EXHIBIT 10.4
MASTER AGREEMENT NO. P/PS-960163
Amendment to Master Agreement
for
the Purchase of Products
and
Inventory Maintenance, Assembly and Fulfillment (IAF) Services
between
PACIFIC XXXX MOBILE SERVICES
and
CELLSTAR, LTD.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as *****. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.
-1-
MASTER AGREEMENT NO. P/PS-960163
CHANGES ONLY
TABLE OF CONTENTS
1. DEFINITIONS 5
2. TERM OF AGREEMENT 7
4. SCOPE OF WORK 8
4.1 External Relationships 8
4.1.1 Sourcing 8
4.1.2 Product Suppliers 9
4.1.3 Retailers 10
4.2 Working Relationship 10
4.2.1 Dedicated Product Inventory Ownership and Management 10
4.2.2 Product Assembly 12
4.2.3 Credit Line Administration, Order Processing and Fulfillment 12
4.2.4 Accounts Receivable, Invoicing and Collections 15
4.2.5 Inventory Accounting and Control 16
4.2.6 Maintenance of Books and Records and Reports 16
4.2.7 Inventory/Warehousing 19
4.2.8 Returns Processing 19
4.2.9 Use of Fictitious Business Name 20
4.3 Compensation 21
4.3.1 Dedicated Inventory 21
4.3.2 Credit for Customer Receivable 22
4.3.3 Returns 22
4.3.4 Purchase Price Variances and Price Protection 22
4.4 PBMS/Supplier Agreements 23
6. PRICES 24
7. INVOICING AND PAYMENT 24
8. SHIPPING AND PACKING 26
9. TAXES 27
10. RECORDS AND AUDITS 27
14. INSURANCE 28
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-2-
MASTER AGREEMENT NO. P/PS-960163
23. CHANGES, SUSPENSIONS AND TERMINATIONS 29
25. PARTIAL TERMINATION OR CANCELLATION 29
26. NONASSIGNMENT 29
27. NOTICES 30
41. MBE/WBE/DVBE PARTICIPATION PLANS AND REPORTS 30
42. MBE/WBE/DVBE CANCELLATION CLAUSE 31
43. DELIVERY OF PRODUCTS AND PERFORMANCE OF SERVICES 32
46. RISK OF LOSS 33
52. ENTIRE AGREEMENT 33
53. FINANCIAL REPORTING 33
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-3-
EXHIBITS
The Exhibits in the Original Agreement listed below shall be replaced as
follows:
EXHIBIT A-1: MBE/WBW/DVBE PARTICIPATION PLAN
EXHIBIT A-2: MBE/WBE/DVBE Summary Subcontracting Report
EXHIBIT B: Description of Services & Prices
EXHIBIT C: Deleted in its entirety
EXHIBIT D: Deleted in its entirety
EXHIBIT E: Sample Order, Customer Invoice and Product Invoice
EXHIBIT F: Reporting Requirements
EXHIBIT G: CellStar Performance Notification Form
EXHIBIT H: PBMS Retail Return Policy
EXHIBIT I: Classification of Products
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-4-
THIS AMENDMENT TO THE MASTER AGREEMENT ("Agreement"), is effective May 31,
1999, and amends that certain MASTER AGREEMENT ("Original Agreement"), effective
September 20, 1996, between CELLSTAR, LTD., a Texas Limited Partnership
("CellStar"), and PACIFIC XXXX MOBILE SERVICES, a California corporation
("PBMS"). The rights and obligations of the parties accruing prior to May 31,
1999 shall be governed by the terms of the Original Agreement. The parties,
intending to be legally bound, amend the Original Agreement as follows:
1. DEFINITIONS
For purposes of the Agreement, the following additional terms and all other
terms defined in this Amendment and the Original Agreement shall have the
meanings so defined unless the context clearly indicates otherwise. A term
defined in the singular shall include the plural and vice versa when the
context so indicates.
"Actual Cost" - means the actual dollar amount paid by CellStar to Product
Suppliers for Products.
"Amended Order" - means an order that has been amended to change the
quantity shipped, method of shipment and/or date of shipment.
"Xxxx of Material" - means the listing of Components, along with the
Standard Cost, manufacturer, and manufacturer's part number for those
Components necessary to assemble Products ordered by PBMS or PBMS's
Customers.
"CellStar Order" - means an order executed by CellStar under an agreement
between PBMS and a Product Supplier.
"CellStar Order Request" - means a PBMS request approved by PBMS's CFO or
designee that CellStar place an order to be executed by CellStar under an
agreement between PBMS and a Product Supplier.
"Component" - means items carried in inventory for use in a Xxxx of
Material, or which may be purchased by PBMS without packaging for sale at
retail.
"Customers" - means either Retailers, dealers, and/or agents.
"Customer Invoices" - means invoices provided to PBMS' Customers for the
equipment and materials shipped on each Order or return document ("RMA"),
including but not limited to: PCS handsets, accessories, and collateral
material, as may be furnished to PBMS' Customers by CellStar hereunder. An
example of the Customer Invoice is included in Exhibit E.
"Dedicated Products" - means Products purchased by CellStar on behalf of
PBMS under terms negotiated by PBMS with the Product Suppliers. Subject to
Section 4.2.1.d, Dedicated Products shall be reserved exclusively for PBMS'
use. The parties understand and acknowledge that CellStar shall not receive
and is not entitled to any cooperative
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-5-
advertising funds, merchandising discount funds, credits or other
promotional monies made available by Product Suppliers in connection with
its purchase of the Dedicated Products on behalf of PBMS and that PBMS
shall have the right to request such funds, if any, from the Product
Suppliers, subject to any requirements established by the Product
Suppliers.
"Fulfillment Services" - means picking, packing for shipment to prevent
damage in-transit, preparation of shipping documents, shipping to
Customers, processing of Customer returns and tracking of shipments and all
associated Services associated with providing Products to Customers and
receiving Products back from Customers.
"Net Accounts Receivable" -- means the net amounts due to or from
Customers supported in CellStar's JDEdwards system by an accounts
receivable aging per Exhibit F and the corresponding Customer Invoice, net
of any payments by Customers.
"Net Accounts Receivable Hold-Back" -- means **% of the net amounts due to
or from Customers.
"Net Inventory Purchased" -- means the on-hand inventory for all items in
the PBMS Branch Plant supported by a CellStar Order and/or a PBMS Xxxx of
Material and valued at the Standard Cost for such items.
"Other Charges" - means (a) charges for services set forth in Exhibit B,
(b) charges for Dedicated Products, (c) extraordinary charges, or (d) any
other charge described herein, excluding Customer deductions and charges
for which CellStar is responsible as determined in accordance with the
procedures set forth in Section 4.2.3 and 4.2.4.
"PBMS Branch Plant" - means the JDEdwards branch plants designated to track
all transactions described herein.
"Price Protection" - means, with respect to Dedicated Products the change
in the Standard Cost in a Xxxx of Material times the related Product on
hand at the time the Standard Cost for PBMS Xxxx of Materials is changed in
the PBMS Branch Plant.
"Product Invoice" - means a document provided to PBMS for the equipment and
materials, including but not limited to: PCS handsets, accessories, and
collateral material, as may be shipped to PBMS or PBMS' Customers by
CellStar hereunder. An example of the Product Invoice is included in
Exhibit E.
"Proof of Delivery" - means a package of documents which includes (a) a
xxxx of lading, including number of cartons shipped and total weight of
Product shipped and signed by Customer or PBMS representative who received
the goods, (b) printout of SIM/IMEI numbers provided to Customer on packing
list, and (c) packing list provided to Customer. All documents should
include a CellStar or PBMS Customer number and a Customer order number
which can be used to cross-reference among the documents.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-6-
MASTER AGREEMENT NO. P/PS-960163
"Purchase Price Variance" - means the difference between the Actual Cost of
Products or Components and the Standard Cost contained in CellStar's
accounting systems at the time of receipt in the PBMS Branch Plant.
Purchase Price Variance with respect to Products, Components or kits is
calculated as, the sum of (a) the difference between the purchase order
cost and the Standard Cost contained in CellStar's accounting systems at
the time of receipt of the Products, Components or kits and (b) the
difference between the invoiced cost and purchase order cost of such
Products, Components or kits.
"Retailer" - means any vendor of products, whether through traditional
retail outlet or through membership or discount or wholesale establishments
selling to the end user consumer or to other wholesalers.
"SBC Accessory Contract" - means the contract between Southwestern Xxxx
Mobile Systems and certain of its affiliates and CellStar, Ltd. for the
purchase of accessories, Master Agreement 99006052.
"Standard Cost - means the cost maintained in PBMS Branch Plants and used
in Product Invoices for all shipments to PBMS and Customers for products,
Components or kits sold to Customers or to PBMS. The Standard Cost is (i)
PBMS' price negotiated with Product Suppliers for goods to be purchased by
CellStar; or (ii) a price that is mutually agreed upon by both parties.
"Traditional Credit Risk" - means the risk associated with the financial
strength and ability to pay of a Customer, but specifically excludes
Customer chargebacks and other deductions to (i) Customer claims against
PBMS for commissions, co-op, advertising credits, special program funding
and the like; (ii) claims based on contracts executed between PBMS and the
Customer; or (iii) claims based on agreements between Customers and PBMS
employees, both written and unwritten. Nothing in this herein shall be
deemed to relieve CellStar of its responsibility to fulfill Orders in
accordance with Specifications and Fulfillment, kitting and assembly
services as defined.
Paragraph 2 of the Original Agreement shall be replaced in its entirety as
follows:
2. TERM OF AGREEMENT
a. This Agreement shall become effective as of the date stated above (the
"Effective Date"), and unless sooner terminated or canceled as provided
herein, shall continue through March 31, 2000.
b. Either CellStar or PBMS may terminate this Agreement upon one hundred
and fifty (150) calendar days' prior written notice ("Notice Date") to
the other setting forth the effective date of such termination. The
termination, cancellation or expiration of this Agreement shall not
affect the obligations of the parties under any Order previously
executed hereunder, and the terms and conditions of this Agreement shall
continue to apply to such Order (including, without limitation, terms
governing invoicing, payment and returns) as if this Agreement had not
expired, or been terminated or
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-7-
MASTER AGREEMENT NO. P/PS-960163
canceled. Within one hundred and eighty (180) days after the Notice
Date, PBMS agrees to purchase any Dedicated Products remaining in PBMS
Branch Plants. The purchase price for such inventory shall be the Actual
Cost net of any Purchase Price Variance and Price Protection already
applied by CellStar for such inventory. CellStar shall pay to PBMS all
such amounts received by CellStar from Product Suppliers either before
or after termination of the agreement for Dedicated Products . No
shipping or handling fees will be applied to unassembled Products,
except for the actual costs associated with the shipment of Products to
a location designated by PBMS. On the Notice Date, an Inventory Hold-
Back equal to the lesser of *** ******* dollars ($**********) or **% of
the Net Inventory Purchased will be calculated and deducted from the
first weekly wire transfer following the Notice Date. On a monthly
basis, any difference in the Inventory Hold-Back will be paid to
CellStar within ten (10) business days after the amount is calculated by
CellStar. Upon termination of the contract, the Inventory Hold-Back will
be repaid to CellStar within thirty (30) days after the final shipment
of Products to PBMS or its Customers has been verified.
Paragraph 4 of the Original Agreement shall be replaced in its entirety as
follows:
4. SCOPE OF WORK
This Section 4 describes the principles of the relationship between PBMS
and CellStar and describes CellStar's provision of Products and value added
Services, including but not limited to, sourcing, inventory, assembly,
credit, collections and Fulfillment Services to support Product
distribution to PBMS' Customers. Unless CellStar obtains PBMS' prior
written approval, all Fulfillment Services hereunder will be performed in
Dallas County Texas or in Chino, California, San Bernardino County
California.
