EXHIBIT 10.1
CONTRACT
DM MANAGEMENT
TILTON OPERATIONS CENTER
CONTRACT
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TABLE OF CONTENTS
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Article Title
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1. CONTRACT DOCUMENTS
2. CONTRACT PRICE
3. TERMS OF PAYMENT
4. INSURANCE AND BOND
5. COMPLIANCE WITH LAWS AND REGULATIONS
6. LIMITATION OF LIABILITY
7. INDEMNITY
8. PATENTS / COPYRIGHT INDEMNITY
9. LIENS
10. PURCHASER'S RIGHT TO TERMINATE CONTRACT
11. DCS' RIGHT TO STOP WORK OR TERMINATE CONTRACT
12. CHANGES IN THE WORK
13. NON-DISCLOSURE
14. SOFTWARE LICENSE
15. FIRMWARE, LADDER DIAGRAM PROGRAMMING AND THIRD-PARTY SOFTWARE
16. SCHEDULE
17. FORCE MAJEURE
18. DELAYS
19. ITEMS PROVIDED BY PURCHASER
20. SHIPPING
21. INSTALLATION
22. SYSTEM ACCEPTANCE TEST
23. SYSTEM WARRANTY / LIMITED WARRANTY
24. EQUIPMENT WARRANTY / LIMITED WARRANTY
25. PURCHASER FURNISHED OR SPECIFIED ITEMS
26. SPARE PARTS PROVISIONING
27. ASSIGNMENT
28. AGREEMENT NOT TO HIRE
29. GOVERNING LAW
30. HEADINGS
EXHIBIT A CONTRACT PRICE SUMMARY
EXHIBIT B PROJECT SCHEDULE, DATED 4/1/98
EXHIBIT C INSURANCE CERTIFICATE
EXHIBIT D REFERENCED LETTERS AND FAXES
EXHIBIT E EQUIPMENT LIST, DATED 4/1/98
EXHIBIT F FUNCTIONAL DESIGN DOCUMENT, DATED 4/8/98
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DM Management Page -1- Tilton Operations Center
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THIS CONTRACT ("the Agreement") is entered into this 1st day of April, 1998,
between DM MANAGEMENT COMPANY, a Delaware corporation ("PURCHASER"), and
DESIGNED CONVEYOR SYSTEMS, INC., a Tennessee corporation with offices at 1805
Williamson Court, Brentwood, Tennessee 37027 ("DCS").
For and in consideration of the premises, and other good and valuable
consideration, PURCHASER and DCS (collectively, the "Parties" and individually,
the "Party") covenant and agree as follows:
ARTICLE 1 CONTRACT DOCUMENTS
A. The contract between the parties hereto shall consist of the Agreement
including the following documents (hereinafter called "Contract
Documents"), which Contract Documents are incorporated herein by reference
as if set forth word for word:
1. DCS Proposal #P-98-7227, dated January 14, 1998.
2. Conveyor Performance Requirements, by KSA, dated December 1997.
2a. Letter from KB Marshall to Ken Wood, dated December 19, 1997,
which modifies the package flow rate requirements of the
system.
2b. Fax from KB Marshall to Ken Wood, dated January 7, 1998, which
modifies the mezzanine height and conveyor support
requirements.
2c. Fax from KB Marshall to Ken Wood, dated January 18, 1998, which
clarifies the mezzanine surface as plywood (not concrete).
3. DM Management Control Systems Requirements Definition, by KSA, dated
December 1997.
In the event of any conflict between the terms of this document and the
terms set forth in the DCS Proposal, the terms set forth in this document
shall be controlling.
B. This Agreement sets forth the terms and conditions governing this
transaction.
C. DCS agrees to fully perform all work set forth in this Agreement including
the work set forth in the Contract Documents and changes made pursuant to
this Agreement (the "Work") in a timely and workmanlike manner.
ARTICLE 2 CONTRACT PRICE
A. The contract price for DCS' performance of the Work (the "Contract Price")
is as defined in the Contract Documents Exhibit A - Contract Price Summary,
payable in accordance with this Agreement, and assumes that DCS will be
able to proceed on a continuous uninterrupted schedule and that PURCHASER
will provide the items defined in ARTICLE 19 in a time frame that will
permit DCS to complete the Work.
The Contract Price shall include any design or equipment modifications or
equipment needed to implement recommendations documented by H.K. Systems.
In addition to the Contract Price, PURCHASER shall pay to DCS, when
invoiced, the following:
1. Any additional cost agreed to in writing by Purchaser, including
profit, for changes made by PURCHASER or its representatives after
the Agreement date. Profit on any additions or deletions from the
contract price will be calculated by taking the cost of the change
and dividing by 0.85 (15% profit) for all items except those
purchased from the controls subcontractor. Items purchased from the
controls subcontractor will be calculated by taking the cost to DCS
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and dividing by 0.90 (10% profit). DCS will credit against the
Contract Price any reduced costs and profit resulting from such
changes.
2. The costs of any Performance, Payment or Surety Bonds PURCHASER
requires DCS to furnish.
