EXHIBIT 10(a)
AMENDED & RESTATED
MERCHANDISE AGREEMENT
BY AND AMONG
INTERTAN, INC., INTERTAN CANADA LTD.,
INTERTAN AUSTRALIA LTD., TECHNOTRON SALES CORP. PTY. LIMITED,
AND
TANDY CORPORATION
AND A&A INTERNATIONAL, INC.
THIS AMENDED AND RESTATED MERCHANDISE AGREEMENT ("Merchandise Agreement" or
"Agreement") is made and entered into by and among InterTAN, Inc. ("ITI"), a
corporation organized under the laws of the State of Delaware and having its
principal offices at Xxxxxxx, Xxxxxxx, Xxxxxx; InterTAN Canada Ltd. ("ITC"), a
corporation organized under the laws of Alberta, Canada and having its principal
offices at Xxxxxx, Xxxxxxx, Xxxxxx; InterTAN Australia Ltd. ("ITA"), a
corporation organized under the laws of New South Wales ("N.S.W."), Australia
and having its principal offices at Mount Druitt, N.S.W., Australia; Technotron
Sales Corp. Pty. Limited ("Technotron"), a corporation organized under the laws
of N.S.W., Australia, having its principal offices at Mount Druitt, N.S.W.,
Australia; (ITI, ITC, ITA and Technotron and their respective current or future
subsidiaries being collectively referred to herein as the "ITI-GROUP"); and
Tandy Corporation (Tandy Corporation and its subsidiaries being herein referred
to as "TANDY"), a corporation organized under the laws of the State of Delaware
and having its principal offices at Fort Worth, Texas, and A&A International,
Inc. ("A&A"), a corporation organized under
-1-
the laws of the State of Nevada and having its principal office at Fort Worth,
Texas and being a wholly-owned subsidiary of Tandy.
W I T N E S S E T H:
WHEREAS, ITI is the parent corporation of all of the other members of the
ITI-GROUP, through direct or indirect stock ownership; and
WHEREAS, the parties desire to enter into this Merchandise Agreement which
states the agreements of the parties with respect to the purchase of merchandise
by the ITI-GROUP from and through TANDY and A&A and the designation of A&A as
the exclusive agent and exporter in the Far East (as herein defined)of products
for the members of the ITI-GROUP; and
WHEREAS, in order to enable the ITI-GROUP to act as a single business
enterprise to obtain the benefits of this Merchandise Agreement, each member of
the ITI-GROUP desires to guarantee to TANDY and A&A the obligations of each of
the other members of the ITI-GROUP for any and all of their respective payment
obligations under this Merchandise Agreement as well as the indemnity
obligations of each under the terms of that certain Distribution Agreement dated
as of September 30, 1986, as amended;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties
hereto agree as follows:
-2-
ARTICLE I
MERCHANDISE
1.1 Purchase of Merchandise. Any member of the ITI-GROUP may purchase
-----------------------
through A&A merchandise bearing trademarks owned or licensed by TANDY and sold
in its United States company-owned Radio Shack stores carrying a full line of
merchandise, including new and replacement models, which merchandise is
manufactured in the Far East and included in the then-current Radio Shack U.S.
catalog or, if TANDY ceases publication of such Radio Shack U.S. catalogs,
merchandise regularly sold in TANDY's full line company-owned Radio Shack
stores, in either case at merchandise prices to be negotiated. Any other
merchandise not manufactured in the Far East and not included in the then-
current Radio Shack U.S. catalog or not regularly sold in TANDY's full line
company-owned Radio Shack stores may be purchased by members of the ITI-GROUP
through A&A or TANDY only on mutual agreement between A&A or TANDY and any such
member. Members of the ITI-GROUP shall have no right to purchase through TANDY
or A&A any item of merchandise offered for sale by TANDY in any of its retail
stores other than in TANDY's company-owned United States Radio Shack stores
offering a full line of Tandy/Radio Shack merchandise.
1.2 Designation of A&A as Exclusive Export Agent. Each member of the ITI-
--------------------------------------------
GROUP hereby appoints A&A as its exclusive agent and exporter of products
obtained in the Far East, (including
-3-
Japan, Korea, Taiwan, China, Hong Kong, Singapore, Philippines, Asia, Malaysia,
Thailand, Indonesia and Macao) and imported into Canada and Australia for those
items of merchandise which A&A is obliged to source or agrees to source for the
ITI-GROUP pursuant to paragraph 1.1.
1.3 Ordering of Merchandise by Members of the ITI-GROUP.
---------------------------------------------------
Definition: "Same SKU Merchandise" as used hereafter means ITI-Group-ordered
-----------
merchandise which bears the same SKU designation as that ordered by A&A for sale
in Tandy's Radio Shack stores in the United States and is the same product
(allowing for differences in packaging and instructions) as that sold in the
Tandy-owned Radio Shack stores in the United States. Once a product is
identified as "Same SKU Merchandise" it shall remain "Same SKU Merchandise" for
so long as it is sold in Tandy-owned RadioShack stores in the United States,
even if either party changes its SKU number. Neither party may change an SKU
number of a product identified as Same SKU Merchandise without the consent of
the other party, which will not be unreasonably withheld.
(a) When ordering merchandise from vendors in countries in the Far
East other than Korea, each ITI-Group member shall send to A&A, at the
applicable A&A offices in the Far East, confirmation booking telexes, e-
mail or other electronic transmissions, as specified by A&A, ("Bookings")
followed thereafter by purchase orders ("P.O.s"), and when ordering
merchandise from vendors in Korea, each ITI-Group member shall
-4-
send to the A&A office designated by A&A Bookings followed thereafter by
P.O.s on A&A's form of P.O., which Bookings shall specify in each case (1)
the vendor, (2) the quantity and price of the merchandise ordered, (3) the
purchaser/consignee and (4) A&A as payor or accountee. Upon receipt of such
P.O.s, A&A, subject to Section 1.10(a)(ii) hereof, shall provide notice of
such Bookings to the vendors named therein on behalf of, and as agent for
the applicable ITI-Group member.
(b) In consideration of A&A performing its obligations under Section
1.3(a) hereof, each ITI-Group member shall open and maintain a letter of
credit (L/C) for the benefit of A&A in such amounts and on such terms as
provided for herein, with banks acceptable to A&A. Each L/C shall (i) be
irrevocable in form, (ii) valid until the shipment date (such shipment date
being the later of the estimated shipment date and the scheduled shipment
date of any Open Order) furthest away in time of any Open Order covered by
such L/C, (iii) specify the applicable ITI-Group member as the applicant of
the L/C, (iv) specify A&A International, Inc., 100 Xxxxxxxxxxxx Street,
Suite 1200, Xxxx Xxxxx, Xxxxx 00000, X.X.X. as the beneficiary, (v) provide
for payment to A&A in United States dollars, and (vi) provide for payment
to A&A upon the delivery of an original letter or telecopy thereof signed
by the President, any Vice President or the Controller of A&A (or any other
employee of A&A to whom such responsibility has been delegated in writing),
which letter or
-5-
telecopy shall provide (1) the L/C number, (2) the U.S. dollar amount being
drawn and (3) a certification that the drawing is in respect of an F.O.B.
shipment of consumer electronic goods made pursuant to a P.O. issued by a
member of the ITI-Group.
