Exhibit 10.13
COIN XXXX VALIDATOR, INC.
LICENSED DISTRIBUTOR PROGRAM
CURRENCY VALIDATOR INTERNATIONAL (CVI, Ltd.)
July 1, 1996
Agent License Agreement
I. Introduction
This agreement is made as of the 15 day of July, 1996 by and between Coin Xxxx
Validator, Inc. ("Coin Xxxx), a New York manufacturing company whose main
products include bank note validators and accessories, and Currency Validator
International, Ltd. ("CVI"), a London based company with know how regarding Coin
Bill's products and world-wide experience in marketing and supporting these
products. This agreement sets for the terms and conditions under which CVI will
distribute product of Coin Xxxx (the "Products) in the countries outlined in
Article III. Within the context of this Agreement, CVI will be responsible for
providing sales/market development, applications support, service support
(warranty and non-warranty), training and installation support. Coin Bill's
responsibility within the Agreement is to provide factory product support,
applications support and market support to CVI along with participation in
critical market development decisions.
Any changes to the licensing terms and conditions set forth herein must be
mutually confirmed by both parties in writing. The original document will be
maintained as an appendix to any current agreement along with a summary section
outlining the nature of any agreed upon changes. This policy is established so
that an accurate record of modifications can be maintained throughout the
business relationship between the two parties.
Any dispute or controversy arising under or in connection with this Agreement
shall, unless otherwise expressly provided herein, be settled exclusively by
arbitration conducted before a panel of three arbitrators in New York City (or
such other place as may be mutually agreed upon by the parties hereto) in
accordance with the rules of the American Arbitration Association then in
effect. The expense of such arbitration shall be borne by such parties and in
such proportions as the arbitrators shall determine.
This Agreement does not prejudice or forfeit any prior legal rights the parties
may have had as a result of previous dealings.
Unless sooner terminated as hereinafter provided, the term of this Agreement
shall be for the period beginning on July 1, 1996 and ending on June 30, 1999.
II. Licensed Distributor:
For the countries highlighted in Article III, the agent representing Coin Xxxx
will be:
Currency Validator International, Ltd. (CVI, Ltd.)
Principals: Xxxxxx Xxxxxxx, Managing Director
Xxxxxx X. Xxxx, General Manager/Secretary
Xxxxxx Xxxxx
Xxx Xxxxxx Xxxxxxx
Xxxxxx, XX00 0XX
Telephone: 000-00-000-000-0000
Facsimile: 011-44-181-871-3858
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For the purposes of this agreement, the principals listed above are considered
key individuals for the operation of the agency. Any proposed changes in this
management structure or ownership will be submitted to Coin Xxxx and this
Agreement's continuation is subject to the written approval of such changes by
Coin Xxxx. Such approval will not be unreasonably withheld.
Under this agreement, CVI, Ltd. will not represent any competitive currency
validator products and accessories. This exclusion would include sales,
service, marketing and analysis for competitive units.
CVI is an independent contractor. It is not to be deemed an agent of Coin Xxxx
and has no authority to bind or commit Coin Xxxx to any term, condition or
agreement unless specifically authorized thereunder.
As part of this Agreement CVI, Ltd. will change its name to reflect a closer
relationship with Coin Xxxx Validator, Inc. The new company name will be:
Coin Xxxx Validator (UK) Limited, CBV (UK), Ltd.
Within this agreement, CVI, Ltd. will continue to be referenced by the current
company name. Upon termination of this Agreement for any reason, CVI will change
its name to a name dissimilar to Coin Xxxx, and Coin Xxxx will be granted rights
to the CBV (UK), Ltd. title for future use.
III. Market Place Territories:
CVI will have the exclusive rights to distribute Products in the countries
listed below (collectively by "Territory"). These rights will extend to all
markets and industries that can be developed by CVI within the Territory, and
include the right to appoint sub-distributors, service operators and the like,
subject to approval by Coin Xxxx. Such approval not to be unreasonably withheld.
Any inquiries or contacts made by customers within the Territory directly to
Coin Xxxx will be referred to CVI.
Except as indicated in this Article III, Coin Xxxx will not sell directly to
clients who are discovered to be reselling or redistributing Product into the
Territory, unless the Product is incorporated as an integral part of a host
machine.
In the case where CVI has existing customers or develops new customers outside
the Territory (due to example through marketing efforts and contacts), both
parties, when required, will review on a case-by-case the long term support and
compensation to CVI of
these customers.
Coin Xxxx has the right to make the final determination as to the disposition of
such customers.