3. Cost of any Federal, State or local sales, use or similar taxes on
material, equipment or services to be supplied to PURCHASER pursuant
to the terms of this Agreement for which DCS must collect and pay,
unless PURCHASER furnishes valid tax exemption certificates, which
are accepted by the taxing authority, on a timely basis.
ARTICLE 3 TERMS OF PAYMENT
A. Payment shall be made to DCS as follows:
1. Twenty percent (20%) of the Contract Price shall be paid upon
signing the Agreement.
2. Twenty percent (20%) of the Contract Price shall be paid on July 1
(or the start of installation if sooner than July 1), provided the
Approval Drawings, the Functional Design Document, and the
Acceptance Test Plan have been submitted to and approved by
PURCHASER.
3. Forty percent (40%) of the Contract Price shall be paid on August 1
(or thirty days after the start of installation if installation
starts sooner than July 1), provided the installation is progressing
in a manner acceptable to PURCHASER and all equipment has been
delivered to the site.
4. Fifteen percent (15%) of the Contract Price shall be paid upon the
successful completion (sign-off) of the stand-alone Conveyor System
Acceptance Test.
5. The remaining five percent (5%) of the Contract Price shall be due
upon successful completion of the System Integration Testing
(operation under the control of the Warehouse Management System).
Payment shall be due and payable within ten (10) days after System
Integration Testing has been successfully completed. Provided DCS's
obligations for System Integration Testing have been met, final
payment will be made not later than December 31, 1998.
B. Invoices not paid within thirty (30) days from the date of receipt of
invoice shall bear annual interest at two percent (2%) over the then
current composite U.S. Commercial Bank Prime Rate as reported in The Wall
Street Journal, for each day late.
C. Adjustments for approved change orders will be made on each invoice so that
the percentage of the contract value remaining unpaid after the invoice
will be based on the change-adjusted Contract Price.
D. In the event that DCS is responsible for PURCHASER's inability to utilize
the system or portions thereof, DCS will pay PURCHASER liquidated damages
as outlined in the following table. These liquidated damages are
PURCHASER's sole remedy for any delays resulting from DCS's work.
Receiving, Stocking and Returns (100, 200, 300, 500, 600 Series Conveyors):
October 15, 1998
Pick, Pack, and Ship (100, 200, 300, 400, 500, 600, 700 Series Conveyors):
November 15, 1998
If DCS is responsible for these functions not being available on the dates
shown, DCS will pay PURCHASER liquidated damages in the amount of $1,500
per day, up to a maximum of 1% of the Contract Price.
If the Site Availability Date extends beyond July 1, 1998 or if there are
any delays in the work that are outside DCS's reasonable control, the
damages dates will be extended as described in ARTICLE 18.
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ARTICLE 4 INSURANCE AND BOND
A. DCS will show evidence of insurance as follows, and agrees that such
insurance shall be maintained until the Work is completed.
1. Statutory Workman's Compensation Insurance, including Employer's
Liability Insurance with per occurrence coverage of at least
$500,000.
2. Umbrella liability coverage for $3,000,000 per occurrence.
3. Comprehensive General Liability Insurance, including Contractor's
Protective and Completed Operations, covering bodily injury and
property damage with a combined single limit of $1,000,000.
4. Comprehensive Automobile Personal Injury Liability and Property
damage Liability Insurance covering owned and non-owned vehicles
with a combined single limit of $1,000,000.
B. DCS will furnish to PURCHASER Certificates of Insurance evidencing the
above coverages, with PURCHASER named as additional loss payee under such
insurance, which shall provide that said coverages will not be canceled
without thirty (30) days prior written notice to PURCHASER. The
Certificates of Insurance shall provide that the insurer waives its rights
of subrogation against PURCHASER as respects work performed by DCS under
contract with PURCHASER. This waiver shall not apply to injury or damage
arising out of the PURCHASER's sole negligence.
C. PURCHASER shall maintain Fire, Extended Coverage (including without
limitation) Theft, Vandalism and Malicious Mischief Property Damage
Insurance upon the system and on all structures, machinery, equipment and
supplies existing or being erected on the property of PURCHASER which are
or will be incorporated into the Work in such amounts as PURCHASER shall
reasonably determine and DCS its subcontractors and materialmen, shall be
named as an additional loss payee under such insurance. PURCHASER shall
either, at PURCHASER's option, provide similar insurance for the perils of
flood and earthquake or assume the risk of such perils on the same terms
and conditions.
D. PURCHASER waives its right of recovery against DCS, its subcontractors and
materialmen, for any losses, including loss of use, to its existing plant
or other property at the erection site resulting from fire, lightning,
extended coverage perils, earthquakes, flood, vandalism and malicious
mischief property damage, except to the extent that such losses are caused
by DCS or its subcontractors or materialmen.
E. DCS' price is based on the insurance coverage in the types and limits noted
in ARTICLE 4-A and C above. In the event PURCHASER requires additional
types or higher limits of insurance per Article 4-A, or does not furnish
insurance coverage for perils per ARTICLE 4-C, thus requiring DCS to
furnish Builder's (ALL) Risk Coverage to protect against such perils, DCS
shall furnish same and be reimbursed by PURCHASER for such additional
insurance cost.
