EXHIBIT 10.44
SUPPLY AND SERVICE AGREEMENT
This Supply and Service Agreement (this "Agreement") is entered into, as of
this 26 day of November, 1996 and effective as of the closing of the below-
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defined Asset Purchase Agreement ("Effective Date") by and between CellStar,
Ltd., a Texas limited partnership, ("CellStar") and MCI Telecommunications
Corporation, a Delaware corporation, ("MCI").
WHEREAS, MCI has simultaneously herewith purchased certain assets used by
CellStar in connection with the operation of its retail business involving the
sale and activation of wireless communications equipment at kiosks located
inside Sam's Club locations throughout the United States. (Such kiosks located
inside Sam's Clubs throughout the United States which may hereafter be owned or
operated by MCI are hereinafter referred to as the "Communication Centers"); and
WHEREAS, MCI has simultaneously herewith entered into an Interim Services
Agreement pursuant to which CellStar will be providing to MCI certain
operational and inventory management services ("Interim Services Agreement");
and
WHEREAS, CellStar is willing to provide to MCI the benefits of its supply
arrangements with manufacturers of the products sold in the Communication
Centers, as well as CellStar's distribution process for the supply of such
products to the Communication Centers; and
WHEREAS, MCI wishes to obtain a source of supply for accessory products for
Wireless Handsets (as defined below) listed in Exhibit A (the "Accessory
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Products") and cellular telephones ("Cellular Telephones"), Personal
Communications Services ("PCS") handsets and two-way radios listed in Exhibit B
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(collectively referred to herein as the "Wireless Handsets") for the
Communication Centers and contemplates repetitive purchases of such products
from CellStar (the Accessory Products and Wireless Handsets purchased by MCI
from CellStar hereunder being collectively referred to herein as the
"Products"); and
WHEREAS, MCI wishes to retain the services of CellStar for the receiving,
warehousing, assembly (if requested), fulfillment and distribution to the
Communication Centers on behalf of MCI of products sourced by MCI from vendors
other than CellStar (including, but not limited to wireless handsets, pagers,
pre-paid calling cards and movie discount passes) as well as promotional
literature, packaging materials and such other items as may be requested by MCI
from time to time (such products, promotional literature, packaging materials
and other items not purchased by MCI from CellStar hereunder hereinafter
collectively referred to as the "Inventory Items"); and
WHEREAS, MCI wishes to obtain the services of CellStar for packaging (if
requested), programming (if requested), returns processing and other customized
fulfillment services; and
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions herein contained, and other good and valuable consideration, the
receipt and sufficiency of which
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE
INDICATED IN THIS AGREEMENT BY "[REDACTED]".
is hereby acknowledged, MCI and CellStar agree as follows:
1. SALE AND PURCHASE OF ACCESSORY PRODUCTS.
(a) MCI agrees to purchase and CellStar agrees to sell Accessory
Products under the terms and conditions set forth in this Agreement. Subject to
(b) and (c) below, MCI agrees that, during the term of this Agreement, it shall
purchase exclusively from CellStar all of its requirements for Accessory
Products for sale in the Communication Centers. CellStar shall not substitute
any Accessory Product without the express written consent of MCI. Additional
accessory products which are not listed on Exhibit A as of the date hereof may
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be added to this Agreement and the list set forth on Exhibit A upon written
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agreement of the parties. In such an event, the parties will amend this
Agreement accordingly and include a revised Exhibit A.
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(b) In the event that CellStar materially breaches the Interim
Services Agreement between the parties as such material breaches are defined in
the Interim Services Agreement, MCI may, at its option, either terminate (i)
this Agreement in its entirety; or (ii) MCI's exclusive obligation hereunder to
purchase all Accessory Products and associated distribution services associated
with such Accessory Products from CellStar.
(c) In addition, the requirement of MCI to purchase a specific
Accessory Product hereunder shall terminate if (i) MCI has failed to approve
such non-OEM Accessory Product after the technical and quality evaluation set
forth herein in Section 16; and (ii) CellStar has been unable to supply an
alternative product that is acceptable to MCI within the time period set forth
in Section 16. In accordance with the provisions of Section 16 hereof, the
obligation of MCI to purchase all of its requirements of such particular non-OEM
Accessory Product hereunder will be reinstated automatically when CellStar has
available and can provide such a non-OEM Accessory Product that conforms to
MCI's commercially reasonable technical and quality specifications. In such
case, MCI will be permitted to satisfy any outstanding purchase commitments that
it has made to any other vendors who have agreed to provide such a non-OEM
Accessory Product that conforms to MCI's technical and quality specifications,
which commitments shall not exceed one hundred and twenty (120) days from the
date MCI's requirement to purchase such Accessory Products from CellStar
pursuant to this subsection 1(c) terminates.
(d) For purposes of this Agreement, the term "OEM Accessory Products"
shall refer to Wireless Handset accessory products manufactured for, by, or on
behalf of, the original equipment manufacturer.
2. SALE AND PURCHASE OF WIRELESS HANDSETS. MCI agrees to purchase and
CellStar agrees to sell the Wireless Handsets listed on Exhibit B attached
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hereto under the terms and conditions set forth in this Agreement. It is
understood that MCI has the right but not the obligation to purchase all or a
portion of its requirements for Wireless Handsets for sale in the Communication
Centers from CellStar. CellStar shall not substitute any Wireless Handset
without the express written consent of MCI. Additional wireless handsets which
are not listed on Exhibit B as of the
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date hereof may be added to this Agreement and the list set forth on Exhibit B
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upon written agreement of the parties. In such an event, the parties will amend
this Agreement accordingly and include a revised Exhibit B.
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3. WAREHOUSE, DISTRIBUTION AND FULFILLMENT SERVICES.
(a) CellStar will provide to MCI all warehouse, distribution and
fulfillment services required by MCI in connection with MCI's sale in the
Communication Centers of (i) all Products (except for Accessory Products and
associated distribution services which are deleted from the list of Accessory
Products and Services pursuant to Section 1(b) above); and (ii) all wireless
handsets purchased by MCI from third parties.
(b) CellStar will provide to MCI warehouse, distribution and
fulfillment services required by MCI in connection with the sale by MCI in the
Communication Centers of certain Inventory Items, including all wireless
handsets purchased by MCI from third parties.
(c) The services described in (a) and (b) above shall include but are
not limited to warehousing, assembly (if requested), programming (if requested),
packaging (if requested), shipping, insuring (as agreed below), reporting, and
returns processing (if requested) of such Products, Inventory Items, and
wireless handsets purchased by MCI from third parties, to the Communication
Centers as described in Exhibit C (the "Services") .
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(d) Additional services which are not listed on Exhibit C as of the
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date hereof may be added to this Agreement and the list set forth in Exhibit C
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by written agreement of the parties and only if CellStar is able to provide such
additional services at a Competitive Market Price (as such term is defined in
Section 4(j) hereof). In such an event, the parties will amend this Agreement
accordingly and include a revised Exhibit C.
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4. PRICING AND PAYMENT TERMS, AND RIGHT OF OFFSET.
(a) CellStar's prices to MCI for OEM Accessory Products purchased
hereunder shall initially be as set forth on Exhibit A. Those stated prices are
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and such Product Prices for OEM Accessory Products thereafter shall be in an
amount equal to the manufacturer's invoice price less any pro-rata manufacturer
discounts, special incentives and similar rebates to which MCI would otherwise
be entitled if MCI were purchasing such products directly from the manufacturer
(but specifically excluding Co-op and MDF, as defined in Sections 9 and 10
respectively, allowances or credits for which shall be handled in accordance
with Sections 9 and 10 hereof respectively). CellStar shall provide standard
private label packaging of such OEM Accessory Products in accordance with
reasonable instructions from MCI and agreed upon by CellStar and the
manufacturer at no additional cost. Should MCI choose not to have CellStar
perform private label packaging of OEM Accessory Products, prices of such OEM
Accessory Products shall be determined using the formula set forth in subsection
4(b) below.
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(b) CellStar's prices to MCI for non-OEM Accessory Products purchased
hereunder shall initially be as set forth on Exhibit A. Those stated prices are
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and such Product prices for non-OEM Accessory Products thereafter shall be an
amount equal to [REDACTED]. CellStar shall provide standard private label
packaging of such non-OEM Accessory Products in accordance with reasonable
instructions from MCI and agreed upon by CellStar at no additional cost.
(c) Prices for Wireless Handsets purchased hereunder shall initially
be as set forth on Exhibit B. Those stated prices are and such Product prices
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for Wireless Handsets thereafter shall be an amount equal to [REDACTED].
(d) Unless otherwise stated herein, actual freight and insurance
associated with each shipment from CellStar's warehouse to the Communication
Centers shall be billed to and payable by MCI as separate line items on each
invoice. CellStar shall make commercially reasonable efforts to insure that all
such freight and insurance charges paid for by MCI under this Agreement are the
lowest in the market. CellStar and MCI shall work together to obtain such
favorable rates.
(e) Prices for Accessory Products and Wireless Handsets calculated as
set forth in subsections (a), (b) and (c) above are hereinafter collectively
referred to as the "Product Prices."
(f) [REDACTED]
(g) [REDACTED]
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"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
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(h) MCI shall pay CellStar for the Services at the rates established
on Exhibit C (the "Service Fees"). Such Service Fees (including the
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$0.88 set forth below) shall remain fixed until July 1, 1997 following which
date CellStar may adjust its Service Fees upon thirty (30) days prior written
notice to MCI subject to the procedures and limitations set forth in Section
4(j) below. Prior to July 1, 1997, CellStar reserves the right to change such
Service Fees if MCI (i) requests that CellStar distribute wireless handsets
purchased by MCI from third parties; or (ii) sources its accessories product
program in its entirety to another vendor in accordance with the terms of
Sections 1(b) or 4(j) herein and requests CellStar to distribute such
accessories; provided that any such change in Service Fees requested by CellStar
as a result of (i) above shall be determined by adding $0.88 for each wireless
handset purchased by MCI from such third parties and any change as a result of
(ii) above shall be subject to the procedures and limitations set forth in
Section 4(j) below.
