This Marketing Services Agreement ("Agreement")
is made as of this 16th day of November, 2015 ("Effective Date"), by and
between and among Rich Cigars, Inc., a Florida corporation in good standing
with offices at 5100 SW 103rd Street, Ocala, Florida 34476 ("Rich
Cigars"), Cruz Control Entertainment & Marketing Inc., a New York
corporation ("Cruz Control") f/s/o James Cruz ("Mr. Cruz") with
an address c/o The Baldonado Group, P.C., 515 Madison Avenue, New York, New
York 10022, to set forth the terms and conditions under which Mr. Cruz shall
deliver services for Rich Cigars with and through Cruz Control.
1. Scope and Performance of Services.
Mr. Cruz shall perform the following tasks ("Services") for Rich Cigars
A. Marketing Plan Generally.
Mr. Cruz shall develop a comprehensive marketing plan for Rich Cigars ("Marketing
Plan"), and shall execute the Marketing Plan by his own actions and by
supervision of Rich Cigars staff that may be assigned to assist Mr. Cruz from
time to time. Components of the Marketing Plan shall include, at a minimum:
Brand development and management generally;
Advertising content design and creation;
Event planning and attendance; and
Sponsorship and endorsement identification and
Cruz shall deliver to Rich Cigars:
1) Weekly progress reports during the Term which briefly
summarize tasks accomplished during that week and tasks planned for the
following week. Such weekly reports shall be provided orally or in writing as
Rich Cigars may direct.
2) During the first three months of the Term Mr. Cruz shall
prepare and deliver a reasonably-comprehensive written Marketing Plan that
describes all recommended actions to be taken by Rich Cigars to establish its
brand and advertise its products.
3) Within two weeks after the first anniversary of the
Effective Date Mr. Cruz shall prepare and deliver an annual marketing report
that summarizes marketing actions taken during the prior year, and that states
and explains the rationale for any recommended modification of the Marketing
Plan in light of company experience and perceived changes in the market for the
4) Within two weeks after the earlier to occur of (1)
expiration of the Term and (2) earlier termination of the provision of
Services, Mr. Cruz shall prepare and deliver an annual marketing report that
summarizes marketing actions taken during the Term, and that states and
explains the rationale for any recommended modification of the Marketing Plan
in light of company experience and perceived changes in the market for the
company's products since the prior report.
C. Exclusions and Limits. The Services shall
not include the creation of any contracts or other obligations of Rich
Cigars of any kind, including any regarding the creation or publication of any
advertisement or social media posting, or regarding the creation of any event
or sponsorship or endorsement deal. Mr. Cruz shall recommend such actions to
the President of Rich Cigars, who may authorize, modify, or reject such
recommendations in the sole discretion of Rich Cigars. The President may from
time to time authorize Mr. Cruz to enter into specific agreements or to take
other specific actions on behalf of Rich Cigars, without creating any general
authority to create any obligations for or otherwise act on behalf of Rich
D. Method and Manner. Mr. Cruz and Cruz Control
will use best efforts to perform the Services, with time and place of
performance determined in their reasonable discretion.
Support for Services. Rich Cigars shall
provide information to Mr. Cruz regarding Rich Cigars to the extent necessary
for Mr. Cruz to perform the Services, and shall advance and reimburse expenses
necessary to perform those Services as set forth in Section 5 of this
Agreement. All other actions and skills necessary to deliver Services shall be
the sole responsibility of and provided by Mr. Cruz and/or Cruz Control.
Reporting and Meeting. Mr. Cruz shall
report directly to the President of Rich Cigars. Mr. Cruz shall travel for
meetings with the President of Rich Cigars and/or the President's designee(s)
as the President may require, subject to Mr. Cruz's reasonable availability.
3. Term. Mr. Cruz shall provide the Services
until the second anniversary of the Effective Date, unless Rich Cigars earlier terminates
Mr. Cruz for good cause. Examples of good cause include, without limitation,
death or disability, criminal charges, civil charges involving moral turpitude
brought by a party unaffiliated with Rich Cigars, and/or material breach of
this Agreement. Termination shall be effective immediately upon delivery of
notice by Rich Cigars following a reasonable determination of good cause made
by a professional neutral selected by Rich Cigars ("Term").
