EXHIBIT 10.32
MASTER REPAIR SERVICES AND SPARE PARTS SUPPLY AGREEMENT
This Master Repair Services and Spare Parts Supply Agreement (hereinafter the
"Agreement") is made as of the last date written below by and between INTELOGIC
TRACE, INC. ("I T"), a New York corporation, having its principal place of
business located at Turtle Creek Tower I, P. O. Box 400044, San Antonio, Texas
78229 and PC SERVICE SOURCE, INC. ("PCSS"), a Delaware corporation, having its
principal place of business located at 1221 Champion Circle, Suite 105,
Carrollton, Texas 75006.
WITNESSETH:
In consideration of the mutual promises hereinafter set forth, I T and PCSS do
hereby agree as follows:
1. DEFINITIONS. The following terms shall have the meanings
specified below:
A. ACQUIRED ASSETS. "Acquired Assets" shall mean all
Acquired Inventory and Equipment owned by I T.
B. ACQUIRED INVENTORY. "Acquired Inventory" shall mean the
inventory of spare and repair parts listed in the
attached Schedule A.
C. BANKRUPTCY COURT. "Bankruptcy Court" shall mean the
United States Bankruptcy Court for the Western District
of Texas, San Antonio Division.
D. BEST EFFORTS. "Best Efforts" shall mean that either Party
shall use all necessary resources and undertake all
required efforts in good faith to accomplish a task
specified under this Agreement in the timeframes
specified.
E. CASH. "Cash" shall mean cash and cash equivalents
(including certified or cashiers check).
F. CLOSING. The "Closing" shall mean the satisfaction or
waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated
hereby, other than conditions with respect to actions the
respective parties will take at the Closing itself.
G. CONFIRMATION DATE. "Confirmation Date" shall mean the
date designated by the Bankruptcy Court, upon which the
reorganization plan submitted by I T to the Bankruptcy
Court under bankruptcy case number 94-52172-C-11, has
been approved by the Court and such order of approval has
become final and unappealable.
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H. ESCROW AMOUNT. "Escrow Amount" shall have the meaning
specified in paragraph 3.F.2). below.
I. EQUIPMENT. "Equipment" shall mean the items of machinery,
equipment and other items specified in Schedule B to this
Agreement.
J. FULFILLMENT RATE. "Fulfillment Rate" shall have the
meaning specified in paragraph 4.E.1).a. below.
K. I T CUSTOMERS. "I T Customers" shall mean the end-user,
reseller and manufacturer customers of I T.
L. ORDER. "Order" shall have the meaning specified in
paragraph 4.A. below.
M. ORDINARY COURSE OF BUSINESS. "Ordinary Course of
Business" shall mean the ongoing transaction of business
consistent with the customs and practices of the Parties.
N. THE PARTIES. The "Parties" to this Agreement shall
consist of "PCSS" and "I T", which respectively, shall
have the meanings specified above.
O. PARTS AND REPAIR OPERATIONS. "Parts and Repair
Operations" shall mean the I T spare parts repair and
warehouse facilities and other facilities and locations
utilized by I T at time of execution of this Agreement
as specified on the attached Schedule C, including the
Acquired Inventory, Equipment, and personnel employed by
I T in the provision of spare parts and repair services
required by I T.
P. PASS-THROUGH WARRANTY. "Pass-Through Warranty" shall mean
the warranty provided by the original manufacturer and/or
vendor of the Spare Parts and/or Repair Services provided
under this Agreement, which are directly transferable to
I T as the purchaser of any such Spare Parts and/or
Repair Services (consisting of repair and/or replacement
of any such Spare Parts, and applicable penalty credits,
if any).
Q. PERFORMANCE CREDIT. "Performance Credit" shall have the
meaning specified in paragraph 4.E. below.
R. PURCHASE CREDITS. "Purchase Credits" shall mean the sums
made available to I T to be applied against amounts
payable to PCSS under this Agreement, as provided for in
paragraph 3.F. below.
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S. I T PURCHASE CREDIT RIGHT. "I T Purchase Credit Right"
(hereinafter "ITPCR") shall have the meaning specified
in paragraph 3.F.3). below.
T. PURCHASE PRICE. "Purchase Price" shall have the meaning
specified in paragraph 3.F. below.
U. REPAIR SERVICES. "Repair Services" shall mean the
performance of subassembly or unit repair or replacement
services by PCSS or its repair vendors for equipment
units, components or parts on items of Spare Parts
received from or on behalf of I T, required in order to
return such defective Spare Parts to good working order.
V. SPARE PARTS. "Spare Parts" shall mean fully operational:
1) personal computer microcomputer and peripheral
equipment spare parts; 2) spare parts acquired by PCSS
from I T under this Agreement designated as "Acquired
Inventory"); and 3) other spare parts requested by I T
under this Agreement for which an Order is accepted by
PCSS; regardless of where any such spare parts may
reside.
2. SCOPE OF AGREEMENT.
A. PURCHASE AND SALE OF ASSETS. Subject to the terms and
conditions of this Agreement, PCSS agrees to purchase
from I T, and I T agrees to sell to PCSS, all of the
Acquired Assets at the Closing for the consideration
specified in Section 3.F. below.
B. OBLIGATION TO PROVIDE SPARE PARTS AND REPAIR SERVICES.
Subject to the terms and conditions of this Agreement,
PCSS agrees to assume the obligation to provide
substantially all of the Spare Parts and Repair Services
ordered by I T in the course of providing remedial and
preventive maintenance services to I T Customers. PCSS
will not assume or have any responsibility, however, with
respect to any other obligation or liability of I T not
specified in this Agreement.
C. OBLIGATION TO ORDER SPARE PARTS AND REPAIR SERVICES. On and
subject to the terms and conditions of this Agreement, I T
agrees to order, purchase and accept from PCSS, substantially
all of its Spare Parts and Repair Services required by I T in
the course of providing remedial and preventive maintenance
services to I T Customers.
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3. PURCHASE AND SALE OF ASSETS.
A. PCSS agrees to purchase from I T and I T agrees to sell,
transfer, convey and deliver to PCSS, all right, title,
and interest in and to all the Acquired Assets, including
the Acquired Inventory, Equipment and I T's Parts and
Repair Operations, for the consideration specified in
paragraph 3.F. below. I T hereby represents that it has
good and marketable title to the Acquired Assets, free
and clear of all Security Interests, except for those
which will be released at Closing (e.g. Foothill) and/or
subject to trade liens incurred in the Ordinary Course
of Business that are not yet due and payable (such as
Spare Parts maintained in inventory at repair vendors).
The Closing of the transactions contemplated by this
Agreement shall take place at the office of I T located
in San Antonio, Texas, commencing at 9:00 AM, on November
__, 1994 (the "Closing Date").
B. Upon Closing, PCSS shall make offers of employment in good
faith, to all I T personnel employed by I T in the provision
of spare parts and repair services required by I T, at an
equivalent and substantially similar rate of pay (a listing of
all such I T personnel is attached hereto as Schedule D).
C. Upon Closing, PCSS shall assume and at all times
satisfactorily perform the function of I T's Parts and
Repair Operations. This shall consist, initially, of
funding I T's continued operation of such function, at
PCSS' sole expense. PCSS shall designate and communicate
in writing to I T which of the I T personnel, facilities
and utilities it chooses to maintain. PCSS shall be
responsible for the direct expenses of maintaining the
function of I T's Parts and Repair Operations during the
period of time PCSS initiates a readiness to provide
Spare Parts and Repair Services. PCSS shall have a
period of up to ninety (90) days (the "Service Ramp-Up")
in order to meet the full performance requirements
specified in Section 4 below, in accordance with the
provisions of this Agreement.