ARTICLE 5 COMPLIANCE WITH LAWS AND REGULATIONS
A. DCS agrees to comply with all Federal, State, and local laws and
regulations that are applicable to the Work, as such are written and
adjudicated on the date of this Agreement.
B. DCS warrants that the Work, including the products, construction and design
supplied by DCS will comply with the Occupational Safety and Health Act of
1970 as written and adjudicated on the date of the Agreement. DCS shall
not be liable for any failure to so comply which results from the improper
use or maintenance of the equipment, from alterations of the equipment by
persons other than DCS, its
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subcontractors or agents, from absence of equipment or accessories that DCS
has indicated to PURCHASER in writing are required to comply with OSHA but
that are nevertheless omitted at PURCHASER's direction, from design or
instructions furnished by PURCHASER or his agents after the date hereof and
not approved by DCS, or from violations caused solely by combining DCS's
equipment or system(s) with any equipment or system(s) furnished by others,
including PURCHASER, except as contemplated by this Agreement, including
Contract Documents, or approved by DCS after the date hereof.
C. DCS' liability is limited to modification or replacement of the equipment
furnished or at PURCHASER's option, return of the non-conforming equipment
and refund of the cost of the non-conforming equipment.
ARTICLE 6 LIMITATION OF LIABILITY
In no event shall either party be liable to the other for any lost profits, or
other incidental or consequential damages with respect to the work irrespective
of the theory upon which any claim may be based, including without limitation,
breach of contract, failure of consideration, breach of warranty, tort, or
otherwise.
ARTICLE 7 INDEMNITY
A. DCS expressly acknowledges it shall defend, indemnify and hold harmless
PURCHASER, its agents and employees, from any and all third party claims,
suits, losses, liabilities and expenses including reasonable attorneys'
fees, provided that any such claim, suit, loss, or expense is attributable
to bodily injury, sickness, disease or death, or injury to property
(excluding loss of use thereof), which results from: (a) negligence of DCS
or its agents, employees or subcontractors, or (b) a defect in the design,
material or workmanship of the Work, including equipment, software and
system provided by DCS hereunder, or any portion thereof.
B. PURCHASER expressly acknowledges it shall defend, indemnify and hold
harmless DCS from any and all third party claims attributable to bodily
injury, sickness, disease or death, or injury of property (excluding loss
of use thereof) which results from (a) PURCHASER's failure to abide by the
instructions contained in operation and maintenance manuals, safety
literature and training classes furnished by DCS or; (b) unauthorized
modifications to the system including use or combination of the Software
Materials with non-DCS programs, data or equipment, or use of other than a
current unaltered version of the Software Material except as contemplated
by this Agreement, including Contract Documents, or approved by DCS after
the date hereof.
ARTICLE 8 PATENTS / COPYRIGHT INDEMNITY
A. DCS will defend, indemnify and hold harmless PURCHASER, its agents and
employees from any and all third party claims, suits, losses, liabilities
and expenses including reasonable attorneys' fees relating to any alleged
infringement of any trade secret, and United States patent, any copyright
or other intellectual property right of any DCS subcontractor arising out
of the sale or use, in the form supplied by DCS, of equipment and software
materials provided under this Agreement and used within the scope of
Articles 14 or 15.
B. DCS will assume no liability with respect to equipment or software neither
supplied under this Agreement nor specified by DCS.
C. PURCHASER will hold DCS harmless against any liability for infringement of
any trade secret or United States patent or copyright involving PURCHASER's
unauthorized use or combination of the software materials with non-DCS
programs, data, or equipment not furnished hereunder or otherwise provided
by DCS.
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D. The party assuming liability shall be notified promptly of any assertion of
infringement and shall have the absolute control of the defense thereto,
including the right to settle, defend against legal action, or make changes
in the work to avoid infringement, provided that after any such changes the
specifications for any replaced item and for the system as a whole continue
to be met.
ARTICLE 9 LIENS
DCS shall defend and hold PURCHASER harmless from any mechanic's or
materialmen's or other liens asserted against PURCHASER's property which are
based upon DCS's nonpayment of any of its obligations or otherwise arise out of
the performance of the work. In the event that such a lien is filed, DCS shall
immediately procure the discharge thereof at its own cost and expense.
ARTICLE 10 PURCHASER'S RIGHT TO TERMINATE CONTRACT
PURCHASER shall have the right to terminate the Agreement for the following
specific reasons:
A. Either actual or anticipated insolvency, bankruptcy reorganization,
liquidation, or assignment for the benefit of creditors of DCS.
B. Failure of DCS to comply with material provisions of the Agreement, unless
DCS begins correcting such failure within seven (7) calendar days after
receipt of written notification and corrects such failure within 90 days.