4.1 External Relationships
4.1.1 Sourcing
a. PBMS has entered into, or may enter into, agreements
("PBMS/supplier agreements") with certain manufacturers
or suppliers (hereinafter individually and collectively
"Product Suppliers") for the purchase of Products.
CellStar agrees that it shall, upon receipt of a
CellStar Order Request by PBMS, place a CellStar Order
under the PBMS/supplier agreement specified by PBMS for
the quantity of Dedicated Products identified by PBMS in
such CellStar Order Request.
b. With respect to each PBMS/Supplier agreement, PBMS shall
provide CellStar with a separate written description of
any terms of such agreement with which CellStar is
expected to comply (the "Supplier Terms"). Subject to
subsection c. below, if CellStar cannot abide by any
Supplier Terms provided by PBMS, CellStar's Account
Manager shall no later than the close of the following
business day after PBMS' CellStar Order Request,
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-8-
MASTER AGREEMENT NO. P/PS-960163
notify PBMS's Chief Financial Officer or designee and
shall not proceed with placing a CellStar Order under
the applicable agreement until PBMS and CellStar
expressly agree otherwise in writing. Further terms
applicable to CellStar's use of PBMS/supplier agreements
are set forth in Section 4.1.2 below and in Section 4.4.
c. Notwithstanding anything to the contrary contained
herein and notwithstanding the placement of any CellStar
Order under any PBMS/Supplier Agreement, CellStar shall
not be responsible for complying with the terms of any
PBMS/Supplier agreement unless CellStar has received the
applicable Supplier Terms and has had at least five (5)
business days to review such terms prior to making any
CellStar Order. CellStar will notify PBMS in writing if
(i) CellStar has received notification from a PBMS
product supplier that it is not in compliance with any
term of a PBMS/Supplier Agreement, or (ii) CellStar has
reason to believe it is not in compliance with a
PBMS/supplier agreement.
d. All returned goods are the property of PBMS and will be
maintained by CellStar in accordance with PBMS'
instructions for processing, storage and disposition as
described in Exhibits B, H and I.
4.1.2 Product Suppliers
a. Where the term "Product Supplier" is used, it means the
supplier providing Dedicated Products to CellStar under
a CellStar Order issued pursuant to the PBMS/supplier
agreement.
b. With respect to Dedicated Products, PBMS will be
responsible for Product Supplier selection and
certification, product selection, pricing and contract
negotiations for Dedicated Products. As to each CellStar
Order for Dedicated Products, PBMS shall pass through to
CellStar the rights of PBMS under the PBMS/supplier
agreement, including but not limited to, Product
Supplier indemnity and warranties applicable to
CellStar's use of the Dedicated Products, to the extent
allowed by the Product Supplier. Nothing in this
Agreement shall diminish any pass-through warranties,
indemnity or other rights extended to CellStar through
PBMS, by the Product Suppliers.
c. If PBMS directs CellStar to issue a CellStar Order for
the purchase of Dedicated Products under a PBMS/supplier
agreement, PBMS will ensure that the Product Supplier
has granted CellStar all necessary rights to place that
CellStar Order.
d. Subject to the terms hereof, CellStar will purchase,
receive, inventory, pack for shipping, ship, and
disburse Dedicated Products received from the Product
Suppliers as requested in CellStar Order Requests.
e. The parties acknowledge and agree that CellStar shall
not be responsible for the quality control with respect
to OEM products
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-9-
MASTER AGREEMENT NO. P/PS-960163
and dry goods, provided that, CellStar agrees to inspect
for obvious, visible damage and flaws, and to notify
PBMS of any such obvious, visible damages and flaws
within three (3) business days of receipt of the
applicable product. CellStar will segregate such flawed
OEM products and dry goods from its other usable
inventory and hold these items out of production until
such time as PBMS can inspect the goods.
4.1.3 Retailers
a. Generally all Customer contact, with the exception of
4.1.3.b will be through PBMS.
b. Generally, Customer contact related to Customer payment,
credit and collections will be handled through CellStar.
c. CellStar will ship Products to Customers based on the
price per unit included in the Order as provided to
CellStar via EDI or like transmission, and invoice
Customers via Customer Invoices at PBMS' direction as
stated in the applicable Order. Each Customer Invoice
will be issued to the Customer no later than one day
after the product is shipped and will indicate the
payment terms, quantity shipped, PBMS item number, PBMS
order number, and PBMS pricing as communicated in the
Order. All Customer Invoices represent amounts owed to
PBMS for product shipped and returned. Refer to Exhibit
E for an example of a Customer Invoice.
d. CellStar will process Customer returns in accordance
with Exhibit H, PBMS Retail Return Policy.
4.2 Working Relationship
The following processes describe the working relationship between PBMS
and CellStar.
4.2.1 Dedicated Product Inventory Ownership and Management
a. CellStar will maintain inventories of Dedicated Product
owned by PBMS in its facilities and will be responsible
for risk of physical loss or damage, and any reasonably
requested insurance.
b. With respect to minimum safety stock levels and build
requirements at the SKU level (collectively, "Inventory
Requirements"), PBMS shall provide to CellStar's Account
Manager on a monthly basis, within ten (10) calendar
days prior to the end of each calendar month, (i) a
written non-binding rolling Inventory Requirements
forecast for the next ninety (90) calendar days; (ii) a
written non-binding rolling Inventory Requirements
forecast for the next sixty (60) calendar days (the
"Sixty Day Forecast"); and (iii) a written firm
Inventory
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
Requirements forecast for the next thirty (30) calendar
days (the "Thirty Day Forecast"). CellStar will notify
PBMS of purchase requirements to meet Dedicated Product
inventory requirements in accordance with such forecasts
With respect to minimum shipping requirements
(collectively, "Shipping Requirements"), PBMS shall
provide to CellStar's Account Manager on a monthly
basis, within ten (10) calendar days prior to the end of
each calendar month, (i) a written non-binding rolling
Shipping Requirements forecast for the next Sixty (60)
calendar days; (ii) a written non-binding rolling
Shipping Requirements forecast for the next Thirty (30)
calendar days (the "Thirty Day Forecast") and, on
Wednesday of each week, (iii) a written firm Shipping
Requirements forecast for the next seven (7) calendar
days (the "Seven Day Shipping Forecast"). CellStar will
ship Dedicated Product inventory Orders as submitted by
PBMS subject to PBMS approval in certain cases as stated
in 4.1.1.b. If (a) Dedicated Products included in
purchase orders requested by PBMS to be shipped to
Customers (other than Orders on credit hold) and/or to
PBMS are in excess of 25% above the amount set forth in
the Sixty Day Forecast or (b) if Dedicated Products
included in purchase orders requested by PBMS to be
shipped to Customers (other than Orders on credit hold)
and/or to PBMS are in excess of the amount set forth in
the Thirty (30) Day Forecast (either (a) and (b) above
are herein after referred to as an "Incorrect
Forecast"), CellStar will make commercially reasonable
efforts to assemble, package and ship such excess amount
by the requested delivery date set forth in the Order;
provided, however, CellStar shall not be obligated to
meet such deadline. If (a) Dedicated Products included
in Orders requested by PBMS to be shipped to Customers
(other than Orders on credit hold) and/or to PBMS are in
excess of 25% above the amount set forth in the Sixty
Day Forecast or (b) if Dedicated Products included in
purchase orders requested by PBMS to be shipped to
Customers (other than Orders on credit hold) and/or to
PBMS are in excess of the 10% of the amount set forth in
the Thirty (30) Day Forecast (either (a) and (b) above
are herein after referred to as an "Incorrect
Forecast"), CellStar will make commercially reasonable
efforts to ship such excess amount by the requested
delivery date set forth in the Order; provided, however,
CellStar shall not be obligated to meet such deadline.
PBMS shall reimburse CellStar for any extraordinary
expenses incurred by CellStar as a result of any
Incorrect Forecast as defined above, if extraordinary
expenses are approved by PBMS in advance of being
incurred by CellStar. For the purposes of this section,
extraordinary expenses are defined as the overtime
premium associated with shipping and assembly labor and
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
incremental freight above standard shipping terms for
Component deliveries from manufacturers.
c. PBMS's Chief Financial Officer or the CFO's designee
will approve (via email or facsimile) to CellStar's
Procurement Director within three (3) business days of
CellStar's request for approval of CellStar Orders, all
CellStar Orders for handsets, SIM cards, transfer of all
Components into or out of a PBMS Branch Plant, and all
individual CellStar Orders prior to CellStar committing
to a CellStar Orders. CellStar shall have no
responsibility or liability with respect to any such
CellStar Order until such approval has been received.
d. PBMS and CellStar recognize that Product Suppliers may
prohibit sale of handsets outside PBMS' service
territory. In light of that recognition, PBMS and
CellStar shall work cooperatively with the Product
Suppliers to dispose of slow-moving handsets. If
CellStar wishes to sell Dedicated Products to third
parties in addition to PBMS' Customers, CellStar shall
1) gain the written consent of PBMS Chief Financial
Officer prior to the sale, and 2) if requested by PBMS
and at a charge to be agreed upon, remove the Insignia
from the Product.
e. CellStar will provide a working area for PBMS to perform
quality control inspections and Product warranty
processing performed by manufacturers on inbound
Dedicated Products as reasonably required by PBMS.
4.2.2 Product Assembly
a. CellStar will assemble the kits from Components and
PBMS-approved packaging, insert the SIM into the holder
in the transceiver, and label packages to PBMS'
specifications as set forth in the applicable Xxxx of
Materials.
b. CellStar will control the security and data collection
processes for SIM cards.
4.2.3 Credit Line Administration, Order Processing and Fulfillment
a. PBMS' Order Processing systems shall be capable of
accepting Orders from Customers.
b. PBMS will determine and administer all Order processing
procedures, specific Customer Order packaging
requirements, pricing, sales and marketing relationships
with its Customers.
c. PBMS will pass Customer shipping instructions (including
without limitation, Order packaging and labeling
specifications), and billing information to CellStar
electronically through the PBMS Order Processing system,
or in such other written manner used by PBMS to
communicate the information.
d. CellStar shall generate a packing list for each Order,
which will include the SIM and IMEI for each item
shipped on the Order.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
e. CellStar will maintain electronic files of the SIM and
IMEI shipped for each Order.
f. CellStar will provide Retailer credit line
administration for Orders received from PBMS. CellStar's
credit line administration shall include making
recommendations to PBMS in establishing and maintaining
credit lines for Customers; setting credit lines in
accordance with CellStar's recommendations unless PBMS
instructs otherwise; monitoring Customer adherence to
credit lines; managing accounts receivable to obtain the
timely remittance of payments within established terms;
and placing Customers on credit hold for delinquency,
orders placed in excess of credit limit, or failure to
remit payments on time with good funds. CellStar will
not write-off any accounts receivable without prior
written approval of PBMS. Exceptions to CellStar's
credit administration procedures will not be made
without prior approval by PBMS' Chief Financial Officer
or designee and PBMS assumes responsibility for Customer
credit risk with respect to such approved exceptions. In
the event that CellStar is unable to collect the amounts
due from a Customer due to Traditional Credit Risk
exceptions to credit lines approved by the PBMS CFO or
designee, then PBMS will hold CellStar harmless for the
amounts unpaid in excess of the credit line established
by CellStar, unless other arrangements are agreed to in
writing by PBMS and CellStar. Customer balances
determined to be uncollectable will be excluded from the
computation of any Hold Back Amount under this
Agreement. CellStar assumes responsibility for all other
Traditional Credit Risk subject to a cap of the Net
Accounts Receivable Hold Back. PBMS is not responsible
for CellStar's costs to collect amounts owed by
Retailers, under this subsection, unless agreed to in
writing by PBMS' Chief Financial Officer or designee,
prior to those costs being incurred.
g. PBMS shall be responsible for Customer charges or
deductions for allowances and other debits unrelated to
Traditional Credit Risk, provided that CellStar provides
PBMS with the applicable Proof of Delivery and timely
notifies PMBS of such debits as described in Section
4.2.3 (i); and provided further that nothing herein
shall be deemed to relieve CellStar of its
responsibility to fulfill Orders in accordance with
Specifications (e.g. CellStar's responsibilities with
respect to Order accuracy and shipment in accordance
with shipping instructions) and Fulfillment and kitting
accuracy (e.g. labeling, contents per Xxxx of Material).
