Exclusive Distribution Agreement

EXCLUSIVE DISTRIBUTION AGREEMENT

 

 

Exhibit 10.8

 

This exclusive distribution agreement (“Agreement”) is made the             day of June 2006, between Avasoft, Inc., a California corporation ("Avasoft"), and Piancone Group International, a Nevada corporation organized and existing under the laws of Nevada ("Piancone").

 

RECITALS

 

WHEREAS, Avasoft markets, and sells an innovative system of soft serve ice cream delivery which Piancone desires to distribute in the Territory (as defined herein);

 

WHEREAS, Piancone has represented that it possesses the necessary expertise, equipment, facilities and sales organization to promote and sell such Products in the Territory;

 

WHEREAS, Avasoft is willing to appoint Piancone and Piancone is willing to accept appointment as Avasoft's exclusive distributor of the Products (as defined herein) in the Territory (as defined herein) on the terms and subject to the conditions set forth in this agreement.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth and for other valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

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 I unless the context requires otherwise:

 

1.1

Affiliate.  " Affiliate " means, when used with reference to a person or entity, any company that is controlled by, or which controls or is under common control with, such person or entity.  

 

1.3

Commitment.  “Commitment” means that during the term of this Agreement that Piancone contractually commits to purchase certain Product Minimums as set defined in Section 1.8.

 

1.4

Confidential Information. "Confidential Information" means all information (whether oral, written or electronic and whether or not such information is expressly designated by the parties as confidential) which has been or is hereafter disclosed by the parties, directly or indirectly, regardless of the form or manner in which it is disclosed, related in any way to the parties’ or Affiliates' markets, customers, products, patents, inventions, trade secrets, procedures, methods, designs, strategies, plans, assets, liabilities, costs, revenues, profits, organization, employees, agents, distributors, suppliers, or business in general.

 

 

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1.5

Customer.  "Customer" means any actual or potential purchaser of the Products in the Territory.

 

1.6

Distributor Price.  "Distributor Price" has the meaning assigned to such term in Section 7.1 hereof.

 

1.7

Exclusive Distributor.   “Exclusive Distributor” means Avasoft shall appoint Piancone to act as its sole distributor of the Products in the Territory.  

 

1.8

Minimums.  “Minimums” means that during the term of this Agreement Piancone shall purchase not less than Forty-Eight Thousand (48,000) cases per annum or Four Thousand (4,000) cases per month of Avasoft Brand ice cream products and one thousand (1,000) Avasoft Brand machines from Avasoft or any present or future subsidiaries or affiliates of Avasoft, unless the Commitment is reduced or terminated as provided in this Agreement.

 

1.9

Products.  "Products" mean the Avasoft Brand products listed in Exhibit A hereto.  Avasoft may, in its sole and absolute discretion and without incurring any liability or obligation to Piancone, amend Exhibit A from time to time if any product or line of products listed therein is discontinued or Avasoft ceases to offer such product or line of products in the territory for technical, marketing or other reasons.  Avasoft shall give Piancone written notice of any such amendment.

 

1.10

Quality Standards.  "Quality Standards" shall have the meaning assigned to such term in Section 6.1 hereof.

 

1.11

Sample Product.  “Sample Product” shall mean Avasoft shall provide Piancone certain sample products as an incentive to purchase Products pursuant to Avasoft’s Machine Incentive Program, as adjusted by Avasoft from time to time, with each pallet of Avasoft Brand ice cream product and machine ordered (refer to Section 4.5 below).

 

1.12

Territory.  "Territory" means the entire country of Mexico, exclusive of the Avasoft Brand as set forth in Products in Exhibit “A”.

 

1.14

Trademarks.  "Trademarks" means the trademarks of Avasoft listed in Exhibit B hereto.  In those particular classes which Avasoft or its affiliates have registered or have been licensed to use or sublicense such trademarks in the territory.  Avasoft may, in its sole and absolute discretion, amend Exhibit B to correspond to any changes in such trademarks or to any changes in the products listed in Exhibit A.  Avasoft shall give Piancone written notice of any such amendment.

 

Unless otherwise specified, all references herein to numbered articles, sections or exhibits refer to the corresponding articles, sections, or exhibits of this Agreement.

 

 

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ARTICLE II

SCOPE

 

Avasoft hereby appoints Piancone, and Piancone hereby accepts appointment as Avasoft's exclusive distributor, during the term of this Agreement, with the right to buy the Products (as defined in Section 1.9 hereto) from Avasoft and to resell or otherwise distribute the Products to Customers in the Territory, subject to all the terms and conditions of this Agreement.  Nothing in this Agreement is intended, nor shall be construed, to limit the right of Avasoft to appoint one or more other distributor to sell and distribute the Products to any party outside of the Territory.  

