Exhibit 10.6
AMENDMENT NO. 1 TO DISTRIBUTION
AND FULFILLMENT SERVICES AGREEMENT
THIS AMENDMENT NO. 1, effective as of the 21st day of September, 2001, by
and between Cricket Communications ("Cricket"), successor in interest to Chase
Telecommunications, Inc., and CellStar, Ltd. ("CellStar"),
WITNESSETH
WHEREAS, Cricket and CellStar have previously entered into a certain
Distribution and Fulfillment Services Agreement effective as of December 22,
1999 (the "Agreement"), whereby CellStar agreed among other things, to
facilitate the sale and distribution of handsets and accessories to Cricket and
its customers;
WHEREAS, the parties have agreed to modify invoicing and shipping
procedures in certain instances under the Agreement as specifically set forth in
this Amendment No. 1 to the Agreement (the "First Amendment"); and
WHEREAS, the parties desire to acknowledge such modification in connection
with certain Loan Agreements entered into by and on behalf of CellStar;
NOW, THEREFORE, in consideration of mutual covenants herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms used but not defined herein
shall have the meanings assigned thereto in the Agreement.
Section 2. Xxxx and Hold Procedures.
a. Section 6 of the Agreement shall be amended and restated in its entirety
to read as follows:
"If Cricket and/or its customers or designated entities do not issue one or
more purchase orders for an amount of Product equal to or greater than the first
month of forecasted volume of Products during such one month period, any
remaining Products will be purchased by Cricket at a price equal to the
Acquisition Cost (as hereinafter defined), plus any Inclusive Service Fees. At
Cricket's option, CellStar shall either: (i) ship such Products identified by
Cricket to the locations Cricket designates in writing; or (ii) temporarily hold
such
-1-
Products at CellStar's facility, subject to the segregation requirements
described in Section 6(a) below (the "Xxxx and Hold Products"), and thereafter
ship such Xxxx and Hold Products at the times and to the locations Cricket
designates in writing. In either event, CellStar shall invoice Cricket for such
Products at the end of the applicable month. Notwithstanding the title transfer
provision of Section 4 above, title to the Xxxx and Hold Products shall transfer
to Cricket as of the date of the issuance of an invoice for such Xxxx and Hold
Products to Cricket. Neither CellStar, nor its creditors or lenders, shall
retain or claim any ownership interest or security interest in or lien or
encumbrance on any Products for which title has transferred to Cricket under the
terms of this Agreement and specifically disclaim and waive any such security
interest whether arising by presumption or operation of law. Cricket shall make
payment for the Products within thirty (30) days after receipt of the invoice.
a. Immediately upon being designated as Xxxx and Hold Products, CellStar
shall store all Xxxx and Hold Products in CellStar's warehouse facilities in a
secure location, and shall promptly (no more than one (1) day) after being so
designated) segregate, identify and designate such Xxxx and Hold Products as
owned by Cricket, including without limitation: (i) designating all Xxxx and
Hold Products as Cricket Property in CellStar's inventory records, including
computer database; (ii) physically marking each and every Xxxx and Hold Product
with a label or other marking which identifies such product as the property of
Cricket; and (iii) maintaining the Xxxx and Hold Product in an identifiable and
segregated fashion so as to permit Cricket or others to easily and accurately
identify the Xxxx and Hold Products owned by Cricket. CellStar shall bear all
risk of casualty loss with respect to Xxxx and Hold Products while such Products
remain in CellStar's custody and control. CellStar shall obtain casualty loss
insurance for the value of the invoiced price covering such Xxxx and Hold
Products during such period at CellStar's cost and expense. CellStar shall add
Cricket as an additional insured under the casualty loss insurance policies that
cover the Xxxx and Hold Products and shall provide Cricket with a certificate of
insurance that identifies Cricket as an additional insured under such policy.
Cricket shall not be under any obligation to inspect any of the Xxxx and Hold
Products for conformity or to accept or reject such goods until such time as the
Xxxx and Hold Goods are delivered to Cricket or Cricket's customers or
distributors. CellStar shall not pledge nor encumber any of the Xxxx and Hold
Products, and shall neither cause nor permit any lien or encumbrance on any Xxxx
and Hold Products.
b. Cricket shall be entitled to periodic and reasonable access to CellStar
facilities to confirm that the process referred to above is adhered to by
CellStar in connection with the Xxxx and Hold Products."
c. Cricket shall make payment on all invoices for Xxxx and Hold Products
strictly in accordance with the terms thereof without defense, offset,
deduction, recoupment, or counterclaim of any kind arising solely from the fact
that such Xxxx and Hold Products may not yet have been delivered to Cricket;
provided,
-2-
however, that Cricket shall retain the right to raise any other defense, offset,
deduction, recoupment, or counterclaim that it is legally or equitably entitled
to raised related to the payment of any invoice. During the period such Xxxx and
Hold Products are stored in CellStar facilities CellStar shall have the right,
at its discretion, to charge reasonable fees for costs associated with
warehousing the Xxxx and Hold Products, but shall notify Cricket of its
intention to charge such fees and the amount of such fees before accepting any
Xxxx and Hold Products upon which it intends to charge such fees.
d. The Xxxx and Hold Procedures described in this Section 6 constitute the
current course of trade between Cricket and CellStar and are not, and shall not
be construed or presumed to create an improper or fraudulent transfer or
conveyance under the facts or the law.
Section 3. Xxxx and Hold Letter. Cricket acknowledges that it has executed
the Xxxx and Hold Letter attached hereto and incorporated herein as Schedule 1,
and that the Xxxx and Hold Letter was executed by a representative of Leap
authorized to execute such letter. CellStar shall provide its creditors and
lenders with that notice that is customary and/or required under law or any
agreements regarding the transfer of title and the Xxxx and Hold procedures set
forth in the Agreement and this First Amendment such that any and all such
lenders and creditors are on notice that the Xxxx and Hold Products held in the
CellStar facility are the property of Cricket and are not subject to any
security interest, lien or other encumbrance of CellStar or its lenders and
creditors. CellStar hereby confirms that nothing in the Agreement, this
Amendment or any of the transactions contemplated hereby would constitute a
breach or give rise to a default under any of CellStar's agreements with its
creditors, lenders or any other third party.
Section 4. All Other Provisions of Agreement Unaffected. Except as
specifically modified by this Amendment, all other terms and conditions
contained in the Agreement shall remain in full force and effect. Nothing herein
shall be construed as invalidating or in any way effecting the parties' mutual
commitments and obligations under their prior management of Products held in a
xxxx and hold process, notwithstanding the absence of any specific agreement in
writing covering that management or that such occurred prior to the effective
date of this Amendment.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hand to this
Amendment by their duly authorized representatives.
CELLSTAR, LTD CRICKET COMMUNICATIONS, INC.
By: National Auto Center, Inc.,
Its General Partner
By: /s/ Xxxxxx Xxxx Xxxxxxxxx By: /s/ Xxx XxXxxxx
-------------------------- -----------------------------
Title: Senior VP Title: VP Sales and Marketing
----------------------- ------------------------
-3-
