Distributor Agreement

DISTRIBUTION AGREEMENT Given in......................., on.................... BETWEEN - The first party, MR/S................. and MR/S...................... Acting as joint representatives on behalf of the AZKOYEN INDUSTRIAL, S.A. trading company, with registered address in Peralta (Navarre) at C/ San Silvestre S/N....................... - And the second party, MR/S................................. Acting as ................... on behalf of the XXX trading company, with registered address in ..............................................., with Tax Registration Code ....................., authorised for this act by virtue of ................................................... Both parties recognise the full and reciprocal legal capacity to enter into a contract and undertake obligations, and they hereby STATE 1.- That AZKOYEN INDUSTRIAL, S.A. (hereinafter AZKOYEN), markets, among other products, the vending machines listed in Appendix number 1 to this agreement. 2.- That XXX (hereinafter DISTRIBUTOR), in performance of the tasks comprising its registered trading activity, works in the promotion, sales and distribution of vending machines and in the provision of after-sales technical assistance services, and that it has an adequate organisation for the performance of such activities. 3.- That the DISTRIBUTOR is interested in acquiring, for the geographical area to be defined below, the exclusive distribution rights for the machines described in Appendix number 1, with the exception of national or international operators (Large Accounts) for which AZKOYEN reserves the right to sell and attend from the Central Offices in Peralta. And, having reached an agreement, they formalise it in accordance with the following STIPULATIONS 1.- OBJECT OF THE CONTRACT. 1.1.- AZKOYEN, as it is represented, grants the DISTRIBUTOR, which in turn accepts, the exclusive distribution of the machines the object of this agreement in Italy (hereinafter “The Territory”). Consequently, the DISTRIBUTOR shall sell and distribute the machines the object of this agreement in its own name and through its own resources, subject to the tariffs established in the AZKOYEN price list or by applying discounts charged to its own sales margins. 2 1.2.- The DISTRIBUTOR shall not assume or create obligations in the name of AZKOYEN, neither may it act as agent or representative of it. 1.3.- AZKOYEN reserves the right to commercialize directly or indirectly the machines the object of this agreement to product manufacturers, large national and/or international operators, buying groups and/or associations, who so request, or for whom the special terms and conditions necessary for this type of customer are advisable (“Large Accounts”). 1.4.- AZKOYEN reserves the right to sell cigarette vending machines to its exclusive cigarette machine Distributor for Italy, since it is aimed at a non-traditional vending channel and is therefore not in competition. 2.- PRODUCTS. The products the object of this agreement (hereinafter “the products”) are the vending machines listed in Appendix number 1, which may be extended in the future to any other vending machine that AZKOYEN may manufacture and/or commercialize, in which case the DISTRIBUTOR shall promote the sales thereof. 3.- PRICES, DISCOUNTS AND RAPPELS 3.1.- The prices, discounts and rappels of the products the object of this agreement shall be those set forth in Appendix number 2 hereto. 3.2.- AZKOYEN shall inform the DISTRIBUTOR of price changes, that will become valid after a notification period of one month. 4.- METHOD OF PAYMENT 4.1.- The method of payment of “the products” (term and terms and conditions) are set forth in Appendix number 3 hereto. 4.2.- The scheduled instalments shall remain in effect solely in the event that the DISTRIBUTOR is up to date in its previously acquired payment commitments. To the contrary, AZKOYEN reserves the right not to serve the orders placed by the DISTRIBUTOR. 3 4.3.- The maximum risk that AZKOYEN shall assume with the DISTRIBUTOR will not exceed 33% additional to the sum provided by the latter as guarantee. Anything exceeding this “classification” must be paid in advance, unless AZKOYEN decides to increase the limit of risk. 4.4.- All sums not paid when due shall accrue in favour of AZKOYEN, until complete payment thereof, the legally established money-rate interest increased by two points, and the right for reimbursement of any bank charges incurred in the return of the invoice, draft, promissory note, etc. in question. 5.- ORDERS and DELIVERIES 5.1.- AZKOYEN shall send the orders received from the DISTRIBUTOR with the utmost speed possible, but it shall not be held liable for any costs, losses or damage which may arise from a delay due to causes outside its control, such as cases of force majeure, Government restrictions, strikes, delays in transport or by suppliers, etc. 5.2.