D. PCSS shall be responsible for all movement, shipping and
stocking costs associated with the transfer of Acquired
Inventory and Equipment from I T's facilities to locations
specified by PCSS.
E. PCSS shall meet the scheduling needs imposed by the
processing of lease rejections, for use by PCSS of
facilities leased by I T from third parties, under the
requirements of its plan of reorganization with the
Bankruptcy Court. PCSS may continue use of I T
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facilities, subject to mutually agreed to terms, conditions
and prices negotiated by and between PCSS and the landlord(s)
of any such facilities, at PCSS' sole expense. I T will
cooperate with PCSS in good faith to secure extensions to time
limits on acceptance or rejection of leases, imposed by the
Bankruptcy Court, in the event PCSS requests any such
extensions.
F. PCSS agrees to pay at the Closing, Five Million, One
Hundred Twenty-Five Thousand Dollars ($5,125,000) (the
"Purchase Price") by delivery of:
1) the payment in cash to Fidelity Capital and Income
Fund ("Fidelity") on behalf of I T One Million, Four
Hundred Twenty-Five Thousand Dollars ($1,425,000)
immediately upon Closing, and
2) the payment in cash to Fidelity on behalf of I T One
Million, Two Hundred Thousand Dollars ($1,200,000)
upon the Confirmation Date of the reorganization plan
submitted by I T to the Bankruptcy Court under
bankruptcy case number 94-52172-C-11, provided that I
T is a publicly traded corporation listed on a
national stock exchange at time of exiting from
bankruptcy protection. In the event I T is not a
publicly traded corporation listed on a national
exchange at time of confirmation, PCSS will make
payment in cash of One Million, Two Hundred Thousand
Dollars ($1,200,000) (the "Escrow Amount") to the
Escrow Agent pursuant to the Escrow Agreement
attached hereto as Exhibit 1, under which such sum is
payable to Fidelity on behalf of I T in accordance
with the following:
the payment in cash of One Hundred Thousand
Dollars ($100,000.00) per month, until such
time as the full amount has been paid to
Fidelity on behalf of I T, provided that I T
maintains an average minimum order placement
value of One Hundred Thousand Dollars
($100,000), net of any returns but including
any fees due PCSS by I T, calculated on a
cumulative rolling quarterly basis. In the
event I T fails to maintain the minimum
cumulative average order placement value
mentioned above or has outstanding balances
due in excess of the credit terms provided
herein, PCSS may suspend payments of the
Escrow Amount until I T achieves the minimum
cumulative average order placement value or
brings its account current, in which case
PCSS shall
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immediately pay Fidelity on behalf of I T
any payments withheld, in addition to any
additional payments due I T; and,
3) the establishment of a Two Million, Five Hundred
Thousand Dollar ($2,500,000) I T Purchase Credit
Right as a contingent liability on the financial
books of PCSS (the "ITPCR"), to be offset by Purchase
Credits generated by certain purchases of Spare Parts
and/or Repair Services from PCSS (except in the event
of breach by PCSS of the "Delivery Requirements"
specified below, or termination of this Agreement
without cause by PCSS as provided for in paragraph
5.A.3), in which case One Million Two Hundred Fifty
Thousand Dollars ($1,250,000) shall be immediately
payable and paid in cash to Fidelity on behalf of I T
in accordance with paragraph 5.A.2).c. below)
pursuant to the following:
a. Purchase Credits shall accrue on a monthly
basis for each month during the term of this
Agreement, in accordance with the following:
(1) Purchase Credits shall be calculated
based upon the aggregate gross total
value ("Gross Total Value") of all
amounts payable to PCSS by I T under
the provisions of this Agreement
(net of any returns, but including
any fees to be paid PCSS under this
Agreement), during each calendar
month during the term of this
Agreement.
(2) Purchase Credits shall accrue at the
rate of five percent (5%) of the
Gross Total Value for any calendar
month, for amounts due PCSS when the
Total Gross Value is less than Seven
Hundred and Fifty Thousand Dollars
($750,000).
(3) Purchase Credits shall accrue at the
rate of six percent (6%) of the
Gross Total Value for any calendar
month, for amounts due PCSS
hereunder, when the Total Gross
Value is equal to or greater than
Seven Hundred and Fifty Thousand
Dollars ($750,000).
(4) Purchase Credits shall not accrue
during any month in which the Gross
Total Value payable to PCSS is less
than One Hundred Thousand Dollars
($100,000).
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b. Purchase Credits may be applied by I T
effective on or after the first day of the
following month in which such Purchase
Credits were earned, and may be applied by
I T in the form of a short payment of
amounts due and payable to PCSS by I T.
c. In the event the PCSS Note has not been
fully utilized by Purchase Credits generated
hereunder prior to expiration of the initial
term of this Agreement, Purchase Credits
shall continue to accrue, and I T may
continue to use any such Purchase Credits,
for so long as the Agreement is not
terminated as provided for in paragraph
5.A.1). below.
G. PCSS shall have a period of up to sixty (60) days
from date of Closing in which to perform a detailed
inventory and inspection of the Acquired Inventory.
I T hereby represents that the Acquired Inventory
shall be as described in the attached Schedule A.
In the event the inventory results in a
determination that a material shortage of quantities
of Acquired Inventory exists, as compared to the
listing specified in Schedule A, I T will replace
any such material shortages or adjust the purchase
price for such inventory on a proportional basis.
This replacement of material shortages and/or
adjustment of purchase price shall be the exclusive
remedy to PCSS in the event of material shortages
in the Acquired Inventory. Any reduction of the
purchase price provided herein shall reduce the
ITPCR portions of the purchase price in proportion
to the original amount.
H. In the event I T is sold or acquired by a third
party (by merger, stock sale, or sale of a majority
of its business or assets) during the term of this
Agreement and any such transaction results in the
termination of this Agreement prior to the
expiration of the term hereof because the Agreement
is not assumed by a purchaser which would do a
substantially similar type and amount of business
with PCSS as would I T, or is left as a liability
of a corporation or other entity which no longer
conducts a business similar in type and amount to
I T, I T shall agree to the following:
1) If so terminated during the initial twelve
(12) month period from the Confirmation Date
by the Bankruptcy Court, I T will pay PCSS
Seven Hundred and Fifty Thousand Dollars
($750,000).
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If the Escrow is being paid monthly by PCSS
to I T hereunder, I T will forfeit the
unpaid balance of the Escrow Amount
specified above, subject to a minimum amount
of Seven Hundred and Fifty Thousand Dollars
($750,000), such that if there is an
insufficient amount remaining in escrow to
cover the $750,000 amount, I T would arrange
and make provision for such payment to be
made by I T or the buyer to PCSS as a
condition to the sale, if such sale were to
result in the termination of this Agreement.
2) If terminated subsequent to the initial
twelve (12) month period from the
Confirmation Date, the amount due PCSS would
decline from the $750,000 amount specified
in paragraph 3.H.1) above, at the rate of
Fifteen Thousand, Six Hundred Twenty-Five
Dollars ($15,625) for each month beyond
month twelve (12), beginning on the first
day of any such month, during the remaining
term of the Agreement, until the amount is
reduced to Zero Dollars ($0).
