark Ownership
Trademark Owner
--------- -----
Xxxxxx Xxxxxx Holdings, Inc.
Xxxx'x Xxxx'x Cigar Company, Inc.
Exhibit A - Page 1