A. The sole compensation to Cruz Control and Mr. Cruz
arising from this Agreement shall be the transfer to Mr. Cruz of Common Stock
of Rich Cigars ("Equity Compensation"), as follows:
1) 30,000 shares as of the Effective Date (prior receipt of
which is hereby acknowledged by Mr. Cruz) ("First Transfer");
2) 10,000 shares on the first anniversary of the Effective
Date ("Second Transfer");
3) Additional shares on the second anniversary of the
Effective Date as required to bring Mr. Cruz's total holdings in Rich Cigars to
ten percent (10%) of all issued shares ("Final Transfer") as of that
The computation set forth in Section 4 A (3)(ii) below is
provided as an illustration only, for the avoidance of doubt regarding
calculation of Equity Compensation, and not to modify any of the foregoing
ii. As of October 30, 2015, Rich Cigars issued 471,080 shares
of stock and has 200,000,000 shares authorized. If issued shares remain the
same and Equity Compensation is not otherwise affected, the Final Transfer
would be 7,108 shares (i.e., 30,000 First Transfer + 10,000 Second
Transfer + 7,108 Final Transfer = 47,108 shares as Equity Compensation = 10% of
471,080 of total issued shares).
B. Equity Compensation transferred to Mr. Cruz shall be
protected against dilution caused by additional issue(s) of Common Stock of
Rich Cigars that may occur during the Term, but only as and to the extent that
founder shares may be protected against such dilution. Said protection against
dilution, if any is required, shall be accomplished in computation of the Final
Transfer pursuant to Section 4 A above. For the avoidance of doubt, the total
number of shares issued to Mr. Cruz will bring his holdings to ten percent
(10%) ownership in Rich Cigars after all shares have vested pursuant to
paragraph 4 A (3) above, and Mr. Cruz will maintain a 10% ownership interest as
it pertains to shares whenever issued as and to the extent founder shares are
diluted and/or are protected against dilution.
C. The Equity Compensation may issue from company treasury
stock, or be transferred from other stockholder(s) of Rich Cigars as Rich
Cigars may determine in its reasonable discretion.
D. Mr. Cruz is solely responsible for any tax consequences
of his receipt and disposition of the Equity Compensation.
E. The First Transfer shall revert to Rich Cigars if and only
if grounds to terminate for good cause (other than death or disability) are
found to have existed prior to the Second Transfer (with such good cause found
pursuant to the process set forth in Section 3 above). Rich Cigars'
obligations to deliver the Second Transfer and the Final Transfer are
conditioned upon Mr. Cruz's good faith performance of this Agreement and the
absence of good cause for termination at all times before the time of each such
transfer, and upon this Agreement being in full force and effect at the time of
each transfer. In the event that Mr. Cruz is required to transfer Equity
Compensation back to Rich Cigars pursuant to this paragraph due to death or
disability, Rich Cigars shall provide consideration of fair market value for
the transferred equity (with value determined as of the date of termination).
In the event of early termination for any other cause, Rich Cigars shall
provide consideration of $1.00 for the transfer. Rich Cigars is authorized to
make all transfers described in this paragraph without further action on the
part of Mr. Cruz.
No other rights to compensation are created or implied by
this Agreement or Mr. Cruz's performance thereof, and no health insurance or
other benefits of any kind shall be provided by Rich Cigars to Mr. Cruz unless
by later amendment of this Agreement according to its terms for amendment.
G. Notwithstanding anything to the contrary, Mr. Cruz and
Cruz Control shall have no obligation to transfer the entire Equity
Compensation back to Rich Cigars due to death or disability. In the event of
death or disability, the shares issue to Mr. Cruz and or Cruz Control shall be
prorated up to the time of thirty (30) days of such death or disability.
Moreover, disability shall be defined as a period of more than 90 consecutive
days in which Mr. Cruz is unable to perform the Services due to a physical or
mental impairment, certified by a qualified health care professional.
5. Expenses. Rich Cigars shall advance
or reimburse only those expenses that are incurred in and necessary to
performance of the Services and that it approves in writing in advance. Such
payments shall include, without limitation, the reasonable costs for travel
required pursuant to Section 2 of this Agreement. Mr. Cruz shall be solely
responsible to satisfy the cost of any unauthorized expenses. Mr. Cruz shall
submit proposals for advancement of expenses for approval by Rich Cigars that
shall identify with particularity and provide reasonable justification for and
approximation of anticipated costs. Mr. Cruz shall submit invoices monthly for
expense reimbursement, supported by receipts showing payment by Mr. Cruz.
Failure to properly document expenses shall waive and forfeit reimbursement.
Rich Cigars shall provide all office supplies and similar tangible materials
necessary for Mr. Cruz's performance of the Services upon Mr. Cruz's request.
6. Ownership. All work product,
deliverables, and any other works created by Mr. Cruz specifically for Rich
Cigars in connection with this Agreement shall be "works for hire" for Rich
Cigars is and shall be deemed the sole and exclusive owner of all right, title,
and interest to all work product and deliverables and other works generated by
Mr. Cruz pursuant to this Agreement, without any rights retained by Mr. Cruz.