If PBMS in good faith believes that any Customer
deduction for allowances, etc. are the result of
CellStar's failure to perform as described herein (based
on CellStar's receipt from PBMS of a (i) Performance
Notification Form, in the form attached as Exhibit
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
G within two (2) business days of the Retailer's receipt
(or non-receipt, if applicable) of the applicable
shipment, or (ii) electronic or facsimile notification
of the dispute within two (2) business day of the
Retailer's receipt (or non-receipt, if applicable) of
the applicable shipment, in the case of discrepancies,
then PBMS will notify and present the issue to CellStar
for resolution as set forth in Section 4.2.3 (j) below,
including correcting the Customers account and PBMS'
inventory, as applicable. PBMS and CellStar recognize
that some discrepancies may not be reasonably detected
within the time guidelines established above, including
labeling accuracy of master cartons and kits, and
contents of master cartons and kits. In these instances,
the notification guidelines above apply to the date of
discovery of the error by the Customer.
h. CellStar shall provide all Fulfillment Services with
respect to Customer Orders.
i. CellStar will notify PBMS (via a copy of the Retailer's
check) within ten (10) business days of deposit in its
bank account, of any deduction by a Retailer for any
reason, including returned goods, as set forth in
Section 4.2.4 (d) below. CellStar will notify PBMS of
any differences between the quantity and dollar amount
of goods returned by a Retailer and amount deducted by
that Retailer for such return in accordance with the
requirements of subsection (j) below. Such notice of
Retailer deductions shall be via the following reports:
RMA Customer Reconciliation Report and Retailer
Discrepancy Report, which are provided monthly to PBMS.
j. If CellStar believes that it cannot collect an amount
due to PBMS for an amount deducted by a Retailer under
this section, then CellStar shall notify PBMS in writing
of the amount owed as stated in Section 4.2.4 (d) or
Section 4.2.3 (g) above. PBMS has ten (10) business days
from the date of notification by CellStar to dispute the
amount in accordance with the requirements of subsection
(k) below. If PBMS does dispute the amount notified by
CellStar within ten (10) business days and CellStar does
not dispute PBMS' notification with in the ten (10)
business days, PBMS will omit payment of the amount from
future electronic wire transfer payments to CellStar. If
PBMS and CellStar are unable to agree on the amounts
owed, the provisions of Section 49 will apply.
k. If PBMS believes, based on a completed Performance
Notification Form provided to CellStar in accordance
with subsection (g) above, that CellStar owes PBMS for
an amount deducted by a Retailer under this section,
then PBMS shall provide CellStar with written
notification of the dispute (including a copy of the
applicable Performance Notification Form), detailing the
facts surrounding the non-performance and
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
stating the amount in dispute. Such notification will be
provided to CellStar within ten (10) business days of
the notification by CellStar of a Customer deduction.
CellStar shall have ten (10) business days from the date
of notification by PBMS to dispute the claim of non-
performance. If CellStar does dispute the claim within
ten (10) business days and PBMS does not dispute
CellStar's notification within ten (10) business days
from the date of CellStar's notification, PBMS will
invoice CellStar for the disputed amount or will deduct
the disputed amount from future electronic wire transfer
payments to PBMS. If CellStar and PBMS are unable to
agree on amounts owed, the provisions of Section 49 will
apply.
4.2.4 Accounts Receivable, Invoicing and Collections
a. PBMS will own Net Accounts Receivable, including all
invoices, receipts, credits and adjustments issued to
its Customers pursuant to Orders and documented as
described below.
b. CellStar will invoice Retailers on behalf of PBMS upon
Product shipment in accordance with net 30-day terms,
except for those Retailers with whom PBMS has terms in
excess of 30 days.
c. CellStar will collect payments from Retailers on behalf
of PBMS.
d. CellStar will perform payment reconciliation with
Retailers to assist PBMS in properly classifying
deductions and resolving disputes for unauthorized
Customer deductions from invoices and will provide
reconciliations to PBMS as described in Exhibit F. If
CellStar believes the difference cannot be collected by
CellStar, then CellStar will provide detail of
collection efforts with the Retailer, including the
individuals contacted, phone numbers and dates called,
and copies of any correspondence. Subject to PBMS's
rights under Section 4.2.3.g with respect to Performance
Notification Forms, PBMS will not deduct from amounts
owed CellStar for all Customer deductions not associated
with Traditional Credit Risk within ten (10) day time
period set forth in Section 4.2.3 (j) above whether
authorized or otherwise, if notified in accordance with
the procedure set forth in this Section 4.2.3 (i). If
either PBMS or CellStar disputes the amount billed by
the either party, the provisions of Section 4.2.3 (i)
and (j), respectively, will apply.
e. Previous to the effective date of this agreement, if
PBMS reimbursed CellStar for a Customer deduction and
CellStar subsequently collects the deduction from the
Customer, either through direct cash payment or
application of outstanding credit issued to the
Customer, CellStar shall credit PBMS that amount as part
of the next weekly wire reconciliation.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
f. On a weekly basis, CellStar will provide a Product
Invoice and a recap of Product Invoices to PBMS for
Products shipped to the Customer. Each Product Invoice
will correspond to the Customer Invoice and will be
issued on the same day as the Customer Invoice and will
indicate the quantity shipped, PBMS item number, PBMS
order number, PBMS Standard Cost, and include PBMS for
Service Fees and freight charged to PBMS by CellStar per
Exhibit B. An example of the Product Invoice is included
in Exhibit E.
g. CellStar will provide information to PBMS regarding
Orders on credit hold twice each day.
h. CellStar will inform PBMS' Chief Financial Officer of
Retailers which have a net amount due of a credit
balance and will refund the net amount due credit
balances to Retailers upon written request by the
Retailers, subject to approval by PBMS' Chief Financial
Officer or designee. CellStar will refund the credit
balance on behalf of PBMS as approved by PBMS, provided
that debit balances and deductions requested by PBMS's
CFO or designee will be offset prior to refund. At the
time of settlement, copies of Retailer acceptance of
credit balance to be refunded will be provided to PBMS.
4.2.5 Inventory Accounting and Control
CellStar covenants and agrees to employ methods of inventory
accounting and control that are in accordance with generally
accepted accounting principles.
4.2.6 Maintenance of Books and Records and Reports
a. CellStar covenants and agrees to maintain books and
records covering all transactions under this Agreement
and shall make such existing books and records available
for PBMS' inspection upon five (5) business days' notice
from PBMS' Chief Financial Officer to CellStar's Account
Manager, including CPA auditors from a major accounting
firm hired by or engaged by PBMS, by and through
CellStar's representatives and agents, during regular
business hours on any business day. All other books and
records required to meet CellStar requirements with
respect to generally accepted accounting procedures will
be made available upon ten (10) business days' notice
from PBMS' Chief Financial Officer to CellStar's Account
Manager.
b. CellStar shall provide to PBMS on a routine basis
reports described in Exhibit F Additional reports
regarding Products or Services or required for CellStar
to meet reasonable information requests may be added to
Exhibit F upon the mutual written agreement of the
parties.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-16-
c. CellStar will make reasonable efforts to ensure that
data provided in the reports in Exhibit F and all
requests for payment for Services and Product shipped
under Orders are correct. If review and inspection of
the data by PBMS proves that the quantities shown or
dollar amounts provided in the informational reports
does not meet the standards set forth on Exhibit F, PBMS
will withhold the disputed amount until the discrepancy
is resolved to mutual satisfaction of both parties. If
review and inspection of data supporting an invoice
payment submitted to PBMS by CellStar proves that the
standards set forth on Exhibit F are not satisfied, PBMS
will withhold the disputed amount until the discrepancy
is resolved to mutual satisfaction of both parties. If
PBMS and CellStar are unable to agree on the amounts
owed, the provisions of Section 49 will apply.
d. CellStar may provide to PBMS access via the Internet to
a CellStar managed website (the "Customer Access") to
retrieve the reports set forth in Exhibit F. Such access
shall be subject to applicable restrictions under
CellStar's license arrangements with software providers.
e. PBMS will be responsible for installing and maintaining
an adequate link to the Internet and for providing a
stable, adequate desktop computer environment. CellStar
agrees to support PBMS's browser software, provided that
PBMS uses Microsoft or Netscape browser software.
f. PBMS agrees that is will appoint a site administrator to
serve as an interface point for any computers/systems
issues and that CellStar is not responsible for training
that individual. PBMS agrees that such individual will
be skilled in using the web browser software and EDI
communication standards for those portions of such
software in use from time to time under the agreement.
PBMS's site administrator will be given ability to set-
up user access, including passwords and levels of access
to the website. PBMS hereby assumes all risks involving
a breach of confidentiality hereunder by PBMS, its
employees or any of its other agents or representatives;
provided that the foregoing shall not apply with respect
to any individual to whom CellStar has authorized access
to the Customer Access, but who has not been granted
such access by PBMS. CellStar and PBMS will grant access
permission only to those individuals specifically
authorized in writing by PBMS Chief Financial Officer.
On two (2) business days notice demand, CellStar's
Account Manager will provide to PBMS, a listing of all
individuals (both CellStar and PBMS) authorized by
CellStar to access the PBMS information. CellStar's
Account Manager will modify access privileges of the
site administrator within 4 hours of receipt of a
written request by PBMS'sChief Financial Officer or
designee to terminate access for the site administrator.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
g. PBMS will notify CellStar within two (2) business day of
PBMS's recognition of any issues with service involving
the Customer Access.
h. CellStar will implement a disaster recovery plan for its
JDEdwards systems which provide for no more than 72
hours break in Services plus two (2) business days to
complete fulfillment of affected unshipped Orders, and
offsite storage of PBMS data which would result in loss
of no more than two (2) business days of invoicing,
assembly and product testing activity. CellStar will
provide an executed disaster recovery plan for review by
PBMS upon request, and on the anniversary of the
effective date of the Amended Agreement. Noncompliance
with the first sentence of this section constitutes a
material default in this Agreement and PBMS may cancel
this Agreement immediately, notwithstanding the fifteen
(15) day period in Section 24.a.
i. PBMS shall acquire no license, ownership or other right
to the Customer Access or any other software or
intellectual property owned or used by CellStar except
the right to use same as provided herein, and PMBS
hereby acknowledges that, except as expressly provided
in this Agreement, it shall not acquire any rights in
respect thereof and that all such rights are, and shall
remain, vested in CellStar.
j. Thirty (30) calendar days following termination of this
Agreement PBMS's right to use the Customer Access shall
cease and PBMS hereby empowers CellStar, and agrees to
assist CellStar if requested, to cancel, revoke or
withdraw any licenses or authorizations permitting PBMS
to use the Customer Access. However, PBMS will not be
liable for any financial penalties or charges in
connection with this termination. Commencing with the
date of termination and for the thirty (30) days
following the date of termination (the "Transition
Period"), CellStar will provide PBMS with files
containing all information stored by CellStar on behalf
of PBMS in a format reasonably requested by PBMS. During
the Transition Period, CellStar will continue to provide
PBMS with reporting and support similar to that provided
during the terms of the Agreement. PBMS shall not use
the Customer Access in any way that might violate
CellStar's license agreement with any software provider,
provided that a copy of the applicable terms has been
provided to PBMS.
k. CellStar's and PBMS's electronic data interface
standards shall be compatible by May 31, 1999.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
4.2.7 Inventory/Warehousing
CellStar shall separately inventory and warehouse Dedicated
Products and CellStar shall separately inventory, warehouse
and process returned Products. CellStar shall designate an
area for Dedicated Products, and shall store SIM cards in a
separate secure area, and in accordance with PBMS'
reasonable instructions. PBMS recognizes that CellStar may
store non-Dedicated Products in the same building as PBMS
Dedicated Product inventories.
