Exhibit 10.1
*** Confidential Treatment Requested Under 17
C.F.R. Section 240.24b-2.
DISTRIBUTORSHIP
AGREEMENT
Between
“MACHINES GAMES AUTOMATICS,
S.A.” (“M.G.A”)
M.G.A. Building - Parc Tecnologic
del Valles
C/Fargaires, 1-3
08290 Cerdanyola del Valles
(Barcelona)
(hereafter “Distributor”),
and
SHUFFLE MASTER GMBH & CO
KG
(d.b.a. CARD)
duly organized under the laws of
Austria and having its principal place of
business at Wipplingerstrasse 25,
A-1010 Vienna, Austria
(hereafter
“CARD”).
Date: 17 Mai 2005
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the
following words, terms and phrases, where written with an initial
capital letter, shall have the meanings assigned to them in this
Article 1 unless the context otherwise requires:
1.1
Products: Shall mean those products of CARD’s or of
CARD’s ultimate parent, Shuffle Master, Inc.
(“SMI”) (CARD and SMI are collectively referred to
herein as the “CARD”) listed in Exhibit I attached
hereto, which exhibit may be amended from time to time by the
parties.
1.2
Territory:
Shall mean the countries
specifically listed in Exhibit II attached hereto, but subject
to all of the terms and limitations contained herein, including in
Exhibit II, which Exhibit may be amended from time to
time by the parties.
1.3
Distribute:
For the purpose of this Agreement,
Distribute or Distribution shall mean the sale or lease of Products
according to specifications in Exhibits III and IV.
1.4
Distributor Prices:
Shall mean the prices then being
quoted by CARD for sales of Products to Distributor, the current
Distributor Prices being set forth in Exhibit III attached
hereto.
1.5
Company Information:
Shall mean all information that is
directly or indirectly disclosed to Distributor by CARD or embodied
in Products provided hereunder regardless of the form in which it
is disclosed, relating in any way to CARD’s markets,
customers, Products, patents, inventions, procedures, methods,
designs, strategies, plans, assets, liabilities, costs, suggested
prices, revenues, profits, organization, employees, agents,
distributors or business in general, unless the information was
published or was expressly designated by CARD, in writing, as
non-confidential.
1.6
Support Services:
Shall mean warranty, maintenance and
repair of all Products in the Territory regardless of when placed
as well as continuing customer training and liaison services with
respect to the Products.
1.7
Support Service
Standards: Shall mean
that technical support that is available from Distributor from
Monday to Friday during normal business hours, however, with the
added option to reach a Distributor representative twenty-four (24)
hours, seven (7) days a week.
1.8
Service Point:
Shall mean a minimum of at least one
work shop/location that Distributor sets up in the Territory to
service and repair Products.
1.9
Retail Prices:
Shall mean prices payable by the
customer/end user not including taxes, duties or fees
whatsoever.
1.10
Control: Shall mean the direct or indirect ownership of
more than 50% of the voting stock of Distributor.
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1.11
Initial Contract Year:
Shall mean the twelve (12) month
period beginning on the Commencement Date. A “Contract
Year” shall be any subsequent twelve (12) month
period.
1.12
Affiliates:
Shall mean any entities that are
controlled by, controlling or under common control of or with
Distributor.
1.13
Spare Parts:
Shall mean the parts listed in
Exhibit V attached hereto.
1.14
Term: Shall mean the period stated in
Article 12.1
ARTICLE 2
APPOINTMENT
2.1
Scope: Subject to each of the terms and conditions of
this Agreement, CARD hereby appoints Distributor, and Distributor
hereby accepts appointment as CARD’s sole and exclusive
Distributor for the Products in the Territory during the Term, with
the right to distribute Products in the Territory, only under
CARD’s name, logotypes and trademarks, subject to all the
terms and conditions of this Agreement, and provided further that
such distributions are only made to lawful gaming establishments.
Distributor’s rights to buy or sell Spare Parts shall be on a
non-exclusive basis and shall only apply during the Term and within
the Territory. Notwithstanding any rights granted to Distributor
under this Article 2.1, CARD shall have all rights under and
pursuant to Article 2.3 of this Agreement.
2.2
Distribution outside the
Territory: Unless
expressly permitted by EU Competition Defense Regulations,
Distributor shall not i) advertise, promote or solicit customers
for Products outside the Territory or establish any offices outside
the Territory through which orders are solicited, ii) set up
inventories of Products or store Products outside the Territory; or
iii) make any sales or distributions of any Products to any
customers or subdistributors where Distributor knows or has a
reasonable basis to believe that the Products are either intended
for final distribution outside the Territory or where it is likely
that the Products will be ultimately placed outside the
Territory.
