PCI RETAILER AGREEMENT
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VENDOR: RETAILER: Tosco Marketing Co.
PREMIUM CIGARS INTERNATIONAL, LTD. Circle K
11259 East Via Linda, Suite #100-102 *
602-657-0200 (Office) 602-661-6026 (Facsimile) *
800-PCI-1001 (Toll Free)
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Effective Date: August 25, 1997
1. TERM OF AGREEMENT. The initial term of this Agreement shall be for
one (1) calendar year from the Effective Date (the "First Term"). This Agreement
shall automatically renew at the expiration of the First Term for up to three
(3) additional one (1) year terms (each an "Additional Term") unless either
party, at least thirty (30) calendar days prior to the end of the then existing
First Term or Additional Term, gives written notice to the other party that this
Agreement shall not renew. Notwithstanding the forgoing, either party may
terminate this Agreement at any time upon one hundred twenty (120) days prior
written notice to the other party of such termination.
2. GENERAL RETAILER OBLIGATIONS. Retailer agrees to use its standard
business practices to actively promote, in lawful ways, the marketing and sale
of Vendor's products (the "Vendor Products") to customers at each retail
location of Retailer listed on exhibit "A" attached hereto (each a "Retail
Location"). Retailer shall conduct its operations at each Retail Location in a
manner which shall not reflect adversely upon the reputation, quality or
credibility of Vendor or the Vendor Products and shall comply with all
applicable federal, territorial, state and local laws and regulations in
performing its duties hereunder. Furthermore, in the event that Retailer becomes
aware of any material complaints, charges or claims concerning Vendor or the
Vendor Products, Retailer shall notify Vendor of such complaints, charges or
claims. If requested by Vendor, Retailer shall consult with Vendor regarding
mutually agreeable actions to be taken by Retailer regarding any such
complaints, charges or claims.
3. CONTACT PERSON. Retailer shall provide Vendor with the name and
phone number of the person responsible for communications with Vendor regarding
this Agreement. At the request of Vendor, Retailer shall provide Vendor with any
changes to the name or phone number of such person after the occurrence of such
changes.
4. HUMIDORS. All Vendor Products shall only be displayed in and sold
from humidors or other display units (each a "Vendor Humidor" and collectively
"Vendor Humidors") provided or sold to Retailer by Vendor or an authorized
distributor of Vendor Products (a "Vendor Distributor") pursuant to this
Agreement. Either Vendor or a Vendor Distributor shall provide Retailer with the
Vendor Humidors required for the sale of Vendor Products at each Retail
Location. Neither Vendor nor the Vendor Distributor shall charge Retailer for
the first Vendor Humidor required for each display position at a Retail Location
(each a "First Vendor Humidor" and collectively "First Vendor Humidors").
Retailer shall be responsible for the care of all Vendor Humidors placed in or
at a Retail Location. Any damaged (except by normal wear and tear), lost or
stolen Vendor Humidors shall be repaired or replaced by Vendor or a Vendor
Distributor, with the cost of any such repairs or replacements being charged to
and paid by Retailer. The cost to Retailer for the replacement of a
* Confidential portions omitted and filed
separately with the Commission.
Vendor Humidor shall be prorated to the Retailer based upon * schedule of PCI's
cost as set forth in Exhibit "A" attached hereto and hereby incorporated by
reference. Any repair or replacement of a Vendor Humidor due to manufacturing
defects or normal wear and tear shall be made by Vendor or a Vendor Distributor
at no charge or cost to Retailer.
5. HUMIDOR PLACEMENT. Retailer agrees to have at least one (1) Vendor
Humidor prominently displayed at each Retail Location in full view of a primary
traffic location.
6. PRODUCTS AND DISPLAYS: OWNERSHIP. Only Vendor Products may be placed
in or on Vendor Humidors or sold in, on, or from Vendor Humidors. Retailer and
each Retail Location shall display only such labels, displays or signs in or on
the Vendor Humidors as are mutually agreeable to Vendor and Retailer. All Vendor
Humidors provided to Retailer pursuant to this Agreement, including replacements
for damaged, lost or stolen Vendor Humidors, shall be and shall remain the
property of Vendor. Upon the termination of this Agreement for any reason,
Retailer shall return to Vendor, within thirty (30) calendar days of such
termination, all Vendor Humidors provided to Retailer pursuant to this
Agreement. Any and all costs of the return of Vendor Humidors pursuant to this
Section 6 shall be paid by Vendor.