(c) Twice every calendar month A&A shall deliver, by telecopy, e-mail
or telex, a notice to the ITI-Group concerning L/C coverage on Open Orders
(the "L/C Notice") ("Open Orders" being Bookings placed or confirmed by A&A
with vendors for merchandise not yet shipped) instructing the ITI-Group to
cause the issuing bank of the L/C to adjust such L/C by the amount provided
for in the L/C Notice. In addition, in the months of April, June and July,
A&A shall deliver by telecopy, e-mail or telex an additional notice to the
ITI-Group member to cause the issuing bank of each L/C to adjust such L/C
as of the first day of May, July and August, as the case may be, by the
additional amount, if any, reflecting the ten percent (10%) increase of L/C
coverage of Open Orders in each of such months over the previous month as
required pursuant to subsections 1. 3 (e) (ii) , (iii) and (iv) hereof.
(d) The L/C Notice shall specify (i) the aggregate U.S. dollar amount
of all Open Orders issued by and relating to the ITI-Group (or member, as
the case may be) as of the date of such notice and as reflected in A&A's
records; (ii) the percentage applicable to (i) above as set out in
subsection (e) below; and (iii) the U.S. dollar amount by which the L/C
intended to cover
-6-
Open Orders shall be adjusted and the aggregate U.S. dollar amount of the
L/C after giving effect to such adjustment; provided, however, that in the
-------- -------
case of Open Orders for products intended for sale in Canada and Australia
and placed after May 15, 1996, the L/C Notice shall specify instead of the
above, the following: (i) the aggregate U.S. dollar amount of all Open
Orders issued by and relating to ITC, or ITA, as appropriate, less the
aggregate U.S. dollar amount of Same SKU Merchandise as of the date of such
notice and as reflected in A&A's records; (ii) the percentage applicable to
(i) above as set out in subsection (e) below; (iii) the aggregate U.S.
dollar amount of Same SKU Merchandise on Open Orders issued by and relating
to ITC, or ITA, as appropriate, as of the date of such notice and as
reflected in A&A's records; (iv) the percentage applicable to (iii) above
as set out in subsection (e) below; and (v) the U.S. dollar amount by which
each L/C intended to cover Open Orders shall be adjusted and the aggregate
U.S. dollar amount of each L/C after giving effect to such adjustment.
(e) The percentage of the aggregate U.S. dollar amount of Open Orders
specified in the L/C Notice to be covered by the L/C maintained by the
ITI-Group (or member, as the case may be) with respect to such Open Orders
shall be in the following amounts for the following periods:
(i) December 1 through April 30: 60% of the aggregate U.S. dollar
Amount of the Open Orders covered by the
-7-
applicable L/C as specified in the L/C Notice;
(ii) May 1 through June 30: 70% of the aggregate U.S. dollar
amount of the Open Orders covered by the applicable L/C as specified
in the L/C Notice;
(iii) July 1 through July 31: 80% of the aggregate U.S. dollar
amount of the Open Orders covered by the applicable L/C as specified
in the L/C Notice;
(iv) August 1 through August 31: 90% of the aggregate U.S. dollar
amount of the Open Orders covered by the applicable L/C as specified
in the L/C Notice;
(v) September 1 through September 30: 80% of the aggregate U.S.
dollar amount of the Open Orders covered by the applicable L/C as
specified in the L/C Notice; and
(vi) October 1 through November 30: 70% of the aggregate U.S.
dollar amount of the Open Orders covered by the applicable L/C as
specified in the L/C Notice.
and provided further, that, in the case of Open Orders for
--- -------- -------
products intended for sale in Canada and Australia and placed after
May 15, 1996, the percentage of the aggregate U.S. dollar amount of
Open Orders specified in each L/C Notice to be covered by ITC, or ITA,
as appropriate, with respect to such Open Orders shall be adjusted as
follows for Same SKU Merchandise:
(x) Aggregate U.S. dollar amount of Open Orders less the
aggregate U.S. dollar amount of Same SKU Merchandise, the
resulting amount then multiplied by the applicable percentage
-8-
stated in Section 1.3(e)(i), (ii), (iii), (iv), (v) and (vi)
above AND
---
(y) The aggregate U.S. dollar amount of Same SKU
Merchandise, multiplied by 60%, the result of which shall be
multiplied by the applicable percentage stated in Section
1.3(e)(i), (ii), (iii), (iv), (v), and (vi) above.
(f) Within ten (10) business days of receipt of an L/C Notice (a
business day being a day in which commercial banks are open for
business in the United States) the ITI-Group (or member as the case
may be), shall have caused such issuing bank to have (i) adjusted such
L/C by the amount specified in the L/C Notice and (ii) sent to TANDY
and A&A, or A&A's advising bank, by telecopy or telex, confirmation of
the adjustment to such L/C by the amount specified in the L/C Notice.
(g) With respect to any payment to be made to A&A for merchandise
shipped under an Open Order, at the time of shipment A&A shall be
entitled to draw on the L/C covering such Open Order the U.S. dollar
amount of such shipment in accordance with the terms and conditions of
the L/C, provided, however, that in the event that any Cash Deficiency
Payments (as defined in Section 1.10(a) hereof) have been deposited by
the ITI-Group (or member, as the case may be) with A&A as provided in
Section 1.10(a) hereof, the amount of lower payment shall be effected
first, by set-off by A&A from the amount of such Cash Deficiency
Payments and second, by a drawing by A&A under the applicable L/C for
the
-9-
balance of such payment not set-off by the Cash Deficiency Payments.
(h) The ITI-Group covenants and agrees with TANDY and A&A that so
long as this Agreement is in effect and L/Cs are required to be issued
as provided for herein, the ITI-Group (or member, as the case may be)
shall deliver monthly to TANDY and A&A a statement with respect to the
ITI-Group setting forth as of the date of such statement (i) the
maximum principal amount (in U.S. dollars and the denominated
currencies) of all credit facilities provided by such banks in
connection with which the ITI-Group (or member, as the case may be)
may request an L/C to be issued (the "Credit Facilities"), (ii) the
amounts (in U.S. dollars and the denominated currencies of the
applicable Credit Facilities) of all borrowing notices or requests for
credit delivered to any L/C issuing bank by the ITI-Group (or member,
as the case may be) to the extent not reflected in (iii) below, (iii)
the aggregate principal amount in U.S. dollars of outstanding
indebtedness owed by the ITI-Group (or member, as the case may be),
under the Credit Facilities, (iv) the scheduled due date for repayment
of such outstanding amounts, (v) the aggregate amount of all cash
balances of the ITI-Group (or member, as the case may be), and (vi)
such other information relating to the Credit Facilities and the L/Cs
as may be reasonably requested by TANDY or A&A.