In the event PURCHASER elects to terminate DCS' performance and have the
remaining Work completed by others, PURCHASER may procure upon such
commercially reasonable terms and in such manner as PURCHASER may deem
appropriate, equipment and services similar to those terminated, and DCS
shall be liable to PURCHASER for any reasonable excess costs for such
similar equipment or services, provided that DCS' liability to PURCHASER
shall not exceed the Contract Price less the actual cost of equipment and
services provided.
C. For PURCHASER's convenience, but in such event DCS shall be compensated for
all work performed and costs incurred and profit at the rates described in
ARTICLE 2, paragraph A1, provided that such charges shall not be greater
than 100% of the Contract Price.
D. If this Agreement is terminated as provided in Article 10, PURCHASER, in
addition to other rights provided in this Agreement, may require DCS to
transfer title and deliver to PURCHASER, in a manner and to the extent
directed by PURCHASER, any equipment, components and software materials,
and such materials, parts, tools, dies, jigs, fixtures, plans, drawings,
information and contract rights, or other manufacturing materials, as DCS
has specifically produced or specifically acquired for the performance of
this Agreement; in such event, DCS shall, upon direction of PURCHASER,
protect and preserve property in possession of DCS in which PURCHASER has
an interest. Payment for such equipment, components and other property
delivered to and accepted by PURCHASER shall be at the price specified in
this Agreement. Payment for any manufacturing materials delivered to and
accepted by PURCHASER and for the protection and preservation of property
shall be in an amount agreed upon by DCS and PURCHASER.
ARTICLE 11 DCS'S RIGHT TO STOP WORK OR TERMINATE CONTRACT
DCS shall have the right to terminate the Agreement before payment of the final
installment of the Contract Price for the following specific reasons:
A. Either actual or anticipated insolvency, bankruptcy, reorganization,
liquidation, or assignment for the benefit of creditors of PURCHASER.
B. Failure of PURCHASER to comply with material provisions of the Agreement,
unless PURCHASER corrects such failure within a reasonable period of time
after written notification; or if PURCHASER fails
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to pay DCS any sum not in dispute when due and such failure continues for a
period of seven (7) calendar days after receipt of written notice
respecting such failure is given by DCS to PURCHASER.
C. If PURCHASER suspends or delays DCS' performance for a period of sixty (60)
days, then DCS may stop work and terminate this Agreement and recover from
PURCHASER the value of the Work performed, which shall include all costs
and profit at the rates described in ARTICLE 2, paragraph A1, provided that
such charges shall not be greater than 105% of the Contract Price.
ARTICLE 12 CHANGES IN WORK
A. PURCHASER may make changes in the general scope of the Work, including
drawings, designs, specifications, method of shipment, schedule, or place
of delivery, require additional Work or direct the omission of Work or
require the working of overtime. If such change causes an increase or
decrease in the cost of, or the time required for, the performance of the
Work, an equitable adjustment to reflect this shall be made and the
Agreement shall be modified accordingly.
B. Alternatively, the parties authorized representatives may verbally agree
(which shall be confirmed in writing within 5 days) that DCS should
commence work on a scope of Work change prior to the issuance of a change
order, in which event DCS will be paid for Work performed under the change
ordered on the basis of actual costs incurred plus profit (at the rates
described in ARTICLE 2, paragraph A1) and the delivery schedule shall be
adjusted commensurate with the time required to perform the change.
C. DCS shall not be authorized or required to proceed with any change without
PURCHASER'S prior written approval.
D. Payment terms for changes in Work shall be per the terms as outlined in
Article 3.
ARTICLE 13 NON-DISCLOSURE
A. All technical and other information furnished by PURCHASER shall be used by
DCS, its employees, and agents only for the purpose of performing the Work.
Such technical and other information shall not be disclosed to a third
party, except to subcontractors and suppliers as necessary for work
performance, without PURCHASER's written consent. Title to and ownership
of all such technical and other information shall remain with the
PURCHASER. DCS agrees to require its employees, agents, subcontractors and
suppliers to be familiar with the non-disclosure requirements and to
observe same.
B. All technical information, including software materials, furnished by DCS
during the performance of the Work will be solely for the PURCHASER's use
in operating and maintaining the system provided by DCS. Such technical
information shall not be disclosed to a third party without DCS' prior
written consent. Title to and ownership of all such technical data shall
remain with DCS. PURCHASER agrees to require its employees to be familiar
with the non-disclosure requirements and to observe same.
C. PURCHASER and DCS further agree to maintain all business information
furnished in connection with this Agreement confidential and not to
disclose such information without the prior written consent of the other.
D. These obligations of limited use and non-disclosure shall not apply to the
extent that such information:
1. Is generally known to companies in the disclosing party's business;
2. Is lawfully obtained by the receiving party without restriction on
disclosure;
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3. Is known to the receiving party prior to receipt from the disclosing
party without restriction on disclosure;
4. Is independently developed by the receiving party without use of
information provided by the disclosing party; or
5. Is required to be disclosed by the receiving party pursuant to law or
regulation.