(i) Each delivery of Products and Inventory Items to the Communication
Centers will be separately invoiced, along with related Service Fees for
assembly and order processing. All Product Prices and freight and insurance,
including any expediting fees, shall be included as separate line items on each
invoice and payable by MCI unless otherwise stated herein. Such invoices shall
include, but not be limited to: (i) purchase order number; (ii) SKU or item
numbers shipped; (iii)
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quantity shipped and billed; (iv) "ship to" address; (v) Service Fees incurred;
(vi) Services performed; (vii) net invoice amount; and (viii) any other
information or special instructions reasonably requested by MCI. CellStar shall
provide reasonable supporting documentation for each invoice as MCI may
reasonably request including, but not limited to packing slips. CellStar will
also issue invoices from time to time for returns processing credits and/or
fees, credits for penalties, credits for MDF, credits for MCI's twenty percent
(20%) share of 800# orders as described in Exhibit C hereof, and other Service
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Fees for Services rendered which are not otherwise invoiced with each delivery.
Co-op reimbursements will be handled in accordance with Section 9 hereof. Such
invoices or credit statements shall include information reasonably requested by
MCI. MCI shall pay all invoiced amounts within thirty (30) days after the date
of invoice.
(j) [REDACTED]
__________
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
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(k) CellStar shall provide to MCI a credit against payments owed under
this Agreement for any amounts finally determined to be owed by National Auto or
CellStar under Sections 3.6 and 3.7 of the Asset Purchase Agreement.
5. PERFORMANCE STANDARDS.
(a) CellStar warrants that the Services provided hereunder shall be
performed in a professional and workmanlike manner in accordance with the
deadlines and specifications set forth herein or as reasonably requested by MCI
from time to time.
(b) Notwithstanding whether or not CellStar has had an opportunity to
inspect the Inventory Items, CellStar shall be responsible for all security and
safety of the premises used to perform activities under this Agreement, and
shall be responsible for any loss or damage to Inventory Items while in
CellStar's possession or on CellStar's premises in accordance with Section 11.
CellStar shall make best efforts to identify and eliminate any pattern of
shrinkage of Inventory Items. In addition, CellStar shall immediately correct
any deficiencies it identifies in its processes that are contributing to such
shrinkage. CellStar shall maintain a log for all significant problem
resolutions and shall provide problem trending reporting.
(c) CellStar shall be responsible for establishing a comprehensive
problem escalation, coordination and response procedure to respond to systems
failures, or any developments or problems that impact the order processing and
fulfillment activities described in this Agreement. CellStar shall establish
eight (8) hour per day, five (5) day per week notification procedures to ensure
that appropriate MCI personnel are notified promptly following CellStar's
determination of a significant problem or possible problem. In addition,
CellStar will provide an after hours contact person for MCI who will be
available to MCI twenty-four (24) hours a day, seven (7) days a week. Such
person shall be capable of implementing problem resolution plans that are
mutually agreed upon by MCI and CellStar.
6. FORECASTS.
(a) MCI's Inventory Manager shall provide CellStar on a monthly basis,
within ten (10) days prior to the end of each calendar month, a continuous usage
forecast for the next three
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(3) calendar months to assist CellStar in maintaining an orderly production flow
for the purpose of MCI's delivery requirements for both Products and Services.
MCI shall indicate the Product model number or SKU, projected purchase volume by
units, and specific Services requested for each calendar month included in the
forecast. The first calendar month of the three month forecast shall constitute
a firm purchase commitment by MCI for the Products and Services set forth
therein. If there is a shortage of such forecasted Products caused solely by
the manufacturer, CellStar shall allocate products received from the
manufacturer among its customers who have firm purchase commitments on a prorata
basis in accordance with the volume of their respective commitments. MCI shall
draw down on such firm purchase commitment by placing weekly or bi-weekly
Purchase Orders (as defined in Section 7(a) below) against such forecast. MCI
shall have three (3) months to make up any shortfall. If after such three (3)
month period MCI has not satisfied such shortfall, then MCI shall pay to
CellStar the forecasted price of the Products not yet purchased by MCI and
CellStar shall ship such Products to MCI in accordance with MCI's instructions.
(b) If the total of Products included in Purchase Orders for shipment
submitted by MCI in any calendar month exceeds the forecasted amount (such
orders hereinafter referred to as "Out of Forecast Orders"), CellStar agrees
that it shall utilize a "first order in-first shipment out" method for
allocating inventory among customers. CellStar shall make commercially
reasonable efforts to ship such materials by MCI's requested deadline and shall
not be assessed any penalty for failure to meet such deadline. MCI shall
approve any rush charges before they are incurred.
7. PURCHASE ORDERS.
(a) MCI shall submit purchase orders for Products ("Purchase Orders")
to CellStar at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx 00000 via facsimile or
other mutually agreed upon methods. Each Purchase Order shall be submitted by
MCI and received by CellStar before 1 p.m. (Dallas time) on Monday of each week
(Tuesday when Monday is a holiday) (the "Order Deadline"). Any Purchase Order
received by the Order Deadline shall be shipped by CellStar in order to be
delivered to the Sam's Club address where the particular Communication Center is
located no later than Friday of the same week in which the Purchase Order was
received. In the event CellStar shall fail to timely deliver any order which
was received by CellStar by the Order Deadline, CellStar shall credit to MCI on
future purchases an amount equal to the lesser of ten percent (10%) of the
insured value of Products and Inventory Items ordered for that shipment or fifty
percent (50%) of the insured value of any missing or damaged materials;
provided, however, that CellStar shall not be required to issue such credit to
MCI in the event CellStar's failure to timely and accurately deliver was due to
(i) a Force Majeure event as defined in Section 24 hereof; (ii) the Purchase
Order was changed after the order entry process has been performed; (iii) the
order was an Out of Forecast Order described in Section 6(b) above; (iv) the
damage to or discrepancy in an order was caused by the shipping carrier; (v) the
Inventory Items to be delivered were not available to CellStar in a timely
manner for any reason beyond CellStar's control; (vi) such failure is due solely
to the default of any carrier or supplier; or (vii) such failure is due solely
to the acts or omissions of Sam's Club, MCI or their agents or employees.
CellStar agrees to use commercially reasonable efforts to notify MCI of any
Purchase Orders it receives which request shipment to locations other than the
Sam's Club
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locations at which MCI owns kiosks or which are unusual orders due to size or
product mix. CellStar agrees to cooperate with MCI in immediately halting the
shipment of any such orders upon notice from MCI.
(b) All Purchase Orders shall be only upon the terms and conditions of
this Agreement. The only effect of any terms and conditions in MCI's Purchase
Orders shall be to request the time and place of delivery or the number and type
of units to be delivered, but they shall not change, alter or add to the terms
and conditions of this Agreement in any other way. CellStar's invoice shall
also not change the terms and conditions of this Agreement.
(c) In order the facilitate transactions under this Agreement, the
parties may electronically transmit and receive data in agreed formats in
substitution for conventional paper based documents as provided in an Electronic
Data Interchange Trading Partner Agreement to be mutually agreed upon by the
parties.
8. Stock Balancing. Within [REDACTED] following the end of each [REDACTED]
during the term of this Agreement, MCI may return for credit against future
purchases, F.O.B. CellStar's warehouse, an unlimited amount of new, unopened,
undamaged and not defaced Accessory Products purchased by MCI from CellStar
during the previous [REDACTED]. MCI shall be responsible for the cost of
freight and insurance for such returned Accessory Products. MCI will include a
return authorization received from CellStar with any such returned shipment.
CellStar agrees to issue any credit for the actual Product Price, including any
taxes paid by MCI to CellStar, of such returned Accessory Products within thirty
(30) days of receipt of the Accessory Products.
9. [REDACTED]
10. [REDACTED]
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"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
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11. DELIVERY, RISK OF LOSS AND TITLE.
(a) Unless otherwise mutually agreed upon in writing by the parties,
all deliveries of Products and Inventory Items hereunder are FOB the Sam's Club
location designated on the . Unless otherwise agreed to herein, actual freight
and insurance associated with each shipment shall be billed to and payable by
MCI as separate line items on each invoice. CellStar reserves the right to make
deliveries of any per kiosk shipment in installments; provided, however, that
any additional costs incurred by CellStar as a result of such installment
shipments shall be borne by CellStar.
(b) Title to Products and risk of loss or damage to the Products
shall pass to MCI upon CellStar's delivery to and MCI's acceptance at the Sam's
Club location. Such acceptance by MCI shall be deemed to have occurred when the
receipt of such goods is acknowledged by MCI or by Sam's Club acting on behalf
of MCI. MCI hereby grants to CellStar a purchase money security interest in
Products delivered to MCI and the proceeds thereof now existing or hereafter
arising out of MCI's sale or other disposition of the Products. MCI agrees to
cooperate in whatever manner necessary to assist CellStar in perfecting and
recording such purchase money security interest upon CellStar's request.
(c) Title to Inventory Items shall at all times remain with MCI;
provided, however, that CellStar shall be responsible for any loss or damage to
Inventory Items upon delivery and acceptance by CellStar at CellStar's
warehouse; and provided, further, however, that CellStar shall not be
responsible for loss or damage to fulfillment, collateral and promotional
materials included in the list of Inventory Items in an amount up to five
percent (5%) of the total value of such fulfillment, collateral and promotional
materials received by CellStar during the calendar quarter in which such
shrinkage occurred. Such acceptance by CellStar shall be deemed to have occurred
when the receipt of such goods is acknowledged by CellStar. CellStar shall use
best efforts for the safekeeping and safe handling of all Inventory Items
provided to CellStar pursuant to this Agreement and shall insure the full
replacement value of the Inventory Items located in its warehouse at any time.