-10-
(i) As an alternative procedure to that stated in Section 1.3(a)
through (h) above, the parties agree that the ITI-Group (or member, as
the case may be) may post one or more standby letters of credit
("SL/C's") on terms acceptable to A&A, in an amount or amounts
acceptable to A&A at banks acceptable to A&A. The ITI-Group shall
notify A&A in writing of their intent to use this alternative
procedure at least 60 days prior to implementation of this alternative
procedure. Each SL/C shall (i) be irrevocable in form, (ii) valid for
a full calendar year, (iii) specify the ITI-Group (or member, as the
case may be) as the accountee (applicant), (iv) specify A&A
International, Inc., 100 Xxxxxxxxxxxx Street, Suite 1200, Xxxx Xxxxx,
Xxxxx 00000, X.X.X. as the beneficiary, (v) provide for payment to A&A
in United States dollars, and (vi) provide for payment to A&A upon the
delivery of an original letter, or telecopy or facsimile transmission
thereof signed by the President, any Vice President or the Controller
of A&A (or any other employee of A&A to whom such responsibility has
been delegated in writing), which letter shall provide (1) the SL/C
number (if any), and (2) the amount, in U.S. dollars, that the
ITI-Group (or member, as the case may be) has failed to pay and which
is past due. The ITI-Group hereby agrees and the banks shall agree,
that no affidavit or sworn certification shall be required from A&A in
order for A&A to draw on the SL/C. The ITI-Group agrees to pay A&A all
amounts due within five (5) days from the date of the payment request,
and
-11-
agrees that upon its failure to do so, A&A shall be entitled to
immediately present the letter described above to the bank and draw
upon the SL/C for payment. Further, if for any reason A&A is unable to
draw upon the SL/C for payment, A&A may declare the ITI-Group in
default of this Agreement, terminate same, and enforce its rights
hereunder.
(j) (i) The parties agree that the ITI-Group, as an alternative
or conjunctive procedure to that stated in Section 1.3(b) through (i)
above, may from time to time post one or more Surety Bonds
(individually a "Surety Bond" and collectively, the "Surety Bonds") in
form and substance acceptable to A&A in an amount or amounts
acceptable to A&A and with a surety or sureties acceptable to A&A. The
Surety Bond(s) may be posted as either partial or complete fulfillment
of the security required hereunder, up to the penal amount of the
Surety Bond(s). In the event the amounts due and owing under this
Agreement, for which an L/C would have been otherwise required,
exceeds the penal sum of the Surety Bond(s), the ITI-Group shall
arrange for L/C's (as per Section 1.3(b) through (i) above) or Cash
Deposits to secure payments as required under this Agreement. Each
Surety Bond posted by the ITI-Group shall contain such terms and
conditions as deemed mutually acceptable to A&A, the ITI-Group, and
the issuer of the Surety Bond. Notwithstanding anything herein to the
contrary, no Surety Bond shall be deemed acceptable to A&A until such
time as A&A has, in writing, acknowledged and accepted such
-12-
Surety Bond. If, for any reason, A&A is unable to draw upon any Surety
Bond for payment, A&A may declare the ITI-Group in default of this
Agreement and absent a cure by the ITI-Group, may terminate same and
enforce its rights hereunder.
(ii) The ITI-Group agrees that, regarding A&A's right to
receive payment under any Surety Bond, and, as a material
inducement for A&A to enter into this Agreement and to accept a
Surety Bond in lieu of a documentary letter of credit, the
ITI-Group jointly and severally hereby waives any and all claims,
defenses or offsets of any kind that it or any member has or may
have against A&A relating to, or serving as a basis for,
non-payment under any Surety Bond posted under this Agreement.
Without limiting the foregoing, all of the following are hereby
waived and shall not be asserted by the ITI-Group or any member
thereof as a defense, a claim for reimbursement, or a basis for
non- payment under any Surety Bond:
(1) Any claim or defense based upon the ITI-Group's, or
any member's, failure to pay A&A due to force majeure,
laches, impracticability, impossibility, or
unconscionability, material alteration of this Agreement,
extension of time to pay, failure to mitigate by A&A,
improper/inadequate notice of default, usury, or release or
loss of collateral.
(2) Any claim or defense based upon nonconformity of
finished product with the corresponding purchase
-13-
order or similar documents.
(3) Any claim or defense based upon warranties or
representations, whether express or implied, made by A&A to
the ITI-Group and/or any member thereof under the terms of
this Agreement.
(iii) In the event of a default in payment by any member of
the ITI- Group necessitating a claim to be made under any Surety
Bond, A&A agrees to use commercially reasonable efforts to assist
the ITI-Group (or member, as the case may be) to cancel product
orders placed by the ITI-Group (or member, as the case may be) in
accordance with Section 1.10(c) of this Agreement, as previously
amended.
(iv) Open Orders secured by any Surety Bond posted in the
manner as described in (i) above shall be subject to (1) the same
percentage formula as applicable to L/C postings and (2) the Same
SKU Merchandise formula, each as specified in Section 1.3(e) of
this Agreement. Prior to the posting of any Surety Bond under
this Section 1.3(j), the ITI-Group shall notify A&A in writing as
to the manner in which the full face amount of any Surety Bond
shall be allocated between the members of the ITI-Group. The
ITI-Group shall be entitled to reallocate, from time to time, the
full face amount of any Surety Bond between the ITI-Group
members; provided A&A shall be notified not less than ten (10)
days prior to any such reallocation of the full face amount.
-14-
1.4 Purchasing Agent's Commission. A&A will perform the export agent
-----------------------------
services described above for the following purchasing agent's commission
described below:
Purchasing Agent's Commission
-----------------------------
Unit Price Unit Price
---------- ----------
Under $1.00 F.O.B. Over $1.00 F.O.B.
------------------- ------------------
Merchandise 6% gross margin 4% gross margin
(excluding parts)
Parts (spare &/or 10% gross margin 10% gross margin
repair parts for
finished goods)
"unit" price = the price per item, or per group of items (if such items are sold
at a single price for a certain number of items), normally charged by a
manufacturer.