The countries which initially are included in the Territory are as follows:
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o Austria
o Albania
o Belgium
o Bulgaria
o Czech Republic
o Denmark
o Estonia
o Finland
o France
o Germany
o Hungary
o Iceland
o Irish Republic
o Latvia
o Lithuania
o Luxembourg
o Monaco
o Netherlands
o Norway
o Poland
o Portugal
o Romania
o Slovak Republic
o Spain
o Sweden
o Switzerland
o United Kingdom
o The Former Yugoslavia
The parties will periodically evaluate the sales results under this Agreement
and may, by mutual agreement, restrict or expand the list of countries
comprising the Territory.
Anything to the contrary notwithstanding:
1. While Germany is within the Territory, the company ADP-Gauselmann Group
will continue to be marketed and supported directly by Coin Xxxx. CVI will
not be entitled to compensation, or credits for any purpose, for any
Product sales made to this company, provided such Products are for fitting
to ADP-Gauselmann group products.
2. While CVI is entitled to special pricing for sales with the Territory, it
will not receive compensation for Units sold to an International company,
through a buying office, located outside the Territory and shipped to one
of its subsidiaries or distributors with the Territory, provided these
Units are for fitting to that Company's products.
3. CVI will not be required to provide free warranty support for Products
sold under the 1. or 2. above. However, CVI will provide technical repair
on such Products, at Coin Bill's request, at prices referred to in Article
VII.
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IV. License Agreement Performance Terms:
As CVI begins to service and develop the markets in the Territory, it will have
an established goal for a minimum number of Coin Xxxx Validator ("Units"). This
goal is set as a measure to be used in assessing CVI's ability to effectively
market, promote and support the Products. The number of Units to be sold by CVI
for each of the next three contract years, i.e. July 1st to June 30th of each
year commencing on July 1, 1996 is:
1st Contract Year: 5,000 Units
2nd Contract Year: 7,500 Units
3rd Contract Year: 10,000 Units
For purposes of determining the minimum number of Units sold each year, a Unit
sale shall be defined as a Unit (Validator) ordered by a customer of CVI and
shipped to such customer. If CVI does not make the minimum number of Unit sales
in any contract year, Coin Xxxx shall have the option to terminate this
agreement by notice in writing to CVI at any time within 90 days after the end
of such contract year. In the event of such termination, CVI will be allowed,
from receipt of notice, a further period of 120 days trading under this
Agreement, to allow transition of CVI's business, and to enable Coin Xxxx to
arrange alternative warranty cover on Products sold by CVI.
In addition, Coin Xxxx shall have the right to terminate this Agreement upon 120
days prior notice, if CVI defaults on any of its obligation hereunder.
In case of termination of the Agreement, CVI shall be responsible for providing
warranty support for Products sold by CVI through the 120 day period of business
transition. To assure that there are sufficient funds to cover any unfunded
warranty repairs for the six months following the business transition, Coin Xxxx
will have the right to hold back a reserve of up to $5,000 owing to CVI. At the
end of the six months, Coin Xxxx will provide CVI with a detailed listing of
warranty support costs during the period and refund the remaining balance of the
reserve to CVI.
CVI agrees that for the term of the agreement, and for one year thereafter, it
will not directly or indirectly compete with Coin Xxxx or with its licensed
distributors in the manufacture or sale of currency validators, equipment or
accessories in the Territory. CVI will also cause its principals by separate
instruments to agree that they will not individually or collectively engage in
such a competitive business during the foregoing period.
It is contemplated that Coin Xxxx and CVI will meet every six months to discuss
the status of their arrangement under this Agreement, at which time they will
discuss such topics as customer lists, pricing, marketing strategies and
possible amendments to this Agreement.
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V. Additional Obligations of the Parties:
1. CVI will perform the following services as a licensed distributor of
Coin Xxxx:
(a) CVI will actively promote and sell the Products within the
Territory, and provide installation service when and if required in connection
with its sale of the Products.
(b) CVI will support Coin Bill's warranty program (currently one
year for parts and labor), and at a repair and service facility ("Repair
Facility"), designated by CVI and approved by Coin Xxxx, in the Territory. The
Repair Facility shall provide free repairs and replacements for Products that
fail to perform as warranted within the warranty period.
(c) CVI will also provide repair and parts replacement service at
its Repair Facility for Products no longer covered by the Coin Xxxx warranty,
and charge for the labor and parts used in accordance with Article VII.
(d) CVI will maintain at its Repair Facility, a stock of spare parts
in amounts recommended by Coin Xxxx to meet its warranty and non-warranty
service obligations hereunder.