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12. INSPECTION.
(a) MCI must notify CellStar, in writing, within seventy-two (72)
hours of receipt of shipment of Products or Inventory Items of (i) any
shortages, discrepancies or freight damage claims existing between the items
charged to MCI on any packing slip and the goods actually received by MCI in the
corresponding shipment; or (ii) any damages to the corresponding goods. CellStar
shall promptly correct such shortage, discrepancy, or damage at no charge to MCI
within one (1) business day following notice from MCI if CellStar has goods in
stock in its warehouse. If CellStar does not have such goods in stock in its
warehouse, CellStar shall make best reasonable efforts to correct such shortage,
discrepancy, or damage promptly at no charge to MCI. If written notice of such
shortage, discrepancy, damage, or other objection is not received by CellStar
within that time, MCI shall be deemed to have accepted the missing or damaged
goods, and MCI agrees to pay the total amounts agreed to herein for such missing
or damaged goods. Freight damage claims shall be filed by CellStar directly with
the carrier within seven (7) days of receipt of the notification of damage.
(b) CellStar must notify MCI, in writing, within twenty-four (24)
hours of receipt of shipment of Inventory Items of (i) any shortages,
discrepancies or freight damage claims existing between the items charged to MCI
on any packing slip from MCI or a third party vendor for Inventory Items and the
Inventory Items actually received by CellStar in the corresponding shipment; or
(ii) any damages to the corresponding Inventory Items. MCI shall promptly
intervene with such third party vendors on behalf of CellStar to correct such
shortage, discrepancy, or damage at no charge to CellStar. If after such
intervention by MCI, such third party vendors refuse to correct any such
shortage, discrepancy, or damage, then MCI shall not hold CellStar responsible
for such missing or damaged goods; provided that CellStar has exercised
commercially reasonable care regarding the protection and security of such
goods. If written notice of such shortage, discrepancy, damage, or other
objection is not received by MCI within that time, CellStar shall be deemed to
have accepted the missing or damaged goods, and CellStar agrees to be
responsible to MCI for such missing or damaged goods. Freight damage claims
shall be filed by MCI or its third party vendors directly with the carrier
within seven (7) days of receipt of the notification of damage from CellStar.
CellStar will assist MCI or its third party vendors in the filing of such
freight damage claims and shall retain all packaging and shipping materials from
such damaged shipments until the claim is settled and unless otherwise directed
by MCI.
13. RETURNS.
(a) Return Authorization. A return authorization must be obtained in
accordance with CellStar's standard procedures prior to any Products or
Inventory Items being shipped back to CellStar. Except as specifically set
forth in subsection (d) below, all freight and insurance charges for returned
goods must be paid by MCI.
(b) Warranty Returns for Products.
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(i) Accessory Products. Accessory Products shall be accepted for
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return in accordance with the warranty provisions set forth
in Section 18 hereof. Upon receipt, CellStar shall inspect
such Accessory Products and the accompanying documentation,
if any, to determine whether such returned Accessory
Products qualify for warranty protection under the terms of
the applicable warranty. If such Accessory Products are
found to be defective under the terms of the applicable
warranty, CellStar shall, at its option exchange or credit
MCI for such defective Accessory Products and shall report
to MCI accordingly pursuant to the Interim Services
Agreement or Section 17, as appropriate. If CellStar
exchanges such products, CellStar shall ship such exchanged
product, at CellStar's cost (including freight and
insurance), to the Communication Center from which the
defective product was received. If such Accessory Product is
found not to qualify for warranty protection under the terms
of the applicable warranty, CellStar shall, at MCI's option,
return such non-qualifying product at MCI's cost to the
Communication Center from which the product was received or
dispose of such Accessory Products at no cost to MCI.
(ii) Cellular Telephones. Cellular Telephones shall be accepted
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for return in accordance with the manufacturers' warranty
set forth in Section 18 hereof. Upon receipt, CellStar shall
inspect such Cellular Telephones and the accompanying
documentation, if any, to determine whether such returned
Cellular Telephones qualify for warranty protection under
the terms of the applicable warranty. If such Cellular
Telephones are found to be defective under the terms of the
applicable warranty, CellStar shall, at MCI's option, repair
or return to the manufacturer for repair or replacement such
defective Cellular Telephones at no cost to MCI. Any
repaired or replaced product shall be returned, at
CellStar's cost (including freight and insurance), to the
Communication Center from which the defective product was
received. If such Cellular Telephones are found not to
qualify for warranty protection under the terms of the
applicable warranty, CellStar shall return such non-
qualifying product, at MCI's cost (including freight and
insurance), to the Communication Center from which the
product was received.
(iii) Two-Way Radios. Two-Way Radios shall be accepted for return
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in accordance with the manufacturers' warranty set forth in
Section 18 hereof. Upon receipt, CellStar shall, at its own
expense, coordinate the return of such products to the
manufacturer, for repair or replacement in accordance with
the terms of the applicable warranty.
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Any repaired or replaced product shall be returned, at
CellStar's cost (including freight and insurance), to the
Communication Center from which the defective product was
received. If such Two-Way Radios are found not to qualify
for warranty protection under the terms of the applicable
warranty, CellStar shall return such non-qualifying product,
at MCI's cost (including freight and insurance), to the
Communication Center from which the product was received.
(iv) Technical Support for Products. CellStar shall make
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available to MCI telephone technical support and assistance
in the diagnosis and resolution of problems with Products
eight hours a day, five (5) days a week during CellStar's
normal business hours. There shall be no charge for such
technical support.
(c) Returns for Inventory Items. CellStar shall accept returns of
Pagers from Communication Centers for processing in accordance with Exhibit C
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attached hereto. Pagers accepted for return shall be subject to the returns
processing fees set forth in Exhibit C hereto. The parties may agree to add
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returns services for other Inventory Items by mutual written agreement and shall
amend this Agreement accordingly.
(d) Transition Period. Regardless of whether the Products are under
warranty, for a period of forty five (45) days following the Effective Date
hereof, CellStar shall credit to MCI the refund value of such items, including
all freight, insurance, and any taxes related to the return of such Products
returned to CellStar from the Communication Centers. Thereafter, MCI shall be
responsible for all freight and insurance for the return of all Products
returned to CellStar from the Communication Centers.
14. CANCELLATION OR CHANGE OF PURCHASE ORDERS. MCI may cancel, change or
reschedule Products or Inventory Items on any Purchase Order subject to MCI's
payment to CellStar of a cancellation, change or rescheduling fee equal to
[REDACTED] for each Purchase Order that has advanced to order entry/print status
and [REDACTED] for each Purchase Order that has advanced to pick confirm status.
MCI shall not be charged cancellation or change fee for orders having a pre-
order entry status. If any such change or rescheduling results in additional
shipments within the same calendar week to the same "ship to" address, such
shipment shall be made at a cost of [REDACTED] per shipment per "ship to"
address.
15. TAXES. The prices set forth herein are exclusive of any amount for
Federal, State and/or Local excise or sales taxes on the Products and/or
Services provided under this Agreement. If any such excluded tax, exclusive
however, of any taxes measured by CellStar's net income or taxes based on
CellStar's gross receipts or based on CellStar's franchise, is determined to be
applicable to the Products and Services provided under this Agreement or to the
extent CellStar is required to pay or bear burden thereof, one hundred percent
(100%) thereof shall be added to the prices set forth
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__________
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
herein and paid by MCI. In the event MCI claims exemption from sales or other
such taxes under this Agreement, MCI shall hold CellStar harmless for any
subsequent assessments levied by a proper taxing authority for such taxes,
including interests, penalties and late charges.
16. PRODUCT CHANGES.
(a) MCI shall make best efforts within ten (10) business days from the
Effective Date hereof to (i) perform a commercially reasonable technical and
quality evaluation of Accessory Products provided to MCI as of the date of
closing in accordance with 16(b) and approve or reject Accessory Products in
accordance with the procedures set forth in Section 16(b) herein; and (ii)
provide to CellStar its minimum commercially reasonable technical and quality
specifications for each Accessory Product. If the technical and quality
evaluation required in (i) above results in MCI's rejection of the Accessory
Products, CellStar shall immediately initiate efforts to provide a conforming
Accessory Product. In any case, however, MCI may not source or give notice of
an intent to source such an Accessory Product from another vendor until January
1, 1997.
(b) In the event CellStar wishes to (i) make available to MCI any new
non-OEM Accessory Product, or (ii) change any style or manufacturer for any non-
OEM Accessory Product, CellStar shall, at least twenty (20) business days prior
to offering such Accessory Product for sale or effecting such change, provide to
MCI at least three (3) random samples for a ten (10) business day technical and
quality evaluation in accordance with MCI's minimum technical and quality
specifications described in subsection 16(a) above or MCI's revised commercially
reasonable technical and quality specifications that are provided to CellStar
from time to time. In the event such Accessory Product is approved by MCI, such
Accessory Product shall be added to the list set forth on Exhibit A upon
---------
execution of an amendment hereto.