"gross profit" = sales price minus unit price
"gross margin" = gross profit of an item divided by the sales price
"sales price" = unit price plus gross profit
X
Formula: -------------- where "X" = gross profit
unit price + X = a and "a" = gross margin desired
FORMULA EXAMPLE 1:
UNIT PRICE = $.50
GROSS MARGIN DESIRED = 6%
( X
---
.5 + X) = 6%
Steps: 1. X = (.5 + X) x .06
2. X = .03 + .06X
3. X - .06X = .03
4. .94X = .03
5. X = .03
---
.94
X (gross profit) = .0319
-15-
unit price + gross profit = sales price
.5 + .0319 = $.5319
gross margin = .0319 (gross profit)
--------------------
.5319 (sales price) = 6%
The ITI-GROUP will pay to A&A a per-unit purchasing agent's commission of
$.032 on each unit with a unit price of $.50.
Add-on Calculations: unit price x 6.38% = gross profit necessary
for 6% gross margin
unit price x 4.17% = gross profit necessary
for 4% gross margin
unit price x 11.11% = gross profit necessary
for 10% gross margin
ADD-ON CALCULATION EXAMPLE:
$.50 x 6.38% = .0319 gross profit necessary for 6% gross margin
.0319 (gross profit)
--------------------
.5319 (sales price) = 6% gross margin
The ITI-GROUP will pay to A&A a per-unit purchasing agent's commission of
$.032 on each unit with a unit price of $.50
1.5 Purchasing Agent/Exporter Fee. In addition to the purchasing agent's
-----------------------------
commission, A&A shall receive a Purchasing Agent/Exporter Fee ("P/E Fee"). The
P/E Fee shall consist of a minimum annual base fee of U.S.$710,000 from the
ITI-GROUP, subject to increase as provided below. A portion of the minimum
annual base fee will be paid in quarterly installments of 12-1/2% of the minimum
annual base fee. Such quarterly installments shall be due and payable on the
last day of September, December, March and June of each year during the term
hereof. The balance of the
-16-
P/E Fee may be paid by a merchandise credit, as described below, to the extent
purchases through A&A are sufficient. The settlement of the balance will be made
on or before August 31 following the end of each Annual Period ("AP"). An AP is
from July 1 through June 30. "AP Sales" shall be the net sales reported in the
audited, consolidated Annual Report of the ITI-GROUP.
The minimum annual base fee will be increased by an additional sum, if
any, based upon the following calculation (all figures in U.S. dollars):
AP Sales over $400,000,000
--------------------------
$400,000,000 x $710,000
EXAMPLE: AP Sales = $412,000,000
-------
Purchasing Agent/Exporter Fee ("P/E Fee") =
-----------------------------------------
$710,000 + [(12,000,000
-----------
400,000,000) x $710,000] = $731,300
Fees on all purchases made on or before January 24, 1999 shall be
calculated in accordance with the terms and conditions of the merchandise
agreement in effect as of January 24, 1999, adjusted for the portion of the AP
during which it was in effect, and shall take into account purchases made by
InterTAN U.K. Limited prior to its sale and disassociation from the ITI-Group on
January 25, 1999.
1.6 Merchandise Credit. A&A will give the ITI-GROUP a credit up to
------------------
but not exceeding the base fee, in the amount obtained by multiplying one-fourth
of one percent (0.25%) times all purchases of merchandise F.O.B.C. (free on
board plus purchasing agent's commission) made by the ITI-GROUP through A&A
during an Annual Period as reflected on invoices or reports issued
-17-
by A&A to the ITI-GROUP or any of its members. If the total of the quarterly
installments (as described above) plus the merchandise credit for any Annual
Period is less than the P/E Fee, then on or before August 31 following each such
Annual Period, the ITI-GROUP will pay the deficiency to A&A. If the total of the
quarterly installments (as described above) and the Merchandise Credit for any
Annual Period is in excess of the P/E Fee, then on or before August 31 following
each such Annual Period, A&A will refund the excess, but not in excess of the
total of all quarterly installments paid during such Annual Period.
Formula: P - (I + C) = Amount due or refundable.
Where: P = P/E Fee
I = Quarterly Installments paid toward the minimum
base fee during AP
C = Merchandise Credit earned during AP
(All figures in U.S. Dollars)
Example 1:
----------
Assuming purchases of merchandise F.O.B.C. by the ITI-GROUP through
A&A of $130,000,000 during an Annual Period, the formula would have
the results indicated below:
$731,300-[($88,750x4)+($130,000,000x0.0025)]=$51,300
The ITI-GROUP would pay A&A $51,300 on or before August 31.
Example 2:
----------
Assuming purchase of merchandise F.O.B.C. by the ITI-GROUP through A&A
of $400,000,000 during an Annual Period, the formula would have the
results indicated below:
$731,300-[($88,750x4)+($400,000,000x0.0025)]=($623,700)
A&A would refund to the ITI-GROUP on or before August 31 $500,000
which is the maximum amount of the refund due under this Section 1.6.
Credits on all purchases made on or before January 24, 1999
-18-
shall be calculated in accordance with the terms and conditions of the
merchandise agreement in effect as of January 24, 1999, adjusted for
the portion of the AP during which it was in effect, and shall take
into account purchases made by InterTAN U.K. Limited prior to its sale
and disassociation from the ITI-Group on January 25, 1999.
1.7 Adjustment for First Annual Period. During the first AP under this
----------------------------------
Merchandise Agreement, the calculations set out in Sections 1.5 and 1.6 above
will be adjusted as follows:
(a) The adjusted AP will be the period from January 25, 1999 through
June 30, 1999.
(b) AP Sales will be the net sales reported in the audited,
consolidated Annual Report of the ITI-GROUP, less the sales for each fiscal
----
quarter reported in the published ITI-GROUP Quarterly Reports for the
periods ending September 30, 1998 and December 31, 1998, plus an adjustment
to be determined by the parties for InterTAN U.K. Limited sales occurring
between January 1, 1999 and January 24, 1999, inclusive.
(c) The minimum annual base fee for purposes of calculating the P/E
Fee for the adjusted AP will be U.S. $355,000. The minimum annual base fee
during the first AP will be increased by an additional sum, if any, based
upon the following calculation (all figures in U.S. dollars):
AP Sales Over $200,000,000
--------------------------
$200,000,000 x 355,000
Example: AP Sales = $225,000,000
-------
(25,000,000
-------------
P/E Fee = $355,000 + [ 200,000,000) x $355,000] = $399,375
-19-
(d) An installment of $88,750 will be due for each of the two
remaining quarters of the first AP payable on or before March 31, 1999; and
June 30, 1999. The ITI-Group would pay $221,875 on or before August 31,
1999.
(e) The merchandise credit will be obtained by multiplying one-fourth
of one percent (0.25%) times all purchases of merchandise F.O.B.C. made
during the adjusted AP set out in Section 1.7(a) above, not to exceed the
adjusted base fee set out in Section 1.7(c) above.