ARTICLE 14 SOFTWARE LICENSE
A. Pyramid Control Systems (DCS's subcontractor) grants to PURCHASER a non-
assignable, nonexclusive, non-transferable, perpetual license to use
software materials at a single, specific site location. This license
covers multiple CPU's within the building, as well as one CPU located
outside the building whose purpose is to remotely maintain the system. In
the event that PURCHASER sells the system to another company for use in the
existing building, the software license will be assigned and transferred to
the new owner provided that DCS is notified in writing within thirty (30)
days of the transfer. Or, if PURCHASER or any permitted transferee moves
the system to another facility for use by PURCHASER or any permitted
transferee, the license will transfer to the new facility provided that the
software is not in use at any previous facility and that DCS is notified in
writing within thirty (30) days of the transfer. Software materials
include the Pyramid-developed system software, including object code and
executable code, and system operations documentation.
B. PURCHASER may copy the software materials in whole or in part for its
internal use for the purpose of maintenance trouble shooting and
modification. Furthermore, PURCHASER agrees to maintain records of the
number and location of all such copies. The original and all copies shall
remain the property of Pyramid Control Systems. PURCHASER agrees to
reproduce and incorporate Pyramid's proprietary notices in/on the Software
Materials.
C. Neither party may terminate this software license at any time without
mutual consent.
D. Pyramid warrants that the system provided is Year-2000 compliant.
E. During the warranty period, and for the period of time afterward that
PURCHASER maintains or initiates a software service contract with Pyramid,
Pyramid agrees to support the system in a manner acceptable to PURCHASER,
which is generally defined as responding to service requests within the
following timeframes:
. Critical (system is down, unable to process packages from packing to
shipping, or system unable to properly communicate to or from PkMS): 2
hours
. Major (problem allows goods to be packed and shipped, but causes
significant operational work-around): 6 hours
. Routine (problem causes an annoyance, however it does not impact
operations): 72 hours
. Changes (changes requested that are outside the scope of this
contract): to be mutually agreed upon.
Pager support is available for after hours support, however pages are not
always delivered at the time they are sent (examples would include the
person being on an airplane or in an area that is not covered by the
nationwide services subscribed to by Pyramid). For that reason, Pyramid
will deliver to PURCHASER, prior to system acceptance, a list of contacts,
pager numbers, and phone numbers to use in the event of a Critical or Major
problem. It will be PURCHASER's responsibility to page or call appropriate
contacts within Pyramid until a response is confirmed, up to one call for
each number on the list.
Provided that PURCHASER uses the paging and phone procedure outlined in the
previous paragraph, if Pyramid fails to support the software as defined
earlier in this section, PURCHASER will notify
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Pyramid (and copy DCS) in writing of the nature of the service deficiency.
If PURCHASER is not currently on a service contract at that time, PURCHASER
agrees to start a minimum 12-month service contract that will commence at
the time the letter is sent. Pyramid will then be "on probation" for a
period of three months, at which time all reasonable calls for service must
be responded to within the agreed-upon timeframes. During the probation
period, if Pyramid fails to provide the agreed upon service level two times
without providing reasonable explanation, the Pyramid-developed source code
utilized on this project will be delivered to PURCHASER for their sole use
at a single facility.
Pyramid will use their best efforts to support the system and PURCHASER
will use their best efforts to maintain the system and troubleshoot
problems. If it is found that a majority of service calls are the result
of poor maintenance or problems that could have reasonably been diagnosed
and corrected by PURCHASER's personnel, then PURCHASER will use fair
judgement when deciding whether to place Pyramid on probation.
F. Fees for the different service contract options will be at the following
rates through 1999, which include up to five hours per month of phone
support.
. $550 per month for 8:00 am to midnight, weekdays (non holiday)
. $670 per month for 24 hours per day, weekdays (non holiday)
. $780 per month for 24 hours per day, 7 days per week, 365 days per
year
If a service contract is purchased and in effect, hourly rates for support
will be $78 per hour (business hours) or $95 per hour (after hours) through
1999. Service contract monthly and hourly rates will escalate at an annual
rate equal to the percentage increase in the Revised CPI for all U.S. Urban
Consumers.
If a service contract is not purchased or in effect, software support is
available after the warranty period for $95 per hour (business hours) or
$135 per hour (after hours) through 1999. These rates will escalate at a
rate not more than an annual rate equal to the percentage increase in the
Revised CPI for all U.S. Urban Consumers.
G. The Pyramid-developed source code utilized on this project will be placed
in escrow. If Pyramid goes out of business or for any other reason decides
to stop support of the system, Pyramid will notify DCS in writing of such
decision. DCS will then take ownership of the source code and will provide
a copy at no charge to PURCHASER for their internal use in support of this
system.
DCS represents and warrants that it has the authority to grant the license set
forth in this Article 14 on behalf of Pyramid Control Systems and agrees to
cause Pyramid Control Systems to execute a written confirmation of such license
grant if requested by PURCHASER.
