REPAIR AND REFURBISHMENT AGREEMENT
THIS REPAIR AND REFURBISHMENT AGREEMENT dated as of June , 1999 is made and
entered into by and between AZTEC INTERNATIONAL LLC, a Delaware Limited
Liability Company and, Vodavi Communications Systems, Inc. ("Vodavi") a Delaware
Corporation.
BACKGROUND
Aztec is involved in the business of repair, refurbishment and sale of
telecommunications equipment and other electronic products. Vodavi is in the
business of design, development and sales of telecommunications equipment,
software and hardware products. Aztec desires to undertake performing the
testing, refurbishing and repair work described in this agreement for Vodavi.
As of the date hereof the parties have entered into a Xxxx of Sale and
Purchase Order whereby Vodavi has transferred certain of its assets regarding
repair services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. APPOINTMENT. Vodavi hereby appoints Aztec as the exclusive authorized
repair service center for products distributed and manufactured by Vodavi. As
the exclusive authorized repair service center, Aztec agrees to perform the
repairs for Vodavi in such a manner as to maintain the customer satisfaction
levels currently established. Aztec will perform the repair and refurbishment
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work for telecommunications and computer products, as outlined in this
agreement, that were sold or serviced by Vodavi or its dealers in the United
States ("Products"), and will work closely with Vodavi to ensure that accurate
processing, disposition, and accounting is set up and maintained for products
repaired for Vodavi under warranty to its customers. For so long as Aztec is not
in material default, which default is continuous; Vodavi will use reasonable
efforts to refer all third party inquiries that it receives with respect to
repair, refurbishment and resale of Vodavi products to Aztec. Aztec shall have
the right to use any phone or fax numbers used exclusively by Vodavi in
connection with the repair service. Vodavi will provide its "third party"
vendors who supply components and ancillary devices for Vodavi products with a
Letter of Agency authorizing Aztec to request and receive repair services on
Vodavi's behalf. Vodavi will from time to time communicate with its dealers to
urge them to use Aztec for the repair of Vodavi products.
2. REPAIR SERVICES. Aztec shall perform the services as requested by Vodavi
and shall invoice Vodavi ( warranty) or the Vodavi customer/dealers
(non-warranty) for such services in accordance with Aztec policies. Aztec will
provide data in the form as requested by Vodavi to Vodavi on repairs. This data
will be used by Vodavi to measure product reliability, improvements to design,
and other management reports. Vodavi and Aztec will use the date code
stamping/serialization method to determine the warranty status of product for
billing purposes. Such services shall initially be provided at the prices and
upon the terms set forth on the attached Schedule A. Vodavi shall pay Aztec for
all services on a net thirty-day basis. Repair pricing will be reviewed yearly
on the anniversary of this Agreement and the parties will seek to mutually agree
on any increases or decreases to such charges based solely upon actual changes
in (i) the cost of Aztec's operations in support of the Vodavi business and (ii)
the costs of materials and supplies. No increase or decrease in price shall be
effective until after sixty days following the agreement of the parties.
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Notwithstanding the exclusivity, if both parties agree in writing, and Aztec
chooses not to perform the work, Vodavi may use another repair facility.
3. RESALE SERVICES. Vodavi will make available to Aztec various products,
as covered in the service Agreement dated August 28, 1998 that have been removed
from Vodavi's inventory. Aztec will sell these products through its market
channels and the proceeds from this sale will be divided between Aztec and
Vodavi at a rate that is mutually agreed upon. Vodavi will advise Aztec the
products that are authorized for resale, and Aztec will only resell those
products that are authorized.
4. PERFORMANCE. Aztec warrants that it will perform the repair services for
Vodavi in such a manner that the customer satisfaction levels will be
maintained. The standard used to measure the performance are shown in SCHEDULE
B. In the event that Aztec fails to meet the customer satisfaction levels,
Vodavi will notify Aztec, in writing, of the short coming and Aztec will take
corrective action. In the event that Aztec fails to make significant progress
within 90 days of the written notice in restoring customer satisfaction in
accordance with schedule B, Vodavi may terminate the exclusivity provision
herein, or terminate the Agreement and obtain repair services from another
company or choose to do the repairs internally. Any failures in performance of
the services provided by Aztec must be in Aztec's control. Notwithstanding the
above Vodavi agrees to provide Aztec with continued support and will make every
effort to help Aztec to meet its performance objectives, as it is in the best
interest of both parties to maintain a high level of customer satisfaction.
