Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Terrace Ventures Inc. - Exhibit 10.1

 PURCHASE AGREEMENT 

THIS AGREEMENT dated as of the 15th day of August, 2001.

BETWEEN:

  
     DON ARCHIBALD, of 1797 Layton Drive, North Vancouver, British
      Columbia, Canada V7H 1X7 

     (hereinafter called the “Vendor”) 

  

AND:

  
     TERRACE VENTURES INC., of 2300 West Sahara Avenue, Suite
      500, Box 18, Las Vegas, NV 89102 

     (hereinafter called the “Purchaser”) 

  

WHEREAS:

 A.                              The
  Vendor is the sole recorded and beneficial owner of the mineral claim described
  in Schedule “A” hereto (the “Property”); 

 B.                              The
  Vendor wishes to sell an undivided 100% interest in and to the Property to the
  Purchaser and the Purchaser wishes to acquire such interest pursuant to the
  terms and conditions hereinafter set out; 

 NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration
  of the premises and of the mutual covenants and agreements hereinafter contained,
  the parties hereto agree as follows: 

 VENDOR’S REPRESENTATIONS AND WARRANTIES

	1. 	 	The Vendor represents and warrants to
        the Purchaser that:

	 	 	 
	 	(a)	He is the sole recorded and beneficial
        owner of an undivided l00% interest in and to the Property;

	 	 	 
	 	(b)	The claim comprising the Property has
        been, to the best of the information and belief of the Vendor, properly
        located and staked and recorded in compliance with the laws of the jurisdiction
        in which it is situate, is accurately described in Schedule “A”
        and is a valid and subsisting mineral claim as at the date of this Agreement;

- 2-

	 	(c)	The Property is in good standing under
        all applicable laws and regulations, all assessment work required to be
        performed and filed has been performed and filed, all taxes and other
        payments have been paid and all filings have been made;

	 	 	 
	 	(d)	The Property is free and clear of any
        encumbrances, liens or charges and neither the Vendor nor, to the best
        of the Vendor’s knowledge, any of her predecessors in interest or
        title, have done anything whereby the Property may be encumbered; and

	 	 	 
	 	(e)	He has the right to enter into this
        Agreement and to deal with the Property in accordance with the terms of
        this Agreement, there are no disputes over the title to the Property,
        and no other party has any interest in the Property or the production
        therefrom or any right to acquire any such interest.

	 	 	 
	PURCHASER’S REPRESENTATIONS AND WARRANTIES
	 	 	 
	2. 	 	The Purchaser represents and warrants
        to the Vendor that:

	 	 	 
	 	(a)	it has been duly incorporated, amalgamated
        or continued and validly exists as a corporation in good standing under
        the laws of its jurisdiction of incorporation, amalgamation or continuation;

	 	 	 
	 	(b)	it has duly obtained all corporate authorizations
        for the execution of this Agreement and for the performance of this Agreement
        by it, and the consummation of the transactions herein contemplated will
        not conflict with or result in any breach of any covenants or agreements
        contained in, or constitute a default under, or result in the creation
        of any encumbrance under the provisions of the Articles or the constating
        documents of the Purchaser or any shareholders’ or directors’
        resolution, indenture, agreement or other instrument whatsoever to which
        the Purchaser is a party or by which it is bound or to which it or the
        Property may be subject; and

	 	 	 
	 	(c)	no proceedings are pending for, and
        the Purchaser is unaware of any basis for the institution of any proceedings
        leading to, the dissolution or winding up of the Purchaser or the placing
        of the Purchaser in bankruptcy or subject to any other laws governing
        the affairs of insolvent corporations.

	 	 	 
	SURVIVAL OF REPRESENTATIONS AND WARRANTIES

       3.                              The
        representations and warranties in this Agreement shall survive the closing
        of this transaction and shall apply to all assignments, conveyances, transfers
        and documents delivered in connection with this Agreement and there shall
        not be any merger of any representations and warranties in such assignments,
        conveyances, transfers or documents notwithstanding any rule of law, equity
        or statute to the contrary and all such rules are hereby waived. The Vendor
        shall have the right to waive any representation and warranty made by
        the Purchaser in the Vendor’s favour without prejudice to any of
        its rights with respect to any other breach by the Purchaser and the Purchaser

- 3-

 shall have the same right with respect to any of the Vendor’s
  representations in the Purchaser’s favour. 

 PURCHASE AND SALE 

 4.                              The
  Vendor hereby sells and assigns and the Purchaser hereby purchases an undivided
  100% interest in and to the Property for the sum of $5,000 US. 

 FURTHER ASSURANCES 

 5.                              Concurrently
  with the execution of this Agreement the Vendor shall execute or cause to be
  executed a Bill of Sale or such other documents as the Purchaser may reasonable
  require transferring a 100% interest in and to the Property to the Purchaser
  which the Purchaser shall be at liberty to record forthwith. The parties shall
  execute all further documents or assurances as may be required to carry out
  the full intent of this Agreement. 

 NOTICE 

 6.                              Each
  notice, demand or other communication required or permitted to be given under
  this Agreement shall be in writing and shall be delivered, telegraphed or telecopied
  to such party at the address for such party specified above. The date of receipt
  of such notice, demand or other communication shall be the date of delivery
  thereof if delivered or telegraphed or, if given by telecopier, shall be deemed
  conclusively to be the next business day. Either party may at any time and from
  time to time notify the other party in writing of a change of address and the
  new address to which notice shall be given to it thereafter until further change.