(c) In the event MCI wishes to buy a new non-OEM Accessory Product or
change any style or specification for any non-OEM Accessory Product, MCI shall
provide to CellStar in writing commercially reasonable technical and quality
specifications for any such new product or changes. CellStar shall stock in its
warehouse such new or changed product within thirty (30) days in accordance with
the following procedure. Within five (5) business days following receipt by
CellStar of MCI's technical and quality specifications, CellStar shall provide
at least three (3) random samples of such new or changed product for a ten (10)
business day technical and quality evaluation in accordance with those minimum
technical and quality specifications. If MCI approves such accessory product,
it shall be added to the list of Accessory Products and this Agreement shall be
amended accordingly. If CellStar is unable to provide three (3) random samples
of such accessory product within five (5) business days or MCI rejects the
accessory products due to failure to satisfy such technical and quality
evaluation, MCI may source such accessory product from another party until
CellStar is able to source such accessory product for MCI. Alternatively,
CellStar and MCI may agree in writing on the substitution of an alternative
accessory product that conforms to MCI's commercially reasonable technical and
quality specifications.
(d) All samples to be provided hereunder shall be sent to Xxxxxx
Xxxxxxxxx,
14
National Service Manager, MCI Wireless, 0000 Xxxx Xxxx, Xxxxxxxx, Xxxxxxxx
00000, Suite 126, or such other person or address as MCI may designate in
writing to CellStar from time to time. Within 72 hours following the completion
of any such evaluations or tests, MCI shall provide to CellStar copies of any
test results or other evaluations which it conducts on non-OEM Accessory
Products, including a detailed written explanation of any perceived failure to
meet specifications previously provided to CellStar.
17. RECORDS AND REPORTS.
(a) CellStar shall maintain complete and accurate records of all
invoices, shipping, inventory, insurance, returns, penalties, MDF, Co-op, MCI's
twenty percent (20%) share of #800 items, all amounts billable to and payments
made by MCI, the information listed in subsection (d) below, and any other
matters which relate to CellStar's obligations hereunder, in accordance with
generally accepted accounting practices. CellStar shall retain and make
available upon request such records for a period of three (3) years from the
date of shipment of Products, Inventory Items, or rendering of Services covered
by this Agreement.
(b) CellStar shall provide to MCI by 11 a.m. (EST) each Monday, an
ASCII file (in similar fashion as file transmissions described in the Interim
Services Agreement) containing all of the information contained in each of the
individual invoices issued during the prior calendar week, consolidating such
information by "ship-to" address (which corresponds to a Communication Center or
an area manager's address) and as soon as reasonably available by SKU or item
number. Such file shall also contain all fees invoiced during such calendar week
and such other sales order information as MCI may reasonably request. CellStar
shall provide a paper printout of such ASCII file promptly thereafter.
(c) CellStar shall provide to MCI a consolidated monthly statement.
The monthly statement shall include the information listed in subsection 17(b)
above for outstanding invoices.
(d) Upon the reasonable request of MCI, CellStar agrees to provide
weekly inventory reports on Inventory Items located in its warehouse and cycle
counts within one (1) business day.
(e) CellStar has agreed as part of the Interim Services Agreement to
provide to MCI certain information for inventory information reporting. During
the term of the Interim Services Agreement, all such information will be
provided under the terms and conditions of the Interim Services Agreement.
Thereafter, CellStar shall continue to provide the following information under
the terms of this Agreement to MCI five (5) business days a week (except as
otherwise noted in subsection 17(e)(v)) with Monday information including
Friday, Saturday and Sunday data, no later than noon, CST (except for Mondays
when Friday, Saturday and Sunday data get transmitted at approximately 6:00 p.m.
CST). If any of the following information is not made available within one (1)
business day of the time that MCI notifies CellStar that the information has not
been received in accordance with the deadlines above, then MCI shall be entitled
to a credit
15
against the Services Fee equal to[REDACTED] per day for each day that the
information is not made available starting on the day of MCI's notice.
(i) MCI Purchase Orders
(ii) Receipts of Inventory Items against MCI Purchase Orders
(iii) Replenishment orders from the Communication Centers
(iv) All orders of items shipped from CellStar's warehouse to
the Communication Centers
(v) Warehouse inventory quantities for all Inventory Items on
a weekly basis
(vi) Adjustments/returns that were sent back to CellStar's
warehouse from the Communication Centers
(vii) Credits/returns related to Inventory Items
(viii) Credits/returns of Inventory Items that do not require
shipment (damaged goods that are non-returnable to the
vendor, shrinkage, miscounted inventory, receiving
discrepancies, etc.)
(ix) Any other inventory management and tracking information
reasonably requested by MCI and agreed to by CellStar.
(f) Upon five (5) business days advance notice, MCI or its
representatives shall have the right to conduct an audit and review, at
reasonable hours and on CellStar premises (no more often than quarterly), of the
books and records of CellStar as they pertain to amounts owed under this
Agreement, Inventory Items, Co-op, MDF, special incentives and similar rebates,
and the net actual cost of Products purchased under this Agreement (in order to
verify the cost plus a factor pricing set forth in Section 4 hereof). MCI shall
bear the costs of such audits unless the auditors find a variance of two percent
(2%) or greater in the amounts invoiced to MCI whereupon such overcharges shall
be refunded to MCI with interest at the prime rate. In the event of such an
overcharge, CellStar shall pay the reasonable costs associated with the audit.
Any undercharges shall be paid by MCI.
18. LIMITED WARRANTIES AND REMEDIES.
(a) CellStar warrants its title to the Products sold by it and
warrants to MCI that its Products are free of defects of workmanship or material
and are in conformity with applicable specifications and descriptions set out in
the printed publications of CellStar or the manufacturer.
16
__________
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
The limited warranty provided by the manufacturers of Wireless Handsets and OEM
Accessory Products shall accompany such Products. A copy of the limited
warranty which will accompany each non-OEM Accessory Product and which will be
extended by CellStar to ultimate purchasers for use is attached hereto as
Exhibit D. CellStar extends to MCI the same such warranties it extends to
---------
ultimate purchasers for use, subject to the conditions stated hereinafter in
this Section 18. No claim shall be maintained hereunder unless the facts
giving rise to it are discovered within the warranty period of the Product and
written notice thereof given to CellStar within thirty (30) days of discovery.
The sole and exclusive liability of CellStar for breach of warranty shall be to
refund the purchase price of, or at its option, to replace or repair the Product
or part concerned FOB its service facility or such other places as CellStar may
designate.
(b) The warranty period for the Products shall be as follows:
(i) All non-OEM batteries: Two (2) year warranty (subject to
requirement for proof of purchase after one year).
(ii) All other non-OEM accessories: Lifetime warranty (subject
to requirement for proof of purchase after one year).
(iii) All OEM accessories: Manufacturers' warranty passes
through to MCI. CellStar provides no additional warranty.
(iv) All Wireless Handsets: Manufacturers' warranty passes
through to MCI. CellStar provides no additional warranty.
(c) The foregoing sets forth the sole and exclusive remedy of MCI for
claims (except as to title) based on defect in or failure of Products, whether
the claim is in contract, tort (including negligence), strict liability or
otherwise, and however instituted. Upon expiration of the warranty period, all
such liability shall terminate. Except as set forth in Section 23, the
foregoing warranties are exclusive and in lieu of all other warranties, whether
written, oral, implied or statutory. NO IMPLIED OR STATUTORY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE SHALL APPLY.
19. TRADEMARK LICENSE. CellStar grants to MCI the nonexclusive right to
use CellStar's trade names and trademarks set forth on Exhibit E in marketing
---------
CellStar's Products during the term hereof. MCI agrees to designate the Product
properly and depict marks accurately.
20. TERM. This Agreement shall be for an initial term of two (2) years,
commencing on the date hereof unless otherwise terminated pursuant to the terms
hereof.
21. TERMINATION.
(a) Either party my terminate this Agreement immediately upon written
notice to the other party if (i) the other party is in default of any material
obligations hereunder, and, if curable, such party has failed to cure such
default within thirty (30) days after receipt of such written notice; (ii) the
other party violates any international, federal, state, provincial or local law
relating
17
to or affecting this Agreement; or (iii) the other party becomes insolvent,
makes a general assignment for the benefit of its creditors, files or does not
object to the filing of any petition in bankruptcy or insolvency in any federal
or state proceeding, has a receiver or trustee appointed over all or any
substantial part of its property or undertakes or is subject to similar actions.
(b) During the initial term hereof, MCI shall additionally have the
right to terminate this Agreement at any time following eighteen (18) months
from the effective date hereof in the event CellStar breaches any of the terms
of the Non-Competition Agreement of even date herewith between the parties,
notwithstanding the fact that such Non-Competition Agreement will have already
terminated according to its own terms.
(c) In the event of a material breach of the Interim Services
Agreement and expiration of any applicable cure period, as such material
breaches and cure periods are defined in the Interim Services Agreement, MCI
shall have the right to terminate this Agreement immediately.
(d) MCI shall have the right to terminate this Agreement upon thirty
(30) days prior written notice if: (i) shrinkage of Inventory Items exceeds
eight percent (8%) of total Inventory Items under the control of CellStar in any
given month (other than fulfillment, collateral, and promotional materials for
which CellStar already has a five percent (5%) shrinkage allowance); or (ii)
shrinkage of Inventory Items exceeds five percent (5%) of total Inventory Items
under the control of CellStar in a second month (other than fulfillment,
collateral, and promotional materials for which CellStar already has a five
percent (5%) shrinkage allowance) provided that MCI has given CellStar a written
warning that shrinkage of Inventory Items exceeded five percent (5%) of total
Inventory Items under the control of CellStar in one previous month during the
term of the Agreement.
22. CONFIDENTIALITY OF INFORMATION.
(a) CellStar agrees that all information related to the Services,
whether received orally, in print, or electronically, including but not limited
to MCI data and business information inputted, received, reported or generated
by CellStar, or stored in any CellStar computer system under the terms of this
Agreement, shall be received by CellStar in strict confidence. MCI agrees that
all information related to all amounts due and payable under the terms of this
Agreement, including but not limited to Product Prices and Service Fees and such
other information that CellStar may, from time to time designate as
confidential, whether received orally, in print, or electronically, shall be
received by MCI in strict confidence. All such information shall be deemed to
be "Confidential Information".
