[CONFORMED COPY]
FIRST AMENDMENT TO SERVICES AGREEMENT
This is the First Amendment to that certain Services Agreement
dated as of March 1, 1995 (the "Services Agreement"), by and
between Kash n' Karry Food Stores, Inc., a Delaware corporation
("Kash n' Karry"), and GSI Outsourcing Corporation, a Delaware
corporation ("GSI").
TERMS
In consideration of the mutual covenants and promises
hereinafter set forth, and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Staff.
1.1. Section 3.2(a) of the Services Agreement is hereby
amended by deleting the second and third sentences and inserting
the following in lieu thereof:
Within 10 days prior to the Effective Employment Date (as
hereinafter defined), GSI or its Subcontractors will
offer, or cause to be offered, employment to those Kash
n' Karry employees listed on Schedule O (the "Affected
Employee"), as the same may be amended from time to time
after the Closing Date to reflect changes in such
personnel. Subject to the provisions of Section 3.2(b),
such employment will become effective on the earlier of
May 1, 1995, or the date that is 31 days after the
Closing Date (the "Effective Employment Date").
1.2. Section 3.2(b) of the Services Agreement is hereby
amended by deleting the third sentence and inserting the following
in lieu thereof:
On or before the Effective Employment Date, Kash n' Karry
will pay to such Transferred Employees all monies owed to
them by reason of their employment with Kash n' Karry, on
a prorata basis as of the Effective Employment Date.
1.3. GSI represents and warrants to Kash n' Karry that GSI is
presently obtaining bids for workers compensation and employers'
extended coverage liability insurance as required pursuant to
Section 15.1 of the Agreement. GSI further covenants and agrees to
obtain such coverage and to provide to Kash n' Karry a certificate
of insurance on or before the Effective Employment Date (as defined
in the Agreement).
2. Reconciliation of Service Charges During Transition Period.
2.1. Section 3.9 of the Services Agreement is hereby deleted
in its entirety, and the following is hereby inserted in lieu
thereof:
(a) On the Closing Date, all payment obligations and
liabilities under the Contracts and all other costs
and expenses associated with the provision of
Services shall be apportioned between the parties
as of the opening of business on the Commencement
Date, it being understood that Kash n' Karry shall
be responsible for any such obligations,
liabilities, costs and expenses for all periods
prior to the Commencement Date, and that GSI shall
be responsible for any such obligations,
liabilities, costs and expenses for all periods
commencing on and after the Commencement Date. To
the extent that Kash n' Karry pays any costs and
expenses associated with the provision of Services
during the Transition Period, such amounts shall be
credited against the portion of the Annual Service
Charge for 1995 that is payable by Kash n' Karry on
the Closing Date pursuant to Section 7.1 hereof.
On or before the Closing Date, Kash n' Karry will
submit to GSI an itemized list of all such costs
and expenses paid by Kash n' Karry through the most
recent practicable date prior to the Closing Date
(the "Itemized Costs"). From time to time after
the Closing Date, the parties agree to make such
further adjustments between them as may be
necessary to properly allocate the payment
obligations and liabilities under the Contracts,
and all other costs and expenses associated with
the provision of Services hereunder, between the
parties as of the Commencement Date. Without
limitation of the foregoing, if, following the
Closing Date, Kash n' Karry incurs additional costs
and expenses in connection with the provision of
Services on and after the Commencement Date
(including, without limitation, the costs and
expenses of employing the Affected Employees
through the Effective Employment Date), GSI will
reimburse Kash n' Karry for such costs and expenses
promptly upon receipt from Kash n' Karry of an
itemized statement thereof. During the three month
period following the Closing Date, GSI shall have
the right to review the books and records of Kash
n' Karry, during normal business hours, for
purposes of auditing the Itemized Costs and any
additional reimbursable costs and expenses of Kash
n' Karry.
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(b) Prior to and from time to time after the Closing
Date, the parties agree to negotiate in good faith
any adjustments to the Annual Services Charge
attributable to any Retained Contracts, costs
relating to assigning the Assets, material costs
and liabilities not disclosed in the MIS Budget,
and any costs reallocated between the parties
pursuant to negotiations during the Transition
Period.
2.2. Section 7.1 of the Services Agreement is hereby amended
by deleting the third sentence and inserting the following in lieu
thereof:
Provided, however, the Annual Services Charge for 1995
will be due and payable as follows:
(a) an amount equal to the sum of the following will be
payable by Kash n' Karry on the Closing Date:
(i) the portion of the Annual Services Charge for
1995 allocable to the Transition Period, prorated
on a per diem basis, minus (ii) the total amount of
Itemized Costs paid by Kash n' Karry pursuant to
Section 3.9(a) hereof;
(b) an amount equal to 1/12th of the total Annual
Services Charge for 1995, prorated on a per diem
basis for the period from and including the Closing
Date to the last day of such month, will be payable
by Kash n' Karry on the Closing Date; and
(c) the portion of the Annual Services Charge for 1995
allocable to the period commencing on the first day
of the month next succeeding the Closing Date will
be payable in equal installments prorated over the
number of remaining months in 1995.