4.2.8 Returns Processing
a. CellStar will process Customer returns from Retailers
through its processing system.
b. Retailers and other Customers must contact PBMS and
receive a Return Material Authorization ("RMA") for each
Product return. For returns received with a proper RMA,
CellStar will credit the Customer on behalf of PBMS for
100% of the price authorized to be credited under the
applicable RMA. CellStar may refuse any return shipment
(i) which does not have a RMA number issued by PBMS or
(ii) with respect to which the RMA is not clearly
visible on the outside of the box or shipping carton.
PBMS will make reasonable commercial efforts to
encourage Retailers to return RMA's on separate
shipments. PBMS will cross-reference the Customer return
number to the PBMS-assigned RMA number. CellStar will
complete receiving audit processes as described in
Exhibit B on any return shipment with a RMA number
within the performance guidelines set forth in Exhibit
H, but in no case longer than five (5) business days of
CellStar's receipt of the returned Product. CellStar's
return processing shall include but not be limited to
insuring that the number of Product kits returned
matches the amount specified in the RMA. If the amount
of Product kits returned does not match the RMA,
CellStar shall notify PBMS within the reporting
guidelines set forth in Exhibit F, but in no case longer
than five (5) business days of CellStar's receipt of the
returned Products. With respect to any returns, CellStar
will issue a report to PBMS which lists, by RMA, the
quantities and Standard Cost for all non-reusable
collateral material, any missing Components and any non-
reusable items. An example of this report is included in
Exhibit F.
c. PBMS will be responsible for setting the appropriate
quality standards for all inventory stock items in the
inventory master file. CellStar will determine the
classifications of Products based upon PBMS return
procedures. See Exhibit I, Classification of Product.
CellStar shall not be responsible for quality of
returned
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
products, if such products have been process in
a timely basis in accordance with Exhibits H and I.
d. PBMS is responsible for filing claims for freight losses
with its insurance carrier. CellStar will notify PBMS on
the same day it is notified by a Customer of any
potential loss or damage of product. Upon PBMS' request,
CellStar will provide to PBMS the information required
to submit a claim to PBMS's insurance carrier.
e. All Customer returns and Product Supplier warranty
procedures for the Products shall be in accordance with
Product Supplier guidelines or instructions from PBMS.
f. CellStar's returns audit, sort and breakdown, testing,
and refurbishment guidelines are set forth in Exhibit H.
CellStar's compensation for this performance is included
in the per-item returns processing prices set forth in
Exhibit B.
4.2.9 Use of Fictitious Business Name
a. The parties understand and agree that CellStar will, for
certain purposes, need to use the name "Pacific Xxxx
Mobile Services Fulfillment" or such other substantially
similar name as CellStar is able to register as an
assumed name in the State of Texas and Dallas County,
Texas, and in the State of California and San Bernardino
County, California (the "Name"). PBMS hereby authorizes
CellStar to use the Name for the following purposes: (i)
receipt and acceptance of payment from Customers
(including, without limitation, via lock-box wire
transfer or check), (ii) inclusion in shipping
collateral provided to Customers, (iii) invoicing of
Customers and provision of Customer statements, (iv)
written and oral correspondence with Customers, (v) such
other purposes as are authorized in writing by PBMS and
(vi) collection activities; provided that any use of the
Name by CellStar shall be in accordance with the
guidelines provided by PBMS entitled "Four Basic Rules",
incorporated by reference into this Agreement. PBMS
further authorizes CellStar to register the Name with
the Secretary of State of the State of Texas and in
Dallas County, Texas and with the Secretary of State of
the State of California and in San Bernardino County,
California. CellStar's right to use the Name is a
nonexclusive right and PBMS shall retain all ownership
and intellectual property rights in the Name. Except as
provided herein, CellStar shall not use the Name in any
advertising or publicity matter without PBMS' prior
written consent.
b. Upon expiration, termination or cancellation of this
Agreement, CellStar may continue to use the Name only
during the period the Services are transitioned to PBMS
or its authorized
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
contractor and for the purpose of receiving or
collecting remaining payments, if any, due CellStar or
PBMS from Customers in connection with the Agreement
(collectively, the "Collections Transition Period").
Upon the conclusion of the Collections Transition
Period, and upon PBMS' request, CellStar shall confirm
in writing that it has ceased all use of the Name and
cancelled and withdrawn all registrations of the Name.
4.3 Compensation
PBMS shall make payments to CellStar as set forth below, and as set
forth in Exhibits B.
4.3.1 Dedicated Inventory
a. On a monthly basis, CellStar will invoice PBMS for all
Products received in a PBMS Branch Plant and purchased
pursuant to a CellStar Order per Section 4.1.1.
("CellStar Receipts Invoice").
b. On a weekly basis, PBMS will transfer cash to CellStar
for Product Supplier invoices corresponding to Products
received in a PBMS Branch plant and purchased pursuant
to each CellStar Order, and for which payment is due to
the Product Supplier in the next seven (7) days ("Vendor
Invoice Requests"). Vendor Invoice Requests will be
reconciled to CellStar Receipts Invoices and the
corresponding Purchase Price Variance reported to PBMS.
c. On a monthly basis, the Net On-Hand in PBMS Branch
Plants will be reconciled as the previous month's Net
Inventory On-Hand, plus CellStar Receipts Invoices, less
net Product Invoices and Price Protection reported for
the month.. The difference between Net Inventory On-Hand
and the on-hand inventory per PBMS Branch Plant at
Standard Cost ("On-Hand Inventory") will be reconciled
by CellStar. Any unsupported differences will reduce or
increase the Net Inventory Purchased to an amount no
lesser than the On-Hand Inventory.
d. On a monthly basis, the outstanding amounts due to
Product Suppliers will be reconciled to the difference
between the Net Inventory Purchased and total Vendor
Invoice Requests.
e. PBMS reserves the right to participate in CellStar's
quarterly physical inventory counts of PBMS Branch
Plants and to audit the reconciliation of the physical
count to the counts per the PBMS Branch Plant. PBMS may,
with no notice to CellStar, inspect and count all PBMS
inventory, provided that CellStar is not held
accountable for any delays in PBMS's product fulfillment
and kitting operations and/or that PBMS does not delay
other non-PBMS operations.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
f. PBMS will reimburse CellStar for the actual cost of
standard ground transportation from the Product Supplier
to CellStar. Exceptions to such standard ground
transportation must be approved by PBMS prior to
shipment by the Product Supplier.
4.3.2 Credit for Customer Receivable
a. On a weekly basis, the cash received from Customers will
be remitted to PBMS.
b. On a monthly basis, CellStar will reconcile cash
received per the corresponding bank statements on behalf
of PBMS ("Cash Receipts") to the Net Customer Invoices
issued in the month plus the change in the Net Accounts
Receivable from the beginning of the month to the end of
the month ("Cash Rollforward"). Differences between the
Cash Rollforward and the Cash Receipts will be adjusted
by CellStar in the weekly wire following the
calculation, but no later than the 20th day of the month
after the basis month.
c. An Accounts Receivable Hold-Back equal to **% of the Net
Accounts Receivable will be recalculated monthly. Any
difference in the Net Accounts Receivable Hold-Back as
of the end of the month will be paid to or deducted from
weekly wire transfers to CellStar within ten (10)
business days after the amount is reported by CellStar.
Upon termination of the Contract, the Net Accounts
Receivable Hold-Back will be repaid to CellStar ninety
(90) days after the Net Accounts Receivable with
supporting documentation has been provided to PBMS.
4.3.3 Returns
See Exhibit B for the fees to be billed to PBMS for Products
returned by Customers.
4.3.4 Purchase Price Variances and Price Protection
a. For PBMS Branch Plants, CellStar shall operate on the
basis of a Standard Cost accounting system and shall
prepare all Product Invoices at Standard Cost as noted
in Section 4.2.4. CellStar shall change the Standard
Cost and Xxxx of Materials only upon the express request
of PBMS. Any change in Standard Cost will be documented
by PBMS and will include the new Xxxx of Material and
the change in standard cost for each Component within
the Xxxx of Material. CellStar will change the Standard
Cost in its system or establish a new Xxxx of Material
and related Standard Cost within five (5) business days
of receipt of a Xxxx of Material from PBMS.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
b. Within eight (8) business days after the end of each
month (the "Month End"), CellStar shall report to PBMS
all Purchase Price Variances and Price Protection for
the account of PBMS. Such reports shall be effective as
of the close of that month, provided that CellStar shall
in no event be responsible for processing any invoices
or credits to PBMS related to the change in price of any
Components to the extent that CellStar has not changed
the Standard Cost in its system because it has not
received from PBMS the related Standard Cost change
within six (6) days prior to the end of the month.
4.4 PBMS/Supplier Agreements
a. PBMS has included in PBMS/supplier agreements the right for
a third party distributor, such as CellStar, to execute
Orders under the PBMS/supplier agreements for the purchase
of PCS products. As necessary and as permitted by
nondisclosure agreements between PBMS and its suppliers,
PBMS agrees to provide CellStar a copy of the PBMS/supplier
agreements (or pertinent extracts) in order for CellStar to
order Dedicated Products only as PBMS may direct, and not
for the purpose of ordering products for any of CellStar's
other customers. CellStar agrees to keep the terms of the
supplier agreements strictly confidential and not to
disclose the terms of the PBMS/supplier agreements,
including pricing, to any third party, without PBMS' prior
written consent, unless that third party has a legitimate
need to know in the performance of services to CellStar, and
is covered by an appropriate confidentiality agreement prior
to accessing the Information. "Third parties" shall include
without limitation, any potential competitors of the Product
Suppliers, including competitors that are partners or third
parties holding any form of equity interest in CellStar.
b. In addition to the above (and subject to CellStar's rights
under Section 4.1.1. above regarding instances, if any, in
which CellStar (i) has notified PBMS that it cannot comply
with Supplier Terms prior to executing a CellStar Order
and/or (ii) has not received the Supplier Terms relating to
the PBMS/Supplier agreement which resulted in non-compliance
prior to PBMS's request that CellStar place a CellStar
Order), CellStar agrees to abide by Supplier Terms. CellStar
may not add any supplementary or conflicting terms to any
CellStar Order under a PBMS/supplier agreement without PBMS'
prior written consent. The right to receive any liquidated
damages, credits, market development funds, co-operative
advertising funds, promotional monies or other such payments
under a PBMS/supplier agreement shall belong exclusively to
PBMS whether or not CellStar executed a CellStar Order for
Dedicated Products in connection with the Product Supplier's
payment of liquidated damages, promotional monies or other
such payments. In the event the Product Supplier pays any
such liquidated damages, promotional monies or other such
payments to CellStar in connection with Dedicated Products,
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
CellStar shall immediately credit those funds to PBMS on the
next scheduled wire transfer without set-off, administrative
charge or deduction of any kind.
c. In connection with a CellStar Order for Dedicated Products
under a PBMS/supplier agreement for which PBMS was notified
of the due date on a timely basis under Section 4.3.1 and
payment was made by PBMS, if CellStar does not or, believes
it cannot, make full payment to any Product Supplier within
30 days following product delivery by the Product Supplier
under the applicable CellStar Order (other than due to
recovering discrepancies), CellStar's Account Manager shall
notify PBMS's Chief Financial Officer immediately and
provide information concerning the reason for the
nonpayment. CellStar will not be responsible for timely
payment in the event that PBMS does not pay the Product
supplier invoices to CellStar on a timely basis.
