SPARE PARTS SALES AND AUTHORIZATION AGREEMENT
REDACTED
AS FILED
Exhibit
10.21
NOTE:
[*]* signifies redacted portions for which confidential treatment is
requested.
SPARE
PARTS SALES AND AUTHORIZATION AGREEMENT
This
Spare Parts Sales
and
Authorization Agreement (the “Agreement”) is made and entered into this 8 day of
July, 2008 by and between Philips Consumer Lifestyle, a division of Philips
Electronics North America Corporation, a Delaware corporation (“Philips”), with
offices at 0000 Xxxxxx Xxxxxx, Xxxxxxxx XX 00000 and Xxxxx Xxxxxxx, Inc.,
a
Florida corporation (“Xxxxx Xxxxxxx”) and a wholly owned subsidiary of Encompass
Group Affiliates, Inc., with offices at 0000 Xxxxx Xxxx 00, #00, Xx. Xxxxxxxxxx,
XX 00000. The Effective Date of this Agreement shall be the date on which
the
second Party to sign this Agreement executes the Agreement.
WHEREAS,
Xxxxx
Xxxxxxx sells certain products and materials to authorized service providers,
distributors and major retailers with service departments for service of
consumer electronic products;
WHEREAS,
Philips
desires that Xxxxx Xxxxxxx purchase certain products and/or materials for
resale
by Xxxxx Xxxxxxx to authorized service providers, distributors and major
retailers with service departments (collectively referred to as “Buyers”) for
service of Philips televisions. Such products and/or materials are replacement
parts for finished products sold by Philips;
WHEREAS,
Xxxxx
Xxxxxxx desires to purchase the Parts (as defined below) hereunder for resale
to
Buyers for service of Philips televisions; and
WHEREAS,
Philips
desires to authorize Xxxxx Xxxxxxx as their single primary authorized OEM
distributor for digital electronics television spare parts for Philips products
in North America generally applicable up to design year ending in 2008. Philips
makes no representation that it will sell or make available parts for any
design
year after 2008;
NOW,
THEREFORE,
for
good and valuable consideration, the receipt and sufficiency of which are
hereby
acknowledged, Xxxxx Xxxxxxx and Philips (together, “the Parties”) agree as
follows:
1.
SCOPE
This
Agreement shall govern the sale of all products and/or materials as more
particular set forth on Appendix 1 attached hereto (“Parts”) and incorporated
herein by reference which Parts shall be provided by Philips to Xxxxx Xxxxxxx
under this Agreement, and is intended to authorize Xxxxx Xxxxxxx to act as
their
single primary authorized OEM distributor of these digital electronics spare
parts for Philips products in North America. It is understood that the Parts
are
provided to Xxxxx Xxxxxxx by Philips for the purpose of resale by Xxxxx Xxxxxxx
to Buyers.
2.
PARTS, PURCHASE PRICE AND PAYMENT
2.1
Parts: Xxxxx Xxxxxxx agrees to purchase and Philips agrees to sell the Parts
under this Agreement, the initial on hand inventory of Parts on the Effective
Date as set forth in Appendix 1, and as appropriate on an ongoing basis
thereafter. The total amount of the initial bulk purchase of on hand inventory
of Parts will be based on actual on hand balances as specified on shipment
invoice, on the Effective Date. All shipments will be FOB
destination.
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
2.2
Price: The Purchase Price per unit is as indicated in Appendix 1 under the
column heading of Revaluated Standard Cost, exclusive of applicable sales
tax.
Accordingly, Xxxxx Xxxxxxx:
|
a)
|
shall
buy Parts [at the applicable Purchase Price] listed in Appendix
1 which is
compiled from current stock as of the Effective Date in Mechanicsburg
as
attached in Appendix 1.1 and available stock in Ozark as attached
in
Appendix 1.2.
|
|
b)
|
shall
purchase any inventory received after initial transfer through
separate
purchase orders, new part receipts of Parts in transit on the Effective
date, i.e. from suppliers and
Buyers.
|
|
c)
|
shall
buy all available Philips panel crates at agreed price as listed
in
Appendix 2
|
|
d)
|
shall
buy all current available Philips broken Flat panel products with
broken
or defective panels that are complete units, and in good condition
other
than the broken or defective panels at agreed price as listed in
Appendix
3.
|
shall
receive ownership of all available inventories of Philips defective Parts
at PTS
Electronics Inc. as listed in Appendix 4 at price of $[*]*.
2.3
Payment: Purchase of current inventory and supplies
Xxxxx
Xxxxxxx will wire [*]*%
of the
aggregate Purchase Price determined as of each shipment invoice value presented
by Philips to Philips’ bank account at Bank of America [*]*
days
before each shipment starts. Bank details will be separately
provided.