 PAYMENT 

 7.                              All
  references to monies hereunder will be in United States funds. All payments
  to be made to any party hereunder may be made by cheque mailed or delivered
  to such party to its address for notice purposes as provided herein. 

 ENTIRE AGREEMENT 

 8.                              This
  Agreement constitutes the entire agreement between the parties and replaces
  and supercedes all agreements, memoranda, correspondence, communications, negotiations
  and representations, whether verbal or express or implied, statutory or otherwise,
  between the parties with respect to the subject matter herein. 

 GENDER 

 9.                              Wherever
  the singular or neuter are used herein the same shall be deemed to include the
  plural, feminine or masculine. 

 ENUREMENT 

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 10.                            This
  Agreement shall enure to the benefit of and be binding upon the parties hereto
  and their respective successors and permitted assigns. 

IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of the day and year first above written.

	SIGNED SEALED & DELIVERED	)	 
	BY DON ARCHIBALD	)	 
	in the presence of:	)	 
	 	)	 
	 	)	 
	/s/ L. Anderson	)	/s/ Don Archibad
	Name of Witness	)	DON ARCHIBALD
	 	)	 
	 	)	 
	Address of Witness	 	 
	 	 	 
	TERRACE VENTURES INC.	 	 
	by its authorized signatory:	 	 
	 	 	 
	 	 	 
	/s/
      Gordon F. Burley	 	 
	Signature of Authorized Signatory	 	 
	 	 	 
	Gordon
      F. Burley	 	 
	Name of Authorized Signatory	 	 
	 	 	 
	 	 	 
	Position of Authorized Signatory	 	 

SCHEDULE “A”

THE PROPERTY

	 	Record	 	 
	Claim Name	Number	Anniversary Date	Year of Expiry
	 	 	 	 
	PEACH #1	385660	March 31	2002

all located in the Similkameen Mining Division, British ColumbiaIncentive Stock Plan, Page 12
                                  EXHIBIT 10.5

                             TAMBORIL CIGAR COMPANY
                              INCENTIVE STOCK PLAN

1.     Purpose of the Plan

       This Incentive Stock Plan is intended to promote the interests of
Tamboril Cigar Company, a Delaware corporation (the "Company"), by providing the
employees of the Company, who will be largely responsible for the management,
growth and protection of the business of the Company, with a proprietary
interest in the Company.

2.     Definitions

       As used in the Plan, the following definitions apply to the terms
indicated below:

       (a) "Board of Directors" shall mean the Board of Directors of Tamboril
Cigar Company, a Delaware corporation.

       (b) "Cause," when used in connection with the termination of a
Participant's employment with the Company, shall mean the termination of the
Participant's employment by the Company by reason of (i) the conviction of the
Participant by a court of competent jurisdiction as to which no further appeal
can be taken of a crime involving moral turpitude; (ii) the proven commission by
the Participant of an act of fraud upon the Company; (iii) the willful and
proven misappropriation of any funds or property of the Company by the
Participant; (iv) the willful, continued and unreasonable failure by the
Participant to perform duties assigned to him and agreed to by him; (v) the
knowing engagement by the Participant in any direct, material conflict of
interest with the Company without compliance with the Company's conflict of
interest policy, if any, then in effect; (vi) the knowing engagement by the
Participant, without the written approval of the Board of Directors of the
Company, in any activity which competes with the business of the Company or
which would result in a material injury to the Company; or (vii) the knowing
engagement in any activity which would constitute a material violation of the
provisions of the Company's Policies and Procedures Manual, if any, then in
effect.

       (c) "Cash Bonus" shall mean an award of a bonus payable in cash pursuant
             to Section 10 hereof.

       (d) "Change in Control" shall mean:

              (1) a "change in control" of the Company, as that term is
contemplated in the federal securities laws; or

              (2) the occurrence of any of the following events:

                    (A)    any Person becomes, after the effective date of this
                           Plan, the "beneficial owner" (as defined in Rule
                           13d-3 promulgated under the Exchange Act), directly
                           or indirectly, of securities of the Company
                           representing 20% or more of the combined voting power
                           of the Company's then outstanding securities;
                           provided, that the acquisition of additional voting
                           securities, after the effective date of this Plan, by
                           any Person who is, as of the effective date of this
                           Plan, the beneficial owner, directly or indirectly,
                           of 20% or more of the combined voting power of the
                           Company's then outstanding securities, shall not
                           constitute a "Change in Control" of the Company for
                           purposes of this Section 2(d).

                    (B)    a majority of individuals who are nominated by the
                           Board of Directors for election to the Board of
                           Directors on any date, fail to be elected to the
                           Board of Directors as a direct or indirect result of
                           any proxy fight or contested election for positions
                           on the Board of Directors, or

                    (C)    the Board of Directors determines in its sole and
                           absolute discretion that there has been a change in
                           control of the Company.

       (e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

       (f) "Committee" shall mean the Compensation Committee of the Board of
Directors or such other committee as the Board of Directors shall appoint from
time to time to administer the Plan.

       (g) "Common Stock" shall mean the Company's Common Stock, par value
$.0001 per share.

       (h) "Company" shall mean Tamboril Cigar Company, a Delaware corporation,
and each of its Subsidiaries, and its successors.

