EXHIBIT B
Memorandum of Understanding
This Memorandum of Understanding is dated this 26th day of September, 1995, is
by and between X.X. Xxxxx ("Xxxxx") and PSI Energy, Inc. ("PSI"); and sets out
the intentions of both parties relating to a potential strategic alliance,
retail pilot program, and expanded retail program and alliance.
WHEREAS:
A. The parties intend for this Memorandum of Understanding to represent
an outline of events which would lead to a strategic alliance, a retail pilot
program and an expanded retail program and alliance. Neither party intends to
be legally bound by any of the provisions of this Memorandum; and
X. Xxxxx, a privately-owned company, is engaged in the retail sale of
electronics and appliances through stores located in the State of Indiana; and
C. PSI, a wholly-owned subsidiary of Cinergy Corp., is engaged in the
business of generating, transmitting and distributing electricity to its
customers in the State of Indiana, with customer service offices located
throughout the state; and
X. Xxxxx and PSI intend to work together through a strategic alliance to
develop and implement a pilot program utilizing a maximum of five (5) PSI field
office locations and Xxxxx s electronic and appliance distribution
infrastructure, to sell electronics and appliances at the retail level; and
E. Based on the success of the pilot program, Xxxxx and PSI may enter
into subsequent discussions to expand the program and to explore the potential
for other strategic alliances.
THE PARTIES STATE THAT THEIR MUTUAL INTENT IS AS FOLLOWS:
1. Strategic Alliance
1.1 The alliance is expected to begin in October 1995 and last
approximately 12 to 15 months.
1.2 During this period, Xxxxx intends to provide electronic and appliance
retailing expertise along with inventory, delivery and service support.
1.3 During this period, PSI intends to provide and staff a maximum of five
(5) PSI field office locations for the display and sale of electronic and
appliance equipment.
1.4 PSI and Xxxxx would expect to mutually agree on the five (5) PSI
offices as pilot locations to test the retailing of electronics and appliances.
1.5 PSI and Xxxxx intend to establish a level of dollar sales for each
location in order to determine the location s success. This level is expected
to be approximately $240,000 per year in sales.
1.6 PSI would intend to market these electronics and appliances using its
best efforts.
2. Retail Pilot Program
2.1 Xxxxx intends to stock the PSI office locations with display inventory
on consignment. Display products will be expected to change as needed for new
models. At the termination of the pilot program, the display models would be
returned to Xxxxx or purchased by PSI.
2.2 PSI, through the assistance of Xxxxx, intends to arrange with a third
party, the option for customers to finance their purchases.
2.3 When a customer makes a purchase from a PSI location, PSI would expect
to notify Xxxx s commercial ordering center creating the orders, to deliver the
product to the customer and xxxx PSI.
2.4 PSI would be charged $25.00 per customer stop or the UPS charge,
whichever is less, for the delivery of appliances and major electronics.
Customers would have the option to pick up smaller purchases at the PSI office
without an additional delivery fee.
2.5 Product service warranties are expected to be billed to PSI at the
manufacturer s rate rather than retail, allowing PSI the option to sell extended
warranties.
2.6 Xxxxx intends to establish sales volume levels with PSI that would
allow PSI to purchase products at even lower prices, possibly 3% - 5%.
2.7 Xxxxx intends to invoice PSI monthly for all products and services
sold.
3. Expanded Retail Program and Alliance
3.1 If the pilot program is considered by both parties to be a retail and
operational success, Xxxxx and PSI intend to review and select additional sites
for electronic and appliance sales. Sites would be chosen by the parties from
other field offices of PSI and/or The Cincinnati Gas & Electric Company, a
wholly-owned subsidiary of Cinergy Corp.
3.2 Xxxxx and PSI may also explore at that time, the possibility of
entering into other strategic alliances.
3.3 Xxxxx and PSI would further intend to make a reasonable effort to
achieve a mutually acceptable agreement for any such expansion phase.
4. Non-Binding Effect of Memorandum
4.1 PSI and Xxxxx intend for this Memorandum of Understanding to represent
an outline of events which could lead to the development of the alliance, the
retail program and the expanded retail program and alliance.
4.2 Neither party intends to be legally bound by any of the provisions of
this Memorandum.
IN WITNESS WHEREOF the parties have caused this Memorandum of Understanding to
be executed by their duly authorized representatives as of the day, month and
year first written above.
X.X. Xxxxx PSI Energy, Inc.
By: /s/ Xxxxx Xxxxxxxxxxx By: /s/ Xxxx X. Xxxx
Printed Name: Xxxxx Xxxxxxxxxxx Printed Name: Xxxx X. Xxxx
Printed Title: President Printed Title: President