EXAMPLE:
-------
Assuming purchases of merchandise F.O.B.C. by the ITI-GROUP through
A&A of $110,000,000 during the first AP as adjusted, the formula set out in
Section 1.6 using the first year adjustments would have the results indicated
below:
$399,375-[($88,750 x 2)+($110,000,000 x 0.0025)]=($53,125)
A&A would refund to the ITI-Group $53,125 on or before August 31, 1999.
1.8 Payment Terms. Invoices for commissions, fees and expenses chargeable
-------------
to the ITI-GROUP under this Agreement shall be due and payable within thirty
(30) days of the receipt of invoice or facsimile thereof by the applicable
ITI-GROUP member. In the alternative, A&A, at its option, may xxxx for
commissions, fees and expenses charged to the ITI-GROUP under this Agreement by
means of a month-end statement which statement shall be due and payable within
fifteen (15) days of the statement date. Anything
-20-
in this Agreement notwithstanding, P/E Fee installments are due as set out in
Section 1.5 above and, during the first AP, as set out in Section 1.7(d) and the
ITI-GROUP will pay those installments to A&A as set out in paragraphs 1.5 and
1.7 without requirement of an invoice or statement from A&A. If a Surety Bond or
SL/C is used in place of an L/C, the ITI-Group agrees to pay A&A by wire
transfer all amounts due for merchandise in the amount(s) specified in the
applicable Merchandise Payment Request ("MPR") within three (3) business days
from the date of receipt of the applicable MPR by the ITI-Group (or member, as
the case may be), the form of which will be provided by A&A. Notwithstanding the
foregoing, A&A may, in its sole discretion, extend the payment period and adjust
any amount(s) specified in a MPR in order to resolve any inaccuracies or
discrepancies, or to make similar adjustments to the MPR which may be required.
1.9 Interest Charges. Past due amounts owed to A&A hereunder shall accrue
----------------
interest at the prime rate published in the Money Rates section of The Wall
Street Journal on the date the amounts become past due, plus one (1) percentage
point per annum.
1.10 Cash Deficiency Payments; Cancellation of Open Orders; Non-
-----------------------------------------------------------
Acceptance of Bookings.
-----------------------
(a) (i) If at any time the ITI-Group or any member fails or is unable
to maintain or adjust any L/C for any reason whatsoever, in the form and in
the amounts and during the periods provided for hereunder, the ITI-Group
shall immediately pay into
-21-
an account designated by A&A in immediately available funds the U.S. dollar
amount equal to the difference between (x) the U.S. dollar amounts of Open
Orders required to be covered at such time by L/Cs as provided for
hereunder and (y) the U.S. dollar amounts of Open Orders actually covered
by L/Cs and Cash Deficiency Payments at such time (such payment being a
"Cash Deficiency Payment").
(ii) Within five (5) business days of receipt of notice by A&A
from the ITI-Group of a repayment obligation under this Section
1.10(a)(ii), A&A shall repay in immediately available funds to the
ITI-Group or its order the U.S. dollar amount equal to the positive
difference between (x) the U.S. dollar amounts of Open Orders actually
covered by L/Cs and Cash Deficiency Payments at any time and (y) the
U.S. dollar amounts of open Orders required to be covered at such time
by L/Cs and Cash Deficiency Payments as provided for hereunder. Such
repayments by A&A shall not include interest and shall be made solely
from and limited to the amounts of Cash Deficiency Payments, if any,
deposited pursuant to Section 1.10(a)(i) hereof.
(b) In the event that the ITI-Group, or any member, fails or is unable
to maintain or adjust any L/C for any reason whatsoever, in the form and in
the amounts and during the periods provided for hereunder and fails to make
any Cash Deficiency Payments for any reason whatsoever, in the amounts
provided for
-22-
hereunder, then irrespective of whether A&A has declared or waived any
event of default pursuant to Section 2.1 hereof, A&A (i) shall be entitled
in its sole discretion to cancel any Open Order, provided that A&A shall
use its best efforts, to the extent not contrary to its best interests as
determined in its sole discretion, to cancel only Open Orders or amounts of
Open Orders by amounts such that after giving effect thereto the balance of
Open Orders will be covered by L/Cs and Cash Deficiency Payments in the
amounts provided for hereunder; and (ii) shall not be required to initiate
or accept any Booking from the ITI-Group or place or confirm on behalf of
the ITI-Group any Booking with any vendor unless prior to acceptance or
placement or confirmation of such Booking the ITI- Group pays into an
account designated by A&A in immediately available funds the full U.S.
dollar amount of such Booking. Nothing in this subsection (b) shall be
construed as limiting in any way the right of A&A to declare an event of
default pursuant to Section 2.1 hereof.
(c) With respect to cancellation of Open Orders in circumstances other
than in subsection (b) above, (i) in countries other than Korea, the
ITI-Group shall have the sole right to cancel any Open Order and to
negotiate cancellation fees directly with vendors and (ii) in Korea, both
A&A and the ITI-Group shall have the right to cancel any Open Order. A&A,
in its capacity as purchasing agent, will assist (provided such assistance
does not involve the incurrence of any expense on the
-23-
part of A&A) the ITI-Group in canceling any Open Order in an attempt to
mitigate and minimize the ITI-Group's liability to any vendor.
(d) A&A shall have the option to refuse to act as purchasing
agent/exporter for the ITI-Group with any vendor with respect to which the
ITI- Group has canceled, through A&A or otherwise, an Open Order. In such
circumstances, the ITI-Group may then deal directly with such vendor,
notwithstanding the terms of this Agreement.
1.11 Indemnification.
----------------
(a) Each member of the ITI-Group, jointly and severally, hereby
agrees to indemnify and hold harmless Tandy and A&A and each of their
respective affiliates, directors, officers, employees, agents and
advisors (each, an "Indemnified Party") against (i) all claims,
damages, losses, liabilities, costs, fees (including reasonable
attorney fees), expenses and charges that may be incurred by, or
asserted or awarded against an Indemnified Party, in each case arising
out of or in connection with the cancellation or attempted
cancellation of any Open Order pursuant to Section 1.10 hereof or
otherwise, or any proceeding or litigation or threatened proceeding or
litigation relating thereto; (ii) all costs, fees (including
reasonable attorney fees), expenses and charges, including without
limitation all bank fees and charges, that may be incurred by or
awarded against an Indemnified Party in connection with any drawing
under any
-24-
L/C, or any proceeding or litigation or threatened proceeding or
litigation relating thereto; and (iii) all costs, damages, losses,
liabilities, fees (including reasonable attorney fees), expenses and
charges that may be incurred by or awarded against an Indemnified
Party, in each case arising out of or in connection with enforcing or
defending the provisions of this Agreement and any subsequent
amendments thereto, whether involving any ITI- Group member or any
third party.