3) The amounts specified in 3.H.1). and 3.H.2).
above shall be considered liquidated damages
in lieu of cover or any other damages which
PCSS might allege as a result of such
termination, and shall be considered the
sole and exclusive remedy available to PCSS
with regard to the termination of this
Agreement as provided for hereinabove.
4. SUPPLY OF SPARE PARTS AND REPAIR SERVICES
A. ORDERING OF SPARE PARTS AND REPAIR SERVICES.
1) I T may from time to time request that PCSS provide
Spare Parts and/or Repair Services by notifying PCSS
in writing, electronically and/or verbally (verified
in writing by I T within one (1) business day),
specifying the Spare Part(s) and/or Repair Services
to be provided (an "Order").
2) PCSS shall provide any such Spare Parts and/or Repair
Services to I T that I T requests which are required
within the Ordinary Course of Business by I T, upon
PCSS's receipt of an Order. Each Order shall
constitute a contract exclusively consisting of the
terms of this Agreement, any applicable Schedule(s)
and the Spare Parts and/or Repair Services set forth
in the Order. The Parties agree that if there is any
inconsistency between the terms of this Agreement and
any Order or acknowledgment form submitted by I T or
PCSS, then the terms of this Agreement shall govern
and control and the inconsistent term found in the
Order or acknowledgment form shall be of no force and
effect.
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3) "Normal Parts" shall mean those Spare Parts and/or
Repair Services normally provided by PCSS in the
Ordinary Course of Business, whether such Spare Parts
are kept in stock or are ordered on a case-by-case
basis. "Sourced Parts" shall mean those Spare Parts
and/or Repair Services that are not normally provided
by PCSS in the Ordinary Course of Business, but which
are within the scope of the types of Spare Parts
and/or Repair Services normally provided by PCSS
(e.g., a Spare Part such as a hard drive to be used
on a personal computer, of a type or brand not
regularly purchased by PCSS). "Special Order Parts"
shall mean those Spare Parts and/or Repair Services
not normally provided by PCSS in the Ordinary Course
of Business, that are not within the scope of types
of Spare Parts and/or Repair Services normally
provided by PCSS (e.g., a Spare Part or item such as
a peripheral device that attaches to a personal
computer). "Acquired Parts" shall mean those Spare
Parts derived from the Acquired Inventory.
4) With respect to Normal Parts and Acquired Parts, PCSS
shall accept any such Order(s) and fulfill them in
accordance with the Performance Requirements of this
Agreement. With respect to Sourced Parts, PCSS shall
accept any such Order(s) and use its best efforts to
respond to any such request(s) and fulfill them in
accordance with the Performance Requirements of this
Agreement.
B. SPECIAL BID REQUESTS.
1) With respect to Special Order Parts, PCSS shall
immediately use its best efforts to respond to any
such request with a bid price which will be firm for
a minimum period of ninety (90) days. The definition
of normal work day ("Normal Work Day") for purposes
of securing Special Order Parts shall be the greater
of the hours of 8:00 AM to 5:00 PM, Monday through
Friday, excluding regularly observed national
holidays, or the actual hours of operation in the
event the applicable vendor has hours of operation
beyond the Normal Work Day.
2) PCSS will have a period of up to two (2) Normal Work
Days to respond to any such request. In the event
PCSS chooses not to bid on any such request made by
I T, I T shall be free to pursue the purchase of such
Spare Part(s) and/or Repair Service(s) elsewhere,
with no further obligation or liability to PCSS for
any such item(s). Failure by PCSS to
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respond in writing within the above mentioned two (2)
Normal Work Day response time shall be considered a
formal "No Bid" response by PCSS.
3) In the event PCSS responds with a bid price for any
such item(s) and I T provides PCSS with notification
that the bid price is noncompetitive with the given
bidding opportunity, PCSS will have the opportunity
to revise its bid accordingly.
4) PCSS shall have up to twenty-four (24) hours from
time of receipt of notification that a bid price is
nonresponsive, in which to revise its price. In the
event PCSS chooses not to revise its bid price in a
manner deemed by I T to be competitive with the given
bidding opportunity, or PCSS fails to respond in
writing to any such request within twenty-four (24)
hours of receipt of any such request, the bid
response shall be considered non- responsive, and I T
shall be free to pursue the purchase of such Spare
Part(s) and/or Repair Service(s) with no further
obligation or liability to PCSS for any such item(s).
5) In the event of a No-Bid response as provided for
above, any dollars spent by I T with third parties
for purchase of spare parts and/or repair services
No-Bid by PCSS for items that are within the scope of
equipment normally purchased by PCSS (e.g. personal
computer type equipment, including peripheral
devices), shall accrue for the purposes of
determining the Purchase Credit(s) I T is entitled to
under this Agreement, as if any such spare parts were
purchased by I T from PCSS hereunder (provided that
in the case of No-Bids by PCSS due to a determination
by I T that the PCSS bid price was not competitive,
no such credits will accrue in the event the PCSS bid
price was within a price range consistent with the
percentage uplift specified in the Pricing Schedule
specified in Section 4.I.3). below). I T will notify
PCSS of any such purchases and shall be entitled to
utilize any such credits beginning on the first day
of the week following any such purchases. Purchases
made by I T subsequent to a No-Bid by PCSS that are
not within the scope of equipment purchased by PCSS
shall not accrue for purposes of determining Purchase
Credit(s) I T is entitled to under this Agreement.
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6) A request for bid shall not constitute placement of
an Order by I T hereunder. I T will communicate
acceptance of special order bids by placement of an
Order with PCSS. PCSS shall not be responsible for
fulfilling special bid items, and I T will be under
no obligation to purchase any such item(s) from PCSS,
unless and until I T places an Order for any such
items. I T will promptly advise PCSS of any contracts
entered into by I T based on bids submitted by PCSS.
C. AUTHORIZED SPARE PARTS AND REPAIR SERVICES PROVIDER.
Provided that PCSS is providing Spare Parts and/or performing
Repair Services in accordance with the provisions of this
Agreement and the applicable Order(s) and extending the below
mentioned payment terms to I T, I T shall not utilize any
party other than PCSS for the provision of Spare Parts and
Repair Services specified under this Agreement.
Notwithstanding the above, I T shall be free to pursue the
procurement of any Spare Parts and/or Repair Services with
third parties outside the scope of this Agreement, for items
for which PCSS has responded with a No Bid, as provided for in
paragraph 4.B. above.
D. SPECIFIED REPAIR SERVICES. PCSS shall provide labor,
parts and materials and shall perform all Repair Services in a
first class and workmanlike fashion, consistent with commonly
accepted industry standards for repair of similar component
spare parts, necessary to repair and upgrade the Spare Parts
to the current minimum revision level, so that any repaired
Spare Parts will conform to the OEM's then current published
operating specifications for form, fit, function and finish;
and consistent with the following:
1) the repair specifications specified in the attached
Exhibit 2 ("Repair Specifications"), and
2) the performance requirements specified below;
E. PERFORMANCE REQUIREMENTS.
1) PARTS DELIVERY. TIME IS OF THE ESSENCE WITH RESPECT
TO THE DELIVERY OF SPARE PARTS ORDERED BY I T. PCSS
shall use its best efforts to deliver all Spare
Parts within the timeframe(s) requested by I T.