7. PAYMENT. Retailer shall pay for all Vendor Products placed in a
Vendor Humidor at each Retail Location. Such payment shall be made on the
following terms: * otherwise.
8. WARRANTIES AND REPRESENTATIONS. As of the date of this Agreement,
each party represents and warrants that: (i) it holds all necessary federal,
state and local licenses and permits required for the sale, distribution and
marketing of Vendor Products to customers in accordance with applicable law (the
"Required Permits"); (ii) there are no actions or proceedings pending or
contemplated within its knowledge that would in any way jeopardize any Required
Permits; (iii) it is in good standing under the laws of the state in which it is
located, has all requisite corporate or organizational authority required to
perform its obligations under this Agreement and has taken all corporate or
organizational actions required for the performance of its obligations under
this Agreement and (iv) its performance of its obligations under this Agreement
will not violate any agreement or contract to which it is a party. Each party
agrees to use commercially reasonable efforts to ensure that the above
representations and warranties shall remain true throughout the term of this
Agreement and will notify the other party, in writing, of any material changes
of the above conditions.
9. POLICIES AND PROCEDURES. Any and all marketing or sales materials
related to the Vendor Products shall be mutually agreeable to Vendor and
Retailer and, if Vendor notifies Retailer that any such materials are
objectionable to Vendor, then Retailer shall work with Vendor to reasonably
resolve such objections to the mutual satisfaction of both Vendor and Retailer.
Retailer shall not make false or misleading representations or claims with
respect to Vendor or the Vendor Products. Retailer shall also refrain from
communicating, as being binding on Vendor, any representations, guarantees or
warranties with respect to the Vendor Products, except as expressly authorized
by Vendor in writing or are set forth in written materials provided by Vendor.
10. INDEPENDENT CONTRACTOR. Vendor and Retailer specifically agree that
for all purposes hereunder, Retailer is, and shall be deemed to be, an
independent contractor. Neither Retailer nor Retailer's employees, agents or
representatives shall be deemed to be employees, agents
* Confidential portions omitted and filed
separately with the Commission.
or representatives of Vendor, nor shall any of them have the power to enter into
any contract, agreement or obligation on behalf of Vendor or to otherwise
legally bind Vendor in any way, nor enlarge upon or extend any warranty or
representation regarding Vendor Products beyond that made by Vendor or the
manufacturer of such products. Retailer shall be responsible for obtaining and
paying for any and all costs, bonds, insurance and licenses required for
Retailer's distribution, sale and marketing of the Vendor Products. Retailer
shall also be further responsible for the collection, payment and reporting of
any and all taxes required to be paid and/or reported by Retailer by any
federal, state, territorial or local government including, but not limited to,
any and all sales, use, employee, withholding and valued added taxes.
Notwithstanding the foregoing, Vendor shall be responsible for paying tobacco
taxes required by any federal, state, territorial or local government to be paid
on or for the Vendor Products.
11. RELATED PRODUCTS. During the term of this Agreement and any other
period that Retailer sells or markets the Vendor Products, Retailer hereby
agrees not to sell or market, either directly or indirectly, any cigars or cigar
products, other than the Vendor Products, in, on or from humidors.
12. INDEMNIFICATION. Each party agrees to and does hereby fully
indemnify and hold harmless the other party and any of the other party's
affiliates, successors, assigns, officers, directors, shareholders, employees,
and agents (the "Indemnified Parties"), from and against any and all losses,
damages, liabilities, obligations, judgments, settlements, costs and other
expenses incurred or suffered by the Indemnified Parties by reason of the
assertion of any claim or the institution of any litigation against them during
the term of the Agreement or subsequent to its expiration or termination, which
is directly or indirectly based upon or related to any acts or omissions of such
party (the "Indemnifying Party") or the Indemnifying Party's employees or
agents, or which are directly or indirectly based upon or related to any breach
of the Agreement by the Indemnifying Party. The Indemnifying Party shall assume
the defense, at its sole expense, of any claim or litigation as to which it has
an indemnification obligation hereunder. If the Indemnifying Party fails to do
so, the Indemnified Parties shall have the right to assume their own defense,
and the Indemnifying Party shall be obligated to reimburse the Indemnified
Parties for any and all reasonable expenses (including, but not limited to,
attorneys' fees) incurred in the defense of such claim or litigation, in
addition to the Indemnifying Party's other indemnity obligations hereunder.