Notwithstanding the foregoing, CellStar agrees to make
reasonable best efforts to make payment to the Product
Suppliers when due and, subject to CellStar's right to cure
under Section 24, CellStar expressly acknowledges that
failure to do so shall result in a material breach by
CellStar of the terms of this Agreement, unless PBMS
expressly waives CellStar's breach in writing.
d. In the event that this Agreement expires or is terminated or
canceled, any credits, including default amounts remaining
in PBMS' account, shall be credited to PBMS in the next
scheduled wire transfer within thirty (30) days of such
expiration, termination or cancellation date. Additionally,
PBMS may set-off any PBMS payment due CellStar, by the
amount of credits due PBMS on the next scheduled wire
transfer.
Paragraph 6 of the Original Agreement shall be replaced in its entirety as
follows:
6. PRICES
Prices for services are set forth in Exhibit B. Price changes and prices
for any Services set forth in Exhibit B shall be implemented only when
agreed to in writing by both parties.
Paragraph 7 of the Original Agreement shall be replaced in its entirety as
follows:
7. INVOICING AND PAYMENT
a. Promptly after shipment of Products to the Customer, CellStar shall
render a Product Invoice to PBMS for each such shipment. The invoice
shall identify and separately show quantities and prices for each item
shipped and for Services provided, any shipping charges to be borne by
PBMS, applicable sales or use taxes, any discounts and total amount due.
On a weekly basis, CellStar will provide PBMS with an electronic copy of
the previous week's Customer Invoices
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
sent by CellStar to a Retailer or other Customer for the corresponding
items, and an electronic file of the corresponding SIM and/or IMEI. On a
weekly basis CellStar will prepare a report reconciling all of Product
Invoices to Customer Invoices. Unreconciled invoices will be withheld
from wire transfers until reconciled as outlined in Section 4.2. .
b. On a weekly basis, CellStar shall prepare a weekly wire transfer invoice
summarizing amounts due to or from CellStar as outlined in Section 4.3.
c. On a monthly basis, CellStar shall prepare a reconciliation of the Net
Inventory On-Hand, Net Inventory Purchased, outstanding Product Supplier
liabilities, Net Accounts Receivable and a detailed outline of all other
items due to (from) PBMS. Refer to Exhibit F for an example of this
reconciliation.
d. PBMS shall promptly pay CellStar (without deduction) via electronic
funds transfer the amount due within five (5) business days after
receipt of the weekly wire transfer invoice. PBMS has the right to
withhold an amount equal to the Product Invoice for shipments for which
it has not received the corresponding Customer invoice and SIM/IMEI
files on a timely basis. PBMS will pay CellStar for the shipment and
deduct the corresponding amount due from the Customer in the next
scheduled wire transfer five (5) business days after receipt of the
missing items. Upon (5) business days notice, CellStar will provide to
PBMS copies of the original invoice sent to Retailers, not to exceed 25
invoices per request. PBMS will not take any deductions from CellStar
invoicing to PBMS unless the provisions of 7.e, f and g below are
followed. PBMS shall have the right to dispute the invoicing presented
in accordance with the procedures set forth in subsection (f.) below.
e. CellStar shall render a separate invoice to PBMS for Other Charges not
already described in Sections 4.2.4, 4.2.5 and 7.a. Such invoice shall
identify and separately state each charge. Documentation will include
detail support of the item invoiced (e.g., applicable contract section.)
PBMS shall contest any questionable charges within ten (10) business
days of receipt of an invoice and supporting detail for Other Charges.
If PBMS does not contest any of the Other Charges, PBMS shall pay
CellStar the amount due via electronic funds transfer within ten (10)
business days after receipt of the invoice unless CellStar cannot
provide the justification provided for in subsection e below.
f. If PBMS disputes any invoice rendered under subsections a or b above,
PBMS' Chief Financial Officer shall notify CellStar's Accounting and
Credit Departments of the detailed reasons for such dispute via
electronic mail within ten (10) business days of receipt of the
applicable invoice. CellStar will have ten (10) business days from
receipt of PBMS' notice to provide PBMS with justification for the
invoicing. If CellStar is unable to provide justification within such
time provided that, if and when CellStar can prove that the invoicing is
correct, PBMS shall reimburse CellStar for any deduction taken. Such
reimbursement shall be due on the day of the next scheduled wire
transfer.
g. Notwithstanding the foregoing, PBMS reserves the right to make
deductions from any outstanding invoice to the extent such deductions
relate to errors of CellStar in performing Services as defined under
this Agreement (e.g. errors in labeling Products, shipping instructions
in Orders.). PBMS shall deduct the funds ten (10) days after written
notice to CellStar. If CellStar disputes the deduction,
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
the parties shall negotiate in good faith to resolve the claim. If the
parties do not agree, the provisions of Section 48 regarding
notification and payment provisions will apply. However, if no funds are
payable to CellStar for a period of 21 business days, and the amount
owed by CellStar to PBMS is over $********, then CellStar shall remit
payment to PBMS via electronic funds transfer. If no funds are payable
to PBMS for a period of 21 business days, and the amount owed by PBMS to
CellStar is over $*******, then PBMS shall remit payment to CellStar via
electronic funds transfer.
h. With respect to Section 7.a. and b. above, upon agreement by both
parties, amounts due for transactions under such Sections may be
consolidated for the purpose of the single transfer of funds. Nothing in
this paragraph g. however, limits PBMS' right to make deductions,
credits or set-off against payments due CellStar as set forth in various
provisions in this Agreement.
Paragraph 8 of the Original Agreement shall be replaced in its entirety as
follows:
8. SHIPPING AND PACKING
a. CellStar shall ship all Orders to PBMS' Customers according to the
specific shipping instructions for that Customer, unless PBMS specifies
other instructions in the applicable Order or Amended Order, provided
that CellStar shall have had a reasonable opportunity but in no event
less than two (2) business days (with the exception of an individual
Amended Order subject to Section 43.b) to (i) review the applicable
Customer's standard shipping instructions prior to receipt of such
Order, or (ii) make arrangements to accommodate any special instructions
of such Customer. PBMS agrees to reimburse CellStar for actual freight
charges. Whenever possible however, CellStar shall use the lowest priced
shipping carrier (at contract carrier prices which are less than
tariffed prices) that is capable of shipping the Products on time and
meeting all other PBMS's requirements for shipping. In the event the
Order or Amended Order contains other shipping instructions, then
notwithstanding the section entitled "Order of Precedence" in this
Agreement, the Order shall take precedence over the shipping
instructions. All shipments shall originate in Dallas County Texas or
San Bernardino County California unless CellStar obtains the prior
written approval from PBMS' Chief Financial Officer or designee to ship
from another point of origin.
b. CellStar shall ship Products as specified in PBMS' Order or Amended
Order to meet PBMS' specified shipment method and arrival date as
described herein and in Section 43. CellStar shall be responsible for
freight costs associated with any delivery that arrives late as a result
of CellStar's error; provided that if PBMS requires a specific shipping
carrier, CellStar shall not be responsible to the extent that PBMS's
specified arrival date cannot be met via such shipping carrier. Provided
that CellStar has received the applicable Order within the time
specified in Section 43, if Products do not reach their destination by
the specified arrival date, CellStar shall be responsible for any
incremental freight cost to deliver the products within 24-hours of the
date that CellStar becomes aware that it did not deliver the goods on
the specified arrival date or the date CellStar is
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
notified either by PBMS or the Customer, that the goods are not
delivered on the specified arrival date, provided that CellStar shall
not be responsible for non-performance of the shipping carriers.
c. Marking and labeling ("Marking") of packages may vary depending on
Product and Order type. Standard Markings shall include Markings which
are or shall be required by applicable laws and regulations governing
the environment and hazardous materials/wastes, Order number, container
number, ship-to address, return address, date shipped and gross weight,
where applicable.
Paragraph 9 of the Original Agreement shall be replaced in its entirety as
follows:
9. TAXES
a. PBMS shall reimburse CellStar the cost of all sales and use taxes and
import and export duties, and other governmental fees to the extent
related to PBMS' Orders not otherwise included in the invoice for the
original shipment to PBMS Customers.
b. CellStar agrees to pay, and to hold PBMS harmless from and against, any
penalty, interest, additional tax or other charge that may be levied or
assessed as a result of the delay or failure of CellStar for any reason
to pay any tax or file any return or information required by law, rule
or regulation or by this Agreement to be paid or filed by CellStar.
c. If PBMS is exempt from payment of any applicable sales and/or use tax
upon PBMS's Chief Financial Officer notifying CellStar's Account Manager
of the basis for claiming such exemption CellStar agrees to take all
legal and proper steps to sell the Products free of sales and/or use tax
or to act as PBMS' agent in applying for any applicable rebate of tax.
PBMS will, upon request furnish CellStar with any applicable tax
exemption number.
Paragraph 10 of the Original Agreement shall be replaced in its entirety as
follows:
10. RECORDS AND AUDITS
CellStar shall maintain records of all matters which relate to CellStar's
obligations hereunder in accordance with generally accepted accounting
principles and practices, uniformly and consistently applied in a format
that will permit audit. Unless otherwise provided in this Agreement,
CellStar shall retain such records for a period of four (4) years from the
date of final payment under the Order to which such records relate. To the
extent that such records may be relevant in determining if CellStar is
complying with its obligations under the applicable Order, PBMS and its
authorized representatives shall, at any time, upon reasonable advance
notice, no more than five (5) business days, from PBMS's Chief Financial
Officer to CellStar's Account Manager, have access to such existing records
for inspection and audit during normal business hours. All records
required to comply under this section will be made available, upon
reasonable advance notice, not more than ten (10) business days, from
PBMS's Chief Financial Officer to CellStar's Accounting Manager.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
Paragraph 14 of the Original Agreement shall be replaced in its entirety as
follows:
14. INSURANCE
Any and all insurance, including Worker's Compensation Insurance, that may
be required under the laws, ordinances, and regulations of any governmental
authority, with respect to CellStar's performance under this Agreement, is
and shall be the sole responsibility of CellStar.
a. Without in any way limiting CellStar's indemnification obligations
hereunder, CellStar shall maintain the following insurance:
i) Commercial General Liability (Bodily Injury and Property
Damage) Insurance including the following supplementary
coverages:
1. Contractual Liability to cover liability assumed under
this Agreement;
2. Personal Injury Liability;
3. Product and Completed Operations Liability Insurance;
4. Property Damage Liability Insurance;
ii) Business Automobile Liability Insurance if any of CellStar's
employee owned, leased, hired or borrowed automobiles are
used in the performance of this Agreement. Coverage shall be
in force for all owned, non-owned and hired automobiles used
by CellStar.
iii) The limit of the liability for insurance required above
shall not be less than two million dollars ($2,000,000)
combined single limit per occurrence.
b. The insurance specified above shall:
i) Name PBMS, its Affiliates, directors, agents and employees
as additional insureds in matters covered by this Agreement
and as their interest may appear, at CellStar's sole
expense;
ii) Provide that such insurance is primary coverage with respect
to all insureds;
iii) Contain a Standard Cross Liability Endorsement which
provides that the liability insurance applies separately to
each insured;
iv) Contain a waiver of subrogation and an assignment of
statutory lien against PBMS for purposes of Worker's
Compensation Insurance;
v) Include a requirement that the insurer provide PBMS with
thirty (30) days written notice to PBMS prior to the
effective date of any cancellation or material change of the
policy or policies of insurance;
vi) Have insurance issued by insurance companies that hold a
current rating of not less than B/VII, according to Best's
Key Rating Guide.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
c. CellStar shall provide PBMS with a Certificate of Insurance executed
by a duly authorized representative of the insurer evidencing the
coverages, limits, and provisions specified above.
d. If CellStar's insurance is on "claims-made" basis, CellStar's
obligation to maintain the insurance and to provide policy
endorsements required herein shall survive the termination of this
Agreement for a period of one (1) year.
e. CellStar shall provide to PBMS annually a statement of Net Inventory
or hand in a form reasonably acceptable to PBMS' Risk Management
department.