Without limiting the foregoing, the following
provisions shall apply to the delivery of Spare
Parts:
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a. Spare Parts ordered by I T from PCSS under
this Agreement shall arrive at the specified
site within the requested arrival time, for
ninety percent (90%) or more of all such
Spare Parts shipped to I T (the "Fulfillment
Rate"), as determined by I T. Orders shall
be designated for arrival by I T as a
Priority 1 Order or a Priority 2 Order. A
Priority 1 Order shall be set for next
business day arrival and a Priority 2 Order
shall be designated for arrival no later
than 4 business days from the order day.
Failure to meet the Fulfillment Rate
will entitle I T to the Performance Credits
and other remedies specified in this
Agreement, which shall be the exclusive
remedies available to I T for any such
failure. The Fulfillment Rate shall be
measured on a weekly basis (a "Week" being
measured as seven (7) consecutive days
commencing on each Monday), for all Spare
Parts Ordered by I T, shipped by PCSS, in
accordance with the following:
i) "Order Cut-Off Time" shall mean the
point in time during a normal
business day by which I T shall have
placed an Order with PCSS,
subsequent to which time the Order
shall be considered to have been
placed during the following business
day, for purposes of determining
when the Order shall be shipped. The
normal Order Cut- Off Time for
Normal Parts shall be 7:00 PM,
Central Standard Time.
ii) "Orders Received" shall mean the
number of Orders placed with PCSS
during a normal business day by I T
prior to the Order Cut-Off time, for
purposes of determining how many
Orders were placed by I T with PCSS
on a given day.
iii) "Order Shipment Cut-Off Time" shall
mean the point in time during a
normal business day by which PCSS
shall have to physically deliver the
Order to a shipper, in order for the
shipper to accept the Order for
delivery on that day.
iv) "Order Shipment Requirement" shall
mean the amount of time allowed for
PCSS to delivery a received Order to
a shipper, in order to meet the
Fulfillment Rate.
v) "Fulfillment Rate" shall mean the
number of Orders shipped within the
Order Shipment Requirement, divided
by the number of Orders Received
during any such
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Week, even if delivery for some of
those Orders is scheduled to occur
during the following Week.
b. In the event the Fulfillment Rate for any
week is less than eighty-eight percent
(88%), but not less than eighty-six percent
(86%) of all such Spare Parts shipped to
I T, I T will earn a performance credit (the
"Performance Credit") equal to one and one
half percent (1 1/2%) of the Gross Total
Value of all amounts payable to PCSS by I T
under this Agreement, accrued during any
such one (1) week period, net of returns,
usable by I T beginning on the first day of
the following week.
c. In the event the Fulfillment Rate for any
week is less than eighty-six percent (86%),
but not less than eighty-four percent (84%)
of all such Spare Parts shipped to I T, I T
will earn a Performance Credit equal to
three and one half percent (3 1/2%) of the
Gross Total Value of all amounts payable to
PCSS by I T under this Agreement, accrued
during any such one (1) week period, net of
returns, usable by I T beginning on the
first day of the following week.
d. In the event the Fulfillment Rate for any
week is less than eighty-four percent (84%),
but not less than eighty-one percent (81%)
of all such Spare Parts shipped to I T, I T
will earn a Performance Credit equal to
seven and one-half percent (7.5%) of the
Gross Total Value of all amounts payable to
PCSS by I T under this Agreement, accrued
during any such one (1) week period, net of
returns, usable by I T beginning on the
first day of the following week.
e. In the event the Fulfillment Rate for any
week is less than eighty-one percent (81%)
of all such Spare Parts shipped to I T, I T
will earn a Performance Credit equal to
fifteen percent (15%) of the Gross Total
Value of all amounts payable to PCSS by I T
under this Agreement, accrued during any
such one (1) week period, net of returns,
usable by I T beginning on the first day of
the following week.
f. In the event the Fulfillment Rate for any
week exceeds ninety-two percent (92%) of all
such Spare Parts shipped to I T, PCSS will
earn a Performance Credit equal to one half
of one
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percent (1/2%) of the aggregate Gross Total
Value of all amounts payable to PCSS by I T
under this Agreement, accrued during any
such one (1) week period, net of returns,
usable by PCSS beginning on the first day of
the following week. This credit will accrue
solely for the purposes of offsetting the
Performance Credits earned by I T, as
specified above, and shall be usable by PCSS
during the term of this Agreement.
g. During the Service Ramp-Up period, the 84%
to 86% Performance Credit category and the
86% to 88% Performance Credit category shall
go into effect in a phased manner in
accordance with the following:
(1) During the initial thirty (30) days
of the Service Ramp-Up period, the
total Performance Credits earned by
I T for the categories specified in
paragraph 4.E.g. above, the 81% to
84% Performance Credit category and
the Less Than 81% Performance Credit
category shall be limited to
twenty-five percent (25%) of any
such amounts.
(2) During the thirty-first (31st)
through sixtieth (60th) day
following the start of the Service
Ramp-Up period, the total
Performance Credits earned by I T
for the categories specified in
paragraph 4.E.g. above shall be
limited to fifty percent (50%) of
any such amounts.
(3) During the sixty-first (61st)
through ninetieth (90th) day
following the start of the Service
Ramp-Up period, the total
Performance Credits earned by I T
for the categories specified in
paragraph 4.E.g. above shall be
limited to seventy-five percent
(75%) of any such amounts.
(4) All other Performance Credit
categories shall remain unchanged
during the Service Ramp-Up period.
h. At the end of the Service Ramp-Up period,
and on any anniversary of the Closing Date
during the term of this Agreement, I T and
PCSS will review the Fulfillment Rates
specified hereunder, and will, subject to
written mutual
14
agreement of the parties, adjust such
Fulfillment Rate(s) accordingly; provided,
however, that I T shall have no obligation
to decrease the Fulfillment Rate
requirements set forth herein.
i. Since Time is of the Essence, in addition to
the foregoing provisions, and notwith-
standing any implication to the contrary
contained in any such provisions, I T, at
its sole discretion, may terminate this
Agreement (in which case the provisions of
paragraph 5.A.2). below shall apply) if and
only if the failure described in (1) and (2)
below occur and are followed promptly
thereafter by written notice of such failure
by I T to PCSS and following that notice
such failure by PCSS reoccurs within 6
months of the failure described in the
notice:
(1) in the event the Fulfillment Rate of
PCSS during any three (3) out of
four (4) consecutive weeks, measured
on a weekly basis, fails to exceed
eighty-four percent (84%), or
(2) in the event the Fulfillment Rate of
PCSS during any week fails to exceed
eighty-one percent (81%).
(3) Notwithstanding the above, during
the initial thirty (30) days of the
Service Ramp-Up period, I T shall
not terminate this Agreement for
failure by PCSS to meet the
Performance Requirements specified
in this Agreement. I T may, however,
elect to terminate this Agreement
subsequent to the initial thirty
(30) day period in accordance with
the provisions specified above.
2) PARTS AGEING. In the event any Spare Parts ordered by
I T are not shipped within three (3) days from the
date specified by I T on the applicable Order, PCSS
shall issue an additional Performance Credit in the
amount of One Hundred Dollars ($100) for each such
Spare Part, for each day beyond three (3) days of any
such required shipment date that PCSS fails to ship
any such Spare Part.
a. During the initial ninety (90) day Service
Ramp-Up period, the above Performance Credit
shall be waived for up to five percent (5%)
of the aggregate number of Spare Parts
falling outside the Parts Ageing three (3)
day Performance Credit window.