(b) In connection with any claim for indemnification by an
Indemnified Party under subsection (a)(i) hereof arising out of or in
connection with any proceeding or litigation or threatened proceeding
or litigation by a vendor against any Indemnified Party relating in
any way to the cancellation or attempted cancellation of an Open
Order, upon reasonable written notice to Tandy and such Indemnified
Party, the ITI-Group may at its option contest, manage, and defend any
such claim for which it has, or may have, responsibility for payment,
provided that during the pendency of any such proceeding or
--------
litigation, the ITI- Group will reimburse such Indemnified Party
currently on a monthly basis for all reasonable legal and other
expenses incurred by it in defending, or assisting in the defense of,
any such proceeding or litigation notwithstanding the absence of a
judicial or quasi-judicial determination as to the merit of the claim
or as to the propriety and enforceability of the ITI-Group's
responsibility for such claim and expenses.
-25-
1.12 Fee and Credit Renegotiation. Each of the Purchasing Agent's
-----------------------------
Commission set out in Section 1.4 above, the Purchasing Agent/Exporter Fee set
out in Section 1.5 above, and the Merchandise Credit set out in Section 1.6
above may be renegotiated by the parties at any time upon the request of either
party.
1.12A Term. This Agreement will expire upon the termination of the license
-----
agreement dated as of January 25, 1999 between Tandy and ITC and the license
agreement dated as of January 25, 1999 between Tandy and ITA.
1.13 ITA Contact Employee Cost Sharing.
----------------------------------
(a) The ITI-Group may employ one person to act as a focal point
for operational and planning issues that develop between A&A and the
ITI-Group, including providing A&A with local market analysis and
coordinating product development and marketing between the ITI-Group
and A&A (the "Contact Person"). Tandy agrees to share the reasonable
and necessary costs of the ITI-Group to maintain one ITA employee in
Australia to act as the Contact Person with A&A on the following
basis. If ITA purchases through A&A as purchasing agent the amount of
merchandise specified as a Purchase Level for ITA below for the
corresponding fiscal year indicated below, then Tandy will reimburse
ITA the percentage(s) stated below of the undisputed costs of
maintaining
-26-
the Contact Person for each fiscal year in which ITA achieves such
Purchase Levels, up to a maximum of U.S. $150,000 in any one fiscal
year for the Contact Person:
(in thousands -- U.S. Dollars)
PURCHASE TANDY'S COST
YEAR LEVEL - ITA SHARING % - ITA
---- ----------- ---------------
FY `97 19,661 50%
FY `98 23,593 50%
FY `99 24,000* 100%
*If ITA purchases from A&A for any FY equal or exceed 24,000, Tandy
will reimburse the ITI-Group 100% of the costs that are not in
dispute, up to a maximum of U.S. $150,000 in any fiscal year.
By August 30 of each year, beginning in 1997, ITI-Group purchases will be
calculated for the most recently completed fiscal year ended June 30 to
determine Tandy's share of costs, if any.
(b) Expatriate Costs. An "expatriate employee" is an employee who
----------------
has worked for A&A, who is hired by ITA and who moves to a country
that is not his or her country of permanent residence to act as the
Contact Person for ITA. Unless otherwise agreed by the parties in
writing at the time of submission of the costs to Tandy for payment,
the reasonable and necessary costs for an expatriate employee
("Expatriate Costs") are agreed to be the following:
1. Salary and related costs of the customary benefit plans
for employees at the same or similar salary level;
2. Automobile allowance;
-27-
3. Cost of living allowance;
4. Housing allowance;
5. Income tax equalization payments and reasonable tax
return preparation costs; and
6. Initial relocation costs of the original expatriate
employee only.
In no event shall Tandy pay or share in paying Expatriate Costs past the fiscal
year ending June 30, 2002. In no event shall Tandy pay or share in paying
Expatriate Costs in excess of U.S. $150,000 in any fiscal year.
(c) Permanent Resident Costs. The reasonable and necessary costs
------------------------
for a permanent resident employee ("Permanent Resident Costs") are
agreed to be the salary, related employee benefit costs, and initial
relocation costs only, unless otherwise agreed by the parties in
writing. In no event shall Tandy pay or share in paying Permanent
Resident Costs in excess of U.S. $150,000.
(d) Billing and Audit Right. By September 30 of each year, the
-----------------------
ITI-Group shall present detailed billing to Tandy for any costs in
which Tandy is to share for the most recently completed fiscal year.
The billing shall be in U.S. dollars based on the average exchange
rate for the applicable fiscal year and by October 31 of each year
Tandy shall pay any amount not in dispute. Payment shall be due in
U.S. Dollars to InterTAN, Inc. in Xxxxxxx, Xxxxxxx, Xxxxxx. The ITI-
Group shall have a fiduciary duty to
-28-
Tandy to control the costs of the Contact Person so that such costs
are at a level consistent with employees of the ITI- Group at the same
or similar employment levels. Within 30 days after the end of each
quarter, ITA shall submit to Tandy quarterly reports of all
reimbursable costs related to the Contact Person for the quarter and
all purchases for the quarter from A&A. Tandy, at its sole cost, shall
have the right to audit the records of the ITI-Group concerning the
Contact Person, and comparable employees of the ITI-Group at the same
or similar employment levels, upon reasonable notice and during
regular business hours.
ARTICLE II
DEFAULT
2.1 Events of Default.
-----------------
(a) The use of A&A as exclusive agent for the purchase of
merchandise under Article I of this Merchandise Agreement by any and
all members of the ITI- GROUP and all obligations of A&A related
thereto may be terminated by TANDY or A&A upon written notice to ITI
(it being understood and agreed by all parties to this Merchandise
Agreement that neither TANDY nor A&A shall be required to give any
such notice to any other member of the ITI-GROUP and that notice to
ITI constitutes notice to all members of the ITI-GROUP), at its
principle offices at Xxxxxxx, Xxxxxxx, Xxxxxx in the event of the
occurrence of any of the following events of default:
-29-
(i) Any member of the ITI-GROUP:
(A) fails to make any payment to TANDY or A&A, when
due, of any purchasing agent's commission or purchasing
agent/exporter fee, or any other amounts payable to TANDY or
A&A under this Merchandise Agreement; or
(B) fails to perform any other material obligation
under this Merchandise Agreement, including, without
limitation, the guarantee obligations set forth in Article
III hereof; or
(ii) Any member of the ITI-GROUP defaults on any agreement,
including lease agreements, to which any member of the ITI-GROUP
and TANDY are parties or are in privity with third parties; or
(iii) Any license agreement between TANDY, as licensor, and
any member of the ITI-GROUP, as licensee, expires or is
terminated for any reason, or any member of the ITI-GROUP fails
to make payment of any sums of money due to TANDY under any
license agreement; or
-30-
(iv) There is a "change of control" of ITI, ITC, or ITA as
that phrase is used and defined in the respective license
agreements between TANDY and any member of the ITI-GROUP, which
amended and restated license agreements are being entered into
contemporaneously with this Merchandise Agreement.