       (i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

       (j) the "Fair Market Value" of a share of Common Stock on any date shall
be (i) the closing sales price on the immediately preceding business day of a
share of Common Stock as reported on the principal securities exchange on which
shares of Common Stock are then listed or admitted to trading or (ii) if not so
reported, the average of the closing bid and asked prices for a share of Common
Stock on the immediately preceding business day as quoted on the National
Association of Securities Dealers Automated Quotation System ("Nasdaq") or (iii)
if not quoted on Nasdaq, the average of the closing bid and asked prices for a
share of Common Stock as quoted by the National Quotation Bureau's "Pink Sheets"
or the National Association of Securities Dealers' OTC Bulletin Board System. If
the price of a share of Common Stock shall not be so reported, the Committee in
its absolute discretion shall determine the Fair Market Value of a share of
Common Stock.

       (k) "Incentive Award" shall mean an Option, a share of Restricted Stock,
a share of Phantom Stock, a Stock Bonus or Cash Bonus granted pursuant to the
terms of the Plan.

       (l) "Incentive Stock Option" shall mean an Option which is an "incentive
stock option" within the meaning of Section 422 of the Code and which is
identified as an Incentive Stock Option in the agreement by which it is
evidenced.

       (m) "Issue Date" shall mean the date established by the Committee on
which the Company pursuant to the terms of Section 7(d) shall issue certificates
representing shares of Restricted Stock hereof.

       (n) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option and which is identified as a Non-Qualified Stock Option
in the agreement by which it is evidenced.

       (o) "Option" shall mean an option to purchase shares of Common Stock of
the Company granted pursuant to Section 6 hereof. Each Option shall be
identified as either an Incentive Stock Option or a Non-Qualified Stock Option
in the agreement by which it is evidenced.

       (p) "Participant" shall mean a full-time employee of the Company who is
eligible to participate in the Plan and to whom an Incentive Award is granted
pursuant to the Plan, and, upon his death, his successors, heirs, executors and
administrators, as the case may be, to the extent permitted hereby.

       (q) "Person" shall mean a "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act, and the rules and regulations in effect
from time to time thereunder.

       (r) a share of "Phantom Stock" shall represent the right to receive in
cash the Fair Market Value of a share of Common Stock of the Company, which
right is granted pursuant to Section 8 hereof and subject to the terms and
conditions contained therein.

       (s) "Plan" shall mean the Tamboril Cigar Company Incentive Stock Plan, as
it may be amended from time to time.

       (t) "Qualified Domestic Relations Order" shall mean a qualified domestic
relations order as defined in the Code, in Title I of the Employee Retirement
Income Security Act, or in the rules and regulations as may be in effect from
time to time thereunder.

       (u) a share of "Restricted Stock" shall mean a share of Common Stock
which is granted pursuant to the terms of Section 7 hereof and which is subject
to the restrictions set forth in Section 7 (c) hereof for so long as such
restrictions continue to apply to such share.

       (v) "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.

       (w) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Common Stock pursuant to Section 9 hereof.

       (x) "Subsidiary" or "Subsidiaries" shall mean any and all corporations in
which at the pertinent time the Company owns, directly or indirectly, stock
vested with 50% or more of the total combined voting power of all classes of
stock of such corporations within the meaning of Section 424(f) of the Code.

       (y) "Vesting Date" shall mean the date established by the Committee on
which a share of Restricted Stock or Phantom Stock may vest.

3.     Stock Subject to the Plan

       Under the Plan, the Committee may grant to Participants (i) Options, (ii)
shares of Restricted Stock, (iii) shares of Phantom Stock, (iv) Stock Bonuses
and (v) Cash Bonuses.

       The Committee may grant Options, shares of Restricted Stock, shares of
Phantom Stock and Stock Bonuses under the Plan with respect to a number of
shares of Common Stock that in the aggregate at any time does not exceed
15,000,000 shares of Common Stock. The grant of a Cash Bonus shall not reduce
the number of shares of Common Stock with respect to which Options, shares of
Restricted Stock, shares of Phantom Stock or Stock Bonuses may be granted
pursuant to the Plan.

       If any outstanding Option expires, terminates or is canceled for any
reason, the shares of Common Stock subject to the unexercised portion of such
Option shall again be available for grant under the Plan. If any shares of
Restricted Stock or Phantom Stock, or any shares of Common Stock granted in a
Stock Bonus are forfeited or canceled for any reason, such shares shall again be
available for grant under the Plan.

       Shares of Common Stock issued under the Plan may be either newly issued
or treasury shares, at the discretion of the Committee.

4.     Administration of the Plan

       The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more persons, each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3(c)(2) promulgated under Section 16 of
the Exchange Act. The Committee shall from time to time designate the employees
of the Company who shall be granted Incentive Awards and the amount and type of
such Incentive Awards.

       The Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan and the terms of
any Incentive Award issued under it and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Committee
shall be final and binding on all parties.

       The Committee may, in its absolute discretion (i) accelerate the date on
which any Option granted under the Plan becomes exercisable, (ii) extend the
date on which any Option granted under the Plan ceases to be exercisable, (iii)
accelerate the Vesting Date or Issue Date, or waive any condition imposed
pursuant to Section 7(b) hereof, with respect to any share of Restricted Stock
granted under the Plan and (iv) accelerate the Vesting Date or waive any
condition imposed pursuant to Section 8 hereof, with respect to any share of
Phantom Stock granted under the Plan.

       In addition, the Committee may, in its absolute discretion, grant
Incentive Awards to Participants on the condition that such Participants
surrender to the Committee for cancellation such other Incentive Awards
(including, without limitation, Incentive Awards with higher exercise prices) as
the Committee specifies. Notwithstanding Section 3 hereof, Incentive Awards
granted on the condition of surrender of outstanding Incentive Awards shall not
count against the limits set forth in such Section 3 until Such time as such
Incentive Awards are surrendered.