(e) CVI will use reasonable efforts to achieve its goals in
advertising and promoting its Products in the Territory in accordance with an
advertising budget to be agreed to by the parties hereto, and in consideration
of a standard or level recommended by Coin Xxxx.
(f) CVI will provide training for its customers in the use and
maintenance of the Products.
(g) CVI shall furnish to Coin Xxxx with 15 days after the expiration
the period ending three months from the date hereof, and within 15 days after
the expiration of each successive three month period, details on the sale by it,
of Products during each such three month period with a separate accounting of
the sales by CVI of Products shipped to it on consignment. Coin Xxxx shall have
the right, upon reasonable notice to CVI, to review CVI's books and records in
order to verify the sales figures reported by CVI.
2. Coin Xxxx shall have the following responsibilities:
(a) Coin Xxxx will sell Products to CVI on the terms and at prices
set forth herein, or in the schedules referred to herein as such terms and
schedules may be amended from time to time.
(b) Coin Xxxx will supply the Repair Facility, at Coin Bill's
expense, with the necessary tools and equipment to enable such facility to
provide the repair services which CVI is obligated to perform under this
Agreement. Such tools and equipment shall remain the property of Coin Xxxx. CVI
and the Repair Facility shall maintain such tools and equipment in good order
and repair, and shall return such tools and equipment to Coin Xxxx on
termination of the Agreement.
(c) Coin Xxxx will provide CVI, or the Repair Facility, with the
prescribed number of warranty parts for each 100 Units sold to CVI. These parts
will be sold to CVI on a
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consignment basis. CVI shall pay for such parts promptly (Net 30 days) upon
their sale or utilization in connection with it repair and replacement
obligations, the price of such parts to be paid Coin Xxxx to be at the prices
set forth in Coin Bills then current price list. Parts used under warranty
repair obligations by CVI are to be returned for Credit to Coin Xxxx, if
requested. Coin Xxxx will then provide CVI with additional parts on consignment
for further repair requirements.
(d) Coin Xxxx will, at its expense, provide CVI with Exchange Units.
Coin Xxxx shall provide or have will have provided previously to CVI, each
contract year, with such number of Exchange Units as are equal to 2% of the
total number of Units sold by CVI in the prior contract year. In the first
contract year, Coin Xxxx will provide such number of Exchange Units as equal 2%
of the number of Units it estimates CVI will sell during such contract year.
3. CVI agrees to execute such documents and take such action as may be
necessary to preserve Coin Bill's interest in the tools and equipment, and in
the Products sold to it on consignment. This protection should be in the form of
an insurance policy which adequately covers the value of such items. The cost of
such an insurance would be borne by CVI.
VI. Product Line Pricing Program:
CVI will be responsible for marketing and servicing the following Coin Xxxx
production models:
Model IDS (Ivo Down Stack)
Model IVO
Model 125
in addition to all other currency validator modules, variants and accessories
released by Coin Xxxx during the period of the Agreement.
Pricing structure that is offered to CVI from Coin Xxxx is provided in the
attached pricing tables. Included in the pricing structure are the recommended
selling prices to CVI, for OEM and Operator levels. While there are customer
situations that might require a minimal deviation (less than 5%) from the listed
pricing, CVI should (but is not required) to follow the recommended retail
pricing structure. CVI acknowledges that all customers have the right to check
suggested retail pricing, ex works Hauppauge, NY.
This policy is established to protect both parties. By following the pricing
list, customers will have no incentive to try and bypass CVI and obtain Products
directly from the factory. Additionally, the pricing structure will protect Coin
Bill's ability to compete within global markets.
Coin Xxxx and CVI will formulate a policy and procedures for generating formal
quotations to customers.
CVI is a recognized distributor in the Territory and will be responsible for
handling day-to-day customer contact and follow-up. However, this representation
will not preclude any customer from contacting Coin Xxxx directly to obtain
confirmation of pricing or additionally technical
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support. Coin Xxxx will routinely alert CVI about such contract and at all times
try to let CVI continue the follow-up.
Coin Xxxx will refer all new business inquiries emanating from the Territory to
CVI. During the term of the Agreement, Coin Xxxx will not sell directly into the
Territory. However, if such sales, other than those referred to in Article III,
do occur by mutual consent of both parties to retain a customer, CVI will be
entitled to compensation equivalent to the margin normally derived from the sale
which it would otherwise have earned had it made the sales as well as credit for
the sale for purposes of determining whether it has met its minimum annual sales
figures.