(b) The ITI-GROUP, acting collectively by and through ITI, shall
have the right to cure certain events of default as follows:
(i) In the event of the occurrence of an event of default
under Section 2.1(a)(i) above, the ITI-GROUP shall have the right
to cure such event of default within thirty (30) days from and
after the date of written notice by TANDY or A&A of such event of
default; provided, however, that the right to cure any such event
of default shall be limited and shall not exceed a total of three
times during each AP on defaults under 2.1(a)(i)B and payment
defaults on monthly amounts due; or once each AP on payment
defaults on quarterly amounts due;
(ii) In the event of the occurrence of an event of default
under Section 2.1(a)(ii) above, the ITI-GROUP shall have the
right to cure such event of default in accordance with the
provisions, if any, relating to the cure of an event of default
contained in any agreement included within the scope of the
provisions of such Section; and
(iii) In the event of the occurrence of an event of default
under the provisions of Section 2.1(a)(iii) above, the ITI-GROUP
shall have the right to cure such event of default in
-31-
accordance with the provisions of the respective license
agreements referred to in such Section relating to the cure of an
event of default; provided, however, that the ITI-GROUP shall not
have the right to extend the term of an expired license agreement
between TANDY, as licensor, and any member of the ITI-GROUP, as
licensee, and upon termination or expiration of any such license
agreement this Merchandise Agreement shall terminate and shall be
of no further force or effect.
(c) The ITI-Group shall not have the right to cure an event of
default resulting from a "change of control" as described in Section
2.1(a)(iv) above.
2.2 Acceleration of Payment. Upon written notice to members of the ITI-
-----------------------
GROUP, TANDY or A&A may also declare any and all purchasing agent's commissions
and purchasing agent/exporter fees, as well as any other amounts payable to
TANDY or A&A under this Merchandise Agreement, to be immediately due and payable
upon any of the events of default described in Sections (i) through (v) of
Section 2.1(a) above, subject to the right of the ITI-GROUP to cure certain
specified events of default as provided in Section 2.1(b) above, provided that
TANDY or A&A may not take any action contemplated by this Section 2.2 so long as
the failure of the ITI-GROUP to make payments under Section 2.1(a)(ii)(A) above
is the result of a reasonable dispute pursued in good faith and, with regard to
such dispute, TANDY has received from the ITI-GROUP within five (5) business
days prior to the date payment is due
-32-
under this Agreement a detailed written notice of the amounts, invoices, and the
basis for dispute, and provided further that all undisputed amounts are paid to
TANDY or A&A in accordance with the terms of this Agreement. The parties shall
make their best, good faith effort to resolve any such dispute within thirty
(30) days after the due date of the statement or invoice which includes the
disputed amounts. Within fifteen (15) days after the due date of the statement
or invoice which includes the disputed amounts, the chief financial officer of
the ITI-GROUP and the chief financial officer of A&A shall attempt to resolve
the matter. In the event the chief financial officers are unable to resolve the
dispute within the initial fifteen (15) day period, the chief executive officer
of the ITI-GROUP and the chief executive officer of Tandy shall discuss the
matter during the fifteen (15) days next following in an attempt to resolve the
dispute. In any event, if the dispute is not resolved within thirty (30) days
after the due date of the statement or invoice which includes the disputed
amount, then A&A shall have the right to terminate, without notice, the right of
the ITI-GROUP to purchase products through A&A and to immediately terminate,
without notice, all purchasing agent services performed by A&A under Sections
1.1 and 1.2 of this Agreement.
2.3 Non-assignment and Termination. The ITI-GROUP acknowledges that its
------------------------------
right to purchase products through TANDY or A&A as provided in Article I of this
Merchandise Agreement, any
-33-
economic benefits secured by TANDY or A&A from its vendors for members of the
ITI-GROUP under any licensing, software and hardware agreements, and the
agreement of A&A to perform purchasing agent services for members of the
ITI-GROUP as provided in Section 1.2 of this Merchandise Agreement, are
nonassignable, except with the express written consent of TANDY and A&A, which
consent may be withheld by TANDY or A&A in their sole discretion. Further, such
rights and obligations shall terminate automatically, without need for any
action, including notice from TANDY or A&A, in the event any member of the
ITI-GROUP (a) becomes insolvent,
(b) initiates or otherwise becomes the subject of a foreign or
domestic receivership, arrangement, composition, liquidation,
reorganization, bankruptcy, or other insolvency proceeding, or
(c) enters into an arrangement or composition for the benefit of
creditors.
ARTICLE III
GUARANTEE BY EACH MEMBER OF THE ITI-GROUP
3.1 Guarantee. Each of InterTAN, Inc., InterTAN Canada Ltd., InterTAN
---------
Australia Ltd. and Technotron Sales Corp. Pty. Limited (hereinafter "Guarantors"
or each "Guarantor") hereby irrevocably and unconditionally, jointly and
severally, guarantees to TANDY and A&A the due and punctual payments, observance
and
-34-
performance of all of the obligations, terms, conditions and covenants of each
of the other members of the ITI-GROUP pursuant to this Merchandise Agreement,
including, but without limitation, the payment to TANDY and/or A&A when due of
the purchasing agent's commissions, purchasing agent/exporter fees and any other
amounts payable to TANDY or A&A under this Merchandise Agreement. This Guarantee
is a continuing guarantee and shall be binding upon each Guarantor, its
successors and assigns, and shall inure to the benefit of, and be enforceable
by, TANDY and A&A, their successors, transferees and assigns.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each member of the ITI-GROUP represents and warrants to TANDY and A&A as
follows:
4.1 Due Authority; Enforceability; No Breach. The execution, delivery and
----------------------------------------
performance by it of this Agreement and the consummation of the transactions
contemplated hereby, have been duly authorized by its Board of Directors and by
all other necessary corporate action. This Agreement has been duly executed and
delivered by it and is a legal, valid and binding obligation of it, enforceable
against it. Neither the execution, delivery and performance by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby,
nor the compliance by
-35-
it with, or fulfillment by it of the terms and provisions hereof will
(i) conflict with or result in a breach or violation of any of
the terms, conditions or provisions of its certificate of
incorporation or bylaws, or applicable corporate organizational
documents; (ii) with or without the giving of notice or lapse of time
or both, conflict with or result in a breach or violation of, or
default under, or permit the acceleration of any obligation under any
provision of any agreement, indenture, mortgage, lien, lease or other
instrument or restriction of any kind to which it is a party or by
which it is otherwise bound or affected; or (iii) violate any
judgment, order, writ, injunction, decree, law, statute, rule or
regulation applicable to it.