       The Committee in its absolute discretion shall determine whether an
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment.

       No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated from and against any cost or
expense (including attorneys' fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee) arising out of any
action, omission or determination relating to the Plan, unless, in either case,
such action, omission or determination was taken or made by such member,
director or employee in bad faith and without reasonable belief that it was in
the best interests of the Company.

5.     Eligibility

       (a) Incentive Stock Options may only be granted to persons who are
regular full-time employees of the Company. In determining the employees to whom
Incentive Stock Options shall be granted and the number of shares to be covered
by each Incentive Stock Option, the Committee shall take into account the nature
of employees' duties, their present and potential contributions to the success
of the Company and such other factors as it shall deem relevant in connection
with accomplishing the purposes of the Plan. An employee who had been granted an
option or options under the Plan may be granted an additional option or options,
subject to such limitations as may be imposed by the Code on such options.

       (b) Non-Qualified Stock Options, shares of Restricted Stock, shares of
Phantom Stock, Stock Bonuses and Cash Bonus granted may be granted to any
person, including, but not limited to, directors of the Company who do not
qualify as "outside directors" under Section 162(m) of the Internal Revenue Code
of 1986, independent agents, consultants, attorneys and advisors, who the
Committee believes has contributed, or will contribute, to the success of the
Company.

6.     Options

       The Committee may grant Options pursuant to the Plan, which Options shall
be evidenced by agreements in such form as the Committee shall from time to time
approve. Options shall comply with and be subject to the following terms and
conditions:

       (a)    Identification of Options

       All Options granted under the Plan shall be clearly identified in the
agreement evidencing such Options as either Incentive Stock Options or as
Non-Qualified Stock Options.

       (b)    Exercise Price

       The exercise price of any Non-Qualified Stock Option granted under the
Plan shall be such price as the Committee shall determine on the date on which
such Non-Qualified Stock Option is granted; provided, that such price may not be
less than the minimum price required by law. Except as provided in Section 6(d)
hereof, the exercise price of any Incentive Stock Option granted under the Plan
shall be not less than 100% of the Fair Market Value of a share of Common Stock
on the date on which such Incentive Stock Option is granted.

       (c)    Term and Exercise of Options

         (1) Each Option shall be exercisable on such date or dates, during such
       period and for such number of shares of Common Stock as shall be
       determined by the Committee on the day on which such Option is granted
       and set forth in the agreement evidencing the Option; provided, however,
       that no Option shall be exercisable after the expiration of ten years
       from the date such Option was granted; and, provided, further, that each
       Option shall be subject to earlier termination, expiration or
       cancellation as provided in the Plan.

         (2) Each Option shall be exercisable in whole or in part with respect
       to whole shares of Common Stock. The partial exercise of an Option shall
       not cause the expiration, termination or cancellation of the remaining
       portion thereof. Upon the partial exercise of an Option, the agreement
       evidencing such Option shall be returned to the Participant exercising
       such Option together with the delivery of the certificates described in
       Section 6(c)(5) hereof.

         (3) An Option shall be exercised by delivering notice to the Company's
       principal office, to the attention of its Secretary, no fewer than five
       business days in advance of the effective date of the proposed exercise.
       Such notice shall be accompanied by the agreement evidencing the Option,
       shall specify the number of shares of Common Stock with respect to which
       the Option is being exercised and the effective date of the proposed
       exercise, and shall be signed by the Participant. The Participant may
       withdraw such notice at any time prior to the close of business on the
       business day immediately preceding the effective date of the proposed
       exercise, in which case such agreement shall be returned to the
       Participant. Payment for shares of Common Stock purchased upon the
       exercise of an Option shall be made on the effective date of such
       exercise either (i) in cash, by certified check, bank cashier's check or
       wire transfer or (ii) subject to the approval of the Committee, in shares
       of Common Stock owned by the Participant and valued at their Fair Market
       Value on the effective date of such exercise, or (iii) partly in shares
       of Common Stock with the balance in cash, by certified check, bank
       cashier's check or wire transfer. Any payment in shares of Common Stock
       shall be effected by the delivery of such shares to the Secretary of the
       Company, duly endorsed in blank or accompanied by stock powers duly
       executed in blank, together with any other documents and evidences as the
       Secretary of the Company shall require from time to time.

         (4) Any Option granted under the Plan may be exercised by a
       broker-dealer acting on behalf of a Participant if (i) the broker-dealer
       has received from the Participant or the Company a duly endorsed
       agreement evidencing such Option and instructions signed by the
       Participant requesting the Company to deliver the shares of Common Stock
       subject to such Option to the broker-dealer on behalf of the Participant
       and specifying the account into which such shares should be deposited,
       (ii) adequate provision has been made with respect to the payment of any
       withholding taxes due upon such exercise and (iii) the broker-dealer and
       the Participant have otherwise complied with Section 220.3(e)(4) of
       Regulation T, 12 CFR Part 220.

         (5) Certificates for shares of Common Stock purchased upon the exercise
       of an Option shall be issued in the name of the Participant and delivered
       to the Participant as soon as practicable following the effective date on
       which the Option is exercised; provided, however, that such delivery
       shall be effected for all purposes when a stock transfer agent of the
       Company shall have deposited such certificates in the United States mail,
       addressed to the Participant.