(b) Each party agrees that it shall use such Confidential Information
for the purposes of and only in the performance of this Agreement, and that it
shall not make copies of any such Confidential Information or any part thereof
except to the extent otherwise expressly permitted by this Agreement or by the
owner of the information ("Owner"). The party receiving the Confidential
Information ("Recipient") shall not disclose any Confidential Information to any
third party without the express written consent of the Owner other than to its
employees, consultants and
18
agents, and its Affiliates' employees, consultants and agents, who have a need
to know to perform under this Agreement, and who are bound to protect the
received Confidential Information from unauthorized use and disclosure under the
terms of a written agreement or corporate policy, provided that in any case, the
Recipient shall be liable for any breaches of confidentiality by any of them.
The Recipient shall protect the Confidential Information using the same degree
of care used to protect Recipient's own confidential or proprietary information
of like importance, but in any case using no less than a reasonable degree of
care. The Recipient shall return Confidential Information and any copies
thereof to the Owner at the completion or termination of this Agreement, or at
such earlier date as the Owner may desire.
(c) If the Recipient is required by law, regulation or court order to
disclose any Confidential Information, the Recipient will promptly notify the
Owner in writing prior to making any such disclosure in order to facilitate the
Owner seeking a protective order or other appropriate remedy from the proper
authority. The Recipient agrees to cooperate with the Owner in seeking such
order or other remedy. The Recipient further agrees that if the Owner is not
successful in precluding the requesting legal body from requiring the disclosure
of the Confidential Information, it will furnish only that portion of the
Confidential Information which is legally required and will exercise all
reasonable efforts to obtain reliable assurances that confidential treatment
will be accorded the Confidential Information.
(d) The Recipient acknowledges that the Confidential Information
constitutes unique, valuable and special trade secret and business information
of the Owner, and that disclosure may cause irreparable injury to the Owner.
Accordingly, the parties acknowledge and agree that the remedy at law for any
breach of the covenants contained in this Agreement may be inadequate, and in
recognition, agrees that the Owner, shall, in addition, be entitled to seek
injunctive relief without bond including reasonable attorneys' fees and other
court costs and expenses, in the event of a breach or threatened breach of any
of the provisions of this Agreement, which relief shall be in addition to and
not in derogation of any other remedies which may be available to the Owner as a
result of such breach.
(e) Notwithstanding the foregoing, the restrictions set forth in this
Section on use and disclosure of Confidential Information shall not apply to
information that: (a) was publicly known at the time of Owner's communication
thereof to Recipient; (b) becomes publicly known through no fault of Recipient
subsequent to the time of Owner's communication thereof to Recipient; (c) is
received from a third party free to disclose it to Recipient; (d) was in
Recipient's possession free of any obligation of confidence at the time of
Owner's communication thereof to Recipient; (e) is developed by Recipient
independently of and without reference to any of Owner's Confidential
Information or other information that Owner disclosed in confidence to any third
party ; (f) is rightfully obtained by Recipient from third parties authorized to
make such disclosure without restriction; (g) is identified by Owner as no
longer proprietary or confidential; or (h) is lawfully required to be disclosed
to any governmental agency or judicial body or is otherwise required to be
disclosed by law.
19
23. INDEMNIFICATION AND INSURANCE.
(a) Patent and Copyright Indemnification. CellStar agrees to defend,
at its expense, any claims or suits against MCI based upon a claim that any
Products furnished hereunder directly infringes a U.S. patent or copyright and
to pay costs and damages finally awarded in any such suit, provided that
CellStar is notified promptly in writing of the suit and at CellStar's request
and at its expense is given control of said claim and all requested assistance
for defense of same. If the use or sale of any Products furnished hereunder is
enjoined as a result of such suit, CellStar at its option and at no expense to
MCI, shall obtain for MCI the right to use or sell said Products or shall
substitute an equivalent Product reasonably acceptable to MCI, and extend this
indemnity thereto or shall accept the return of the Products and reimburse MCI
the purchase price therefor, less a reasonable charge for reasonable wear and
tear. This indemnity does not extend to any suit based upon any infringement or
alleged infringement of any patent or copyright by the alteration of any
Products furnished by CellStar or by the combination of any Products furnished
by CellStar and other elements, nor does it extend to any products of MCI's
design or formula. The foregoing states the entire liability of CellStar for
patent or copyright infringement. IN NO EVENT SHALL CELLSTAR BE LIABLE FOR
INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING FROM INFRINGEMENT OR ALLEGED
INFRINGEMENT OF PATENTS, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS EXCEPT
AS OTHERWISE SET FORTH HEREIN.
(b) Other CellStar Indemnification. CellStar shall indemnify and hold
MCI, its officers, directors, employees, affiliates (including their officers,
directors and employees), and agents (the "MCI Indemnified Parties") harmless
from any liabilities, claims, losses and expenses, including without limitation,
interest, penalties, consequential damages and all reasonable attorneys' fees
including in-house counsel fees, accountants, and other experts, that may be
incurred by MCI as a result of or arising out of claims made: (i) by any third
party for injury to persons, including death, and damage to property, including
theft, resulting from CellStar's negligent acts or omissions; (ii) by any third
party for injury to persons, including death, and damage to property, resulting
from any material supplied or used by CellStar in a defective and unreasonably
dangerous condition; (iii) under Worker's Compensation, or similar employer-
employee liability acts, against MCI by persons provided by CellStar; and (iv)
any claim for infringement of any U.S. trademark or copyright by reason of use
of CellStar's trademarks in connection with the Products. If any MCI
Indemnified Party makes an indemnification request to CellStar, the MCI
Indemnified Party shall permit CellStar to defend or settle at its own expense,
any action or claim against the MCI Indemnified Party for which CellStar is
responsible under this provision; provided that (i) any such settlement or
disposition shall impose no obligation whatsoever on the MCI Indemnified Party
that is not wholly discharged or dischargeable by CellStar, and imposes no
conditions or obligations on the MCI Indemnified Party other than the payment of
monies that are readily measurable for purposes of determining the monetary
indemnification or reimbursement obligations of CellStar and (ii) CellStar will
be capable of fully performing its obligations pursuant to such settlement or
disposition, including the financial capacity to pay when due all sums it is
obligated to pay pursuant to such settlement or disposition. The MCI
Indemnified Party shall notify CellStar promptly of any claim
20
for which CellStar is responsible and shall cooperate with CellStar in every
commercially reasonable way to facilitate defense of any such claim; provided
that the MCI Indemnified Party's failure to notify CellStar shall not diminish
CellStar's obligations under this Section unless CellStar is materially
prejudiced as a result of such failure.
(c) MCI Indemnification. MCI shall indemnify and hold CellStar, its
officers, directors, employees, affiliates (including their officers, directors
and employees), and agents (the "CellStar Indemnified Parties") harmless from
any liabilities, claims, losses and expenses, including without limitation,
interest, penalties, consequential damages and all reasonable attorneys' fees
including in-house counsel fees, accountants, and other experts, that may be
incurred by CellStar as a result of or arising out of claims made: (i) by any
third party for injury to persons, including death, and damage to property,
including theft, resulting from MCI's negligent acts or omissions; (ii) by any
third party for injury to persons, including death, and damage to property,
resulting from any material supplied by MCI in a defective and unreasonably
dangerous condition; and (iii) under Worker's Compensation, or similar employer-
employee liability acts, against CellStar by persons provided by MCI. If any
CellStar Indemnified Party makes an indemnification request to MCI, the CellStar
Indemnified Party shall permit MCI to defend or settle at its own expense, any
action or claim against the CellStar Indemnified Party for which MCI is
responsible under this provision; provided that (i) any such settlement or
disposition shall impose no obligation whatsoever on the CellStar Indemnified
Party that is not wholly discharged or dischargeable by MCI, and imposes no
conditions or obligations on the CellStar Indemnified Party other than the
payment of monies that are readily measurable for purposes of determining the
monetary indemnification or reimbursement obligations of MCI and (ii) MCI will
be capable of fully performing its obligations pursuant to such settlement or
disposition, including the financial capacity to pay when due all sums it is
obligated to pay pursuant to such settlement or disposition. The CellStar
Indemnified Party shall notify MCI promptly of any claim for which MCI is
responsible and shall cooperate with MCI in every commercially reasonable way to
facilitate defense of any such claim; provided that the CellStar Indemnified
Party's failure to notify MCI shall not diminish MCI's obligations under this
Section 23 unless MCI is materially prejudiced as a result of such failure.
(d) Insurance Requirements. During the term of this Agreement,
CellStar shall maintain insurance of the kinds and in the amounts specified
below with insurers of recognized responsibility, licensed to do business in the
State(s) where the work is being performed, and having either: an A.M. Best's
rating of A8, a Standard & Poor's (S&P) rating of AA, or a Xxxxx'x rating of
Aa2.
(i) In accordance with the above, CellStar shall maintain the
following insurance coverages:
(1) Workers' Compensation insurance as required by the
State(s) in which the contract is to be performed;
(2) Employer's Liability insurance with limits of not less
21
than [CONFIDENTIAL MATERIAL REDACTED] per occurrence;
(3) Comprehensive or Commercial General Liability
Insurance, on an Occurrence Basis, including but not limited to
(premises-operations, broad form property damage in addition to
that covered by Section 23(d)(5) below, contractual liability,
independent contractors, personal injury) with limits of no less
than $10,000,000 combined single limit for each occurrence; and
(4) Automobile Liability, Comprehensive Form, with limits
of at lease $1,000,000 combined single limit for each occurrence.