2.3
Sales by CARD:
Notwithstanding any other provision
of this Agreement, in the event that Distributor fails to
purchase
(i)
at least a quantity of [...***...]
products as set out in Exhibit IV within the first [...***...]
period, or
(ii)
at least a quantity of less than
[...***...] of the minimum quantity requirements but more than
[...***...] products as set out in Exhibit IV without any
material reasons, such as in particular but not limited to a lack
of necessary authorisations, licences or approvals by the public
authorities or delayed delivery, for which Distributor may not be
held liable, within the first [...***...] period, or
(iii)
at least [...***...] of the minimum
quantity requirements set out in Exhibit IV in any subsequent
[...***...] period within the Term,
***Confidential Treatment Requested.
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upon written notice to Distributor,
CARD reserves the right to sell Products under CARD’s name,
logos and trademarks directly to those customers in the Territory
that request direct sales from CARD, in which event, after such
notice, Distributor shall not thereafter solicit, sell, lease or
distribute any Products to said customers. Any direct sales by CARD
to customers in the Territory shall be credited to
Distributor’s sales for purposes of the minimum quantity
requirements set out in Exhibit IV. In the event of any such
sale by CARD under this Article 2.3 where CARD is also hired
to perform the service and maintenance of the Products, then
Distributor shall receive five percent (5%) of the actual sales
price received by CARD per Product sold. In the event of any sale
by CARD where CARD is not hired to perform the service and
maintenance of the Products, or in the event of any leasing or
licensing by CARD of a Product, then Distributor shall not be
entitled to any compensation or fee whatsoever from CARD, but, in
such latter case, nothing contained herein shall prevent
Distributor and customer from negotiating a service fee which
Distributor may earn, but for which CARD shall not be
liable.
2.4
Subdistributors:
Distributor may, only with the prior
written consent of CARD, appoint one or more subdistributors to
promote and/or distribute Products within the Territory. Each such
appointment shall be upon terms and condition substantially
comparable to those set forth in this Agreement and shall be for a
term not to exceed the term of this Agreement as set forth in
Article 12.1 hereof. Notwithstanding such additional
appointments or CARD’s approval thereof, Distributor shall at
all times remain fully liable for the performance of its
subdistributors and/or dealers and hereby agrees to indemnify and
hold CARD harmless of all damages, losses, costs or expenses
(including, without limitation, CARD’s attorneys’ fees)
arising in any manner from any act or omission on the part of its
subdistributors. CARD will approve any subdistributor that is an
Affiliate and which subdistributor otherwise meets and otherwise
complies with the terms and conditions of this Agreement. In no
event shall CARD be liable for any costs, fees, expenses or any
payments to any subdistributor and Distributor hereby indemnifies
and hold harmless CARD from any and all damages, losses, claims,
costs or expenses (including without limitation, attorneys’
fees) claimed by any subdistributor in connection with its
distribution or sales of any Products. Notwithstanding any other
provision contained herein to the contrary, Distributor shall
verify that, and shall be fully liable and responsible for assuring
that any subdistributor that is approved under this Paragraph 2.4
is fully licensed and qualified with any gaming regulatory
authority or entity in any jurisdiction where said subdistributor
proposes to act. Any such subdistributor shall also comply with the
obligations of Article 3.5 under this Agreement.
2.5
Non-Competition:
Distributor hereby represents,
warrants, covenants and agrees with CARD that during the term of
this Agreement, the Distributor shall not, without the prior
written consent of CARD, sell or otherwise distribute any automatic
video-signal machines based on the Blackjack game that are the same
as or substantially similar to the Product.
2.6
[Intentionally Omitted.]
2.7
Sales Outside the
Territory: Nothing
contained in this Agreement shall in any way prohibit, prevent or
hinder CARD, in its sole and absolute
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discretion, from selling or leasing
any Products outside the Territory or to Customers inside the
Territory where the Products are intended for installation outside
the Territory, at prices and in a manner that is solely determined
by CARD.
2.8
Reserved Rights:
All rights to the Products not
expressly granted herein to Distributor shall be fully reserved and
retained by CARD.