 

ARTICLE III

GENERAL OBLIGATIONS OF PIANCONE

 

3.1

Sales and Distribution.  In connection with its appointment as Avasoft's Exclusive Distributor hereunder, and its sale and distribution of Products, Piancone shall:

  

a.

Best Efforts.  Use its best efforts to further the promotion, distribution and sale of Products in the Territory, including, but not limited to, ensuring that Customers in the Territory carry adequate stocks of and permanently display the Products;

 

b.

Active Participation.  Participate actively in sales and merchandising programs prepared by Avasoft;

 

c.

Respond and Process Promptly. Respond promptly to all inquiries from Customers, including complaints, and process all orders and effect with any off shipments of Products in a timely fashion;

 

d.

Quality Control Standards.  Follow the same quality control standards with respect to the storage, preservation, sale and use of Products as followed by Avasoft and communicated to Piancone by Avasoft from time to time.

 

e.

Adequate Facilities.  Have and maintain adequate distribution and transportation facilities to satisfy the Quality Control Standards referred to above.

 

f.

Professional Conduct.  Conduct its business in a professional manner that reflects positively upon Avasoft and the Products.

 

3.2

Promotion.  Piancone shall diligently undertake to promote the Products in the Territory.  From time to time, Avasoft may authorize Piancone in writing to conduct certain promotions.  Piancone agrees that it will participate in such promotions and will follow all reasonable instructions Avasoft issues respecting such promotions.  Piancone shall use or display the Trademarks in all promotions undertaken by Piancone pursuant to this Section 3.2 or otherwise in the Territory in strict accordance with Article X of this Agreement.

 

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3.3

Expenses.  Piancone assumes full responsibility for all costs and expenses that Piancone incurs in promoting, marketing, distributing and selling the Products in the Territory or otherwise in carrying out its obligations under this Agreement.

 

3.4

Taxes.  Avasoft shall not be responsible for any taxes, contributions or duties in the Territory by reason of Piancone’s execution and performance of this Agreement or arising from payments made or the importation of Products under this Agreement.

 

3.5

Import Documentation and Government Approval.  Piancone is responsible for obtaining all health registration permits and product registration permits for Products that are required to be obtained in the Territory plus  all licenses and permits and for satisfying all formalities as may be required to import Products into the Territory in accordance with the then prevailing laws and regulations.

 

3.6

Piancone's Operations.  Piancone represents and warrants as of the date of this Agreement it possesses all licenses, permits and approvals and the commercial and financial resources necessary to effectively distribute, market and sell the Products throughout the entire Territory.

 

3.9

Customer Complaints and Product Recalls.  Piancone shall provide Avasoft with periodic reports summarizing any consumer complaints regarding the Products, and upon request of Avasoft, Piancone shall investigate any such complaint.  Piancone shall be responsible for handling all consumer complaints; provided, however, that, in light of Avasoft's or Avasoft's Affiliates' ownership of the Trademarks, Avasoft hereby authorized Piancone to take such action with respect to any such complaint that Avasoft deems reasonable under the circumstances.

 

ARTICLE IV

ORDERS FOR PRODUCTS

 

4.1

Purchase Orders.  Piancone shall submit purchase orders for the Products to Avasoft at the address provided to Piancone by Avasoft from time to time, which orders shall set forth (i) identification of the Products ordered, (ii) quantities of such Products, (iii) desired delivery dates, and (iv) shipping instructions and shipping address.  All purchase orders delivered by Piancone shall be received by Avasoft at least   ten (10) business days (lead time) prior to the delivery dates requested in the order.

 

4.2

Acceptance of Orders.  All purchase orders from Piancone are subject to acceptance in writing by Avasoft.  Each purchase order shall be deemed an offer by Piancone to purchase Products pursuant to the term of this Agreement and, upon acceptance by Avasoft either in whole or in part as herein above provided, shall give rise to a contract under the terms set forth herein.

 

 

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4.3

Delivery Terms.  Unless otherwise agreed to by the parties, all deliveries of Product hereunder shall be made to Piancone's San Diego warehouse or such location within San Diego County as may be designated by Piancone or to such ship to and bill to locations as Piancone shall designate.  Products ordered by Piancone shall be delivered in refrigerated trailer(s) which will be utilized by Piancone to import Product.  Piancone agrees to procure and pay for insurance coverage acceptable to Avasoft in connection with delivery.