Xxxxx
Xxxxxxx will receive and reconcile shipment and wire final remaining balance
of
the aggregate Purchase Price to Philips bank account at Bank of America on
each
shipment invoice within [*]* days
after receipt of full shipment and completed reconciliation of receipt. Payment
shall be made only for Parts actually received and listed on Appendix
1.
|
a)
|
Xxxxx
Xxxxxxx will assume the financial liability for any invoices for
open
orders which Philips has placed for the purpose of supplying Buyers,
that
are not yet received on the Effective Date, but in transit from
the
vendors all of which are listed in Appendix
5.
|
2.4
Xxxxx
Xxxxxxx continued Parts support management
|
a)
|
Xxxxx
Xxxxxxx recognizes that Philips will continue to incur staff expense
to
support the parts business (supplier relation management) and also
recognizes that a portion of that labor expense is in support of
Xxxxx
Xxxxxxx Electronics. Xxxxx Xxxxxxx will reimburse Philips [*]*%
of the salary and related benefits of the primary parts support
leaders
that remain on Philips payroll for up to [*]*
Philips employees. This reimbursement will take place on a monthly
basis
based on statements of such costs presented to Xxxxx Xxxxxxx by
Philips.
|
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
2
| b) |
Xxxxx
Xxxxxxx will continue to buy complete flat panel products with
broken or
defective panels from Philips when at Philips’ request and when made
available based on agreed price as listed in Appendix
3.
|
|
c)
|
In
case of free of charge defective Part repairs or replacements by
the
Supplier when within the supplier’s warranty conditions, Xxxxx Xxxxxxx
agrees, to pay Philips [*]*%
of the then current standard cost of the repaired or replaced Part.
Xxxxx
Xxxxxxx will report free of charge Part sales monthly as formatted
in
Appendix 15. Payment will be initiated through Philips
invoice.
|
|
d)
|
Xxxxx
Xxxxxxx agrees to pay Philips a percentage of the consumer exchange
product value, based on Philips’ then current factory price (“MLO”), in
case of product exchanges due to (i) Parts on backorder, and (ii)
Parts no
longer available (“NLA”). The payment percentage is linked to the
improvement results as agreed in the monthly business review meeting
(“BRM”) and specified in Appendix 14. Payment will be initiated through
Philips invoice.
|
2.5
The
Parts are sold “AS IS WHERE IS” without any warranty, express, implied or
otherwise, except as explicitly provided in this Agreement.
THE
IMPLIED WARRANTIES OF NON INFRINGEMENT, FITNESS FOR A PARTICULAR PURPOSE
OR
MERCHANTABILITY ARE SPECIFICALLY DISCLAIMED BY PHILIPS.
3.
REPRESENTATIONS
3.1
Xxxxx
Xxxxxxx represents and warrants that:
|
a)
|
it
is regularly engaged in the business of purchasing and reselling
material
similar to the Parts, which are the subject of this Agreement,
and has the
requisite experience, facilities and qualified personnel to perform
its
obligations under this Agreement.
|
|
b)
|
it
will fulfill its obligations hereunder in compliance with all applicable
laws, and with all terms and conditions of this
Agreement.
|
|
c)
|
it
has obtained and shall maintain in effect, at all times during
the term of
this Agreement, all permits and licenses required, if any, for
performance
of its obligations under this
Agreement.
|
|
d)
|
it
shall continue to provide Parts and return possibilities to the
Buyers
with at least a service level comparable with Philips service levels
to
Buyers as defined in key performance indicators (“KPI’s”) in Appendix 16
and further, upon similar or reasonable commercial
terms.
|
3.2
Philips represents and warrants that:
|
a)
|
it
has valid title to the initial on hand inventory of Parts and any
other
parts transferred from Philips to Xxxxx Xxxxxxx, that the Parts
are free
from any encumbrances such warranties excluding the implied warranties
of
merchantability fitness for a particular purpose and non
infringement.
|
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
3
|
b)
|
it
will use all reasonable efforts to ensure continuity of supply
from
Philips suppliers to Xxxxx Xxxxxxx. Xxxxx Xxxxxxx also has the
right to
source any item though a vendor of their choosing as long as the
item
meets Philips specifications and quality.
|
|
c)
|
it
shall send a vendor change file to Buyers to permit Buyers to change
the
source information to facilitate Buyers ordering directly from
Xxxxx
Xxxxxxx. Philips will transfer its Service Business Portal domain
name to
Xxxxx Xxxxxxx to refer any Buyer for Philips Parts to Xxxxx Xxxxxxx
and
will perform any reasonable task to otherwise promote the availability
of
the Parts from Xxxxx Xxxxxxx. Philips shall exclusively refer Buyers
to
Xxxxx Xxxxxxx for Parts in North
America.
|
|
d)
|
Philips
hereby appoints Xxxxx Xxxxxxx as their preferred authorized OEM
distributor for digital electronics spare parts for Philips products
in
North America generally applicable to design year ending in 2008..