ARTICLE 15 FIRMWARE, LADDER DIAGRAM PROGRAMMING AND THIRD-PARTY SOFTWARE
A. All firmware, ladder diagram programming and documentation developed or
furnished by DCS and its subcontractors under the Agreement is provided to
PURCHASER under a license granted for use on a single system and may be
modified or copied only for internal use for the purpose of maintenance,
trouble shooting and modification. PURCHASER shall not provide or
otherwise make any portion in any form available to any third party without
the prior written approval of DCS.
B. DCS will obtain the right to use third party-supplied software furnished by
DCS, which may be necessary for the development and operation of the
system. This software and its license Agreement will, in accordance with
DCS' Agreement with supplier(s), be transferred to the PURCHASER upon
system acceptance or at an appropriate time agreed by PURCHASER and DCS.
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ARTICLE 16 SCHEDULE
The Work is to be performed in accordance with the schedule reflected in Exhibit
C, except as modified pursuant to ARTICLES 11, 12, 17 and 18.
ARTICLE 17 FORCE MAJEURE
Neither DCS nor PURCHASER shall be liable for delays in delivery or inability to
perform or complete the Work due to causes beyond its reasonable control or acts
of God, acts of the public enemy, civil or military police authorities, strikes,
epidemics, war or riot. In the event of such delays, the time of performance
shall be extended for a period equal to the time lost by reason of the delay,
plus additional time required for rescheduling and implementing a resumption of
work. Both parties shall bear their own expenses from the initiation of Force
Majeure. This provision shall not relieve DCS or PURCHASER from using
reasonable efforts to continue performance whenever such causes are removed.
Nothing herein shall be construed as requiring DCS or PURCHASER to accede to any
demands of labor, or labor unions, or suppliers or their parties which DCS or
PURCHASER consider unacceptable. DCS or PURCHASER shall promptly notify the
other party when such delays occur or impending delays are likely to occur and
shall continue to advise of changes thereto.
ARTICLE 18 DELAYS
If DCS is delayed and is unable to perform or complete the Work as planned by
reason of acts or failures to act which are within the control of PURCHASER,
PURCHASER'S representatives or other contractors to PURCHASER, including delay
in approval of drawings and furnishings of necessary information or items
defined in ARTICLE 19, then the time for performance shall be extended by a
period equal to the time lost on account of any such cause, plus additional time
required for rescheduling and resumption of the Work, and any increased costs
incurred by DCS, plus profit, on account thereof shall be reimbursed by
PURCHASER as defined in ARTICLES 2 and 12.
ARTICLE 19 ITEMS PROVIDED BY PURCHASER
PURCHASER shall provide and pay for the services, equipment and/or facilities as
outlined in the Scope of Work section of DCS's Proposal.
ARTICLE 20 SHIPPING
Delivery will be provided as described in the Agreement.
ARTICLE 21 INSTALLATION
A. During the entire time of installation, DCS will maintain a competent
person at the erection site to superintend and direct the work and will:
1. Provide necessary erection equipment and personnel to erect and
construct the system. The majority of mechanical installers working
on the job site will be employed full time by DCS. The electrical
installation crew will include at least three installers who are
experienced in conveyor systems wiring and are employed full time by
DCS, Pyramid Control Systems, or one of DCS's or Pyramid's normal
sources for field wiring.
2. From time to time during the course of erection, cleanup and remove
from the immediate premises any waste material and debris resulting
from the work hereunder, and deposit it at an agreed location on
PURCHASER's premises for further disposal by PURCHASER.
B. In the course of performance hereof, DCS may employ the service of
qualified subcontractors to the extent permitted by the Conveyor
Performance Requirements identified in Article 1-A-2. DCS shall
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cause any subcontractor used to install the system to enter into agreements
requiring it to comply with the terms and conditions of this Agreement. DCS
shall be fully responsible for all performance by its subcontractors, and
the delegation of any obligation hereunder shall not relieve DCS of its
primary obligation to PURCHASER. If PURCHASER reasonably objects to any of
DCS's non-union subcontractors, DCS will endeavor to replace the
subcontractor with another. Any additional cost (plus profit) or delays
associated with the substitution will be the responsibility of PURCHASER.
C. Upon completion, DCS shall remove its equipment and surplus material from
the erection site.
ARTICLE 22 SYSTEM ACCEPTANCE TEST AND INTEGRATION TESTING
A. PURCHASER shall furnish at its expense sufficient operating personnel,
equipment, supervision, material specified to be handled, power and other
utilities and facilities so that the system operation may be demonstrated
without delay. If PURCHASER fails to do so and as a result the System
Acceptance Testing is not completed within 10 working days or the
Integration Testing is not complete by December 31, 1998, the System shall
be deemed complete for purposes of determining when payment(s) shall be
due, as provided in ARTICLE 3.
B. Testing will be performed in two phases.
1. Upon completion of the Installation and Debug, DCS will demonstrate
that the System operates as defined in the Agreement, approved
drawings and design documents. This test is referred to as the System
Acceptance Test. The System Acceptance Test shall be developed by DCS
and shall be subject to the approval of PURCHASER. Upon successful
completion of the System Acceptance Test, PURCHASER will sign an
acceptance notice and the Mechanical and Firmware portions of the Work
shall be deemed accepted by PURCHASER, the warranty period will
commence, and the System Acceptance Test milestone payment will be
due.