Paragraph 23 of the Original Agreement shall be replaced in its entirety as
follows:
23. CHANGES, SUSPENSIONS AND TERMINATIONS
a. PBMS may, by notice to CellStar's Account Manager, immediately change,
suspend or terminate, in whole or in part, the shipment of Products and
the performance of Services or any Order. In the event of such
suspension, change or termination, PBMS shall pay to CellStar the
reasonable cost of shipping incurred and kits build up to the date of
said suspension, change or termination. PBMS shall not be responsible
for any other costs of shipment or costs of Services performed prior to
termination. To the extent that CellStar Orders cannot be cancelled by
either CellStar or PBMS, PBMS will assume responsibility for open
CellStar Orders specifically approved by PBMS in writing prior to being
placed by CellStar.
b. If PBMS directs a change or suspension in an Order, the parties shall
agree to any adjustments in prices or dates necessitated thereby and
shall execute a revised Order reflecting such adjustments.
c. Subject to Section 40 below, CellStar may not, without PBMS' prior
written consent, make any changes whatsoever with respect to the
Products or Services specified in any Order hereunder.
Paragraph 25 of the Original Agreement shall be replaced in its entirety as
follows:
25. PARTIAL TERMINATION OR CANCELLATION
Any termination or cancellation may, at PBMS' option, be either complete or
partial. In the case of a partial termination or cancellation, PBMS may,
at its option, accept a portion of the Services covered by an Order and pay
CellStar for such Services at the prices set forth in such Order and the
parties shall execute a revised Order to reflect such partial termination
or cancellation. The right to cancel an Order shall also include the right
to cancel any other affected Order.
Paragraph 26 of the Original Agreement shall be replaced in its entirety as
follows:
26. NONASSIGNMENT
Except as otherwise provided by law, neither party shall assign its rights
or delegate its duties ("Assignment") under this Agreement, without the
prior written consent of the
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
other party, which consent shall not be unreasonably withheld. Any
attempted Assignment or delegation of duties in contravention of this
section shall be void and of no effect. This Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns, if
any, of CellStar and PBMS. The assigning party shall provide thirty (30)
days prior written notice to the other party of any proposed Assignment.
The parties acknowledge and agree that some or all of this Agreement may be
performed by National Auto Center, Inc., the general partner of CellStar.
Paragraph 27 of the Original Agreement shall be replaced in its entirety as
follows:
27. NOTICES
Except as otherwise provided in this Agreement, or applicable Order, all
notices or other communications hereunder shall be deemed to have been duly
given when made in writing and either 1) delivered in person, 2) delivered
to an agent, such as an overnight or similar delivery service, or 3)
deposited in the United States Mail, postage prepaid, and addressed as
follows:
To: CELLSTAR, LTD.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn.: General Counsel
To: PACIFIC XXXX MOBILE SERVICES
0000 Xxxxxxxx Xx. Xxxx. 0, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attn.: Chief Financial Officer
The address to which notices or communications may be given by either party
may be changed by written notice given by such party to the other pursuant
to this paragraph entitled "Notices".
Paragraph 41 of the Original Agreement shall be replaced in its entirety as
follows:
41. MBE/WBE/DVBE PARTICIPATION PLANS AND REPORTS
CellStar commits to no goals for the participation of M/WBE and DVBE firms
(as defined in the Section entitled "MBE/WBE/DVBE Cancellation Clause.)
If, subsequent to the Effective Date, CellStar does commit to any such
goals, CellStar will submit (i) Participation Plan outlining its M/WBE-DVBE
goals and specific and detailed plans to achieve those goals (ii) an
updated Participation Plan annually by the first week in January and (iii)
M/WBE-DVBE Results Reports quarterly by the end of the first week following
the close of each quarter, using the form attached hereto and incorporated
herein as Exhibit A2. Participation Plans and Results Reports will be
submitted to the Prime Supplier Results Manager.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
Paragraph 42 of the Original Agreement shall be replaced in its entirety as
follows:
42. MBE/WBE/DVBE CANCELLATION CLAUSE
a. CellStar agrees that falsification or misrepresentation of, or failure
to report a disqualifying change in, the MBE/WBE/DVBE status of
CellStar or any subcontractor utilized by CellStar; or CellStar's
failure to comply in good faith with any MBE/WBE/DVBE utilization
goals established by CellStar; or CellStar's failure to cooperate in
any investigation conducted by Pacific Xxxx, or by Pacific Xxxx'x
agent, to determine CellStar's compliance with this section, will
constitute a material breach of this Agreement. In the event of any
such breach, Pacific Xxxx may, at its option, cancel ("Cancel") this
Agreement upon 20 days notice. CellStar acknowledges and agrees that
Pacific Xxxx'x right to Cancel is absolute and unconditional, and
Pacific Xxxx shall not be subject to liability, nor shall CellStar
have any right to suit for damages as a result of such cancellation.
b. For purchases under this Agreement by Pacific Xxxx, Pacific Xxxx
Directory, Pacific Xxxx Mobile Services, Pacific Xxxx Information
Services, Pacific Xxxx Communications, and any other entity operating
principally in California (collectively "California Affiliates"),
Minority and Women Business Enterprises (MBEs/WBEs) are defined as
businesses which satisfy the requirements of paragraph c. below and
are certified as MBEs/WBEs by the California Public Utilities
Commission Clearinghouse ("CPUC-certified").
c. For purchases under this Agreement by any entity that is not a
California Affiliate, MBEs/WBEs are defined as businesses which
satisfy the requirements of paragraph d. below and are either CPUC-
certified or are certified as MBEs/WBEs by a certifying agency
recognized by the purchasing entity.
d. MBEs/WBEs must be at least 51% owned by a minority individual or group
or by one or more women (for publicly-held businesses, at least 51% of
the stock must be owned by one or more of those individuals), and the
MBEs/WBEs' management and daily business operations must be controlled
by one or more of those individuals, and these individuals must be
either U.S. citizens or legal aliens with permanent residence status.
For the purpose of this definition, minority group members include
male or female Asian Americans, Black Americans, Filipino Americans,
Hispanic Americans, Native Americans (i.e., American Indians, Eskimos,
Aleuts and Native Hawaiians), Polynesian Americans, and multi-ethnic
(i.e., any combination of MBEs and WBEs where no one specific group
has a 51% ownership and control of the business, but when aggregated,
the ownership and control combination meets or exceeds the 51% rule).
"Control" in this context means exercising the power to make policy
decisions. "Operate" in this context means actively involved in the
day-to-day management of the business and not merely acting as
officers or directors.
e. For purchases under this Agreement by California Affiliates, Disabled
Veteran Business Enterprises (DVBEs) are defined as business concerns
that satisfy the requirements of paragraph e. below and are certified
as DVBEs by the California State Office of Small and Minority Business
(OSMB). The DVBE must be a resident of the State of California, and
must satisfy the requirements of paragraph (g.) below.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
f. For purchases under this Agreement by any entity that is not a
California Affiliate, DVBEs are defined as any business concern that
satisfies the requirements of paragraph g. below and is either a
defined DVBE for purchases by California Affiliates, or is certified
as a DVBE by a certifying agency recognized by the purchasing entity.
g. The DVBE must be (1) a sole proprietorship at least 51% owned by one
or more disabled veterans; or (2) a publicly-owned business in which
at least 51% of the stock is owned by one or more disabled veterans;
or (3) a subsidiary which is wholly owned by a parent corporation, but
only if at least 51% of the voting stock of the parent corporation is
owned by one or more disabled veterans; or (4) a joint venture in
which at least 51% of the joint venture's management and control and
earnings are held by one or more disabled veterans. In each case, the
management and control of the daily business operations must be by one
or more disabled veterans. A disabled veteran is a veteran of the
military, naval or air service of the United States with a service-
connected disability. "Management and control" in this context means
exercising the power to make policy decisions and actively involved in
the day-to-day management of the business and not merely acting as
officers or directors.
Paragraph 43 of the Original Agreement shall be replaced in its entirety as
follows:
43. DELIVERY OF PRODUCTS AND PERFORMANCE OF SERVICES
In addition to the shipping services described in Section 8.b the following
applies to all Orders and Amended Orders:
a. Subject to Sections 4.2.1 and 4.2.4, all dates for shipment or
delivery of Products and performance of Services are firm and time is
of the essence. Shipment or delivery dates shall be specified in each
Order or as amended by written communication only (including e-mail or
fax).
i. Subject to Sections 4.2.1 and 4.2.4, in the event CellStar
fails to meet the scheduled delivery date and the Customer
cancels the Order, CellStar agrees to assume return shipping
costs for the canceled Products if the late delivery was due
to CellStar's error.
ii. Subject to Sections 4.2.1 and 4.2.4, in the event CellStar
fails to meet the scheduled delivery date set forth in the
applicable Orders amended but the Customer nonetheless
accepts the late shipment, CellStar shall, assume liability
for deductions taken by that Customer specifically related
to fees in connection with the late shipment if the late
shipment was due to CellStar's error and within CellStar's
reasonable control.
b. Orders received via EDI by 1pm local time will be shipped on the same
day as the Order is received. However, CellStar will not be obligated
to ship more than 3,000 units by Federal Express or UPS and 5,000
units by any other carrier. Notwithstanding anything to the contrary
herein , PBMS understands and agrees that CellStar shall not be
responsible for same day shipping for quantities in excess of 1,500
units per day unless CellStar receives the applicable Order by
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
3:00 p.m., Central Standard Time for shipment from Texas and 3:00
p.m., Pacific Standard Time for shipment from California on the
shipment date.
Paragraph 46 of the Original Agreement shall be replaced in its entirety as
follows:
46. RISK OF LOSS
CellStar will be responsible for risk of physical loss of or damage to all
inventories in their facilities. CellStar will provide to PBMS sufficient
detail to enable PBMS to obtain insurance coverage from the point of
shipment. CellStar will follow written procedures provided by PBMS and its
insurance provider to enable PBMS to file claims with its insurance
carrier.
Paragraph 48 is deleted in its entirety.
52. ENTIRE AGREEMENT
This Agreement, including all Orders, exhibits and subordinate documents
attached to or referenced in this Agreement or any Orders and all
proposals, descriptions, drawings, Specifications, marketing materials and
other literature published by CellStar in connection with or in
contemplation of any Order or of this Agreement shall constitute the entire
agreement between PBMS and CellStar with respect to the subject matter.
53. FINANCIAL REPORTING
PBMS hereby acknowledges that CellStar will be required to file a copy of
this Amendment as an exhibit to a periodic report filed by CellStar with
the Securities and Exchange Commission (the "SEC") under the Exchange Act
of 1934, as amended and hereby grants its consent to the filing of this
Amendment with the SEC by CellStar.