(5) Bailee Liability Insurance, with limits of at least the
full replacement value of all Inventory Items physically located
at CellStar's warehouse at any given time.
(ii) THE REQUIRED MINIMUM LIMITS OF COVERAGE SHOWN ABOVE, HOWEVER,
WILL NOT IN ANY WAY RESTRICT OR DIMINISH CELLSTAR'S LIABILITY UNDER
THIS AGREEMENT.
(iii) CellStar's insurers shall waive all rights of recovery
against MCI for any injuries to persons or damage to property in the
execution of work performed under this Agreement.
(iv) CellStar's insurance shall be considered primary and not
excess or contributing with any other applicable insurance.
(v) All policies (excluding Workers' Compensation) shall name MCI,
its subsidiaries and affiliates, as additional insureds as respects
work performed under this Agreement and all coverage shall include MCI
property. CellStar will submit to MCI a standard "Accord" insurance
certificate (or comparable form acceptable to MCI) signed by an
authorized representative of such insurance company(ies), certifying
that the insurance coverage(s) required hereunder are in effect for
the purposes of this Agreement. Said insurance certificate shall
certify that no material alteration, modification or termination of
such coverage(s) shall be effective without at least 30 days advance
written notice to MCI.
24. FORCE MAJEURE. If the performance of this Agreement, or of any
obligation hereunder, is prevented, restricted or interfered with by reason of
acts of God, wars, revolution, civil commotion, acts of public enemies, blockage
or embargo, strikes, acts of the Government in its sovereign capacity,
interruptions of transportation, material default of any carrier or supplier, or
any other extraordinary and unexpected circumstance beyond the control and
without the fault or
22
negligence of the performing party, upon giving prompt notice to the other, but
in no event to exceed more than ten (10) days after the performing party's
learning of such event or after the date when the performing party reasonably
should have known of event, the performing party shall be excused from such
performance on a day-to-day basis to the extent of such prevention, restriction
or interference with (and the other party shall likewise be excused from payment
for all services not performed); provided, however, that the performing party
shall use its best efforts to avoid or remove such causes of non-performance and
both parties shall proceed whenever such causes are removed or cease.
25. COMPLIANCE WITH LAWS. Each of the parties shall comply with the
provisions of all applicable federal, state, county and local laws, ordinances,
regulations and codes including but not limited to compliance with the Federal
Communications Commission's Rules and Regulations, and, irrespective of whether
a specification is furnished, if equipment, services or containers furnished
hereunder by CellStar are required to be constructed, packaged, labeled or
registered in a prescribed manner, CellStar shall comply with applicable
federal, state or local law. If MCI exports Products outside the United States,
MCI shall be responsible for complying with all U.S. export laws and regulations
and with all laws and regulations, including, but not limited to, permission to
connect, packaging and instruction, in the countries to which Products have been
exported. Each party shall indemnify and hold harmless the other from and
against all liabilities, claims, costs, losses, damages (including, without
limitation, any indirect, special, consequential, incidental or punitive
damages), and expenses (including attorneys' fees and allocated in-house legal
expenses) arising out of breach of this Section.
26. ASSIGNMENT. The rights and obligations under this Agreement may not
be assigned without, in each instance, the prior written consent of the non-
assigning party.
27. GOVERNING LAW. This Agreement, including all matters relating to the
validity, construction, performance and enforcement thereof, shall be governed
by the laws of the State of New York without giving effect to its principles of
conflicts of law.
28. RELATIONSHIP OF PARTIES.
(a) The relationship of the parties under this Agreement shall be, and
shall at all times remain, one of independent contractors and not that of
franchisor and franchisee, joint venturers, partners , principal and agent,
employees, or any other relationship, and neither party shall have the rights
to bind or obligate the other.
(b) All persons furnished by the parties in performance of the
Services hereunder shall be considered solely that party's employees or agents;
and that party shall be responsible for compliance with all laws, rules, and
regulations involving, but not limited to, employment of labor, hours of labor,
working conditions, payment of wages and payment of taxes, such as unemployment,
social security and other payroll taxes, including applicable contributions from
such persons when required by law. In addition, CellStar shall not improperly
influence any MCI employee in any manner that would cause such MCI employee to
violate MCI's Code of Employee Conduct involving
23
conflicts of interest regarding acceptance of vendor gifts and gratuities (as
such MCI's Code of Employee Conduct is updated from time to time and provided to
CellStar by MCI).
(c) Each party shall be solely responsible for all reporting and
payment obligations relating to FICA, income tax, unemployment compensation and
workers compensation withholdings, and other employer related obligations of a
similar nature with respect to their own employees.
(d) Each party shall be solely responsible to the other for all acts
and omissions of its employees and agents assigned by such party for the
performance of its obligations hereunder.
29. ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, together
with the Interim Services Agreement and the Asset Purchase Agreement,
constitutes the entire Agreement between the parties and supersede any prior or
contemporaneous oral or written representations with regard to the subject
matter hereof. This Agreement may not be modified or amended except by a
writing signed by both parties. No waiver of any provision hereof shall be
effective unless in writing signed by the party alleged to have waived such
provision. Any single waiver shall not operate to waive subsequent or other
defaults.
30. SEVERABILITY. If any provision of this Agreement is contrary to,
prohibited by or held invalid by any law, rule, order or regulation of any
government or by the final determination of any state or Federal court, such
invalidity shall not effect the enforceability of any of the provisions not held
to be invalid.
31. NOTICES. All notices, requests, demands or other communications
required or permitted hereunder shall be in writing, shall be deemed delivered
(i) on the date of delivery when delivered by hand, (ii) on the date of
transmission when sent by telex, electronic mail or facsimile transmission
during normal business hours with telephone confirmation of receipt, (iii) one
(1) day after dispatch when sent by overnight courier maintaining records of
receipt, or (iv) three (3) days after dispatch when sent by registered mail,
postage prepaid, return receipt requested, all addressed as follows (or at such
other addresses as shall be given in writing by either Party to the other):
If to MCI:
MCI Telecommunications Corporation
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Segment Marketing
Vice President
Fax: (000) 000-0000
With a copy to:
24
MCI Telecommunications Corporation
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx, Esq.
Senior Attorney
Law & Public Policy
Fax: (000) 000-0000
If to CellStar:
CellStar, Ltd.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx
Chairman and CEO
Fax: (000) 000-0000
With a copy to:
CellStar, Ltd.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
With an additional copy to :
CellStar, Ltd.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
32. DISPUTE RESOLUTION PROCEDURES.
(a) Other than a dispute under Section 4(j) herein, for which the
provisions thereof shall govern, in the event of any disagreement regarding
performance under or interpretation of this Agreement, the parties shall attempt
to reach a negotiated resolution. If such a dispute remains unresolved for a
period of thirty (30) days after one party has provided written notice of the
dispute to the other, then each party shall designate an officer of appropriate
authority to resolve the dispute, in accordance with Section 32(b) below.
(b) Any dispute arising out of or related to this Agreement (including
any dispute
25
arising under Section 4(j) herein), which cannot be resolved by negotiation
under Section 32(a) above, shall be settled by binding arbitration in accordance
with the J.A.M.S./ENDISPUTE Arbitration Rules and Procedures ("Endispute
Rules"), as amended by this Agreement. The costs of arbitration, including the
fees and expenses of the arbitrator, shall be shared equally by the parties
unless the arbitration award provides otherwise. Each party shall bear the cost
of preparing and presenting its case. The parties agree that this provision and
the Arbitrator's authority to grant relief shall be subject to the United States
Arbitration Act, 9 U.S.C. 1-16 et seq. ("USAA"), the provisions of this
Agreement, and the ABA-AAA Code of Ethics for Arbitrators in Commercial
Disputes. The parties agree that the arbitrator shall have no power or
authority to make awards or issue orders of any kind except as expressly
permitted by this Agreement, and in no event shall the arbitrator have the
authority to make any award that provides for punitive or exemplary damages.
The Arbitrator's decision shall follow the plain meaning of the relevant
documents, and shall be final and binding. The award may be confirmed and
enforced in any court of competent jurisdiction. All post-award proceedings
shall be governed by the USAA.
33. WAIVER OF CERTAIN REMEDIES. Notwithstanding any provision of this
Agreement, neither party shall be liable for any indirect, special,
consequential, incidental or punitive damages arising out of this Agreement,
even if advised of the possibility of such damages; provided, that this shall
not limit the liability of the indemnifying party to indemnify the indemnified
party with respect to claims brought by third parties against the indemnified
party as provided for in this Agreement.
34. SURVIVAL. The respective obligations of the parties under this
Agreement that by their nature would continue beyond the termination,
cancellation or expiration, shall survive any termination, cancellation or
expiration, including, but not limited to, obligations to insure and indemnify,
insure and maintain confidentiality, deliver and have the opportunity to inspect
and accept goods under existing Purchase Orders, and provide continued
availability of warranty support and services.
35. PARAGRAPH HEADINGS. The headings of the paragraphs are inserted for
convenience of reference only and are not intended to affect the meaning or
interpretation of this Agreement.
36. ORDER OF PRECEDENCE. This Agreement and all Exhibits are intended to
be read consistently and as a whole. Nonetheless, in the event of any
ambiguity, inconsistency or conflict between the terms of the Agreement and an
Exhibit hereto, the terms and conditions of the Agreement shall control.
37. COUNTERPARTS. This Agreement may be signed in one or more
counterparts each of which shall be deemed to be an original but together shall
constitute one instrument.
26
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate by their duly authorized representatives.