For example, if (i) the Closing Date occurs on April 1,
1995, (ii) the total Annual Services Charge for 1995 is
$7,839,000, and (iii) the Itemized Costs are $1,500,000,
then:
-- The sum of $459,750 would be payable by Kash n'
Karry on April 1, 1995, pursuant to clause (a)
above ($1,959,750 - $1,500,000 = $459,750);
-- The sum of $653,250 would be payable by Kash n'
Karry on April 1, 1995, pursuant to clause (b)
above; and
_________________
1 ($7,839,000/12) X 3 = $1,959,750
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-- The sum of $5,226,000 would be payable by Kash n'
Karry in equal monthly installments of $653,250
each commencing on May 1, 1995, and on the first
day of each month thereafter, through and including
December 1, 1995.
3. Appointment of GSI as Paying Agent.
3.1. Section 3.4(a) is hereby amended by adding the following
to the end thereof:
For example, and without limitation of the foregoing,
Kash n' Karry may appoint GSI as its paying agent with
respect to any such given Contract, in which event GSI
will have such rights and obligations with respect to
such Contract and the equipment and Applications Software
covered thereby as if it were a Retained Contract
described in Section 3.4(b); provided, however, in such
event, no adjustment would be made to the Annual Services
Charge by reason of the appointment by GSI as paying
agent, a subsequent assignment to GSI of all rights and
privileges of Kash n' Karry thereunder, the termination
by GSI of the Contract, or the achievement by GSI of
cost-savings in managing any such Contracts in connection
with the performance of Services hereunder..
3.2. Section 3.4(b) is hereby amended by adding the following
clause to the beginning of the first sentence thereof:
Except as provided in Section 3.4(a) with respect to
Contracts for which GSI is appointed as paying agent,
3.3. Kash n' Karry is a party to contracts with IBM
Corporation governing certain Kash n' Karry Machines and certain
Assets and, at the Closing, will appoint GSI as its paying agent
with respect to the contracts governing the Assets identified on
Annex I to Schedule D. Until such time as Kash n' Karry is able to
obtain segregated invoices from IBM reflecting charges allocable
only to the Kash n' Karry Machines, GSI also agrees to serve as
paying agent with respect to the Kash n' Karry Machines as set
forth on Exhibit 1 attached hereto and to submit monthly invoices
to Kash n' Karry reflecting such charges, and Kash n' Karry agrees
to reimburse GSI upon receipt of an invoice for such charges.
4. Hand Held Scanners.
The parties acknowledge and agree that GSI is not required, as
part of the Services rendered under the Agreement, to replace any
obsolete MSI hand-held scanners currently being utilized in the
Kash n' Karry retail locations, notwithstanding the assumption by
GSI of Kash n' Karry's payment obligations under the maintenance
contracts for such units.
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5. Schedules.
The parties acknowledge and agree that they are presently
collaborating on the preparation of Schedule Q (Help Desk), and
agree to finalize such schedule within three months after the
Closing Date.
6. Incorporation.
This First Amendment is hereby incorporated into and made a
part of the Services Agreement as if fully set forth therein.
Except as amended herein, the Services Agreement remains in full
force and effect. In the event of any conflict between the
provisions of the Services Agreement and the provisions of this
First Amendment, the provisions of this First Amendment shall
govern.
IN WITNESS WHEREOF, the parties hereto have hereunto executed
this First Amendment by and through their duly authorized officers
on the day and year set forth below.
KASH N' KARRY FOOD STORES, INC.,
a Delaware corporation
By: /s/ R. P. Springer
Name: Raymond P. Springer
Title: SR VP - CFO
GSI OUTSOURCING CORPORATION,
a Delaware corporation
By: /s/ Philippe Guionnet
Name: P. Guionnet
Title: VP
20/WL/LWH/KNK.SEC/S1.95/EX-10-5B.ASC
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SCHEDULE?
GSI acts as the paying agent for Kash n' Karry
on IBM invoices. Kash n' Karry will be re-
invoiced monthly for:
RX $ 4,876.16
Financing Charge 19,434.00
Capital Lease Equipment 14,426.00
Volume Purchase Agreement 6,128.00
Total $44,864.16
Exhibit 1