The parties agree that the Agreement may be executed in counterparts and by
facsimile copies. All executed copies are duplicate originals, equally
admissible in evidence.
(Signature Page Follows)
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-00-
XXXXXX XXXXXXXXX XX. X/XX-000000
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized representatives.
PACIFIC XXXX MOBILE SERVICES
By: /s/ Xxxx X. Xxxxxx
--------------------------
(Signature)
Print Name: Xxxx X. Xxxxxx
-----------------
Title: President & CEO
-----------------------
Date Signed:
-----------------
CELLSTAR, LTD.
By National Auto Center, Inc., its General Partner
By: /s/XXXXXXX X. XXXXX
--------------------------
(Signature)
Print Name: Xxxxxxx X. Xxxxx
------------------
Title: President & COO
-----------------------
Date Signed:
-----------------
By signing this Agreement, CellStar Corporation fully accepts and guarantees the
performance and financial obligations of CellStar, Ltd.
CELLSTAR CORPORATION CELLSTAR CORPORATION
By: /s/XXXXXXX X. XXXXX By: /s/XXXXXX XXXX XXXXXXXXX
------------------ -------------------------------
(Signature) (Signature)
Print Name: Xxxxxxx X. Xxxxx Print Name: Xxxxxx Xxxx Xxxxxxxxx
------------------- -----------------------
Title: President & COO Title: Vice President
------------------------ ----------------------------
Date Signed: Date Signed:
------------------ -----------------
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
-34-
LIST THE PRINCIPAL GOODS AND/OR SERVICES TO BE ACQUIRED FROM MBE/WBE/DVBEs OR
DELIVERED THROUGH MBE/WBE/DVBE VALUE ADDED RESELLERS.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
DETAILED PLAN FOR USE OF M/WBEs-DVBEs AS
----------------------------------------
1. GOALS
For every product and service you intend to use, provide the following
information:
(Attach additional sheets if necessary)
--------------------------------------------------------------------------------
Company name Classification Products/Services $ Value Date to Begin
(MBE/WBE/DVBE) to be provided
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SBC - PACIFIC XXXX
M/WBE-DVBE QUARTERLY RESULTS REPORT
Note: Subcontracting & Value Added Reseller Results should reflect ONLY
M/WBE-DVBE dollars directly traceable to PACIFIC XXXX purchases
DURING THE REPORT QUARTER.
------------------------------------------------------------------------------------------------------------------------------------
1. REPORTING COMPANY: 2. CONTRACT/ 3. REPORT QUARTER:
WORK ORDER This report references the utilization of Minority
Name: NUMBER: Business Enterprises/ Woman Business Enterprises/
------------------------ Dissabled Veterans Enterprise participation for period
Address:
------------------------
City, State, Zip: through
------------------------ ------------- ------------------------------------------
Telephone:
------------------------ ------------------------------------------
PARTCIPATION GOAL PARTCIPATION ACHIEVEMENT
4. 5. Actual for Quarter
------------------
Annual Goal MBE WBE DBVE
----------- Subcontracting Dollars |$ |$ |$ |
-----------------------------
Percent of Total | MBE | WBE | DVBE | Total Contact/Work |$ |$ |$ |
Order Dollars
------------------------------- -----------------------------
Total Purchase
Dollars $
-----------------------------
Percent of Total | %| %| %|
Purchases -----------------------------
------------------------------------------------------------------------------------------------------------------------------------
VALUE ADDED RESELLER RESULTS
Telephone:
---------------------------------------------------------------------------------------------------------------
Goods or Services:
-----------------------------
to the basic product. (Attach additional sheets if necessary)
6. Ethinic/Gender Total Dollars:
-------------- --------------
Name: | |
---------------------------------------------------------------------------------------------------------------
Address:
---------------------------------------------------------------------------------------------------------------
City, State, Zip:
---------------------------------------------------------------------------------------------------------------
Telephone:
---------------------------------------------------------------------------------------------------------------
Goods or Services:
---------------------------------------------------------------------------------------------------------------
Ethinic/Gender Total Dollars:
-------------- --------------
Name: | |
---------------------------------------------------------------------------------------------------------------
Address:
---------------------------------------------------------------------------------------------------------------
City, State, Zip:
---------------------------------------------------------------------------------------------------------------
Telephone:
---------------------------------------------------------------------------------------------------------------
Goods or Services:
---------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
7. REPORTING COMPANY Name:___________________________________________
--------------------------------------------------------------------------------
SBC - PACIFIC XXXX SUBCONTRACTING RESULTS
8. M/WBE-DVBE SUBCONTRACTOR(S)
(Attach additional sheets if necessary)
Ethnic/Gender ARC(s) Total Dollars:
------------- ------ -------------
Name: __________________________________________________________
Address: __________________________________________________________
City, State, Zip: __________________________________________________________
Telephone: __________________________________________________________
Goods or Services: __________________________________________________________
Ethnic/Gender ARC(s) Total Dollars:
------------- ------ -------------
Name: __________________________________________________________
Address: __________________________________________________________
City, State, Zip: __________________________________________________________
Telephone: __________________________________________________________
Goods or Services: __________________________________________________________
Ethnic/Gender ARC(s) Total Dollars:
------------- ------ -------------
Name: __________________________________________________________
Address: __________________________________________________________
City, State, Zip: __________________________________________________________
Telephone: __________________________________________________________
Goods or Services: __________________________________________________________
--------------------------------------------------------------------------------
9. CONTACT: (Print or Type)
I hereby certify that the above information is true and correct.
Name:__________ Signature:___________________________________
Title:__________ Date:_________________________
Address:__________
City, State, Zip:__________ TELEPHONE #:
=======================
--------------------------------------------------------------------------------
10. THIS SUMMARY REPORT SHOULD BE MAILED TO:
PRIME SUPPLIER PROGRAM MANAGER
0000 XXXXXX XXXXX, XXXX 00000
XXX XXXXX, XXXXXXXXXX 00000 FAX # (000)000-0000
Note: Questions and/or request for assistance may be referred to the
Prime Suppliers Program Manager at (000)000-0000.
--------------------------------------------------------------------------------
June 15, 1998
MASTER AGREEMENT NO.P/PS-960163
EXHIBIT B
CELLSTAR
DESCRIPTION OF PRODUCTS AND SERVICES
Description Price per Unit
Assembly Costs per kit $***** per kit
Returns Processing
Receiving and sort $***** per RMA
Triage $***** per handset
Testing $***** per handset
Handset Refurbishment $***** per handset, plus actual cost of
parts used
Fulfillment Costs $***** shipping carton
Restocking fee $***** item excluding collateral and
packaging
Skid Storage Fee $***** skid
Credit and Collection Services $******/month
Same-Day Shipping Guidelines:
Orders received via EDI by 1pm local time will be shipped on the same day as the
Order is received as described in Section 43.b. However, CellStar will not be
obligated to ship more than 3,000 units by Federal Express or UPS and 5,000
units by any other carrier.
Triage
Receive, match quantity and SKU to the RMA, list count by SKU for each SKU
received and on the RMA, report discrepancies by SKU between quantity received
and quantity listed on RMA, report discrepancies to CellStar's credit department
and to PBMS within two (2) business days of receiving the Product, return sealed
kits ready for resale to inventory, issue credit to customer.
Physically sort and count by Xxxx of Material component for each RMA, report by
SKU discrepancies by component between quantity received and quantity for
complete Xxxx of Material. Return to stock Dedicated Products and components
ready for resale without additional processing. Sort and return Components to
inventory according to Return Product and Handset Testing Guidelines in Exhibits
H and I. Prepare appropriate documentation for PBMS for incomplete kits per the
Xxxx of Material per Section 4.2.8.b.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. And PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
1
June 15, 1998
MASTER AGREEMENT NO.P/PS-960163
EXHIBIT B
Page 2
Testing
Test handset with Product Vendor and PBMS-approved testing equipment to
determine time of use and functionality in accordance with vendor-established,
PBMS-approved guidelines. Document the quality of each handset tested as set
forth in the Handset Testing Guidelines in the Exhibits H and I. Handsets
which do not require refurbishment will be prepared for resale as outlined in
Exhibits H and I and returned to the Texas or California warehouses for kitting
and/or shipment.
Refurbishment
Replace lens, antennas, hinges, missing screws and other miscellaneous parts as
described in the attached list, or buff out lens and/or plastics on body of
handset.
Return Product and Handset Testing Guidelines
See Exhibits H and I
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. And PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
EXHIBIT C
--------------------------------------------------------------------
PACIFIC XXXX Purchase Order
Mobile Services --------------------------------------------------------------------
PURCHASE ORDER NO. REVISION PAGE
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx XX 00000 --------------------------------------------------------------------
Phone: (000) 000-0000 THIS PURCHASE ORDER NO. MUST APPEAR ON ALL INVOICES,
Fax: (000) 000-0000 PACKAGING LISTS, CARTONS AND CORRESPONDENCE RELATED TO THIS ORDER.
--------------------------------------------------------------------
SHIP TO:
--------------------------------------------------------------------
XXXX TO:
VENDOR:
-------------------------------------------------------------------------------------------------------
CUSTOMER XXXX.XX. VENDOR NO. DATE OF ORDER/BUYER REVISED DATE/BUYER
-------------------------------------------------------------------------------------------------------
PAYMENT TERMS SHIP VIA F.O.B.
-------------------------------------------------------------------------------------------------------
FREIGHT TERMS REQUESTOR/DELIVER TO CONFIRM TO/TELEPHONE
-------------------------------------------------------------------------------------------------------
ITEM PART NUMBER/DESCRIPTION DELIVERY DATE QUANTITY UNIT UNIT PRICE EXTENSION TAX
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
APPROVAL: TOTAL
----------------------------------------
AUTHORIZATION
----------------------------------- ------------------------ ----------------------------------------
Requested By Phone Name
----------------------------------- ------------------------ ----------------------------------------
Prepared By Phone Signature
----------------------------------------
Date
Not for Use or Disclosure Outside
CELLSTAR, LTD. and PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
EXHIBIT D
INVOICE
CELLSTAR, LTD. Phone SALES ORDER NO.
P.O. Box 910261 DOCUMENT DATE
Dallas, TX PAGE NO.
75391-0261 INVOICE NO.
0-000-000-0000 CUST NO.
SALESPERSON
B S
I H
L I
L P
T T
O 0
--------------------------------------------------------------------------------
DATE (SHIPPED) CUSTOMER F.O.B. U/A SHIPPING INSTRUCTIONS
ORDER NO.
--------------------------------------------------------------------------------
LN DESCRIPTION ITEM NO. UM SHIPPED B/O UNIT PRICE EXTENDED AMOUNT
--------------------------------------------------------------------------------
TERMS COPY CODE IN ORDER TO INSURE PROPER AND TOTAL
TIMELY CREDIT TO YOUR ACCOUNT,
PLEASE INDICATE OUR INVOICE NUMBER
NET ON RECEIPT WHEN REMITTING YOUR PAYMENT TO US
PLEASE PAY BY INVOICE NUMBER AS SHOWN ABOVE
Sale is subject to all the terms and MERCHANDISE CANNOT BE RETURNED
conditions appearing on the reverse WITHOUT OUR PRIOR AUTHORIZATION
side hereof. Acceptance of any of the Any shortages or discrepancies
corresponding goods constitutes agreement concerning this order must be
to all of such terms and conditions. reported to Cell Star, Ltd.
within 3 days.
