License And Distribution Agreement

LICENSE and DISTRIBUTION AGREEMENT


THIS AGREEMENT, is made at Aventura, Florida, as of the 28th day of October, 1997, by and between


OTAM SpA, a corporation organized under the laws of Italy, with its
registered offices at Via S. Siro, 1, 16038 Santa Margherita Ligure (Ge),
Italy ("LICENSEE")


and


CIGARETTE RACING TEAM, INC., a corporation organized under the laws of the
State of Florida, U.S.A., with offices at 3131 N.E. 188th Street, Aventura,
Florida 33180, U.S.A. ("LICENSOR")


(hereinafter collectively referred to as ("The Parties")


RECITALS


LICENSEE and LICENSOR, have read this Agreement (hereinafter called "Agreement") and understand and accept the terms, conditions, and covenants contained in this Agreement as being reasonably necessary to maintain LICENSOR's standards and business practices as it relates to the retaining of entities utilizing the LICENSOR's Marks (hereinafter called ("Marks").


WHEREAS, LICENSOR is to the best of its knowledge and belief, the registered owner of the trademarks, service marks, and business names, and registrations for such trademarks, service marks and business names "Cigarette") in International Class 12, as listed on Schedule A hereto; and


WHEREAS, LICENSEE is desirous of obtaining rights in LICENSOR's Mark for use in connection with manufacturing, selling and/or distributing of specific watercraft bearing such Mark which are, respectively 45 feet and 55 feet in length as more specifically defined in Schedule B, hereto (the "Boats").


LICENSEE has investigated and become familiar with LICENSOR and desires upon the terms and conditions set forth herein to enter into this Agreement. LICENSEE acknowledges that it is essential to the maintenance of the high standards of LICENSOR, that LICENSEE maintain and adhere to the standards, procedures and policies described herein.


THEREFORE, The Parties, intending to be legally bound, for and in consideration of the mutual covenants hereinafter following, do mutually covenant and agree:


Page 1 of 12


1. GRANT OF LICENSE


LICENSOR grants to LICENSEE the exclusive, world-wide right and
license to use the LICENSOR's Mark in connection with manufacture, sale,
and/or distribution of the Boats. It is understood and agreed that LICENSEE
shall have no right of sublicense or assignment hereunder under any
condition.


2. NON-DISCLOSURE


As a condition of this Agreement, The Parties agrees that during the
term of this Agreement and any subsequent renewals as defined in Section 5
hereto, The Parties shall not disclose to any third party the terms of this
Agreement.


The Parties acknowledges that each individually would suffer
irreparable harm which could not be satisfied by monetary damages, should
either of The Parties violate the confidentiality of this Agreement and the
terms and conditions hereof, and the undertakings contemplated by this
Agreement.


3. QUALITY MAINTENANCE


LICENSEE agrees to notify LICENSOR by facsimile, first class mail or
overnight mail of any Sales Order (the "Sales Order") for the purchase of a
Boat and thereafter to further notify LICENSOR by same means of the
completion and delivery of such Boat as described in said Sales Order.
LICENSEE undertakes to manufacture the Boats in accordance with
descriptions set forth in Schedule B, applying the high quality standards
required for boats for their class and category and bearing the Mark. Upon
reasonable written request of LICENSEE, which written request shall be made
no more than three days after receipt of such notification in LICENSEE's
offices, the inspection of any Boat utilizing LICENSOR's Marks. If LICENSOR
disapproves of any product submitted for review under this Section 2,
LICENSOR shall notify LICENSEE of LICENSOR's disapproval in writing within
ten (10) days of receipt, in LICENSEE's offices, of such specifications.
Such written disapproval shall set forth in detail:


a) Each disapproval


b) Each defect of each disapproval, and


c) Non-binding, commercially reasonable suggestions for correcting
each such defect.


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4. TERM


A. Initial Term


The initial term of this Agreement shall be for a period of
twenty-four (24) months, commencing on the date first mentioned above,
subject to the terms and conditions set forth herein.