         (6) During the lifetime of a Participant each Option granted to him
       shall be exercisable only by him. No Option shall be assignable or
       transferable otherwise than by will or by the laws of descent and
       distribution.

       (d)    Limitations on Grant of Incentive Stock Options

         (1) The aggregate Fair Market Value of shares of Common Stock with
       respect to which "incentive stock options" (within the meaning of Section
       422, without regard to Section 422(d) of the Code) are exercisable for
       the first time by a Participant during any calendar year under the Plan
       (and any other stock option plan of the Company, or any subsidiary of the
       Company shall not exceed $100,000. Such Fair Market Value shall be
       determined as of the date on which each such Incentive Stock Option is
       granted. If such aggregate Fair Market Value of shares of Common Stock
       underlying such Incentive Stock Options exceeds $100,000, then Incentive
       Stock Options granted hereunder to such Participant shall, to the extent
       and in the order required by Regulations promulgated under the Code (or
       any other authority having the force of Regulations), automatically be
       deemed to be Non-Qualified Stock Options, but all other terms and
       provisions of such Incentive Stock Options shall remain unchanged. In the
       absence of such Regulations (and authority), or if such Regulations (or
       authority) require or permit a designation of the options which shall
       cease to constitute Incentive Stock Options, Incentive Stock Options
       shall, to the extent of such excess and in the order in which they were
       granted, automatically be deemed to be Non-Qualified Stock Options, but
       all other terms and provisions of such Incentive Stock Options shall
       remain unchanged.

         (2) No Incentive Stock Option may be granted to an individual if, at
       the time of the proposed grant, such individual owns, directly or
       indirectly (based on the attribution rules in Section 424(d) of the Code)
       stock possessing more than ten percent of the total combined voting power
       of all classes of stock of the Company or any of its subsidiaries, unless
       (i) the exercise price of such Incentive Stock Option is at least 110% of
       the Fair Market Value of a share of Common Stock at the time such
       Incentive Stock Option is granted and (ii) such Incentive Stock Option is
       not exercisable after the expiration of five years from the date such
       Incentive Stock Option is granted.

       (e)    Effect of Termination of Employment

         (1) If the employment of a Participant with the Company shall terminate
       for any reason other than Cause, "permanent and total disability (within
       the meaning of Section 22(e)(3) of the Code) or the death of the
       Participant (i) Options granted to such Participant, to the extent that
       they were exercisable at the time of such termination, shall remain
       exercisable until the expiration of one month after such termination, on
       which date they shall expire, and (ii) Options granted to such
       Participant, to the extent that they were not exercisable at the time of
       such termination, shall expire at the close of business on the date of
       such termination; provided, however, that no Option shall be exercisable
       after the expiration of its term.

         (2) If the employment of a Participant with the Company shall terminate
       as a result of the "permanent and total disability (within the meaning of
       Section 22(e)(3) of the Code) of the Participant, the voluntary
       retirement of the Participant in accordance with the Company's retirement
       policy as then in effect or the death of the Participant (i) Options
       granted to such Participant, to the extent that they were exercisable at
       the time of such termination, shall remain exercisable until the
       expiration of one year after such termination, on which date they shall
       expire, and (ii) Options granted to such Participant, to the extent that
       they were not exercisable at the time of such termination, shall expire
       at the close of business on the date of such termination; provided,
       however, that no Option shall be exercisable after the expiration of its
       term.

         (3) In the event of the termination of a Participant's employment for
       Cause, all outstanding Options granted to such Participant shall expire
       at the commencement of business on the date of such termination.

       (f) Acceleration of Exercise Date Upon Change in Control

       Upon the occurrence of a Change in Control, each Option granted under the
Plan and outstanding at such time shall become fully and immediately exercisable
and shall remain exercisable until its expiration, termination or cancellation
pursuant to the terms of the Plan.

7.     Restricted Stock

       The Committee may grant shares of Restricted Stock pursuant to the Plan.
Each grant of shares of Restricted Stock shall be evidenced by an agreement in
such form as the Committee shall from time to time approve. Each grant of shares
of Restricted Stock shall comply with and be subject to the following terms and
conditions:

       (a)    Issue Date and Vesting Date

       At the time of the grant of shares of Restricted Stock, the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting Dates
with respect to such shares. The Committee may divide such shares into classes
and assign a different Issue Date and/or Vesting Date for each class. Except as
provided in Sections 7(c) and 7(f) hereof, upon the occurrence of the Issue Date
with respect to a share of Restricted Stock, a share of Restricted Stock shall
be issued in accordance with the provisions of Section 7(d) hereof. Provided
that all conditions to the vesting of a share of Restricted Stock imposed
pursuant to Section 7(b) hereof are satisfied, and except as provided in
Sections 7(c) and 7(f) hereof, upon the occurrence of the Vesting Date with
respect to a share of Restricted Stock, such share shall vest and the
restrictions of Section 7(c) hereof shall cease to apply to such share.

       (b)    Conditions to Vesting

       At the time of the grant of shares of Restricted Stock, the Committee may
impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it in its absolute discretion deems
appropriate. By way of example and not by way of limitation, the Committee may
require, as a condition to the vesting of any class or classes of shares of
Restricted Stock, that the Participant or the Company achieve certain
performance criteria, such criteria to be specified by the Committee at the time
of the grant of such shares.