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5. TERM. The term of this Agreement shall be for a period of seven (7)
years from the date hereof (the "Term"). In the event the Agreement is
terminated by Vodavi prior to the expiration date of the term, in addition to
any other remedies Aztec may have, Vodavi will be required to purchase test
equipment, component parts, inventory, and fixed assets that are then owned or
being used by Aztec for the performance of repair and refurbishment services
under this agreement. Where applicable the assets that are on a depreciation
schedule will be valued at such depreciated amount. All other inventory will be
transferred at Aztec's cost. Cash payment for these assets will be made within
15 days of the termination date at which time the assets will be transferred to
Vodavi.
6. EVENTS OF DEFAULT. To the extent that this paragraph conflicts with
paragraph 4 the terms of paragraph 4 governs to the extent of any conflict. If
either party is in default of any of its obligations hereunder, the other party
shall so advise in writing, including the particulars of the default. If such
fault is material and remains uncured for a period of more than 30 days after
notice , then the party not in default may terminate this agreement. Any party
who is required to take legal action in order to enforce its rights under this
Agreement shall be entitled to recover all costs of enforcement and collection
including reasonable attorneys fees from the defaulting party.
7. CONFIDENTIALITY. Aztec acknowledges that in the course of performance of
its duties hereunder, it shall receive confidential information pertaining to
Vodavi's business, its relationships with its suppliers, and its relationship
with its customers. This includes without limit: customer lists, schematics,
software and test plans. Aztec agrees that it shall keep all such information
confidential and shall not divulge such information to any third party or use
such information for its own benefit without the express written consent of
Vodavi. Aztec agrees to take all reasonable steps to ensure that its employees,
agents and subcontractors are under a similar obligation of confidentiality.
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Aztec agrees that during the Term of this Agreement, Aztec will not solicit or
attempt to influence, directly or indirectly, any customer of Vodavi to
terminate or materially reduce its business with Vodavi or any of its Affiliates
in favor of a direct relationship with Aztec. Upon termination of this agreement
all documentation, schematics, drawings, and other confidential information, and
all copies thereof, provided by Vodavi to Aztec and used for repair of Vodavi
products will be returned to Vodavi within 30 days of the termination date.
8. REBATE. In addition to the foregoing Aztec will pay a yearly rebate to
Vodavi based on Aztec's total receipts from net repair xxxxxxxx to Vodavi's
customers/dealers during each calendar year during the term of this agreement
beginning January 1, 2001. For purposes of this agreement net repair xxxxxxxx
are exclusive of returns, allowances, taxes and freight. This rebate includes
total receipts on Vodavi and non-Vodavi products that are generated from this
agreement. Vodavi will provide Aztec with a list of the customers/dealers that
will be used in determining net repair xxxxxxxx to calculate the rebate.
Customers on this list will be considered to be Vodavi's even if they have done
business with Aztec previously. This list can be updated annually by Vodavi. Not
to be included in the rebate schedule are xxxxxxxx to Vodavi, or repair service
currently being provided on products not manufactured by Vodavi by Aztec to the
dealer base. The rebate schedule will be as follows:
Net Receipts Rebate %
------------ --------
0-$1,000,000 0%
$1,000,001- $1,750,000 1.5%
$1,750,001- $2,250,000 2.5%
$2,250,001- $3,000,000 + 3.0%
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The foregoing rebate shall be paid to Vodavi annually, by March 1 following the
calendar year. The payment should include information about how the rebate was
calculated. The rebate will start for the calendar year 2001 with no rebate due
Vodavi for any period prior to January 1, 2001. Vodavi reserves the right to
audit the methods used to determine the rebate.
9. TRADEMARK. Aztec has the authority to use the Vodavi logo and advertise
as the exclusive authorized Vodavi repair center. In the event Aztec chooses to
use the logo it must have written permission from Vodavi prior to any release of
advertising, print or otherwise.
10. TEST EQUIPMENT. Vodavi will keep Aztec updated with the availability of
new proprietary test equipment from the factories that manufacture products for
Vodavi. In the event that the equipment is required to perform the repair
function, Vodavi will provide it to Aztec at Vodavi's cost. Vodavi may design
test fixtures that could aid in the repair testing. These fixtures may be
offered to Aztec to purchase or build themselves.
11. FREIGHT. The customer sending product in for repair will pay for all
inbound freight to Aztec. Outbound freight for repair work covered by a Vodavi
warranty will be paid for by Vodavi. Outbound freight for out of warranty repair
work will be included in the repair cost to the customer. Aztec will be solely
responsible for outbound freight for any part that failed during the Aztec
warranty period.