B. Renewal Option


LICENSEE shall have the option to renew this Agreement for two (2)
additional periods of twenty-four (24) months each. In all cases,
renewal shall require that: (i) LICENSEE not be in violation of this
Agreement or any other Agreement between LICENSOR and LICENSEE; (ii)
LICENSEE give written notice of their election to renew not less than
three (3) months prior to the end of the term then in effect, and
(iii) LICENSEE shall have paid to LICENSOR pursuant to Section 5B
hereof royalties of at least Six Hundred Thousand United States
(US$600,000) Dollars, during the initial term inclusive of the Advance
Royalty (as defined in Section 5A hereof). If any rules or laws
modifies, alters or amends all or part of the renewal provisions, then
such provisions shall be modified, altered or amended accordingly, so
as to be in full compliance with such rules and laws.


C. Subsequent Renewal Options


Subsequent to the periods as mentioned in Paragraph 4B hereto,
LICENSEE shall have the option to renew this Agreement for two (2)
additional periods of twenty-four (24) months each, if (i) LICENSEE
not be in violation of this Agreement or any other Agreement between
LICENSOR and LICENSEE; (ii) LICENSEE give written notice of their
election to renew not less than three (3) months prior to the end of
the term then in effect; and (iii) during the last term then in effect
LICENSEE shall have paid to LICENSOR pursuant to Section 5B a minimum
of Six Hundred Thousand United States (US$600,000) Dollars.


This Agreement shall continue in force and effect for as provided for
in Section 4 herein and subject to all other terms and conditions set forth
in this Agreement.


5. ROYALTY


A. LICENSEE shall, upon execution of this Agreement, pay to LICENSOR an
advance on royalties in the sum of Four Hundred Thousand United States
Dollars (US$400,000)(the "Advance Royalty").


Page 3 of 12


B. LICENSEE shall pay to LICENSOR as a royalty a percentage of the gross
revenues received by LICENSEE for each Boat sold which bears the Mark.
Said payment shall be made no later than fifteen (15) days after the
receipt of payment by LICENSEE. Payments are to be made at the offices
of LICENSOR, or to such other address as LICENSOR shall notify
LICENSEE, as follows:


(i) on the first three (3) Boats sold ten (10%) percent


(ii) on the fourth and fifth Boats sold nine (9%) percent


(iii) on the sixth Boat sold eight (8%) percent


(iv) any subsequent Boats sold seven and one-half
(7.5%) percent


C. On the sale of any Boats, until Four Hundred Thousand United States
Dollars (US$400,000) in royalties have been earned, the royalties
earned will be a credit against the Advance Royalty.


D. During the term hereof, LICENSEE shall deliver to LICENSOR a Report
(the "Report") of all monies received by LICENSEE during each calendar
quarter with respect to the sale of Boats, no later than 30 days of
the end of the then applicable calendar quarter. The Report shall
fully disclose the amount of income from the sale of the Boats for the
then applicable quarter.


E. LICENSEE shall not be obliged to pay any minimum royalties or monies
to LICENSOR except as explicitly required in this Section 5.


6. GOODWILL


A. LICENSEE recognizes the value of the goodwill associated with the
licensing of the Boats and that the Mark has a secondary meaning in
the mind of the public. LICENSEE acknowledges that the Mark (including
all rights therein and goodwill associated therewith) shall, as
between LICENSEE and LICENSOR, be and remain the exclusive and
complete property of the LICENSOR. LICENSEE will not, during the term
of this Agreement or thereafter, question or challenge the property
right of LICENSOR therein, or the validity of this Agreement.


B. LICENSEE acknowledges and agrees that:


(i) The Mark as owned by LICENSOR shall be and remain the sole and
complete property of LICENSOR;


(ii) LICENSEE shall not at any time acquire or claim any right, title
or interest of any nature ...