15
b. Since Time is of the Essence, in addition to
the foregoing provisions, and notwith-
standing any implication to the contrary
contained in any such provisions, I T, at
its sole discretion, may terminate this
Agreement (in which case the provisions of
paragraph 5.A.2). below shall apply) in the
event more than five percent (5%) of Orders
Received for any Week age more than ten (10)
days beyond the Order Shipment Requirement
if and only if such failure is followed
promptly thereafter by written notice of
such failure by I T to PCSS and following
that notice such failure by PCSS reoccurs
within 6 months of the failure described in
the notice:
3) OUT-OF-BOX-FAILURES. Spare Parts shall be shipped by
PCSS to the I T designated arrival site so as to
arrive in good working order ninety-seven percent
(97%) or more of the time for all such Spare Parts
shipped to I T during any calendar month during the
term of this Agreement. Spare Parts that are not in
good working order at time of arrival shall be
considered an "Out-Of-Box-Failure" ("OOBF"), and
shall entitle I T to a Performance Credit of Fifty
Dollars ($50.00) for every verified OOBF above three
percent (3%) of all such shipped Spare Parts (except
that with respect to Acquired Parts obtained from
I T, the Performance Credit shall be waived for any
such Acquired Parts that have no pass-through
warranty from the applicable Spare Parts vendor, and
the affected Spare parts shall not be counted in
determining the OOBF calculation, until such time as
the affected Spare Part shall have undergone Repair
Services by PCSS, at which time the above Fifty
Dollar ($50.00) Performance Credit shall apply and
any such Spare Part(s) will be counted in determining
the OOBF calculation), in addition to replacement of
the affected Spare Part at no additional charge to
I T for each such OOBF occurrence.
a. Should the OOBF rate for any week exceed
five percent (5%) then I T may elect to
terminate this Agreement (in which case the
provisions of paragraph 5.A.2). shall
apply). In any such event I T shall provide
PCSS with a written notice of its intent to
terminate this Agreement due to excessive
OOBFs.
b. Spare Parts shipped by PCSS to I T from the
Acquired Inventory, which have a warranty
pass-through from the I T Spare Parts vendor
shall be counted in calculating the above
OOBF rate, and will incur a Performance
Credit equal
16
to the greater of the OOBF credit payable by
the repair vendor or the above Fifty Dollar
($50.00) amount.
4) EXCLUDED PARTS. Spare Parts excluded from the
Performance Credit calculations specified in this
Section 4 include Spare Parts which PCSS is unable
to obtain, using its best efforts, as follows:
a. Spare Parts for equipment that is no longer
in production, which are no longer
commercially available.
b. Spare Parts for equipment that is newly
introduced in the marketplace , which are
not commercially available.
c. Spare Parts for which I T and PCSS mutually
agree that the above Performance Credits
shall not apply.
d. Any Spare Parts which for various reasons,
become commercially unavailable on the terms
of delivery and/or at the prices requested
by I T, provided that any such Spare Parts
are ordered by PCSS within one (1) business
day of the request by I T.
e. In each case above, commercially available
shall mean obtainable by PCSS using its best
efforts, within the context of the above
provisions.
F. ON-LINE ACCESS TO PCSS MIS, REPORTING AND INVENTORY CONTROL.
PCSS shall provide I T with the following:
1) PCSS shall provide I T with communication software at
no charge (including dedicated Data Circuit telephone
line), pursuant to which I T and PCSS can communicate
via on-line computer link, including the placement of
Orders, providing shipment status information,
account information, Spare Parts inventory
availability, and access to prices and PCSS Cost
information for Spare Parts and Repair Services
Ordered hereunder.
2) PCSS shall track I T's Spare Parts purchases and
Repair Services usage by computer system, and will
provide regular reports, in the frequency, form,
content and format mutually agreed to by the parties
in writing, at no charge to I T, detailing such
purchases and usage.
17
3) In addition, PCSS shall maintain a database which
identifies and tracks all items of Spare Parts owned
by I T or other parties, maintained in PCSS'
inventory system, which such database shall be at all
times accessible by I T remotely.
G. SHIPMENT AND PACKAGING. Spare Parts shall be shipped in a
manner so as to meet the Performance Requirements specified in
this Agreement. PCSS shall pay the shipping costs for all
Spare Parts purchased and/or receiving Repair Services under
this Agreement, and shall pass on the direct costs of freight
for Orders placed by I T under this Agreement. All Spare Parts
shall be suitably packaged or otherwise prepared for shipment
in accordance with industry standard packing materials. PCSS
shall be responsible for the loss of and/or damage to all
Spare Parts in PCSS's possession, or for items damaged and/or
lost in shipment, and shall coordinate with freight vendors in
any such event. PCSS shall provide adequate insurance coverage
for any Spare Parts owned by I T or other parties, while any
such Spare Parts are in PCSS's possession.
H. DISCREPANCIES.
1) PCSS shall promptly notify I T as to any Spare Part
which I T advises has been shipped to PCSS by I T
which PCSS does not subsequently receive. I T shall
provide PCSS with adequate substantiation of shipment
(i.e., waybill number, etc.) upon request.
2) In the event Spare Part(s) received by PCSS from I T
are not identical to the Spare Part(s) identified on
the Order, PCSS shall immediately notify I T of the
discrepancy which shall be no later than five (5)
days from PCSS's receipt of any such Spare Part(s)
and request a revised Order or instructions regarding
the return shipment of the Spare Part(s). In the
event PCSS fails to acknowledge any discrepancy in
the Spare Part(s) delivered to PCSS within such five
(5) day period, the Spare Part(s) shipped to PCSS
shall be deemed to be in conformance with the Spare
Part(s) identified on the Order.
I. PAYMENT TERMS AND PRICE.
1) PAYMENT TERMS. All purchases under this Agreement
shall be paid for in cash, COD, against a letter of
credit, or on approved credit in accordance with
the following:
18
a. During the term of this Agreement, purchases
hereunder shall be payable on a net sixty
(60) days basis from date of shipment of the
ordered Spare Part . Invoices shall not be
submitted to I T prior to delivery of any
ordered Spare Part(s).
b. PCSS shall extend an initial line of credit
to I T in the amount of Eight Hundred
Seventy-Five Thousand Dollars ($875,000)
provided, however, that PCSS may upon ten
(10) days written notice and failure to cure
by I T, decrease such line of credit and
payment terms if I T has undisputed payables
to PCSS aged more than sixty (60) days. This
line of credit shall be used exclusively for
placing purchases under this Agreement.
c. In the event I T exceeds the line of credit
or extends beyond the net 60 day payment
terms, PCSS shall be entitled to obtain
payment of the amount over credit line from
the Escrow Amount specified in paragraph
3.F.2), in accordance with the provisions of
the Escrow Agreement. In the event the
remaining balance of the Escrow Amount is
insufficient to cover the amount due PCSS,
or the Escrow Amount has been fully paid to
I T, the following shall apply:
i) Past due amounts shall be subject to
an interest charge of the lesser of
one and one-half percent (1-1/2%)
per month or the highest rate
permitted by law.
ii) PCSS may suspend performance under
any Order for which payment is not
made provided that PCSS gives I T
fifteen (15) days advance written
notice of such suspension, and
payment is not made within such
period. In the event I T fails to
remit payment in full of a duly
invoiced amount within such fifteen
(15) day period, PCSS may suspend
any or all Orders under this
Agreement. I T shall be entitled to
this additional fifteen (15) day
notification period no more than
once per any six (6) month period
during the term of this Agreement.