CELLSTAR, LTD. MCI TELECOMMUNICATIONS
By NATIONAL AUTO CENTER, INC. CORPORATION
General Partner
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxxx Xxxxxx
-------------------------------- --------------------------------
Name: Name:
------------------------------ ------------------------------
Its: Executive Vice President Its: Vice President of Finance
------------------------------- -------------------------------
27
EXHIBIT A
ACCESSORY PRODUCTS AND PRICES
-----------------------------
[REDACTED]
Motorola Application
--------
W033020 All
W051019 All
W061020 Flip
W061019 TT250
E26-1-120 650
E8R-1-020 All
W8K3020 Flip
X0X-0-000 XX000
X0X-0-000 650
HFK-5-020 All above
SNN4589P Slim Nickle Metal Batt.
Nokia
-----
E03-3-213 636/638
E03-3-042 232
W051213 636/638
W051027 232
E26-1-213 636/638
E06-1-042 232
X0X-0-000 000
X0X-0-000 636/638
E8S-3-042 232
E8S-3213 636
BBT6LP 636/Slim Nickle Metal Batt.
BTH8SMP 232/Slim Nickle Metal Batt.
E061043 2120
NEC
---
W031025 810
W051025 810
W061025 810
E8R-1-025 810
W8K1025 810
Misc. Accessories
-----------------
E8M-1-079 All handheld
E8B-1-110 All Trans.
28
__________
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
[REDACTED]
E01-1-050 Any 3 Watt
E01-1-055 Any 3 Watt
B01-1-070 Any 3 Watt
HLN9033 Leather Case (Two-Way Radio)
B016063 Connector (Mot. Attache Phone)
29
__________
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
EXHIBIT B
WIRELESS HANDSETS AND PRICES
----------------------------
[REDACTED]
Motorola
--------
TT250
550 ProPak
650
Lite II ProPak
Lite II Standard
Attache with battery
Lunch Box with battery
Nokia
-----
636/638
232 (includes all colors)
NEC
---
000
XXX XXX RADIOS
--------------
Motorola Sprint CS10
Accessory
---------
HLN9034 Xx.x/Xxxx
XXX0000 Xxxx Clip
HLN8371 Desk Chgr
HLN3987 Int. Elim.
HNN9044 Battery Pack
HTN9026 3h Desk Chgr
HTN8232 10h Desk Ch
HAD9742 Stub Ant.
30
__________
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
EXHIBIT C
SERVICES AND FEES
-----------------
1. WAREHOUSE, DISTRIBUTION AND FULFILLMENT SERVICES.
(a) Services Regarding Inventory Items. The services to be performed
hereunder by CellStar regarding Inventory Items shall include the receiving,
handling, storage, assembly (if requested), shipping, and reporting as described
herein of the Inventory Items listed on Attachment A of various vendors (the
------------
"MCI Vendors"). CellStar shall warehouse the Inventory Items at its warehouse
facility located at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx 00000, or such
other warehouse facilities as shall be approved in writing by MCI from time to
time (the "Warehouse").
(b) Fulfillment Services. The services to be performed hereunder by
CellStar include the assembly (if requested), packaging (if requested),
programming (if requested), shipping, returns processing and other fulfillment
services relating to the Products and the Inventory Items.
(c) Availability. The Services provided by CellStar hereunder shall
be available eight (8) hours per day during normal business hours, five days per
week, fifty-two weeks per year unless otherwise mutually agreed upon by the
parties (excluding New Years Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving, the day after Thanksgiving, and Christmas).
(d) Maintenance. CellStar agrees to maintain its warehouse in a
clean, orderly, and safe condition; to maintain all equipment used by it in the
performance of its services hereunder in a clean, proper, and safe operating
condition; and to maintain the grounds around the warehouse in a safe, neat and
presentable manner.
(e) Record keeping. CellStar shall maintain, in accordance with
generally accepted accounting principles and practices, such records as may be
necessary to adequately reflect the accuracy of CellStar's charges and invoices
for reimbursement under the Agreement.
2. COMPENSATION. In consideration for the Services to be performed
hereunder, MCI shall pay CellStar Service Fees as set forth on Attachment B, as
------------
invoiced by CellStar in accordance with Section 4 of the Agreement.
3. SAFEKEEPING/TITLE. CellStar shall exercise all commercially
reasonable care for the safekeeping and safe handling of all Inventory Items
provided to CellStar by MCI pursuant to this Agreement, including, but not
limited to placing pagers, prepaid calling cards, movie tickets and other
valuable items in a segregated, locked area. Title to the Inventory Items
shall at all times remain with MCI.
31
4. OPERATIONS METHODS AND PROCEDURES.
(a) Receiving of Shipments. CellStar shall scan or otherwise enter
Inventory Items into CellStar's inventory management and order processing system
within one full business day of actual receipt of shipment. Product receipt
shall follow the procedures outlined in Attachment C.
------------
(b) Performance of Services. CellStar shall perform the Services in
accordance with its standard and operating procedures as such may be changed
from time to time, including those procedures outlined in Attachment C.
------------
5. IN-BOUND FREIGHT CHARGES. CellStar and MCI understand that MCI
Vendors will be providing in-bound freight shipments of Inventory Items to
CellStar at no charge to CellStar.
6. DAMAGED ITEMS.
(a) In-bound Freight Damage. CellStar shall not be liable for
shipments of Inventory Items until they have been received and accepted at the
Warehouse. CellStar will assist MCI in filing and resolving any freight claims
for these shipments and shall retain all packaging and shipping materials until
the claim is settled unless otherwise directed by MCI.
(b) Out-bound Freight Damage and Warehouse Damage. Subject to the
allowance for shrinkage contained in Section 11(c) of this Agreement, the risk
of loss, damage, or destruction of the Products and Inventory Items shall be
borne by CellStar from the time the shipments are received and accepted at the
Warehouse until the goods are delivered to and accepted by MCI at the Sam's Club
location.
(c) Definition of Damaged Products. Unless otherwise stated in
Section 12, Products and Inventory Items shall be considered damaged when the
actual unit has been marred in any manner, including, but not limited to,
scratched, dented, water stained or stained by any other substance, crushed,
punctured, and/or when the item has obvious damage detected by rattling sound.
Any Inventory Items that is not resalable as a new product, due to any visual
defects or obvious internal damage, shall be considered damaged.
7. INSURANCE.
(a) In-bound Shipment. CellStar shall not be responsible for insuring
in-bound shipments of Inventory Items, nor shall it be responsible for any loss
or damage incurred during such shipment. However, CellStar will assist MCI in
filing and resolving any freight claims.
(b) Warehouse Inventory. CellStar shall insure, and provide proof of
insurance to MCI, naming MCI as beneficiary, the full replacement value of the
Inventory Items stored in the Warehouse at any time. CellStar shall also
maintain property and liability insurance as set forth
32
in Section 23 of this Agreement. In addition, CellStar will promptly notify MCI
in writing of any claims filed that relate in whole or in part to any Inventory
Items. With respect to any such claims disputed in whole or in part by the
insurance carrier, CellStar will notify MCI of the dispute, provide MCI with
such information as may be requested by MCI in writing and shall not settle such
claims (insofar as they relate to the Inventory Items) for less than the full
value thereof without the written approval of MCI.
(c) Out-bound Shipment. Unless otherwise stated in the Agreement,
CellStar shall insure at MCI's cost all out-bound freight shipments for the full
replacement value of the Products and Inventory Items being transported to any
Communication Center.
8. WAREHOUSE ACCESS. MCI shall have access to the warehouse during
CellStar's normal working hours, upon two (2) hours prior notice to CellStar,
for the purpose of inspecting Inventory Items, evaluating damaged Inventory
Items, performing Inventory Item counts and other reasonable requirements.