12. COMPONENT PARTS AND PLASTICS. Vodavi proprietary parts and plastics
will be supplied by Vodavi to Aztec. Aztec will order the parts and plastic from
Vodavi and the items will be ordered from the supplying factory. In most cases
it will take 120 days after receipt of order (ARO) to deliver the ordered parts.
In the event the factory decides to discontinue production and Vodavi has notice
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of discontinuance of any proprietary parts, Aztec will be given the opportunity
to make a "last buy". Parts supplied by Vodavi to Aztec will be sold at a cost
of 15 % over landed cost.
13. REWORK SERVICES. Aztec will perform rework services as requested by
Vodavi in accordance with procedures specified by the Vodavi Quality Management
Department. Aztec shall invoice Vodavi for such rework services at the prices
established on specific purchase orders.
14. LUCENT INVENTORY. Vodavi will sell and transfer to Aztec as covered in
the Xxxx of Sale certain inventory that is used for the repair of telephones
manufactured under contract by LGIC for Lucent (herein the "Lucent Inventory").
In the event that Aztec does not succeed in securing the repair work from Lucent
for telephone equipment manufactured by LGIC, within 90 days after the date of
this agreement, then Aztec shall be entitled to return the Lucent inventory for
credit against the Purchase Order from Aztec to Vodavi of even date herewith.
The inventory will be valued at the same price Aztec purchased the material to
determine the amount of the said credit.
15. RISK OF LOSS OF INVENTORY. Vodavi acknowledges that Aztec does not
maintain insurance on inventory or work in progress. Vodavi agrees to assume the
risk of loss to the extent of Vodavi's inventory and materials being repaired or
reworked by Aztec.
16. ENTIRE AGREEMENT CLAUSE. This Agreement supersedes any and all other
agreements, either oral or in writing between the parties hereto with respect to
the subject matter hereof and contains all of the covenants and agreements
between the parties with respect to said matter; provided however that the
resale service agreement dated August 28, 1998 between the Parties shall
continue in full force and effect.
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17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona applicable to a contract
executed and performed in such State without giving effect to the conflict of
laws and principles thereof.
18. WARRANTIES. Aztec warrants that all services will be performed in a
prompt (which the parties for purposes agree hereof shall be consistent with
Schedule B.), professional and xxxxxxx-like manner in accordance with industry
and professional standards and in accordance with this Agreement and that the
refurbished equipment provided to Vodavi and its dealer network under this
Agreement and the repair work performed hereunder shall be free from defects in
material and workmanship under normal use and service for the period of one (1)
year from the date of shipment by Aztec. THIS WARRANTY IS EXPRESSLY IN LIEU OF
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF
MERCHANTABILITY AND AZTEC SHALL NOT BE RESPONSIBLE FOR CONSEQUENTIAL DAMAGES OR
ACTS OF GOD.
19. COMPLIANCE WITH LAWS. Each party shall, at its own cost and expense,
follow all laws, rules, regulations or requirements of any governmental
authority having juristriction, which may apply to the services being performed
under this agreement. Each party will defend, indemnify, and hold the other
party harmless for any loss, cost, or expense occurring as a direct result of
the first party's violation of any law, rule or ordinance of the United States,
any State, or any other governmental agency in the performance of this
Agreement.
20. SUCCESSORS AND ASSIGNS. In the event that Vodavi is sold or transferred
to a third party whether by way of sale of assets, merger, consolidation or
otherwise, and in the event that Aztec is sold, or transferred by way of sale of
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its assets, merger, consolidation or otherwise, that this repair and
refurbishment agreement shall be transferred to and assumed by the new owner of
the business and shall remain in full force and effect.
21. NOTICE PROVISION. Each notice, instrument or other certificate required
or permitted by the terms hereof shall be in writing and shall be communicated
by personal delivery, telecopier, or mail to the parties hereto at the addresses
set forth below, or at such other address as any of them may designate by notice
in accordance herewith to each of the others, and if notice is given by
telecopier, telex, telegram or hand delivery shall be deemed to have been given
or made on the date on which it was given, and if mailed, shall be deemed to
have been given or made on the third business day following the day after it was
mailed. The address for the notice of each party is:
If to Aztec:
Xxxx Xxxxxx, President or
Xxx Xxxxx, Vice President
Aztec International LLC
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
If to Vodavi:
Xxxx Xxxxxx, President
Vodavi Communications Systems
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
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IN WITNESS WHEREOF, the parties have entered into this Agreement the date
first above written.
AZTEC INTERNATIONAL Vodavi Technology Inc.
By: /s/ Xxxx Xxxxxx By: /s/ Xxxx Xxxxxx
----------------------------- ---------------------------------
Xxxx Xxxxxx Xxxx Xxxxxx
President President
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