19
iii) Notwithstanding the above, in the
event I T has a bona fide dispute
with a PCSS invoice for Spare Parts,
the parties shall in good faith work
to promptly resolve any such dispute
and PCSS agrees to continue to
provide Spare Parts hereunder,
provided that I T remits payment for
any non- disputed line items set
forth on any such invoice(s).
iv) In the event the Parties are unable
to resolve the dispute within thirty
(30) days of the date I T notifies
PCSS of any such dispute, PCSS may
exercise any of its remedies as
specified herein.
d. In addition, Spare Parts and/or Repair
Services may be paid for through the
redemption of Performance Credits as
specified in paragraph 4.E. above.
2) CALCULATION OF PCSS COST(S).
a. The prices charged for Spare Parts and/or
Repair Services under this Agreement shall
be determined by utilizing an amount
designated as the "PCSS Cost", and applying
a percentage uplift, as provided for in
paragraph 4.I.3).d. below.
b. The PCSS Cost shall be calculated by
determining PCSS average acquisition cost
(rather than FIFO or LIFO) determined in
accordance with Generally Accepted
Accounting Principles ("GAAP") applied on a
consistent basis. In all cases, the term
"cost" shall refer to the actual direct
amounts incurred by PCSS with regard to
fulfilling I T Orders under the Agreement,
less all discounts (excluding payment
discounts), rebates (excluding existing
rebates as of the effective date of this
Agreement), or other adjustments.
c. For Spare Parts repaired by PCSS, PCSS Cost
shall be determined based on PCSS' actual
direct costs of manufacturing materials,
direct manufacturing overhead, general
inbound freight directly associated with
purchased Spare Parts, license fees paid to
third-parties on affected Orders, and direct
labor.
20
d. For the purposes of establishing the price
to be paid by I T for purchases made
hereunder by I T of items of Acquired
Inventory, the factor utilized by PCSS as a
base cost factor shall be Four Million
Dollars ($4,000,000), which shall be
allocated proportionately over the items of
Acquired Inventory specified in the attached
Schedule A.
e. Direct manufacturing overhead shall be
computed in a manner consistent with the
accounting practices used in the Ordinary
Course of Business by PCSS to calculate its
cost of goods sold (in accordance with GAAP)
as reported in PCSS' audited annual
financial statements as of PCSS' most recent
business year end.
f. Direct manufacturing overhead includes only
those overhead costs directly attributable
to the manufacturing process of Spare Parts
and/or Repair Services ordered hereunder.
3) PRICE.
a. The price of Spare Parts and/or Repair
Services under this Agreement shall be equal
to the PCSS Cost plus the percentage
indicated in the Confidential Pricing
Schedule (hereinafter referred to as the
"Pricing Schedule"), or the applicable flat
rate charge specified in the Pricing
Schedule.
b. Special Order Spare Parts not regularly
stocked by PCSS which are sought to be
exchanged by I T, shall be amortized ratably
over four (4) usable cycles. I T shall pay
PCSS an amortization factor in accordance
with the above cycle, if any such Special
Order Spare Parts are not exchanged or sold
at least twice per calendar year.
c. PRICE CHART. The price for Spare Parts shall
be the PC Cost(s) and percentage uplifts
specified in the Pricing Schedule.
For the purposes of the Price Chart
specified in the Pricing Schedule, the
following terms have the following meanings:
21
(1) "Normal Parts" refers to Spare Parts
of a type and brand generally
maintained by PCSS in its inventory
or acquired in the Ordinary Course
of Business.
(2) "Sourced Parts" refers to Spare
Parts of a type and brand not
generally held in inventory by PCSS
and ordered by PCSS for I T through
another supplier.
(3) "Repairs and Exchanges" refers to
repaired or replaced Spare Parts,
including circumstances where the
Spare Part being replaced is
exchanged for a new Spare Part, and
in such circumstances the Spare Part
being exchanged is not part of
Normal Parts for the purposes of the
Price Chart specified in the Pricing
Schedule.
(4) "I T Items" refers to Spare Parts in
I T's Acquired Inventory acquired by
PCSS pursuant to this Agreement.
(5) "Internal Repairs" refers to repairs
performed by PCSS.
(6) "External Repairs" refers to repairs
performed by a party other than
PCSS.
4) HANDLING SERVICE FEE FOR NON-PCSS PARTS. In the event
PCSS is requested to handle and ship spare parts
which are purchased by I T and/or its customers
outside the scope of this Agreement (such as spare
parts No-Bid by PCSS, or parts consigned by I T
Customers for labor-only Service arrangements), PCSS
will agree to manage and process any such parts for a
flat Service fee to be mutually agreed to by the
parties in writing.
5) AVERAGE REPAIR PRICE. During each month of the
initial twelve (12) month period of the Agreement,
the average repair price for all Spare Parts
undergoing Repair Services shall not exceed the
actual average repair cost for Spare Parts repaired
internally by I T during the 6 months ended March 31,
1994.
6) MOST FAVORED PROVISIONS. All of the prices, terms,
warranties and benefits provided by PCSS herein
and/or in any Order are, in the aggregate,
comparable to or better than the prices, terms,
warranties and benefits being offered by PCSS to
any of its other customers for similar sale of Spare
22
Parts and/or Repair Services as of the date of this
Agreement. In the event PCSS shall, during the term
of this Agreement, enter into a transaction with any
other customer for the sale of Spare Parts and/or
Repair Services of like quantities of similar items,
on terms and conditions which collectively, are
substantially more favorable than those offered to
I T, then PCSS shall, upon I T's request, negotiate
with the view towards granting comparably more
favorable terms and conditions to I T with respect to
the sale of Spare Parts and/or Repair Services
ordered by I T from PCSS thereafter.
J. RETURN PRIVILEGES. I T shall have the right to return Spare
Parts sold under this Agreement in accordance with this
paragraph. Returns must be delivered to PCSS within 30 days of
delivery to I T, must be unused and in the same condition as
when delivered to I T, less reasonable wear due to shipment.
Returns in any month may not exceed a value equal to 35% of
the prior months gross purchases (prior to the application of
any credits). The first 15% of such 35% of returned Spare
Parts shall be subject to a $10 per unit restocking fee, and
the remaining 20% of such 35% shall be subject to a restocking
fee equal to 20% of the sales price of any such Spare Part,
but in no event less than $10 per unit.
K. RECORDS REVIEW. At any time, I T shall be allowed to review
the books and records of PCSS to the extent such books and
records relate to the determination of PCSS' cost(s) as set
forth in this Agreement. If any dispute arises between the
Parties with respect to the determination of PCSS' cost(s),
then, at the request of either I T or of PCSS, the matter
shall be referred to a mutually agreed-upon nationally-
recognized accounting firm (the "Independent Accountant") for
determination of PCSS's cost(s) in accordance with the terms
of this Agreement. The method for selecting the Independent
Accountant shall be as follows:
1) Both Parties shall designate a representative from
the accounting firm that represents each Party. The
designated representatives shall then be required to
agree on the selection of a third individual, who
shall be selected from an accounting firm
unaffiliated with either party and be designated as
the Independent Accountant.
2) The Independent Accountant shall not have performed
services for I T or PCSS during the eighteen (18)
months prior to the dispute. The determination of
the Independent Accountant shall be final and
23
binding upon the parties, with appropriate
adjustments immediately implemented. The fees and
expenses of the Independent Accountant shall be paid
one-half (1/2) by I T and one-half (1/2) by PCSS.