- All orders are subject to their acceptance by AZKOYEN. 5.3.- AZKOYEN shall deliver “the products” at the address of the DISTRIBUTOR that has been stated in the heading or at the place stated in the previously accepted order. 5.4.- Carriage shall be forward or paid according to the size of the orders. Consequently, carriage shall be paid by AZKOYEN on minimum orders of 14 machines (CPI); for orders of fewer than 14 machines and orders for spare parts, carriage shall be forward (Ex works Peralta). 5.5.- Returned machines due to incidents while in carriage cannot be accepted where the relevant incident report has not been made out and without the express written conformation and authorisation of AZKOYEN. Any claim for damage while in carriage must be made within 24 hours as of reception of the goods. 4 5.6.- As of the date of delivery by AZKOYEN, the DISTRIBUTOR shall assume any damages which “the products” may suffer due to handling, storage and distribution thereof. 6.- TARGETS 6.1.- The estimated figure of purchases or objectives of the DISTRIBUTOR for 200X are also set forth in Appendix number 1. 6.2.- Before 30 December each year, AZKOYEN and the DISTRIBUTOR shall draw up the minimum purchase target for the following year, which will be given in the relevant “addenda” to this agreement. In any event, the budget shall be consistent with the budgetary criteria generally established by AZKOYEN, and in particular for the vending distributors network. 6.3.- Should the agreement be renewed (under the terms and conditions set forth in clause 14.1), the minimum purchase targets for the additional years shall be agreed by the parties at least one month before the expiry of the initial period or of any of the extensions thereof, and shall similarly be given in the relevant “addenda”. 6.3.- AZKOYEN may resolve the agreement and leave it without any effect whatsoever should the DISTRIBUTOR not reach 75% of the minimum figure of purchases targeted in a given year or in the event that it fails to reach 80% thereof in two consecutive years. 7.- COMMITMENTS OF THE DISTRIBUTOR The DISTRIBUTOR shall do everything in its power to achieve the greatest introduction possible of “the products” in the Territory, ensuring in any event that it increases the demand for them. In particular, the DISTRIBUTOR must: - At all times have the adequate staff to attend customers’ orders and ensure that there is adequate sales coverage throughout the whole of the Territory at all times. - Have the adequate means for storing “the products”. - Keep data on the volume of sales and any other information necessary in order to operate efficiently, and make them always available to AZKOYEN. 5 - Obtain all the permits and licences that are necessary and which may be required to distribute “the products” in the Territory. - Refrain from producing or commercializing, for itself or through companies in which it has an interest, or through partners or employees, under any title, any product which competes with or creates barriers to the sale of those constituting the object of this agreement. Neither may it divert its trading activity to the implementation and/or operation of vending machines. - Refrain from selling “the products” to persons or organisations which presumably intend to sell them on outside the contractual Territory, or to persons or organisations which have their usual place of residence outside said Territory. - Provide information regarding the competition, market conditions, customers and other data that may be required of it. - Sustain the promotion and advertising costs in the event that it considers it appropriate to run a campaign of this nature. Exceptionally, the costs of the advertising campaigns may be shared between AZKOYEN and the DISTRIBUTOR, with prior agreement between both parties. - Inform AZKOYEN, with sufficient notice, of its intention of attending trade fairs or shows. AZKOYEN may veto this attendance for duly justified causes, or, should it accept them, participate in their cost. - Maintain in effect, for the duration of this agreement, an insurance policy with sufficient coverage for the distribution activities envisaged herein. The insurance policy taken out to this effect must be approved by AZKOYEN and displayed with proof of payment thereof as many times as is required. - Comply with the current AZKOYEN Corporate Image Manual. 8.- TRADEMARKS 8.1.- “The products” must be commercialized exclusively under the “AZKOYEN” trademark, or under the trademark with which AZKOYEN 6 commercializes the product, without its external appearance being changed in any way. 8.2.- The DISTRIBUTOR shall have the right and the obligation of announcing itself as “official distributor” of the “AZKOYEN” trademark, providing this statement is accompanied by its own name or trading name. 8.3.