 

4.4

Forecasts.  At the end of each calendar quarter, Piancone shall provide Avasoft with a non-binding forecast of Piancone’s orders for the remaining quarters of this Agreement.  Piancone shall provide two (2) monthly binding forecasts to Avasoft of Piancone’s orders on the first (1st) and fifteenth (15 ^th ) of every month, unless such day shall fall on a weekend, in which case the binding forecast is due on the Friday before the first (1st) and fifteenth (15 ^th ) of that month.

 

4.5

Sample Product.  Pursuant to Avasoft’s Machine Incentive Program as amended from time to time, Avasoft shall provide Piancone certain sample products as an incentive to purchase Products, as adjusted by Avasoft from time to time, with each pallet of Avasoft Brand ice cream product and machine ordered.  Refer to Exhibit C for the details of the Avasoft’s Machine Incentive Program.

 

ARTICLE V

GENERAL OBLIGATIONS OF AVASOFT

 

5.1

Best Efforts.  Avasoft will employ its best efforts to fill Piancone’s orders within a ten (10) business day lead time.

 

5.2

Direct All Inquiries to Piancone.  Avasoft shall direct all inquiries from persons interested in purchasing Avasoft’s products for sale or resale within the territory to Piancone and shall list Piancone’s on its website as Avasoft’s designated and Exclusive Distributor in the territory.

 

ARTICLE VI

QUALITY CONTROL

 

6.1

Quality Standards.  Avasoft distributes, sells and authorizes the distribution and sale of its Products in accordance with strict Quality Standards in the United States.  In connection with all distribution and sale of the Products pursuant to this Agreement, Avasoft shall comply in all respects with the same standards of quality in connection with the Product sold to Piancone hereunder.

 

 

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6.2

Quality Assurance Activities.  Piancone shall carry out all reasonable quality assurance activities required to ensure compliance with Avasoft's Quality Standards and other quality guidelines, procedures and/or provisions set forth by supplier from time to time.  Such activities include, without limitation, the following: (i) observance of Avasoft's code-date requirements; (ii) proper handling and protection from damage, including damage due to incorrectly maintained temperatures, of all Products and containers for the Products; (iii) maintenance of clean and sanitary operations; (iv) provision of services, including stocking and stock rotation, at the location of Piancone's customers and accounts to ensure that all Products for sale or sold to consumers are subject only to properly maintained temperatures and are not subject to spoilage.

 

6.3

Reputation and Goodwill.  In all of their respective operations, including the sale and distribution of the Products pursuant to this Agreement, the parties shall not take any action that undermines or prejudices the reputation and goodwill enjoyed by each other respecting the Products or Trademarks.

 

VII

PRICES AND PAYMENTS

 

7.1

Prices.  " Distributor Prices " means the prices quoted by Avasoft from its then current U.S. Distributor Price list to Piancone from time to time for sales of Product to Piancone within the Territory pursuant to this Agreement.  All such Piancone prices shall be quoted in United States dollars.  In no event shall the prices charged by Avasoft be greater than the prices quoted on Avasoft’s U.S. Distributor Price list.  Avasoft shall provide Piancone at least seven (7) days advance notice before increasing the price of any Product sold by Avasoft to Piancone.

 

7.2

Payment Terms.  The Products purchased by Piancone hereunder shall be paid for in U.S. Dollars with a one (1%) discount if paid within ten (10) days and net within thirty (30) days of purchase.  Avasoft agrees to permit Piancone to purchase Products on an open account.  All invoices and payments hereunder shall be denominated in United States dollars.

 

7.3

Resell Prices. Piancone may resell Products at such prices as Piancone shall determine in its sole discretion.

 

 

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ARTICLE VIII

ACCEPTANCE/WARRANTY

 

8.1

Acceptance of Products.  If any shortage, damage or discrepancy in or to a shipment of Products occurs, Piancone shall promptly report the same to Avasoft and furnish such written evidence or other documentation that Avasoft may require.  Avasoft shall not be liable for any such shortage, damage or discrepancy unless Avasoft has received notice and substantiating evidence thereof from Piancone within thirty (30) days of Piancone's receipt of the Products.  If the substantiating evidence delivered by Piancone demonstrates to the Avasoft's satisfaction that Avasoft is responsible for such shortage, damage or discrepancy, Avasoft shall promptly deliver additional or substitute Products to Piancone in accordance with the delivery procedures set for