ARTICLE 3
OBLIGATIONS AND AGREEMENTS OF
DISTRIBUTOR
3.1
Marketing:
Distributor shall use its best
efforts to further the promotion, marketing and distribution of
each of the Products in the Territory. Without limiting the
generality of the foregoing, Distributor shall have the following
obligations with respect to marketing and distribution of each of
the Products:
(a)
to promote, market and distribute
the Products strictly limited to the Territory. In the best
interest of Distributor and to save Distributor from any claims of
third parties, Distributor must specify in all advertising,
promotions, offers and all other activities that the Products are
offered in the Territory only.
(b)
to maintain throughout the Territory
an adequate and knowledgeable distribution force employed on a
full-time basis promoting the distribution and support of the
Products;
(c)
to promote the Products diligently
in each country in the Territory;
(d)
to participate actively in sales or
merchandising programs prepared by CARD and to promote and
demonstrate the Products in all fairs and exhibitions in the
Territory and to develop and implement distribution programs for
the promotion of the Products, at a minimum, to promote, show and
demonstrate Products during the most important trade shows in the
Territory.. Distributor is solely responsible for costs of such
shows including but not limited to transportation and importation
costs.
(e)
to maintain an adequate and balanced
inventory of Products and sufficient parts to service the
Territory;
(f)
to respond promptly to all inquiries
from customers, including complaints, to process all orders and to
effect all shipments of Products;
(g)
to investigate diligently all leads
with respect to potential customers referred to it by
CARD;
(h)
to keep CARD fully informed of all
inquiries and orders received by Distributor from customers located
outside the Territory;
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(i)
to provide CARD not later than
thirty (30) days from the end of each calendar quarter with a
report of its marketing, distribution, service and installation
activities with respect to the Products sold or leased in the
Territory during such quarter, which report shall be in such form
and in such detail as CARD may reasonably require;
(j)
to notify CARD of all installations
including customer’s name and installation address within
seven (7) days of such installations;
(k)
to provide technical training and
casino staff training to its respective customers with reasonable
technical support and backup from CARD;
(l)
to obtain and maintain in good
standing all necessary licenses to allow Distributor to market,
store and distribute the Products in the Territory, and upon
CARD’s request, to obtain copies of all gaming licenses
possessed by any customer to whom Distributor sells or leases a
Product;
(m)
to notify CARD of any potential or
apparent infringement of CARD’s intellectual property rights
related to the Products. CARD maintains the exclusive right to
prosecute any infringement of its intellectual property, which
right CARD shall exercise at its sole discretion;
(n)
All regulatory approvals and
permissions will be obtained by Distributor at Distributor’s
cost; and
(o)
to refrain from making any false or
misleading representations or statements about either CARD or any
of the Products; and further that Distributor shall only make
truthful statements about the Products that are consistent with the
CARD’s documentation describing the Products.
3.2
Engineering
Contribution. Distributor
shall provide a non-refundable capital investment in the amount of
[...***...] payable upon execution of the Agreement, as well as
engineering, testing and translating support services to be agreed
upon by the parties. In return for said capital investment, CARD
will provide to Distributor a discount of [...***...] per unit on
the Distributor Price, for the first [...***...] units of Product
purchased from CARD. In the event, for any reason, Distributor does
not purchase at least [...***...] units of Product, no refund or
credit shall be owed or made to Distributor
3.3
Import Documentation:
Distributor shall be responsible for
obtaining all permits and satisfying all formalities as may be
required to import the Products into the Territory in accordance
with the prevailing laws and regulations.
3.4
Support Services:
Distributor shall provide Support
Services to customers in the Territory to whom Products have been
delivered in accordance with CARD’s then current Support
Service Standards, and shall at all times maintain a sufficient
staff of personnel fully trained and qualified to perform such
Support Services in the Territory. Further, only Distributor
personnel trained in the proper operation and use of the
*** Confidential Treatment Requested.
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Products, as provided in
Article 4.2 hereof, will provide training to
Distributor’s customers in the proper operation and use of
the Products.
In order to provide such Support
Services Distributor is bound to establish Service Points for
customers in the Territory. Such Service Point has to carry a
sufficient spare part inventory for which Distributor shall
purchase original parts from CARD at prices set forth in the Spare
Parts Price List in Exhibit V of this Agreement, which price
list is subject to change from time to time. In the event that
Distributor performs works on a Product that is still under
warranty from CARD, Distributor shall send the defective part(s) to
CARD’s facility in Austria for confirmation by CARD’s
manufacturer that the defect is under warranty. If the part(s) are
under warranty, Distributor shall be provided with replacement
parts; labor costs shall be borne by Distributor. Service Points
shall be manned with technicians or engineers that have been
trained by CARD. Training of such appointed personnel will be
provided pursuant to Article 4.2.