VII. Service Support And Service Pricing Structure:
CVI will be responsible for providing warranty support for the Products sold
under the terms of Coin Bill's warranty program currently being 12 months
parts/labor (from date of shipment). If the incidence of failed Units under
warranty exceeds 5% of the total number of Units shipped to CVI, over the
preceding contract or business year, Coin Xxxx will compensate CVI for the cost
to CVI of the excess warranty work performed, including parts used.
In the case of Units previously sold and shipped into the Territory by Coin
Xxxx, warranty repairs will be charged to Coin Xxxx.
While Coin Xxxx will not set the pricing structure for non-warranty support, CVI
estimates that the cost will be $25.00/hour labor, plus parts and shipping. This
cost is consistent with pricing policies used by Coin Xxxx.
Spare parts are to be provided by Coin Xxxx to CVI at a cost of 1.75 times the
cost of such parts to Coin Xxxx. Suggested selling price to the customer would
be 1.75 times the CVI cost plus the cost of shipping and duties. Overall, the
end costs to the customer of CVI would be consistent in pricing structure if the
customer were to buy directly from the factory, ex works Hauppauge, NY.
As an example of parts pricing for a part costing Coin Xxxx $1.00, CVI would
pay a price of $1.75. CVI would in turn charge the customer a price of $3.06,
plus the cost of shipping and duties.
VIII. Payment Terms And Schedules:
CVI's payment terms are set at Net 30 days from date of shipment. However, as
the business opportunities grow and potential account balances increase there
will he an established policy to protect Coin Bill's receivable in the
International market. This policy will be as follows:
To secure the accounts receivable balance, binding Letters of Credit (LC's) will
be required for any purchase order exceeding $5,000 which will cause the
outstanding receivable owing by CVI to Coin Xxxx to exceed $100,000. This LC
will guarantee Coin Xxxx payment for the shipment within the Net 30 day terms.
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Payment schedules for the Products are to remain at a maximum Net 30 days for
any LC. If those terms are to vary for a particular customer or shipment, Coin
Xxxx and CVI shall agree on such variation before a final commitment is made to
the order.
Invoices settled within a 10 day period will carry a 2% discount.
IX. Shipping:
The standard shipping structure established will be that the goods are Sold To
and Shipped To CVI. At the time of order, CVI will clearly indicate if the Ship
To address will be different from the established policy.
CVI should be responsible for establishing the method of shipment and carrier
based on customer request and pricing shown in the attached schedules reflect,
ex works Hauppauge, NY. Coin Xxxx will assist in shipping coordination of the
product and with a carrier if a specific company is not established on an order.
Freight charges and method of shipment will be provided to CVI prior to the
delivery of the product for their review in all cases where it is possible,
given the time frame of delivery.
X. Optional Company Acquisition Proposal:
As part of this Agreement, CVI grants Coin Xxxx the right to acquire the assets
and stock of CVI, at any time during the 12 months from the start of this
Agreement.
If Coin Xxxx wishes to excersize its right herein, at any time during the first
12 month period, it will make an offer on the following basis:
(i) Coin Xxxx will nominate an independent assessor.
(ii) CVI will nominate an independent assessor
(iii) The two assessors in parts (i) and (ii) above will nominate a third
assessor
The assets of CVI will be evaluated by taking into account previous trading and
recognition in the market place, existing company staff, goodwill of the
business, number of Units sold in the first year, number of Units on order and
projected sales. If the acquisition offer is prior to the completion of the
first year, then the number of Units sold in the first year will be estimated on
performance to date.
If within the first 12 month period, CVI receives an offer to purchase all, or
substantially all of its assets and stock ("third party offer"), it will so
advise Coin Xxxx of the details of the third party offer, and give Coin Xxxx the
right to purchase such assets and stock at the same price, and on the same terms
as contained in the third party offer. If Coin Xxxx does not accept such an
offer within 60 days after its receipt, CVI shall be free to consummate the sale
pursuant to the third party offer within 60 days after the expiration of Coin
Bill's review period.
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XI. Agreement Signature Approval:
Coin Xxxx Validator, Inc.
/s/ Xxxxxxx X. Xxxx July 18, 1996
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Xxxxxxx X. Xxxx, President/COO
/s/ Xxxxxx X. Xxxxx 7-18-96
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Xxxxxx X. Xxxxx, VP Product/Market Development
Currency Validator International, Ltd.
/s/ Xxxxxx Xxxxxxx 18 JULY 1996
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Xxxxxx Xxxxxxx, Managing Director
/s/ Xxxxxx X. Xxxx 18 JULY 1996
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Xxxxxx X. Xxxx, General Manager/Secretary
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