If the Test is not successfully completed, PURCHASER will provide
written notice that details the location and nature of the failure.
Absence of minor items of work or material, not adversely affecting
the successful completion of the System Acceptance Test shall not be
cause to delay acceptance, but DCS will remain responsible for
completing items. These items will be completed prior to PURCHASER's
releasing the final payment.
2. Integration of the Conveyor System and WMS will occur after the
successful completion of the System Acceptance Test. DCS's
responsibility during the Integration Period will consist of assuring
that the conveyor system is properly able to communicate to and accept
communication from the WMS, as well as properly execute commands at
the direction of the WMS. This test is referred to as the Integration
Test. The Integration Test shall be developed by KSA. Upon successful
completion of communication and function testing, PURCHASER will sign
an acceptance notice and the Software portion of the Work shall be
deemed accepted by PURCHASER and the final payment will be due.
If the Integration Test is not successfully completed, PURCHASER will
provide written notice that details the nature of the failure. DCS
will correct and, at the option of PURCHASER, either retest the failed
items or rerun the Integration Test prior to PURCHASER's acceptance of
the Software.
C. If, after a reasonable effort, DCS cannot successfully complete the System
Integration Test, a mutually agreeable settlement shall be made with
PURCHASER in accordance with ARTICLE 23-B.
ARTICLE 23 SYSTEM WARRANTY/LIMITED WARRANTY
A. DCS warrants that the System furnished will operate as defined in the
Agreement, approval drawings
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and design documents, including any performance requirements which are a
part of the Agreement, and will be adequate for the purposes stated herein
if: (1) Properly operated and maintained; (2) the materials to be handled
are of the type, size, shape, weight and other characteristics described in
the Agreement and in a condition to be handled; (3) the attributes and
characteristics of all data and information to be processed are as
contemplated by the Agreement; (4) operating conditions and methods are as
contemplated by the Agreement.
B. This warranty shall apply for the same period as the Equipment Warranty set
forth in ARTICLE 24, and is subject to the same notice requirements. If
any performance deficiency covered by this warranty is found in the system,
DCS will be responsible for repairing, adjusting, modifying, replacing or
adding to the system equipment. If DCS cannot correct a deficiency in
performance after reasonable effort, it shall make an equitable adjustment
with PURCHASER based upon the performance actually achieved. It is agreed
that any equitable adjustment made hereunder shall not exceed the Contract
Price, and shall be PURCHASER's sole remedy in the event DCS cannot correct
the performance deficiency.
C. This is a warranty of specified system performance and not a maintenance
undertaking. If a deficiency in performance is occasioned by the failure
of individual parts or system components, DCS's responsibility shall be
governed by the Equipment Warranty set forth in ARTICLE 24, unless it is
found that the part or component was not reasonably suited for the
particular system application, and failed for that reason.
D. DCS shall not be liable for any operational or performance deficiency which
results, in whole or in part, from (1) any modifications to the system by
persons other than DCS, its subcontractors or agents; (2) absence of
equipment, accessories or features that DCS has indicated to PURCHASER in
writing are required for the system to operate properly but that are
nevertheless omitted at PURCHASER's direction; (3) design or instructions
furnished by PURCHASER after the date hereof and not approved by DCS; or
(4) except as contemplated by this Agreement, including the Contract
Documents, combining DCS' equipment or system(s) after System Acceptance
with any equipment or system(s) furnished by others, including PURCHASER,
without prior written consent of DCS.
E. DCS shall be given reasonable access to make warranty repairs.
ARTICLE 24 EQUIPMENT WARRANTY/LIMITED WARRANTY
A. DCS warrants that items supplied by DCS will conform to the Agreement,
shall be suitable for the intended use, and shall be free of defects in
design, material and workmanship at the time of acceptance of the work and
for the periods defined below.
1. All parts supplied by HK Systems for the original system installation
will be warranted for a period of two years from the date of the
equipment's shipment to the site. On site support to repair defective
parts will be available for one year from the date of System
Acceptance.
2. All other parts supplied for the original system installation will be
warranted for a period of one year from the date of System Acceptance.
B. THERE ARE NO WARRANTIES WITH RESPECT TO THE EQUIPMENT, EXCEPT OF TITLE AND
NON-INFRINGEMENT, EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PURPOSE EXCEPT AS EXPRESSLY SET FORTH IN
THIS ARTICLE.
C. DCS' liability for breach of warranty or otherwise is limited to the
following actions:
1. Structural members: Defective of non-conforming structural members
will be repaired or
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replaced by DCS at PURCHASER's site.
2. Items of DCS' design or manufacture: Defective components will be
repaired or replaced at PURCHASER's site.
3. Defective material or workmanship for computer hardware, peripherals,
software developed by third parties or other items not designed or
manufactured by DCS, which are incorporated into the system, shall be
repaired or replaced when same are returned to DCS or a location
designated by DCS, F.O.B. PURCHASER's Site.