- Once the agreement has concluded, the DISTRIBUTOR must remove form its premises or place of business any lists, headed paper, catalogues, publicity and any other object or document that refers to “AZKOYEN”, without this giving the appearance in any way that this agreement remains in effect, or to carry out actions that may damage the registered trademarks, trading names or other trademarks belonging to the “AZKOYEN” Group. 9.- TECHNICAL ASSISTANCE. 9.1.- The after-sales technical assistance service of “the products” the object of this agreement shall be provided by the DISTRIBUTOR in the contractual territory, an obligation that extends to the machines not sold by it. Consequently, the DISTRIBUTOR undertakes to manage and maintain at its own account the staff, facilities, tools or materials that are necessary to provide an adequate technical assistance service to owners of “the products” the object of this agreement. 9.2.- As regards national or international operators, with regard to which AZKOYEN has reserved the right to sell “the products” directly, they may or may not avail of the technical assistance services provided by the DISTRIBUTOR, as is decided by themselves or by AZKOYEN. 9.3.- Exceptionally, AZKOYEN reserves the right to carry out for itself any repair or servicing that is in its opinion advisable, in which case it shall not be held to account nor may the refund of the sums received for the performance of this work be demanded. 9.4.- AZKOYEN shall supply the DISTRIBUTOR with the spare parts that are necessary, invoicing them at the agreed prices. 9.5.- The services of the DISTRIBUTOR must be available for all the users of AZKOYEN products, including during the guarantee period, in accordance with the provisions of Clause 10. 7 9.6.- The DISTRIBUTOR undertakes to: a) Provide AZKOYEN with regular comprehensive reports of analyses of faults detected in the products. To ensure the fulfilment of this covenant, regular visits will be made to the respective facilities. b) Refrain from involving AZKOYEN in: - Claims for damages, losses or costs of any nature which may be occasioned to the owner of the product as a result of the technical assistance services. - Claims for damages, losses or costs of any nature which may be occasioned to any property, including the product, or due to death or injury, that are the result of the negligence or lack of diligence of the staff of the DISTRIBUTOR. 9.7.- AZKOYEN shall provide the DISTRIBUTOR, when the circumstances so require, with the computer software, circuit diagrams, designs, manufacturing data and any other information that it deems necessary for the DISTRIBUTOR to be able to service and repair correctly the products the object of this agreement. Also, AZKOYEN may, should it see fit, give training courses to the operatives of the DISTRIBUTOR, in which case travel costs shall be payable by the latter and accommodation and board costs shall be payable by AZKOYEN. 9.8.- With regard to the technical information that AZKOYEN may provide the DISTRIBUTOR, the latter undertakes to: a) Maintain absolute confidentiality, except with the written consent of AZKOYEN. b) Use it such that it causes no harm to AZKOYEN. c) Return to AZKOYEN, when the latter so requires, the technical data supplied, and not keep any copy thereof. d) Provide AZKOYEN with a written list of all the partners, administrators or employees to whom it has disclosed the technical data, undertaking that these persons sign a confidentiality agreement with regard to the data with which they have been provided. 8 10.- GUARANTEES. 10.1.- AZKOYEN guarantees the products the object of this agreement against any design or manufacturing defect. 10.2.- The DISTRIBUTOR shall transfer the same guarantee to its customers. 10.3.- The work or services performed by the DISTRIBUTOR during the guarantee period shall be compensated annually by AZKOYEN by means of the payment of a sum equivalent to 1.5% of the volume of purchases made in the previous year, calculated at the net sale price of “the products”. In any event, AZKOYEN reserves the right to perform for itself, or through the individuals or companies it appoints, the repairs or replacement of parts of the machines in the guarantee period. 10.4.- Parts considered to be defective and replaced during the guarantee period shall be the property of AZKOYEN, which, should delivery thereof be required, shall defray the carriage costs. 11.- INDUSTRIAL PROPERTY. All the industrial property rights relating to the technical data provided to the DISTRIBUTOR, including those relating to the design, engineering or manufacture, shall continue to be the exclusive property of AZKOYEN. 