Mr. Cruz will hold in strict confidence and not disclose any information
regarding Rich Cigars and/or persons affiliated with Rich Cigars that is not
readily available to the public including, without limitation, information
regarding Rich Cigars' customers, financial reports and data, costs, pricing,
business strategies, business methods, capacities, plans, data and lists,
forms, contracts, contacts, suppliers and other vendors, staffing,
compensation, private communications among Rich Cigars staff and/or between
Rich Cigars and Mr. Cruz, and any other information about Rich Cigars that has
not been publicly disclosed. These confidentiality obligations shall survive
termination of this Agreement and shall continue indefinitely, with the sole
exception of disclosures compelled by law (e.g., pursuant to court
order) or advance consent to disclosure by Rich Cigars. Disclosures to Cruz
Control, and its employees and attorneys, are permitted by Rich Cigars upon the
condition that all such recipients agree to be bound by the confidentiality
terms of this Agreement. Cruz Control is the guarantor of compliance with such
terms by Cruz Control and those working with it who receive confidential
information regarding Rich Cigars.
Conflicts or Competition. Mr. Cruz represents and warrants that he is not employed
by or otherwise performing any services of any kind for any person or entity
that develops, manufactures, markets, advertises, and/or sells cigars and/or
other products containing tobacco ("Rich Cigars Competitor"). Mr. Cruz
will not, during the Term become employed by, or provide services for, or
otherwise engage in any activity that is for or on behalf of any Rich Cigars
Competitor, or that otherwise competes with Rich Cigars. Breach of any term of
this paragraph shall be a material breach of this Agreement, remediable by
seeking a temporary restraining order and injunction to protect interests of
Rich Cigars, in addition to any other remedies Rich Cigars may have at law.
Relationship and Conduct. Cruz Control f/s/o Mr. Cruz is an independent contractor
engaged to perform Services for Rich Cigars pursuant to this Agreement, and it
shall determine the method and manner for the delivery of services, consistent
with the terms of this Agreement. Mr. Cruz is not an employee or agent or
other legal representative of Rich Cigars in any capacity. Mr. Cruz and Cruz
Control shall conduct all activities for Rich Cigars in a manner that will
comply in all material respects with all applicable local, state, federal, and
foreign laws and regulations.
Rich Cigars shall indemnify, defend, and hold harmless Mr. Cruz and Cruz
Control and their relevant affiliates and assigns ("Cruz Indemnitees") from and
against any and all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries, and deficiencies, including interest,
penalties, and reasonable attorneys' fees and costs ("Liabilities") that the
Cruz Indemnitees may incur or suffer and that result from any breach or failure
of Rich Cigars to perform any of the representations and obligations in this
Agreement, including but not limited to, demands arising from injuries or death
of personal and damage to property, excepting Liabilities arising from the
gross negligence and/or willful misconduct of the part(ies) seeking
Cruz Control shall indemnify, defend, and hold harmless Rich Cigars and its
relevant affiliates and assigns ("Rich Cigars Indemnitees") Liabilities that
the Cruz Indemnitees may incur or suffer and that result from any breach or
failure of Cruz and/or Cruz Control to perform any of the representations and
obligations in this Agreement, including but not limited to, demands arising
from injuries or death of personal and damage to property, excepting
Liabilities arising from the gross negligence and/or willful misconduct of the
part(ies) seeking indemnification.
Notices. All notices pursuant
to this Agreement shall be in writing, effective upon receipt, and delivered
personally or by email with acknowledgement, or by certified mail with return
receipt, or by express delivery courier (e.g., Federal Express) to the
addresses set forth in the introduction above, or to a different address as any
party may later provide by notice given pursuant to this paragraph.
Law, Jurisdiction and Venue. This Agreement shall be governed by the laws of the State
of New York, without regard to the conflict of law principles thereof. Any
disputes arising from this Agreement shall be litigated in the United States
District Court for the Southern District of New York, or if that court is
without subject matter jurisdiction, then in the New York State Supreme Court,
New York County.
and Consent. All parties hereto represent and warrant that they
were provided adequate opportunity to confer with legal and other advisors of
their selection regarding this Agreement, and that each enters into it freely
and voluntarily to avail themselves of its expected benefits.
This Agreement contains the entire agreement between the parties with respect
to its subject matter, and all prior communications, agreements and
understandings, oral or written, between the parties are merged into and
superseded by this Agreement.
Amendment. This Agreement shall
not be amended or otherwise modified except by a writing signed by all parties.
With the intention to
create a binding contract the parties have caused this Agreement to be executed by
their duly authorized representatives.