Management Agreement Dated ( ), 1997

EXHIBIT 10.8


MANAGEMENT AGREEMENT


MANAGEMENT AGREEMENT (this "Agreement") entered into as of the ____ day of June, 1997, by and among MC MANAGEMENT, INC., a New Jersey corporation (the "Management Company"), and 800-JR CIGAR, INC., a Delaware corporation ("JR Cigar"), recently formed to hold all of the outstanding shares of capital stock of J.R. Tobacco of America, Inc., Cigars by Santa Clara, N.A., Inc., J.N.R. Grocery Corp., J.R. Tobacco NC, Inc., J&R Tobacco (New Jersey) Corp., J.R. Tobacco Company of Michigan, Inc., J.R.-46th Street, Inc., J.R. Tobacco Outlet, Inc., J.R. Statesville, Inc. and JR Cigar (DC), Inc. (collectively, the "Constituent Entities" and, together with JR Cigar, the "JR Entities").


WHEREAS, JR Cigar intends to effect a reorganization (the "Reorganization") pursuant to which the stockholders of the Constituent Entities will contribute to JR Cigar all of the outstanding shares of capital stock of the Constituent Entities in exchange for shares of common stock of JR Cigar, all upon the terms and subject to the conditions set forth in a certain contribution agreement (the "Contribution Agreement") and, simultaneously therewith, to conduct an initial public offering of its common stock (the "Offering");


WHEREAS, the Management Company has staff specially skilled in corporate finance, accounting, telemarketing and other management services;


WHEREAS, prior to the date hereof, the Management Company has become familiar with the operations and business of the Constituent Entities as a result of its having provided substantial management services to the Constituent Entities over the course of the past several years;


WHEREAS, following the consummation of the Reorganization and the Offering, JR Cigar will require the Management Company's special skills and services in connection with its general business operations; and


WHEREAS, the Management Company is willing to provide such skills and services to JR Cigar;


NOW THEREFORE, in consideration of the mutual rights and obligations set forth herein, the parties hereto, intending to be legally bound, do hereby agree as follows:


1. Engagement. JR Cigar hereby engages the Management Company upon the terms and conditions set forth herein to provide management and consulting services to JR Cigar. These services will be in the field of corporate finance, accounting, telemarketing and such other management areas as the Management Company and JR Cigar shall mutually agree.


In consideration of the compensation specified herein, the Management Company accepts such engagement and agrees to perform the services specified herein.


2. Management Term. The engagement hereunder shall be for an initial term commencing on the date the Offering is consummated (the "Retention Date") and expiring on the fifth anniversary thereof and shall automatically be extended for successive periods of one (1) year each, unless the Management Company or JR Cigar shall give written notice of termination of the engagement at the end of the initial term or such one (1) year period, as the case may be, to the other at least ninety (90) days prior to the end of the initial term or such one (1) year period, as the case may be, in which case the engagement hereunder shall terminate at the end of the initial term or such one (1) year period, as the case may be.


3. Services to be Performed. The Management Company shall devote such time and efforts to the performance of the management and consulting services contemplated by this Agreement as JR Cigar and the Management Company deem necessary or appropriate. However, no precise number of hours is required to be devoted by the Management Company on a weekly or monthly basis. The Management Company may perform services under this Agreement directly, through its employees or agents, or, with the approval of JR Cigar, indirectly through such outside consultants as the Management Company may engage for such purpose; provided, however, that the Management Company shall be solely responsible for any fees due to such outside consultants unless payment therefor is approved by the Board of Directors of JR Cigar. The Management Company may also be retained to provide such additional special services to JR Cigar as approved from time to time by the Board of Directors of JR Cigar, upon terms and conditions mutually acceptable to the Management Company and JR Cigar. JR Cigar acknowledges that the Management Company's services to JR Cigar are not exclusive and that the Management Company and its affiliates (including its officers, directors, employees, representatives and agents) may render similar services to other persons; provided, however, that the Management Company shall not render services to any other entity or person engaged in the business of manufacturing, distributing or selling tobacco or tobacco-related products during the term of this Agreement other than to Lew Rothman, Lavonda Rothman or entities controlled by Lew Rothman, Lavonda Rothman or members of their immediate families; and provided further, that during the course of and for two years following the termination of the Management Company's retention by JR Cigar, the Management Company shall not, without receiving the prior approval of JR Cigar: (i) directly or indirectly own, manage, control, participate in, consult with, render services for, or in any manner engage in any business competing with the businesses of JR Cigar or any of the Constituent Entities, within any geographical area in which JR Cigar or any of the Constituent Entities engage or plan to engage in such businesses; (ii) interfere with the relationship between JR Cigar or any of the Constituent Entities and any employee thereof; (iii) induce or attempt to induce any customer, supplier, licensee or other entity or person having a business relationship with JR Cigar or any of the Constituent Entities to cease doing business with JR Cigar or any of the Constituent Entities; or (iv) interfere with the relationship between any such customer, supplier, licensee or other entity or person and JR Cigar or any of the Constituent Entities.


2


4. Compensation; Expense Reimbursement.


4.1 Signing Bonus; Management Fees. In consideration of the Management Company providing management and consulting services to JR Cigar, JR Cigar shall pay the Management Company management fees in an aggregate amount equal to the percentages of gross product sales by the JR Cigar Entities as set forth on the attached Schedule I. An estimate of suc ...