4. Pyramid Control Systems and DCS-developed software: Pyramid Control
Systems and DCS developed software is warranted to perform in
accordance with the mutually approved Software Functional Design
Specification. DCS' liability for defects is limited to the
correction of demonstrable defects that are defined and documented by
the PURCHASER.
5. DCS-developed firmware: DCS' liability for defects is limited to the
correction of demonstrable defects that are defined and documented by
PURCHASER.
D. DCS shall be relieved of any obligations under the foregoing warranty as to
any items which: (1) Have not been properly maintained or are not
maintained to the current support level in accordance with DCS' and
manufacturer's recommended procedures and written instructions; (2) have
not been operated in accordance with DCS' or manufacturer's recommended
procedures and written instructions; (3) have been modified by persons
other than DCS, its subcontractors or agents (except when prior approval
has been granted by DCS); (4) differ from the operating conditions and
methods contemplated by the Agreement.
E. DCS shall be given access to make warranty repairs.
F. PURCHASER shall notify DCS in writing of all warranty claims, defining the
nature and extent of the defect.
G. DCS shall not be required to provide labor for minor repairs that PURCHASER
estimates will require less than four (4) man-hours of repair time and are
within the technical expertise of PURCHASER. Repairs of a recurrent and/or
habitual nature shall be considered the responsibility of DCS, even though
individual occurrences may be less than four (4) man hours to repair. DCS
further agrees to repair or replace at DCS's cost any property, equipment
or fixtures DCS may affect or disturb in making repairs.
H. DCS shall assign and transfer to PURCHASER all transferable warranties
provided to DCS by the manufacturers or suppliers of equipment, machinery
and other components used in the System.
ARTICLE 25 PURCHASER FURNISHED OR SPECIFIED ITEMS
If PURCHASER furnishes and requests DCS to use certain items in or in
conjunction with the system, the PURCHASER shall be solely responsible for
its/their sufficiency to accomplish their intended functions such as
performance, reliability and adequacy.
ARTICLE 26 SPARE PARTS PROVISIONING
Spare parts for the System will be procured by PURCHASER and made available to
DCS during the system start-up and acceptance testing phases of the project.
DCS will provide a recommended spare parts list to PURCHASER to facilitate
procurement of the spare parts. In the event DCS utilizes any of the
PURCHASER's spare parts, DCS will replace that part at DCS' expense within ten
(10) working days for stock parts non-stock parts will be replaced as quickly
as the manufacturer can provide the component.
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ARTICLE 27 ASSIGNMENT
Neither party shall assign the Agreement without the prior written consent of
the other party, except that PURCHASER may, upon notice to DCS and without
additional obligation, assign this Agreement, and all rights and licenses
granted hereunder, to an affiliate of PURCHASER or to any person or entity that
succeeds to that portion of the business of PURCHASER with which the System is
used. If the parties agree to an assignment, then such assignment shall be
governed by these terms and conditions.
ARTICLE 28 AGREEMENT NOT TO HIRE
Through completion of the warranty period, neither party shall initiate the
hiring of any of the other party's employees without the prior consent of the
other party.
ARTICLE 29 GOVERNING LAW
The laws governing the interpretation and jurisdiction of the Agreement shall be
the laws of the State of New Hampshire.
ARTICLE 30 HEADINGS
The headings of the ARTICLES used in the Agreement are included for convenience
only and are not to be used in interpreting the Agreement.
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IN WITNESS WHEREOF, the parties have caused this Contract to be executed on the
day and year first above written, and do each hereby warrant and represent that
their respective signatories have been and are on the date of this Contract duly
authorized by all necessary and appropriate corporate action to execute this
Agreement.
DM MANAGEMENT COMPANY DESIGNED CONVEYOR SYSTEMS, INC.
By:/s/ KEVIN E. BURNS By:/s/ KENNETH E.B. WOOD
------------------------ ----------------------
DATED 4/9/98 DATED 4/9/98
Print Name: KEVIN E. BURNS Print Name: KENNETH E.B. WOOD
--------------- -----------------
Title: SVD/GM Title: VICE PRESIDENT
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EXHIBIT A CONTRACT PRICE SUMMARY
Engineering & Project Management..................................... $253,847
Mechanical Equipment................................................. 2,141,040
Mechanical Installation.............................................. 801,860
Air Piping........................................................... 128,235
Freight.............................................................. 97,832
Controls............................................................. 577,781
Field Wiring......................................................... 582,342
Outbound Control System (OCS)........................................ 133,118
TOTAL CONTRACT PRICE................................................. $4,716,055
Pricing is based on the Contract Documents and the following drawings (included
in Contract Binder):
. Drawing MCL1000, Rev. I
. Drawing MCL1001, Rev. I
. Drawing MCL1002, Rev. I
. Drawing MCL1003, Rev. I
. Drawing MCL1004, Rev. I
. Drawing MCL1005, Rev. I
. Auto Bag Sorter Concept Sketch, dated 4/1/98
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