       (c)    Restrictions on Transfer Prior to Vesting

       Prior to the vesting of a share of Restricted Stock, no transfer of a
Participant's rights with respect to such share, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to such share, but immediately upon any
attempt to transfer such fights, such share, and all of the rights related
thereto, shall be forfeited by the Participant and the transfer shall be of no
force or effect.

       (d)    Issuance of Certificates

         (1) Except as provided in Sections 7(c) or 7(f) hereof, reasonably
       promptly after the Issue Date with respect to shares of Restricted Stock,
       the Company shall cause to be issued a stock certificate, registered in
       the name of the Participant to whom such shares were granted, evidencing
       such shares: provided, that the Company shall not cause to be issued such
       a stock certificates unless it has received a stock power duly endorsed
       in blank with respect to such shares. Each such stock certificate shall
       bear the following legend:

          The transferability of this certificate and the shares of stock
          represented hereby are subject to the restrictions, terms and
          conditions (including forfeiture and restrictions against transfer)
          contained in the Tamboril Cigar Company--Incentive Stock Plan and an
          Agreement entered into between the registered owner of such shares and
          Tamboril Cigar Company A copy of the Plan and Agreement is on file in
          the office of the Secretary of Tamboril Cigar Company 1612 N. Osceola
          Avenue, Clearwater, FL 33755.

       Such legend shall not be removed from the certificate evidencing such
       shares until such shares vest pursuant to the terms hereof.

         (2) Each certificate issued pursuant to Paragraph 7 (d)(1) hereof,
       together with the stock powers relating to the shares of Restricted Stock
       evidenced by such certificate, shall be held by the Company. The Company
       shall issue to the Participant a receipt evidencing the certificates held
       by it which are registered in the name of the Participant.

       (e)    Consequences Upon Vesting

       Upon the vesting of a share of Restricted Stock pursuant to the terms
hereof, the restrictions of Section 7(c) hereof shall cease to apply to such
share. Reasonably promptly after a share of Restricted Stock vests pursuant to
the terms hereof, the Company shall cause to be issued and delivered to the
Participant to whom such shares were granted, a certificate evidencing such
share, free of the legend set forth in Paragraph 7 (d)(1) hereof, together with
any other property of the Participant held by Company pursuant to Section 7(d)
hereof, provided, however, that such delivery shall be effected for all purposes
when the Company shall have deposited such certificate and other property in the
United States mail, addressed to the Participant.

       (f)    Effect of Termination of Employment

         (1) If the employment of a Participant with the Company shall terminate
       for any reason other than Cause prior to the vesting of shares of
       Restricted Stock granted to such Participant, a portion of such shares,
       to the extent not forfeited or canceled on or prior to such termination
       pursuant to any provision hereof, shall vest on the date of such
       termination. The portion referred to in the preceding sentence shall be
       determined by the Committee at the time of the grant of such shares of
       Restricted Stock and may be based on the achievement of any conditions
       imposed by the Committee with respect to such shares pursuant to Section
       7(b). Such portion may equal zero.

         (2) In the event of the termination of a Participant's employment for
       Cause, all shares of Restricted Stock granted to such Participant that
       have not vested as of the date of such termination shall immediately be
       forfeited.

       (g)    Effect of Change in Control

       Upon the occurrence of a Change in Control, all shares of Restricted
Stock that have not theretofore vested (including those with respect to which
the Issue Date has not yet occurred) shall immediately vest.

8.     Phantom Stock

       The Committee may grant shares of Phantom Stock pursuant to the Plan.
Each grant of shares of Phantom Stock shall be evidenced by an agreement in such
form as the Committee shall from time to time approve. Each grant of shares of
Phantom Stock shall comply with and be subject to the following terms and
conditions:

       (a)    Vesting Date

       At the time of the grant of shares of Phantom Stock, the Committee shall
establish a Vesting Date or Vesting Dates with respect to such shares. The
Committee may divide such shares into classes and assign a different Vesting
Date for each class. Provided that all conditions to the vesting of a share of
Phantom Stock imposed pursuant to Section 8(c) hereof are satisfied, and except
as provided in Section 8(d) hereof, upon the occurrence of the Vesting Date with
respect to a share of Phantom Stock, such share shall vest.

       (b)    Benefit Upon Vesting

       Upon the vesting of a share of Phantom Stock, a Participant shall be
entitled to receive in cash, within 90 days of the date on which such share
vests, an amount in cash in a lump sum equal to the sum of (i) the Fair Market
Value of a share of Common Stock of the Company on the date on which such share
of Phantom Stock vests and (ii) the aggregate amount of cash dividends paid with
respect to a share of Common Stock of the Company during the period commencing
on the date on which the share of Phantom Stock was granted and terminating on
the date on which such share vests.

       (c)    Conditions to Vesting

       At the time of the grant of shares of Phantom Stock, the Committee may
impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it, in its absolute discretion deems
appropriate. By way of example and not by way of limitation, the Committee may
require, as a condition to the vesting of any class or classes of shares of
Phantom Stock, that the Participant or the Company achieve certain performance
criteria, such criteria to be specified by the Committee at the time of the
grant of such shares.

       (d)    Effect of Termination of Employment

         (1) If the employment of a Participant with the Company shall terminate
       for any reason other than Cause prior to the vesting of shares of Phantom
       Stock granted to such Participant a portion of such shares, to the extent
       not forfeited or canceled on or prior to such termination pursuant to any
       provision hereof, shall vest on the date of such termination. The portion
       referred to in the preceding sentence shall be determined by the
       Committee at the time of the grant of such shares of Phantom Stock and
       may be based on the achievement of any conditions imposed by the
       Committee with respect to such shares pursuant to Section 8(c). Such
       portion may equal zero.