ARTICLE V
MISCELLANEOUS
5.1 Severability. In the event that any provision of this Merchandise
------------
Agreement shall be determined to be invalid or prohibited by law, such provision
shall be ineffective to the extent of such invalidity or prohibition without
invalidating the remainder of this Merchandise Agreement.
5.2 Waiver. No failure or delay in exercising any right, power or remedy
------
under any provision of this Merchandise Agreement shall operate as a waiver of
or otherwise shall prejudice any of
-36-
the rights, powers or remedies of TANDY or A&A. No right, power or remedy herein
conferred upon TANDY or A&A is intended to be exclusive of any other right,
power or remedy, and each and every such right, power or remedy shall be
cumulative of every other right, power or remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise.
5.3 Amendment. This Merchandise Agreement may be amended only by a document
---------
subscribed in writing by all parties hereto.
5.4 Notices. All notices pursuant to this Merchandise Agreement shall be in
-------
writing and shall be deemed given when personally delivered or when mailed by
certified or registered mail, return receipt requested, postage prepaid and
properly addressed, or when sent by legible facsimile transmission (proper
transmission confirmed) properly addressed as follows:
If to any ITI-Group member: InterTAN, Inc.
The Royal Centre
0000 Xxxxxxx #0
Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: General Counsel
Fax: (000)000-0000
If to Tandy or A&A: Tandy Corporation
000 Xxxxxxxxxxxx Xx., Xxx. 0000
Xxxx Xxxxx, Xxxxx 00000
Attn: Xx. Xxxx X. Xxxx
Senior Vice President, Corporate
Secretary and General Counsel
Fax: (000)000-0000
5.5 Counterparts. This Merchandise Agreement may be executed in
------------
counterparts, any or all of which shall constitute one and the same document.
-37-
5.6 Further Assurances. TANDY and A&A each member of the ITI-GROUP agree
------------------
that they will at any time and from time to time, upon request of the other,
execute, acknowledge and deliver all such further instruments and documents and
to do, or cause to be done, all such further acts as may be required to carry
out the purpose and intent of this Merchandise Agreement.
5.7 Merger of Prior Negotiations. All prior negotiations and agreements
----------------------------
between the parties hereto with respect to the subject matter of this
Merchandise Agreement are merged herein.
5.8 Binding effect. This Merchandise Agreement shall be binding on the
--------------
parties hereto and their respective permitted successors and permitted assigns.
5.9 Headings. The article and section headings in this Merchandise
--------
Agreement are for convenience and reference only, and shall not be utilized in
any way to explain, modify, amplify or add to the interpretation, construction
or meaning of this Merchandise Agreement.
ARTICLE VI
GOVERNING LAW AND SUBMISSION TO JURISDICTION
6.1 TEXAS LAW APPLICABLE; SUBMISSION TO JURISDICTION. THIS MERCHANDISE
-------------------------------------------------------------------
AGREEMENT AND ALL AMENDMENTS THERETO, AND ANY AND ALL CLAIMS, DEMANDS OR ACTIONS
--------------------------------------------------------------------------------
OR IN ANY WAY RELATING THERETO OR INVOLVING ANY DISPUTE BETWEEN OR AMONG ANY OF
-------------------------------------------------------------------------------
THE PARTIES HERETO,
------------------
-38-
WHETHER ARISING IN CONTRACT OR TORT, AT LAW, IN EQUITY OR STATUTORILY, SHALL BE
-------------------------------------------------------------------------------
GOVERNED, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
--------------------------------------------------------------------------------
TEXAS, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CHOICE OF LAWS OF SUCH STATE.
------------------------------------------------------------------------------
EACH PARTY HERETO IRREVOCABLY SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF
-----------------------------------------------------------------------------
THE COURTS OF THE FEDERAL COURTS OF THE UNITED STATES, NORTHERN DISTRICT OF
---------------------------------------------------------------------------
TEXAS, FORT WORTH DIVISION, AND TO THE COURTS OF THE STATE OF TEXAS LOCATED IN
------------------------------------------------------------------------------
TARRANT COUNTY, TEXAS, AS TO ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
------------------------------------------------------------------------
RELATING TO THE MERCHANDISE AGREEMENT, AS IT MAY BE AMENDED FROM TIME TO TIME,
------------------------------------------------------------------------------
AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE HAD UPON IT IN
---------------------------------------------------------------------
ACCORDANCE WITH THE PROCEDURES, RULES AND LAWS OF TEXAS IN ANY SUCH DISPUTES.
-----------------------------------------------------------------------------
EACH MEMBER OF THE ITI-GROUP HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
--------------------------------------------------------------------------
PROCESS ON IT AND IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, 000 X. XX.XXXX
----------------------------------------------------------------------------
XXXXXX, XXXXXX, XXXXX 00000, AS THE REGISTERED AGENT FOR THE PURPOSE OF
-----------------------------------------------------------------------
ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF TEXAS AND AGREES TO OBTAIN A
-----------------------------------------------------------------------------
LETTER FROM CT CORPORATION SYSTEM ACKNOWLEDGING THE SAME. EACH MEMBER OF THE
----------------------------------------------------------------------------
ITI-GROUP ALSO CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL DIRECTED TO ITS
--------------------------------------------------------------------------------
PRINCIPAL OFFICE AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED TEN (10)
-----------------------------------------------------------------------------
DAYS AFTER THE SAME SHALL HAVE BEEN POSTED.
------------------------------------------
-39-
IN WITNESS WHEREOF, the parties hereto have executed this Merchandise Agreement
to be effective as of January 25, 1999.
InterTAN, Inc.
/s/Xxxxx X. Xxxx
By: Xxxxx X. Xxxx
Title: President & Chief Executive Officer
InterTAN Canada Ltd.
/s/Xxxxx X. Xxxx
By: Xxxxx X. Xxxx
Title: President
InterTAN Australia Ltd.
/s/Xxxxx X. Xxxx
By: Xxxxx X. Xxxx
Title: Director
Technotron Sales Corp. Pty. Limited
/s/Xxxxx X. Xxxx
By: Xxxxx X. Xxxx
Title: Director
Tandy Corporation
/s/Xxxxx X. Xxxxxx
By: Xxxxx X. Xxxxxx
Senior Vice President and
Chief Financial Officer
A&A International, Inc.
/s/Xxxxx Xxxxxxxxxxx
By: Xxxxx Xxxxxxxxxxx
President
-40-