In the event customers are required
to send defective Products or part(s) to Distributor’s
Service Point, the time between receipt of the defective Product or
part(s)and transport back to the customer shall not exceed 2
business days.
3.5
Modifications to Products and
CARD’s Right of Inspection and Certification:
Distributor shall not make any
modifications to or reproductions of any Products or any parts of
Products including but not limited to E.P.R.O.M.s (Electronically
Programmable Read Only Memory) without first obtaining the written
approval for such modification and/or reproduction from CARD.
Distributor agrees that CARD may, upon reasonable notice to
Distributor, inspect and certify Products in any location to ensure
that Support Service Standards are complied with in the service and
maintenance of Products.
3.6
Due Diligence:
Distributor shall, prior to entering
into this Agreement, have completed CARD’s due diligence
forms to CARD’s sole satisfaction certifying
Distributor’s compliance with relevant gaming laws and
regulations and shall update such forms when reasonably requested
to do so by CARD and at least annually. Notwithstanding any other
provisions that may be contained to the contrary in this Agreement,
Distributor acknowledges that CARD’s business is highly
regulated. Accordingly, both prior to and after the execution of
this Agreement, CARD shall have the right, both prior to and after
any execution hereof, to perform due diligence on Distributor or
any approved subdistributor under Article 2.4 as required by
any gaming regulators in those jurisdictions in which CARD is
licensed. On an ongoing basis, Distributor (and any approved
subdistributors under Article 2.4) shall be obligated to fully
and reasonably cooperate with CARD related to such due
diligence.
3.7
Other Agreements of
Distributor: In addition
to all other agreements and obligations of Distributor contained
herein, Distributor agrees that at all times it shall be in full
and timely compliance with all laws and regulations that are
applicable to it and to its business activities in all countries in
the Territory, and wherever else required to perform its
obligations hereunder. Distributor further agrees that it has the
full right, power and authority to enter into this Agreement, to
perform each of its obligations required of it
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hereunder, and that such performance
does not violate any agreements that Distributor has with any other
entity nor requires the approval or consent of any third party
(other than applicable regulatory authorities.)
ARTICLE 4
GERNERAL OBLIGATIONS OF
CARD
4.1
Supply of
Products:
a)
CARD shall use its good faith
commercially reasonable efforts to supply the Products ordered by
Distributor. Notwithstanding the foregoing, CARD reserves the right
to allocate its production of Products at its sole discretion, with
the proviso that CARD will provide, at a minimum, the number of
units necessary for Distributor to meet the minimum sales
obligations set out in Exhibit IV. In addition, CARD shall use
its good faith commercially reasonable efforts to supply
Distributor with Spare Parts for all Products covered hereunder at
the prices set forth on Exhibit V attached hereto.
b)
CARD will provide Distributor with
demonstration Products as set forth in Exhibit III at no
charge EX WORKS to Distributor during the term of this Agreement,
which demonstration Products shall at all times remain the property
of CARD. Upon termination of this Agreement for whatever reason any
demonstration Products provided by CARD to Distributor that were
not previously purchased by Distributor shall be returned to CARD
in proper working order, reasonable wear and tear excepted.
Distributor shall purchase any demonstration Products at the
Distributor Prices set forth in Exhibit III hereto, which have
originally been provided to Distributor at no charge, and which
Distributor sells to a third party.
c)
Distributor may receive further
Products for demonstration purposes at a current subsidized price
as set forth in Exhibit III. In the event that Distributor
subsequently sells such demonstration Products to a third party,
the difference between the subsidized price paid by Distributor to
CARD and the Distributor Price set forth in Exhibit III shall
be paid by Distributor to CARD.
4.2
Training: Initially, CARD shall provide sales and Support
Service training to a reasonable number of Distributor’s
sales and technical personnel at Distributor’s facilities in
Barcelona. Such training shall last for 5 (five) business days and
all costs for CARD’s employee(s) for travel, accommodation
and labor are to be borne by CARD. Such training shall include the
training of Distributor’s technicians, engineers or
maintenance personnel to service the Products in accordance with
the CARD’s Support Service Standards, as well as training for
a reasonable number of Distributor’s personnel in the proper
operation and use of the Products to enable Distributor’s
personnel to provide such training to the
Distributor’s
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customers. Distributor shall pay all
salaries and all costs for travel, lodging, per diem and related
expenses for its personnel receiving training hereunder. If
requested, CARD shall also provide training to customer’s
personnel, including casino staff and technicians, with customer
paying to CARD per diems at EUR 500,— /day, plus a