EXHIBIT E
Invoice SALES ORDER NO
PACIFIC XXXX MOBILE SERVICES DOCUMENT DATE
STATEMENT PAGE NO.
P.O. BOX 910153 * Dallas, TX * 75391-0153 INVOICE NO.
CUST. NO.
SALESPERSON
S S
O H
L I
D P
T T
O O
--------------------------------------------------------------------------------
DATE (SHIPPED) CUSTOMER F.O.B. U/A SHIPPING INSTRUCTIONS
ORDER NO.
--------------------------------------------------------------------------------
LN DESCRIPTION ITEM UM SHIPPED B/O UNIT PRICE EXTENDED
NUMBER AMOUNT
--------------------------------------------------------------------------------
TERMS COPY CODE IN ORDER TO INSURE PROPER AND TOTAL
TIMELY CREDIT TO YOUR ACCOUNT,
PLEASE INDICATE OUR INVOICE NUMBER
WHEN REMITTING YOUR PAYMENT TO US.
THIS SALE IS SUBJECT TO ALL THE TERMS AND CONDITIONS APPEARING ON THE REVERSE
SIDE HEREOF. ACCEPTANCE OF ANY OF THE CORRESPONDING GOODS CONSTITUTES AGREEMENT
TO ALL OF SUCH TERMS AND CONDITIONS.
MERCHANDISE CANNOT BE RETURNED WITHOUT OUR PRIOR AUTHORIZATION.
Any shortages or discrepancies concerning this order must be reported to Pacific
Xxxx Mobile Services within 3 days.
MASTER AGREEMENT NO.P/PS-960163
EXHIBIT F
CELLSTAR
REPORTING REQUIREMENTS
See the attached worksheets for reports, descriptions and supporting
documentation.
PROPRIETARY AND CONFIDENTIAL
Not for Use or Disclosure Outside
CELLSTAR, LTD. And PACIFIC XXXX MOBILE SERVICES
Except Under Written Agreement
EXHIBIT G
CellStar/PBMS
Performance Report
------------------------------------------- --------------------------------
Prepared by: Date prepared: Date of occurrance:
------------------------------------------- --------------------------------
Communication w/ CellStar: Comments:
--------------------------------------- -------------------------------------
Date: Contact
--------------------------------------- -------------------------------------
Date: Contact
--------------------------------------- -------------------------------------
Date: Contact
--------------------------------------- -------------------------------------
---------------------------------- --------------------------------------
PBMS Order Number: Method of ship:
---------------------------------- --------------------------------------
Customer Order Number: Arrival date:
---------------------------------- --------------------------------------
---------------------------------------------- --------------------------------
Order / Invoice (Circle One) Actually Received
---------------------------------------------- --------------------------------
Price per Date Date Date Date
SKU QTY unit shipped receiv'd Other SKU Qty shipped received
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
---------------------------------------------- --------------------------------
Condition Codes:
A Quantity incorrect________________________________________________________
B SKU incorrect_____________________________________________________________
C Date shipped incorrect____________________________________________________
D Method of shipment________________________________________________________
E Packing list not enclosed/incorrect_______________________________________
F Product in box did not match SKU ordered (Describe)_______________________
G Labeling in correct (Describe)____________________________________________
H Box damaged in-transit (describe)_________________________________________
I Product damaged in-transit (describe)_____________________________________
J Other (Describe)__________________________________________________________
CellStar Review/Comments:
Date Reviewed: Reviewer: Date Billed:
-------------------- -------------------------------- -----------------
-------------
Approvals
-------------
Comments:
------------------------------
------------------------------
------------------------------
------------------------------
Labeled Actual
------------------------
------------------------
------------------------
------------------------------------- -----------------------------------------
Acutally Received REFERENCE
------------------------------------- -----------------------------------------
Master Condition per Date Date
Carton # Box # Received Comments SKU Qty item shipped invoiced Comments
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
------------------------------------- -----------------------------------------
EXHIBIT G
Page 2
Perf. Metric CELLSTAR REVIEW
SHIP Reviewed by: Date:
-------------------------------------
SHIP
------------------------------------- ------------------------ ---------------
SHIP Findings:
------------------------------------- -----------------------------------------
SHIP
------------------------------------- -----------------------------------------
SHIP
------------------------------------- -----------------------------------------
QUAL
------------------------------------- -----------------------------------------
QUAL
------------------------------------- -----------------------------------------
QUAL
------------------------------------- -----------------------------------------
QUAL
------------------------------------- -----------------------------------------
-----------------------------------------
Exhibit H
Retail Returns Policy
Return Merchandise Authorization (RMA): All returns from retailers must be
approved in advance by PBMS. An RMA form is to be completed by the appropriate
Retailer sales manager or PBMS account executive and forwarded to PBMS Customer
Service in Pleasanton. The RMA must specify SKUs and quantities for all items
authorized for return. The RMA can remain open for a maximum duration of 45 days
from issuance and will be valid only for a single shipment to CellStar. Customer
Service personnel will assign a RMA authorization number to the document and
enter it into the order processing system. The transaction will be forwarded to
the customer with shipping instructions as authorization for return of
merchandise.
Criteria for Retail Returns:
1. The retailer requests a RMA # from PBMS.
2. PBMS issues a RMA #.
3. The retailer will return the product to CellStar in Carrollton, Texas.
4. All kits must be returned complete to CellStar.
a) Handset d) Travel Charger
b) Battery e) Car Lighter Adapter, if applicable
c) Antenna f) Leather case or other accessory, if applicable
5. All loose kits must be returned in a master carton.
6. All master cartons must have the Following:
a) RMA # clearly marked on the outside of every carton.
b) If there is more than one master carton the cartons should be
marked 1 of 3, 2 of 3, 3 of 3.
7. If a pallet is used to ship the kits the following is required:
a) Only master cartons are to be put on a pallet.
b) The height cannot exceed 5 ft tall
c) The pallet must be marked "Do Not Stack"
d) The pallet must be secured with a pallet cover, shrink wrap and
security tape.
8. The freight carrier should be the same freight company that delivered the
product.
Unauthorized Returns: In the event returned merchandise is delivered without
prior authorization, CellStar will contact PBMS Retail Customer Service to
resolve discrepancy for shipments with a packing slip but no RA number.
Shipments with no packing slip and no RMA may be refused delivery by CellStar
and returned to the carrier for disposition. Upon refusal, the distribution
center will notify the appropriate PBMS Customer Service personnel of an
attempted return so that the issue may be pursued with that customer. The
parties recognize that some refused shipments may be subsequently authorized for
return, however, the policy of refusing unauthorized shipment will be
continually enforced to prevent abuse of returns policy by customers. In cases
when delivery is not refused, the RMA will be resolved by PBMS Customer Service
and equipment accounted for in inventory.
Freight Charges: All merchandise is to be returned to the PBMS Fulfillment
Center in Carrollton, Texas and freight charges are to be prepaid by the
customer. Collect freight may be authorized by PBMS Customer Service or the
appropriate PBMS sales manager where the return is the result of a PBMS error or
other special circumstances exist. Unless the RMA specifically authorizes the
return of merchandise at PBMS expense, shipments returned "freight collect" will
be refused at the PBMS dock. If a retailer receives an incorrect shipment, the
retailer should contact PBMS Customer Service for resolution. The PBMS customer
service representative will utilize the shipping discrepancy form for
investigation by CellStar. If the shipment error was made by CellStar the return
shipment will be authorized by PBMS as freight collect and the retailer should
use the same shipper as the original shipment, if possible.
EXHIBIT H
Page 2
Customer Deductions for Unauthorized Returns: Deduction for unauthorized returns
will be pursued by CellStar for collection. Failure of the customer to remit
funds for such deductions in a timely manner will impact the shipment of future
orders.
Customer Deductions for Missing or Damaged beyond Manufacturer Repair
Components: PBMS will pursue deductions for components missing and/or
physically noticeable as damaged beyond manufacturer repair upon inspection of
return kits. Missing components such as batteries, travel chargers and other
accessories will be deducted from the total credits to the retailer. If a
handset is found to be damaged beyond repair and was not physically noticed upon
original inspection by CellStar and is returned from vendor as such, then
CellStar will provide PBMS with this information. This information will be
submitted with the RTV data as an exception on the RTV movement report from
CellStar. PBMS will take appropriate action to these rectify these exceptions
with Retailers.
Performance Guidelines:
CellStar will validate all returns for RMA numbers and associated returns. If
any discrepancy exists CellStar will contact PBMS to resolve. All returns
received should be visually inspected for validation of number of complete kits,
and Xxxx of Materials to actual components received within one business day of
receipt. This information should be transmitted electronically to PBMS for
adjustments. Performance measurements include:
Process Measures:
. Turnaround time from receipt from retailer at shipping dock to RA and BOM
validation and reporting within one business day from receipt.
. Classification and testing of A, B, C, D, E stock within one business day of
receipt from retailer
. Movement to main warehouse or other point of distribution designated within
one business day of Quality Assurance inspection
. Movement into and out of refurbishment within two business days from
classification of C stock
. Request for Return Authorization to vendor for repair and credit within one
business day of classification for maximum allowable shipments by vendor.
The return to vendor log will include date shipped, order #, JDE number,
quantity, SKU, date returned from vendor and standard costs.
Quality Measures:
Final Quality Assurance inspection is done for every 7 phones out of cartons of
50. If 1 is found defective, CellStar inspects an additional 7 handsets. If
another defective handset found, the complete carton is failed and returns to
the classification and testing processes. Monthly reports with daily detail on
quality inspection results should be provided to Pacific Xxxx Mobile Services.
Exhibit I
Classification of Handsets:
In QPBMS warehouse all products should be received as A Stock from-retail and
reclassified in a separate process before transferring out.
A Stock: 100% appearance, 100% functionality and less than 60 minutes of use
This equipment should be returned to inventory with one business day of
QC testing for redistribution. Any A stock component should be
transferred to the main warehouse and used for kitting prior to
purchasing additional components for kitting.
B Stock: 100% appearance, 100% functionality and greater than 60 minutes of use
This equipment can be redeployed into markets for sale to end users and
into the exchange group for replacements. Any returned Component should
be transferred to the WPBMS Branch Plant for kitting if 100% in
appearance.
C Stock: 100% functionality and Less than 100% appearance
These phones may require cosmetic upgrade which may include buffing and
lens replacements. Once they have been cosmetically upgraded, they can
be moved to A or B Stock dependent on their minutes of use and may be
sold as is.
D Stock: Less than 100% functionality (defective) and should be returned to
vendor (RTV) for credit or repairs
E Stock: Less than 100% functionality (defective beyond manufacturer repair
capability)
Classification of Accessories:
All accessories that are reclassified become the liability of PBMS upon shipment
to customers, once it is ascertained that the proper classification has been
made by CellStar. A sample of accessories (7 out of 50) will be quality tested
and results will be provided to PBMS. PBMS also has the right at any time to do
a physical inspection at the CellStar returns warehouse to validate that proper
classification is taking place.
"A" Stock / To be used in "A" stock kits
CLA = The unit returned to CellStar from the customer is in the
original packaging and/or appears not to have been used. The product
looks brand new, has the tie still on the power cord and/or the cord
has original tension in cord.
Leather Case = The unit returned to CellStar from the customer is in
the original packaging and/or appears not to have been used. The case
looks brand new, with no defects.
Batteries = The unit returned to CellStar from the customer is in the
original packaging and/or appears not to have been used. The product
looks brand new and passes a go, no go test.
Antenna's = The unit returned to CellStar from the customer is in the
original packaging and/or appears not to have been used. The product
looks brand new and is clean.
Flip's = The unit returned to CellStar from the customer is in the
original packaging and/or appears not to have been used. The product
looks brand new.