         (2) In the event of the termination of a Participant's employment for
       Cause, all shares of Phantom Stock granted to such Participant that have
       not vested as of the date of such termination shall immediately be
       forfeited.

       (e)    Effect of Change in Control

       Upon the occurrence of a Change in Control, all shares of Phantom Stock
that have not theretofore vested shall immediately vest.

9.     Stock Bonuses

       The Committee may, in its absolute discretion, grant Stock Bonuses in
such amounts as it shall determine from time to time. A Stock Bonus shall be
paid at such time and subject to such conditions as the Committee shall
determine at the time of the grant of such Stock Bonus. Certificates for shares
of Common Stock granted as a Stock Bonus shall be issued in the name of the
Participant to whom such grant was made and delivered to such Participant as
soon as practicable after the date on which such Stock Bonus is required to be
paid.

10.    Cash Bonuses

       The Committee may, in its absolute discretion, grant in connection with
any grant of Restricted Stock or Stock Bonus or at any time thereafter, a cash
bonus, payable promptly after the date on which the Participant is required to
recognize income for federal income tax purposes in connection with such
Restricted Stock or Stock Bonus, in such amounts as the Committee shall
determine from time to time; provided, however, that in no event shall the
amount of a Cash Bonus exceed the Fair Market Value of the related shares of
Restricted Stock or Stock Bonus on such date. A Cash Bonus shall be subject to
such conditions as the Committee shall determine at the time of the grant of
such Cash Bonus.

11.    Adjustment Upon Changes in Common Stock

       (a)    Outstanding Restricted Stock and Phantom Stock

       Unless the Committee in its absolute discretion otherwise determines, if
a Participant receives any securities or other property (including dividends
paid in cash) with respect to a share of Restricted Stock, the Issue Date with
respect to which occurs prior to such event, but which has not vested as of the
date of such event, as a result of any dividend, stock split recapitalization,
merger, consolidation, combination, exchange of shares or otherwise, such
securities or other property will not vest until such share of Restricted Stock
vests, and shall be held by the Company pursuant to Paragraph 7 (d) (2) hereof.

       The Committee may, in its absolute discretion, adjust any grant of shares
of Restricted Stock, the Issue Date with respect to which has not occurred as of
the date of the occurrence of any of the following events, or any grant of
shares of Phantom Stock, to reflect any dividend, stock split, recapitalization,
merger, consolidation, combination, exchange of shares or similar corporate
change as the Committee may deem appropriate to prevent the enlargement or
dilution of rights of Participants under the grant.

       (b)    Outstanding Options, Increase or Decrease in Issued Shares
Without Consideration

       Subject to any required action by the shareholders of the Company, in the
event of any increase or decrease in the number of issued shares of Common Stock
resulting from a subdivision or consolidation of shares of Common Stock or the
payment of a stock dividend (but only on the shares of Common Stock), or any
other increase or decrease in the number of such shares effected without receipt
of consideration by the Company, the Committee shall proportionally adjust the
number of shares and the exercise price per share of Common Stock subject to
each outstanding Option.

       (c)    Outstanding Options, Certain Mergers

       Subject to any required action by the shareholders of the Company, if the
Company shall be the surviving corporation in any merger or consolidation
(except a merger of consolidation as a result of which the holders of shares of
Common Stock receive securities of another corporation), each Option outstanding
on the date of such merger or consolidation shall entitle the Participant to
acquire upon exercise the securities which a holder of the number of shares of
Common Stock subject to such Option would have received in such merger or
consolidation.

       (d)    Outstanding Options, Certain Other Transactions

       In the event of a dissolution or liquidation of the Company, a sale of
all or substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving corporation or a
merger or consolidation involving the Company in which the Company is the
surviving corporation but the holders of shares of Common Stock receive
securities of another corporation and/or other property, including cash, the
Committee shall, in its absolute discretion, have the power to:

       (1) cancel, effective immediately prior to the occurrence of such event,
       each Option outstanding immediately prior to such event (whether or not
       then exercisable), and, in full consideration of such cancellation, pay
       to the Participant to whom such Option was granted an amount in cash, for
       each share of Common Stock subject to such Option equal to the excess of
       (A) the value, as determined by the Committee in its absolute discretion,
       of the property (including cash) received by the holder of a. share of
       Common Stock as a result of such event over (B) the exercise price of
       such Option; or

       (2) provide for the exchange of each Option outstanding immediately prior
       to such event (whether or not then exercisable) for an option on some or
       all of the property for which such Option is exchanged and, incident
       thereto, make an equitable adjustment as determined by the Committee in
       its absolute discretion in the exercise price of the option, or the
       number of shares or amount of property subject to the option or, if
       appropriate, provide for a cash payment to the Participant to whom such
       Option was granted in partial consideration for the exchange of the
       Option.

       (e) Outstanding Options. Other Changes

       In the event of any change in the capitalization of the Company or
corporate change other than those specifically referred to in Sections 11(b),
(c) or (d) hereof, the Committee may, in its absolute discretion, make such
adjustments in the number and class of shares subject to Options outstanding on
the date on which such change occurs and in the per share exercise price of each
such Option as the Committee may consider appropriate to prevent dilution or
enlargement of rights.