L. ADDITIONAL REPRESENTATIONS AND COVENANTS OF I T AND PCSS.
1) I T and PCSS agree to cooperate in good faith through
regular communications concerning expected Spare
Parts and Repair Services purchase requirements,
delivery requirements, and other issues relating to
PCSS's sale and delivery of Spare Parts and/or Repair
Services under this Agreement.
2) PCSS shall maintain an ongoing inventory and/or
sources of inventory of Spare Parts sufficient to
meet the expected Ordering requirements of I T under
this Agreement, provided that such maintenance is
consistent with PCSS's expectations as communicated
to PCSS and consistent with I T's prior purchases
from PCSS, during the Ordinary Course of Business.
M. ADDITIONAL CHARGES. PCSS shall obtain written consent from I T
prior to performing Repair Services which are beyond the scope
of this Agreement and specified on the face of an Order.
PCSS's failure to obtain such written consent shall relieve
I T from paying any additional charges not specified in this
Agreement or the Order.
N. PARTS. All Spare Parts that are provided by I T to PCSS on an
exchange basis, to be replaced by Spare Parts provided by PCSS
shall become the property of PCSS. Spare Parts provided by
PCSS in performance of Repair Services may be new or
refurbished Spare Parts which are functionally equivalent to
new Spare Parts and meet and/or exceed the OEM's then current
specifications for form, fit, function and finish and may be
from sources other than the OEM, unless otherwise specifically
requested to be a "like-for-like" replacement at time of Order
placement by I T. I T may inspect PCSS's repair facilities at
any time upon giving PCSS reasonable notice of prior to any
such inspection. I T shall have a period of up to thirty (30)
days from date of receipt of the Spare Part provided on an
exchange basis by I T, in which to return the Spare Part
"core" being exchanged by PCSS. In the event I T fails to
return any such exchanged Spare Part core within such period,
PCSS may invoice I T for the cost of such Spare Part core.
O. PARTS WARRANTY. PCSS warrants to I T and I T's Customers that
the Spare Part(s) will be shipped as specified from time to
time by I T and will be in good operating
24
condition, is at current minimum revision level and will be
free of defects in design, material, workmanship for a minimum
period of the greater of: (1) the warranty period provided by
any vendor of PCSS on a pass-through basis, or (2) One Hundred
twenty (120) days, whichever is greater, from first date of
delivery to I T. Acquired Parts which do not contain a
pass-through warranty from I T's Spare parts Vendors are
excluded from the above warranty.
5. GENERAL.
A. TERM AND TERMINATION.
1) The initial term of this Agreement shall begin on the
Closing Date and shall continue for a period of five
(5) years from such date. Thereafter, the term shall
continue unless terminated by either party upon the
provision of at least one hundred eighty (180) days
prior written notice, effective no sooner than the
expiration of the initial term of this Agreement.
2) In the event PCSS fails to fulfill the provisions of
the section of this Agreement entitled "Performance
Requirements" and I T elects to terminate this
Agreement as a result of such failure, I T shall be
entitled to all of the following remedies if and only
if the failure is a material failure followed
promptly thereafter by written notice of such failure
by I T to PCSS and following that notice such failure
by PCSS reoccurs within 6 months of the failure
described in the notice:
a. by delivering instructions to the Escrow
Agent as provided for in the Escrow
Agreement, the balance of the Escrow Amount
shall be delivered to Fidelity on behalf of
I T, without opposition by PCSS, and
b. all outstanding Purchase Credits earned by
I T as of the effective date of termination
shall be immediately due and payable in Cash
to Fidelity on behalf of I T, net of any
payables due PCSS by I T for Spare Parts
and/or Repair Services ordered hereunder,
and
c. One Million, One Hundred Thousand Dollars
($1,100,000) shall be immediately due,
payable, and paid in Cash to Fidelity on
behalf of I T, and
25
d. PCSS shall return any remaining Acquired
Inventory as of the effective date of
termination of this Agreement. In addition,
PCSS shall be responsible for all costs
associated with movement, packaging and
shipment of any such Acquired Inventory to a
location or locations specified by I T.
e. The remedies specified in 5.A.2).a through
5.A.2). d. above shall be considered
liquidated damages in lieu of cover or any
other damages which I T might allege as a
result of such termination, and shall be
considered the sole and exclusive remedy
available to I T with regard to the
termination of this Agreement as provided
for hereinabove.
3) PCSS may terminate this Agreement without cause,
provided that PCSS shall provide I T with a minimum
notice period of one (1) year, and I T shall be
entitled to all of the remedies specified in
paragraph 5.A.2). above. In any such event, I T may
choose to accept the termination prior to the one (1)
year termination notice period provided by PCSS, at
I T's sole discretion.
4) PCSS may terminate this Agreement for cause in the
event of a material breach or if I T fails to order a
minimum of One Hundred Thousand Dollars ($100,000) in
Spare Parts and/or Repair Services (net of returns
but including any fees paid by I T) per month, during
any three (3) consecutive month period during the
term of this Agreement, and PCSS shall be entitled to
the remedies specified in paragraph 3.H.1). and
3.H.2). above. In any such event, I T will forego the
remedies specified in Section 5.A.2) above.
5) In the event of any such termination as provided for
in paragraphs 5.A.1) through 5.A.4). above, both
parties agree to cooperate with each other in good
faith during the period of time required for the
successful transition of I T to a new spare parts
provider, and I T shall be entitled to any
Performance Credits or other remedies specified in
this Agreement for failure by PCSS to perform during
the transition period.
B. ACCOUNT MANAGER. I T and PCSS will assign specific
managerial employees to be designated as Account Managers
between the parties, who shall serve as a central focal
point to address issues and implement solutions to
ongoing account problems as they occur.
26
C. MISCELLANEOUS.
1) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of
the representations and warranties of the Parties
contained in this Agreement shall survive the
Closing.
2) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party
shall issue any press release or make any public
announcement relating to the subject matter of this
Agreement, prior to the Closing, without the prior
written approval of the other Party; provided,
however, that any Party may make any public
disclosure it believes in good faith is required by
applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which
case the disclosing Party will use its reasonable
best efforts to advise the other Party prior to
making the disclosure).
3) NO THIRD-PARTY BENEFICIARIES. This Agreement shall
not confer any rights or remedies upon any Person
other than the Parties and their respective
successors and permitted assigns.
4) ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire
agreement between the Parties and supersedes any
prior understandings, agreements, or representations
by or between the Parties, written or oral, to the
extent they related in any way to the subject matter
hereof.
5) SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties
named herein and their respective successors and
permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or
obligations hereunder without the prior written
approval of the other Party, which consent shall not
be unreasonably withheld.
6) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed
an original but all of which together will
constitute one and the same instrument.
7) HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and
shall not affect in any way the meaning or
interpretation of this Agreement.
27
8) NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing or
by electronic communication (e.g. communication of
information by computer, not to include telephonic
verbal notices). Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly
given if (and then two business days after) it is
sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the
intended recipient as set forth below:
If to I T: INTELOGIC TRACE, INC.
Turtle Creek Tower I
P.O Box 400044
San Antonio, Texas 78229
ATTN: Account Manager
PCSS Relationship
Copy to: INTELOGIC TRACE, INC.
Turtle Creek Tower I
P.O Box 400044
San Antonio, Texas 78229
ATTN: General Counsel
Mail Stop 8480
If to PCSS: PC SERVICE SOURCE, INC.
2019 McKenzie
Suite 150
Carrollton, Texas 75006
ATTN: Account Manager
I T Relationship
Copy to: PC SERVICE SOURCE, INC.