Notwithstanding the foregoing, Vendor shall neither be responsible nor indemnify
Retailer for any liability resulting from or related to the Vendor Products that
is caused by, based on or related to any spoilage, damage or other modification
of the Vendor Products related to or resulting from the acts of or omissions of
Retailer or Retailer's employees, agents, contractors or affiliates.
13. PRODUCT WARRANTIES. Vendor warrants that, prior to and at the time
of delivery of Vendor Products to Retailer, all Vendor Products shall be
merchantable for their intended use and shall be in compliance with all
applicable state and federal laws and regulations. Any and all other warranties,
whether implied, express or arising pursuant to applicable law and relating to
the Vendor Products, are hereby disclaimed to the maximum extent possible under
applicable law. Furthermore, Vendor shall not be liable to Retailer for any loss
of profit or any indirect, special, incidental or consequential damages in
connection with or arising from the Vendor Products unless advised in writing of
the possibility of such damages prior to or at the time of the ordering by
Retailer of such Vendor Products.
* Confidential portions omitted and filed
separately with the Commission.
14. GOODWILL. Retailer agrees that it neither has, nor will acquire,
any vested or proprietary right or interest with respect to the marketing and
sale of Vendor Products, and that any such goodwill created or increased during
the term of this Agreement shall be considered the property of Vendor.
15. AGREEMENT TO PERFORM NECESSARY ACTS. Each party to this Agreement
agrees to perform any further acts reasonably required under the terms of this
Agreement and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement. This Agreement,
together with any exhibits, schedules and other documents contemplated hereby,
constitute the final written expression of all of the agreements between the
parties, and is a complete and exclusive statement of those terms. It supersedes
all understandings and negotiations concerning the matters specified herein. Any
representations, promises, warranties or statements made by any party that
differ in any way from the terms of this written Agreement, and the exhibits,
schedules and other documents contemplated hereby, shall be given no force or
effect.
16. CONFIDENTIALITY. Other than to their accountants and lawyers or as
otherwise required by applicable law or for their performance of their
obligations under this Agreement, the parties agree, during the term of this
Agreement and for a period not to exceed two (2) years thereafter, not to (i)
publicly announce or disclose the terms of this Agreement or (ii) directly or
indirectly issue or permit the issuance of any publicity whatsoever regarding
the existence or terms of this Agreement.
17. GOVERNING LAW: ATTORNEY'S FEES. This Agreement has been made and
entered into in the State of Arizona and shall be construed in accordance with
the laws of the State of Arizona, United States of America, excluding its choice
of law provisions. The parties agree that the Courts of Arizona, including
Maricopa County, Arizona Superior Court shall be the proper and exclusive forum
for any action relating to a dispute between the parties arising out of, or
related to, this Agreement. Each party consents to the in personam jurisdiction
of said court. The prevailing party in any dispute arising under this Agreement
shall be entitled to receive its costs, fees, and expenses, including attorneys'
fees. Reasonable attorneys' fees shall be determined by the court and not a
jury.
18. SURVIVAL. Any obligation or agreement herein which has not been or
cannot be fully performed prior to the termination or expiration of this
Agreement, including, but not limited to, the provisions of Sections 1 1 and 12
above, shall survive such termination or expiration.
19. NOTICES. The service of any notice provided for in this Agreement
shall be complete and effective on the date such notice is placed in the United
States Mail, certified or registered with return receipt requested, postage
prepaid, and addressed to the respective parties as first written above.
20. SECTION HEADINGS. The section headings contained in this Agreement
are for convenience only and shall in no manner be construed as a part of this
Agreement.
21. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such
* Confidential portions omitted and filed
separately with the Commission.
invalidity, illegality, or unenforceability shall not affect any other
provision, and this Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been included in the Agreement.
22. BINDING ON SUCCESSORS AND ASSIGNS. Subject to the provisions
herein, all covenants and agreements in this Agreement shall extend to and be
binding upon the heirs, legal representatives, successors and assigns of the
respective parties hereto.
IN WITNESS WHEREOF the parties hereby agree to the above and execute
this Agreements as of the Effective Date.
"Vendor" "Retailer"
Premium Cigars International, Ltd.
By: /s/ Steven Lambrecht By: /s/ *
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Its: C.E.O. Its: [authorized officer]
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* Confidential portions omitted and filed
separately with the Commission.
EXHIBIT "A"
* Confidential portions omitted and filed
separately with the Commission.