       (f)    No Other Rights

       Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution, liquidation, merger or
consolidation of the Company or any other corporation. Except as expressly
provided in the Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Common Stock subject to an Incentive Award or the exercise
price of any Option.

12.    Rights as a Shareholder

       No person shall have any rights as a shareholder with respect to any
shares of Common Stock covered by or relating to any Incentive Award granted
pursuant to this Plan until the date of the issuance of a stock certificate with
respect to such shares. Except as otherwise expressly provided in Section 11
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.

13.    No Special Employment Rights; No Right to Incentive Award

       Nothing contained in the Plan or any Incentive Award shall confer upon
any Participant any right with respect to the continuation of his employment by
the Company or interfere in any way with the right of the Company, subject to
the terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.

       No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.

14.    Securities Matters

       (a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state laws. Notwithstanding
anything herein to the contrary, the Company shall not be obligated to cause to
be issued or delivered any certificates evidencing shares of Common Stock
pursuant to the Plan unless and until the Company is advised by its counsel that
the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authority and the requirements of
any securities exchange on which shares of Common Stock are traded. The
Committee may require, as a condition of the issuance and delivery of
certificates evidencing shares of Common Stock pursuant to the terms hereof,
that the recipient of such shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the Committee,
in its sole discretion, deems necessary or desirable.

       (b) The exercise of any Option granted hereunder shall only be effective
at such time as counsel to the Company shall have determined that the issuance
and delivery of shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange on which shares of Common Stock are
traded. The Company may, in its sole discretion, defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the issuance of shares
of Common Stock pursuant thereto to be made pursuant to registration or an
exemption from registration or other methods for compliance available under
federal or state securities laws. The Company shall inform the Participant in
writing of its decision to defer the effectiveness of the exercise of an Option
granted hereunder. During the period that the effectiveness of the exercise of
an Option has been deferred, the Participant may, by written notice, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.

15.    Withholding Taxes

       Whenever shares of Common Stock are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or Vesting Date with respect to a share
of Restricted Stock or the payment of a Stock Bonus, the Company shall have the
right to require the Participant to remit to the Company in cash an amount
sufficient to satisfy federal, state and local withholding tax requirements, if
any, attributable to such exercise, occurrence or payment prior to the delivery
of any certificate or certificates for such shares. In addition, upon the grant
of a Cash Bonus or the making of a payment with respect to a share of Phantom
Stock, the Company shall have the right to withhold from any cash payment
required to be made pursuant thereto an amount sufficient to satisfy the
federal, state and local withholding tax requirements, if any, attributable to
such exercise or grant.

16.    Amendment of the Plan

       The Board of Directors may at any time suspend or discontinue the Plan or
revise or amend it in any respect whatsoever, provided, however, that without
approval of the shareholders no revision or amendment shall (i) except as
provided in Section 11 hereof, increase the number of shares of Common Stock
that may be issued under the Plan, (ii) materially increase the benefits
accruing to individuals holding Incentive Awards granted pursuant to the Plan or
(iii) materially modify the requirements as to eligibility for participation in
the Plan.

17.    No Obligation to Exercise

       The grant to a Participant of an Option shall impose no obligation upon
such Participant to exercise such Option.

18.    Transfers Upon Death

       Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executors or administrators of the
Participant's estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise any Incentive Award, shall be effective to bind the
Company unless the Committee shall have been furnished with (a) written notice
thereof and with a copy of the will and/or such evidence as the Committee may
deem necessary to establish the validity of the transfer and (b) an agreement by
the transferee to comply with all the terms and conditions of the Incentive
Award that are or would have been applicable to the Participant and to be bound
by the acknowledgments made by the Participant in connection with the grant of
the Incentive Award.

19.    Expenses and Receipts

       The Company shall pay the expenses of the Plan. Any proceeds received by
the Company in connection with any Incentive Award will be used for general
corporate purposes.

20.    Failure to Comply

       In addition to the remedies of the Company elsewhere provided for herein,
failure by a Participant to comply with any of the terms and conditions of the
Plan or the agreement executed by such Participant evidencing an Incentive
Award, unless such failure is remedied by such Participant within ten days after
having been notified of such failure by the Committee, shall be grounds for the
cancellation and forfeiture of such Incentive Award, in whole or in part as the
Committee, in its absolute discretion, may determine.

21.    Effective Date and Term of Plan

       The Board of Directors adopted the Plan effective January 8, 2004,
subject to approval by the shareholders of the Company in accordance with
applicable law, the requirements of Section 422 of the Code and the requirements
of Rule 16b-3 under Section 16(b) of the Exchange Act. No Incentive Award may be
granted under the Plan after January 31, 2014. Incentive Awards may be granted
under the Plan at any time prior to the receipt of such shareholder approval;
provided, however, that each such grant shall be subject to such approval.
Without limitation on the foregoing, no Option may be exercised prior to the
receipt of such approval, no share certificate shall be issued pursuant to a
grant of Restricted Stock or Stock Bonus prior to the receipt of such approval
and no Cash Bonus or payment with respect to a share of Phantom Stock shall be
paid prior to the receipt of such approval. If the Company's shareholders do not
approve the Plan, then the Plan and all Incentive Awards then outstanding
hereunder shall forthwith automatically terminate and be of no force and effect.

       IN WITNESS WHEREOF, this Incentive Stock Plan of Tamboril Cigar Company
has been unanimously approved and adopted by the board of directors this 8th day
of January 2004.

Kirk Tierney, director            John L. Petersen, director

Sally A. Fonner, director

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