12. – OTHER ACTIVITIES OF THE DISTRIBUTOR. This agreement does not constitute a limitation on the right of the DISTRIBUTOR, as an independent organisation, to request or accept any other work that it may obtain, providing this is not in competition with “the products” the object of this agreement. However, the DISTRIBUTOR undertakes to give priority to the sales and repairs service of products commercialized by AZKOYEN as far as is necessary to satisfy the demands of the latter or of its customers. 13.-. PROHIBITION OF ASSIGNMENT. 9 The rights acquired by the DISTRIBUTOR by means of this agreement are not transferable to third parties without the prior written authorisation of AZKOYEN. These rights shall only be valid in the area of operations stated in this agreement and may not be used by any person or company affiliated to or associated with the DISTRIBUTOR. 14.- TERM OF THE AGREEMENT AND EARLY EXPIRATION. 14.1.- This Agreement shall enter into effect on the date stated in the heading and shall have a duration until 31/12/03 as of said date, at which term it may be extended by mutual accord between the parties. 14.2.- AZKOYEN may resolve the agreement with immediate effect in any of the following events: a) Should the DISTRIBUTOR fail to maintain an adequate insurance policy in accordance with the provisions to this respect of Clause 7. b) Should the DISTRIBUTOR fail to reach 75% of the minimum purchase figure targeted in a given year, or in the event that it fails to reach 80% thereof in two consecutive years. c) Should the DISTRIBUTOR fail to comply with its payment obligations in the agreed term. d) Should the DISTRIBUTOR produce or commercialize, for itself or through companies in which it has an interest, or through partners or employees, under any title, any products which compete with or create barriers to the sale of those constituting the object of this agreement, or which divert its activity towards the introduction and/or operation of vending machines. e) Should the DISTRIBUTOR assign the rights derived from this agreement without the consent of AZKOYEN. f) Should any substantial change occur in the ownership of the share capital of the DISTRIBUTOR, or in the management or control thereof, providing this change has not previously been authorised by AZKOYEN. 10 g) In the event of the temporary receivership or bankruptcy of the DISTRIBUTOR. h) In any other events which mean the failure to fulfil the obligations established in this agreement, including the defective provision of the technical assistance services to customers. 15.- INDEMNIFICATIONS Under no circumstances may the DISTRIBUTOR require of AZKOYEN any indemnification as a result of the termination of the agreement. 16.- NOTIFICATIONS For the purposes of any notifications that the parties need make in relation to this document, the addresses of the contracting organisations that have been stated in the heading are expressly given. 17.- JURISDICTIONAL LAW For the resolution of such divergences as may arise between the parties due to the interpretation, compliance and performance of the covenants of this agreement, the parties, expressly renouncing their own law or any other which may correspond to them, expressly submit themselves to the jurisdiction of the Courts and Tribunals of Pamplona (Navarre). And as proof of agreement, they sign this document in duplicate and to one sole effect in the place and on the date stated in the heading. AZKOYEN INDUSTRIAL, S.A. THE DISTRIBUTOR 11 12 APPENDIX 1 PRODUCTS AND TARGETS PRODUCTS 1.- Palma B and Office-4 Series Refrigerated Machines. 2.- Palma H and Hz Series Snack Machines. 3.- Palma M and Mz Series Mixed Machines. 4- Veneto Series Ground Coffee Machines. 5- Lugano Series Instant Coffee Machines. And all the products that AZKOYEN INDUSTRIAL incorporates into its vending range. Cigarette vending machines are expressly outside this agreement. TARGETS 200X: ..........Euros (This year the target shall apply proportionally to the date of commencement of activity) 200X: .............. Euros 200X: .................. Euros These targets shall be divided as partial targets by product line for the different regions of Italy in accordance with the DISTRIBUTOR, and shall be formalised in writing in an attached document as part of the agreement. These targets shall be reviewed as products are incorporated into this agreement. 13 APPENDIX 2 PRICES, DISCOUNTS AND RAPPELS PRICES The prices of the products shall match the following list: This tariff shall be revised annually. DISCOUNTS 1.- Commercial discount on machines: a) Palma H and Hz: b) Palma M and Mz: c) Palma B-5 and Officce-4: d) Rest of Palma B range: e) Veneto and Lugano: 2.- Commercial discount on spare parts and accessories: 3.- Discount for guarantee: 4.- Financial discounts for: Early payment: 1.5 % Advance payment: 2 % Discounts shall be shown on the invoice. 14 APPENDIX 3 METHOD OF PAYMENT METHOD OF PAYMENT 15