2019 McKenzie
Suite 150
Carrollton, Texas 75006
ATTN: Chief Financial
Officer
Any Party may send any notice, request, demand,
claim, or other communication hereunder to the
intended recipient at the address set forth above
using any other means (including personal delivery,
expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other
communication shall be deemed to have been duly given
unless and until it actually is received by the
intended recipient. Any Party may change the
28
address to which notices, requests, demands, claims,
and other communications hereunder are to be
delivered by giving the other Party notice in the
manner herein set forth.
9) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the domestic laws of
the State of Texas without giving effect to any
choice or conflict of law provision or rule (whether
of the State of Texas or any other jurisdiction) that
would cause the application of the laws of any
jurisdiction other than the State of Texas.
10) CONFIDENTIALITY. Except as otherwise provided for in
this Agreement, PCSS and I T agree that all
information communicated to each other by the other,
whether before or after the Closing Date of this
Agreement, including without limitation the terms of
this Agreement, will be received in strict
confidence, will be used only for purposes of this
Agreement, and will not be disclosed by the receiving
party, its agents, subcontractors or employees
without the prior written consent of the other Party.
Each Party agrees to use the same means it uses to
protect its own confidential information, but in any
event not less than reasonable means, to prevent the
disclosure of such information to outside parties.
However, neither party shall be prevented from
disclosing information which belongs to such Party or
is:
a. already known by the receiving Party without
an obligation of confidentiality other than
pursuant to this Agreement;
b. publicly known or becomes publicly known
through no unauthorized act of the recipient
Party;
c. rightfully received from a third party;
d. independently developed without use of the
other Party's confidential information;
e. disclosed without similar restrictions to a
third party by the Party owning the
confidential information;
f. approved by the other Party for disclosure;
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g. required to be disclosed pursuant to a
requirement of a governmental agency or law
if the disclosing Party provides the other
Party with notice of this requirement prior
to disclosure.
The provisions of this Section will survive the
expiration or termination of this Agreement for any
reason.
11) INDEPENDENT CONTRACTOR. PCSS is and shall remain
an independent contractor and at no time shall PCSS
represent itself to be an employee, agent, affiliate
or representative of I T.
12) NON-SOLICITATION.
A. PCSS shall not solicit any I T Customer
whose identity is disclosed by I T to PCSS
for the purpose of diverting business from
I T.
B. The Parties recognize that the education,
training and retention of their respective
personnel is essential. So as to preserve
and protect such capabilities, each party
agrees that during the period of this
Agreement and for a period of one (1) year
after termination of this Agreement, neither
party shall, directly or indirectly, recruit
or solicit any personnel of the other
(except that PCSS may solicit and hire the
I T employees specified in Schedule D)
without first obtaining the express written
consent of an officer of the employer. In
the event of breach of this provision, the
hiring party shall pay the other party
liquidated damages equal to three (3) times
the annual compensation of such employee at
the time hired.
13) FORCE MAJEURE. Each Party shall be excused from
performance hereunder (other than performance of
obligations to make payment) for any period and to
the extent that it is prevented from performing
pursuant hereto, in whole or in part, as a result of
delays caused by the other, or an act of God, war,
civil disturbance, court order, labor dispute, or
other cause beyond its reasonable control; however,
I T may acquire Spare Parts and/or Repair Services
from other sources during such event affecting PCSS.
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14) COMPLIANCE WITH LAWS. PCSS and I T shall comply
with all applicable federal, state, municipal and
local laws, codes, orders and regulations.
15) AMENDMENTS AND WAIVERS. No amendment of any provision
of this Agreement shall be valid unless the same
shall be in writing and signed by PCSS and I T. No
waiver by any Party of any default, misrepre-
sentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.
Neither I T nor PCSS shall be bound by any oral
agreement or representation irrespective of by whom
or when made.
16) SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the
offending term or provision in any other situation or
in any other jurisdiction.
17) WARRANTY DISCLAIMER. PCSS DISCLAIMS THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
18) LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER
PARTY BE LIABLE IN CONTRACT, TORT OR OTHERWISE FOR
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR INDIRECT
DAMAGES, INCLUDING WITHOUT LIMITATION, LOST BUSINESS
PROFITS NOR DAMAGE OR DESTRUCTION OF DATA EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SAME.
19) DISPUTE RESOLUTION.
a. QUALITY REVIEW. On a regular basis, at least once
annually, both parties agree to meet to review the
performance of their respective obligations under
this Agreement.
b. PERFORMANCE REVIEW. During the course of the
relationship provided for in this Agreement,
disputes, controversies or claims may arise between
the parties. To minimize the expense to and impact on
each party of formally resolving such disputes,
controversies and claims, the parties will meet
regularly to
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review the performance of each party of its
obligations under this Agreement. If the parties are
unable to resolve a dispute, controversy or claim
through this performance review process, upon the
written request of either party signed by an Officer
with the rank of Vice President or higher, each party
will appoint a representative whose task it will be
to meet for the purpose of resolving the dispute,
controversy or claim and to negotiate a resolution in
good faith, without the necessity of any formal
proceeding relating thereto. No formal proceedings
for the resolution of such dispute, controversy or
claim may be commenced until either or both of the
appointed representatives conclude in good faith that
amicable resolution through continued negotiation of
the matter is not likely. Except where clearly
prevented by the area in dispute, both parties agree
to continue performing their respective obligations
under this Agreement while the dispute is being
resolved unless and until such obligations are
terminated or expire in accordance with the
provisions hereof.
c. ARBITRATION. The parties agree that in the event they
are unable to resolve a dispute, controversy or claim
as provided for above, the dispute, controversy or
claim shall be settled by arbitration in the city
where the initiating party is headquartered by a
single arbitrator pursuant to the American
Arbitration Association's Commercial Arbitration
Rules then obtaining and judgment upon the award
rendered by the arbitrator may be entered in any
Court having jurisdiction thereof. The arbitrator
shall be chosen from a panel of persons knowledgeable
in the provision of services for similar types of
equipment and shall be appointed within thirty (30)
days of the date the demand for arbitration was sent
to the other party.
20) APPROVALS AND SIMILAR ACTIONS. Where agreement,
approval, acceptance, consent or similar action by
either party is required by any provision of this
Agreement, such Action shall not be unreasonably
delayed or withheld.
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21) CONTRACTUAL STATUTE OF LIMITATIONS. No claim and/or
demand for arbitration or cause of action which arose
out of an event or events which occurred more than
two (2) years prior to the filing of a demand for
arbitration or suit alleging a claim or cause of
action may be asserted by either party against the
other party.
22) ACKNOWLEDGMENT OF RISK. PCSS and I T each acknowledge
that the limitations and exclusions contained in this
Agreement have been the subject of active and
complete negotiation between the Parties and
represent the Parties' agreement based upon the level
of risk to PCSS and I T associated with their
respective obligations under this Agreement and the
payments to be made to PCSS and I T under this
Agreement.
23) EXPENSES. Each of PCSS and I T will bear its own
costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
24) INCORPORATION OF EXHIBITS AND SCHEDULES. The
Exhibits and Schedules identified in this Agreement
are incorporated herein by reference and made a part
hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date last written below.
INTELOGIC TRACE, INC. PC SERVICE SOURCE, INC.
By: MARK S. HELWEGE By: MARK T. HILZ
Name: Mark S. Helwege Name: Mark T. Hilz
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
Date: 11/11/94 Date: 11/17/94
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