33
ATTACHMENT A
INVENTORY ITEMS
MCI PAGERS
PART NUMBER DESCRIPTION FREQUENCY COV
BPNXA86BLK002 PRONTO BLACK 929.8625 L
BBFXA86BLK002 BRAVO BLACK 929.8625 L
BBFXA58BLK002 BRAVO BLACK 929.5875 R/N
BUXXA86BLK002 ULTRA BLACK 929.8625 L
BUXXA86TTL002 ULTRA TEAL 929.8625 L
BUXXA86CIC002 ULTRA CRAN 929.8625 L
BUXXA86BBL002 ULTRA BLUE 929.8625 L
BUXXA58BLK002 ULTRA BLACK 929.5875 R/N
BAGXA86BLK002 ADVISOR BLACK 929.8625 L
BAGXA58BLK002 ADVISOR BLACK 929.5875 R/N
BAGXA86BLK002S ADVISOR BLACK 929.8625 L
SPORTS
BAGXA58BLK002S ADVISOR BLACK 929.5875 X/X
XXXXXX
XXXXX00XXX000 ULTRA BLACK 158.7000 L
BUXRE10BLK002 ULTRA BLACK 158.1000 L
BUXRD84BLK002 ULTRA BLACK 152.8400 L
BPNXA96BLK002 PRONTO BLACK 929.9625 L
BPNXA73BLK002 PRONTO BLACK 929.7375 L
BBFXA96BLK002 BRAVO BLACK 929.9625 L
BBFXA96TTL002 BRAVO TEAL 929.9625 L
BBFXA96CIC002 BRAVO CRAN 929.9625 L
BBFXA96BBL002 BRAVO BLUE 929.9625 L
34
PART NUMBER DESCRIPTION FREQUENCY COV
BBFXA86TTL002 BRAVO TEAL 929.8625 L
BBFXA86CIC02 BRAVO CRAN 929.8625 L
BBFXA86BBL002 BRAVO BLUE 929.8625 L
BBFXA73BLK002 BRAVO BLACK 929.7375 L
BBFXA73TTL002 BRAVO TEAL 929.7375 L
BBFXA73CIC002 BRAVO CRAN 929.7375 L
BBFXA73BBL002 BRAVO BLUE 929.7375 L
BUXXA96BLK002 ULTRA BLACK 929.9625 L
BUXXA96TTL002 ULTRA TEAL 929.9625 L
BUXXA96CIC002 ULTRA CRAN 929.9625 L
BUXXA96BBL002 ULTRA BLUE 929.9625 L
BUXXA73BLK002 ULTRA BLACK 929.7375 L
BUXXA73TTL002 ULTRA TEAL 929.7375 L
BUXXA73CIC002 ULTRA CRAN 929.7375 L
BUXXA73BBL002 ULTRA BLUE 929.7375 L
BAGXA96BLK002 ADVISOR BLACK 929.9625 L
BAGXA73BLK002 ADVISOR BLACK 929.7375 L
BAGXA96BLK002S ADVISOR BLACK 929.9625 L
SPORTS
BAGXA73BLK002S ADVISOR BLACK 929.7375 L
SPORTS
BUXRD45BIL002 ULTRA BLACK 454.4500 L
BUXXA63BLK002 ULTRA BLACK 929.6375 L
BUXRE78BLK002 ULTRA BLACK 929.7875 L
BUXXA61BLK002 ULTRA BLACK 929.6125 L
35
PREPAID CALLING CARDS
Holiday Card 30 Unit
Holiday Card 15 Unit
Collectors' Independence Day 4 30 Units
Collectors' Independence Day 4 30 Units (Promotional Cards)
UNITED ARTIST THEATERS PROMOTIONAL MOVIE TICKETS
FULFILLMENT, COLLATERAL AND PROMOTIONAL MATERIALS
Including, but not limited to:
User Guide and Terms & Conditions
Warranty Cards
Box Sleeves
Alpha Paging Software
Sweepstakes Cards
Paging Correspondence Maps
Sports Paging Brochures
Other Brochures
Other Promotional Materials
Sales Aids
Long Distance Welcome Letters
Buckslips
Greeter Flyers
Other Collateral Materials
36
ATTACHMENT B
SERVICE FEES
Service Price Per Unit/Product
------- ----------------------
Assembly:
Private Label Packaging of Pagers [REDACTED]
(Individual packaging of pagers
approved and requested by MCI)
Order Fulfillment:
A negotiated flat fee per order processed [REDACTED]
and shipped to each "ship to" address,
including but not limited to the following
aspects of Inventory Item handling and
management:
*Receiving
*Scanning in ESN's
*Storage
*Picking, Packing and Prepping for Shipping
*Freight Processing
*Scanning Out ESN's
*Reporting
Returns Processing
(For Inventory Items Only):
MCI Pager Returns Handling Fee [REDACTED]
1-800-Number Fulfillment
(OEM Accessories available through a transparent phone catalog sales
system, based on credit card purchases only.) The Service Fee shall be
in the form of a margin split with MCI: [REDACTED] to CellStar and
[REDACTED] to MCI. CellStar shall receive the first [REDACTED] of
margin on the total purchase prior to MCI receiving its [REDACTED]
share. If CellStar's [REDACTED] share constitutes less than
[REDACTED], CellStar is entitled to collect that total amount only and
37
__________
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
MCI shall not owe CellStar the difference between that amount and
[REDACTED]. (For example, on a [REDACTED] item the split would be
[REDACTED] CellStar/[REDACTED] MCI, on an [REDACTED] item the split
would be [REDACTED] CellStar/[REDACTED] MCI, and on a [REDACTED] item
the split would be [REDACTED] CellStar/[REDACTED] MCI.) All such
credits owed to MCI shall be issued in accordance with the provisions
of Section 4(i) of the Agreement.
38
__________
"[REDACTED]" indicates confidential portions omitted and filed separately with
the Commission.
ATTACHMENT C
I. INVENTORY ITEM RECEIVING PROCEDURES
1. Vendors and MCI shall create notification procedures reasonably
acceptable to CellStar regarding shipments of Inventory Items into the
Warehouse.
2. MCI and/or MCI vendors shall provide CellStar the following
information:
(a) MCI Purchase Order number
(b) Vendor shipping reference number
(c) Number of pieces and weight and dimensions of shipment
(d) Loading address
(e) Name and telephone number of contact person
(f) Hours of operation
(g) Description of item (including SKU number)
(h) Cost of good
3. CellStar shall accept Inventory Items and verify bills of lading for
correct address, pallet and box/piece counts. Any discrepancies such as
shortages, overages or any damage to the Inventory Items shall be notated on the
xxxx of lading and signed by the receiving personnel.
4. CellStar shall verify Inventory Items against the MCI vendor's pack
list and note any discrepancies. A receiving exception report shall be
completed describing any discrepancies, including missing and/or damaged
Inventory Items and forward to MCI within two (2) business days of CellStar's
receipt of shipment.
5. CellStar agrees to return any damaged Inventory Items to the MCI
vendor in accordance with instructions to be provided by MCI.
6. Within one (1) business day following receipt at CellStar's warehouse,
CellStar shall enter the serial numbers for all incoming pagers into CellStar's
inventory management system and generate the reports required pursuant to the
terms of this Agreement.
39
ATTACHMENT C (CONTINUED)
II. MCI PAGER RETURN PROGRAM
MCI Kiosk Policy
- 30 day returns/exchange policy is in effect at the kiosk level.
- MCI will establish a policy for the kiosks to return pagers.
- The kiosks will call CellStar for a return authorization ("RA") for
return of the pagers.
MCI Agreement with PageNet
- PageNet will take all pagers back. PageNet and MCI have agreed to
appropriate crediting terms and charges for such returns.
MCI Return to CellStar
- Pagers will be returned to CellStar twice a month or as otherwise
determined by MCI.
CellStar Responsibilities
- CellStar will verify the pagers received against the RA issued to the
kiosks.
- CellStar is responsible for sorting MCI pagers contained in each
return shipment from other returned items in the same shipment
(including CellStar pagers sold to customers by CellStar prior to the
closing of the Asset Purchase Agreement). No triage will be performed.
- CellStar will sort pagers by SKU or serial number.
- CellStar will post credit by SKU or serial number through the system
to the kiosk and within the system to the MCI Inventory Item Inventory
Return Branch Plant (as defined in the Interim Services Agreement).
- CellStar will return pagers to PageNet twice a month or as otherwise
determined by MCI.
- CellStar will provide PageNet with advance notice of such returns and
cooperate with PageNet's return procedures.
- CellStar will issue a return to PageNet which will relieve MCI's
Inventory and establish a receivable in MCI's records against PageNet
for the return credit.
- CellStar will track such returns in accordance with other procedures
that are mutually agreed upon in writing by the parties.
- Within two (2) business days of shipment to PageNet, CellStar will
provide closed loop reporting which includes MCI pagers to be received
by SKU, MCI pagers actually received by SKU, MCI pagers waiting to be
shipped to PageNet by SKU, and MCI pagers shipped to PageNet by SKU.
CellStar Charges
- CellStar will charge MCI a $0.25 handling fee for each MCI pager that
is returned
40
to CellStar.
- CellStar will charge MCI for the actual freight costs (including
insurance) incurred to return the MCI pagers to PageNet.
41
EXHIBIT D
LIMITED WARRANTY FOR NON-OEM ACCESSORY PRODUCTS
-----------------------------------------------
--------------------------------------------------------------------------------
LIMITED WARRANTY
CellStar extends this limited warranty directly to you, the original end-user
purchaser of its products, provided your purchase was made in Canada, the United
States or Latin America. If you sell or otherwise transfer the product,
warranty coverage automatically terminates. If any part of your CellStar
product (except for batteries) was defective in material or workmanship on the
date of purchase, return it with proof of purchase to the place of purchase (in
the U.S. only) and CellStar will, at its option, either repair or replace it
with a new or rebuilt part at no charge to you for parts or labor.
If any part of your CellStar battery was defective in material or workmanship on
the date of purchase, return it with proof of purchase within 2 years of the
date of purchase to the place of purchase (in the U.S. only) and CellStar will,
at its option, either repair or replace it with a new or rebuilt part at no
charge to you for parts or labor.
LIMITATIONS. This limited warranty does not cover products which have been
improperly installed, repaired or maintained or which have been subjected to
misuse, abuse, accident, physical damage, abnormal operation or handling,
neglect, exposure to fire, water or excessive changes in climate or temperature;
or operation outside of published maximum ratings and/or acts of God; cosmetic
items; products on which warranty stickers or product serial numbers have been
removed, altered or rendered illegible; inadequate signal reception by the
antenna; or the cost of installation, removal or reinstallation.
THIS LIMITED WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED,
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
AND EXCLUDES ALL LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES FOR ANY CAUSE
WHATSOEVER. Some states and countries do not allow limitations on implied
warranty durations, or the exclusion or limitation of incidental or
consequential damages, so that the above limitation or exclusion may not apply
to you. This warranty gives you specific legal rights, and you may also have
other rights which vary from state to state and from country to country.
EXCLUSION AND DISCLAIMER OF ANY AND ALL EXPRESS AND IMPLIED WARRANTIES BY MCI.
This accessory is not manufactured by MCI but is supplied to MCI by CellStar.
Therefore, MCI MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT TO THIS ACCESSORY. However, this accessory is covered by
CellStar's limited warranty.
--------------------------------------------------------------------------------
42
--------------------------------------------------------------------------------
Please fill out and return this postage paid card to put your
accessory product limited warranty in effect. (See package insert for
specific warranty information.)
Name:
------------------------------------------------------------
Street Address:
--------------------------------------------------
City: State: Zip:
-------------------------- -------------- ------
Location of Purchase:
--------------------------------------------
Part Number: Date of Purchase:
------------------- ---------------
MCI
--------------------------------------------------------------------------------
43
EXHIBIT E
TRADEMARKS
----------
Essentials/TM/
CellStar/R/
44