Xxxxx
Xxxxxxx shall be entitled to hold itself out as, and promote itself,
as
such preferred authorized distributor.
|
| 4. |
OBLIGATIONS
|
| 4.1 |
Xxxxx
Xxxxxxx is obligated to:
|
|
a)
|
own
Parts inventory and assume full obsolescence risk and management
after the
initial purchase of Philips inventory and inventory currently on
order
with vendor.
|
|
b)
|
manage
and resolve account payable balances with all suppliers with full
financial ownership.
|
|
c)
|
plan
and order Parts during the initial, replenishment and EOL phase
of Philips
products.
|
|
d)
|
actively
seek alternative sources when Parts are NLA from current
suppliers.
|
|
e)
|
provide
and package all Parts according to Philips
specifications.
|
|
f)
|
manage
and resolve account receivable balances with all Buyers with full
financial ownership.
|
|
g)
|
ship
Parts internationally. Shipping charges are allowable to all international
customers except Canada and US
territories.
|
|
h)
|
maintain
a similar web Parts look up and order capabilities for Buyers as
currently
provided by Philips. Similar order referrals for analog parts to
Xxxxxxx
will be maintained by Xxxxx Xxxxxxx.
|
|
i)
|
collect
and upload Parts sales data to Philips designated database from
ServicePower daily.
|
|
j)
|
report
new and changed Part pricing when available to Philips designated
database
from ServicePower.
|
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
4
|
k)
|
make
prepaid return labels available for all designated core Parts to
support
new and defective core returns.
|
|
l)
|
report
core Part returns which are showing signs of customer induced damage,
no
fault found, missing components and uploads results to Philips
designated
database daily.
|
|
m)
|
own
and manage defective Parts repair
process.
|
|
n)
|
sell
Parts to Philips authorized call center for consumer drop ship
and to
Philips authorized depot at master distributor
discount.
|
|
o)
|
acknowledge
that suggested maximum Parts prices for Buyers are set forth on
in
Appendix 1 and as outlined in the suggested pricing table from
Appendix
11, provided however that Xxxxx Xxxxxxx is free to set its own
selling
prices.
|
|
p)
|
chair
the monthly BRM where Xxxxx Xxxxxxx will present performance and
KPI’s and
will show an in-depth analysis and plan for improvements where
necessary.
The topics of discussion during the monthly BRM are outlines in
Appendix
17.
|
|
q)
|
provide
reports to Philips on Parts order book, past due orders and supplier
delivery performance, Parts backorder, Parts inventory and Parts
supply
performance to Buyers on an agreed to timing as defined in Appendix
15.
|
| 4.2 |
Philips
is obligated to:
|
|
a)
|
provide
current Part service bills of materials (“SBOMs”), as listed in Appendix
6, Part substitutions, as listed in Appendix 7 and Parts suppliers,
as
listed in Appendix 8.
|
|
b)
|
provide
supplier contact and order terms and conditions for all Parts,
as listed
in Appendix 9 and the warranty repair agreements, as listed in
Appendix
10.
|
|
c)
|
provide
Philips agreed supplier Parts cost, and vendor location updates
when
available as stored in lightning stroke database
(“LSDB”).
|
|
d)
|
provide
suggested maximum Part authorized ASC price in Appendix 1 and Buyer
discounts as listed in Appendix 11 and will determine on maximum
Parts
reimbursement with authorized service centers
(“ASCs”).
|
|
e)
|
provide
initial and last time buy (“LTB") notices for the Philips
Parts.
|
|
f)
|
provide
suggested new and defective Part return terms and conditions as
listed in
Appendix 12.
|
|
g)
|
provide
packaging spec’s for panel Parts as listed in Appendix
13.
|
|
h)
|
Sell
broken panel complete products to Xxxxx Xxxxxxx when available
and when
requested.
|
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
5
|
i)
|
Provide
service manuals for all Philips products which these Parts
support.
|
5.
CONFIDENTIALITY
5.1
Xxxxx
Xxxxxxx and Philips agree to execute, as part of this Agreement, a Nondisclosure
Agreement for the reciprocal protection of confidential information.
Notwithstanding any provision to the contrary contained in the Nondisclosure
Agreement, the Nondisclosure Agreement shall be in full force and effect
during
the term of this Agreement and any renewals thereof. Said Nondisclosure
agreement shall be attached hereto as Appendix 18.
6.
SHIPPING; INSPECTION
6,1
The
initial inventory of Parts that Xxxxx Xxxxxxx will purchase from Philips
shall
be shipped FOB destination, freight prepaid.
6.2
Upon
receipt of Parts, Xxxxx Xxxxxxx shall, within thirty business days, inspect
the
Part to verify Philips’ representations and to verify weights and quantities.
6.3
With
respect to Xxxxx Xxxxxxx’x right of inspection and rejection, Xxxxx Xxxxxxx
shall, within thirty business days of receipt of Parts, notify Philips of
any
variances with respect to the weights and/or quantities or any matters
pertaining to Philips’ representations concerning the Parts. Xxxxx Xxxxxxx shall
advise Philips within said thirty day period of any Parts rejected. Thereafter,
all Parts shall be deemed accepted by Xxxxx Xxxxxxx Electronics.
7.
TITLE; RISK OF LOSS
Title
and
risk of loss to the Parts shall pass to Xxxxx Xxxxxxx upon delivery at the
FOB
destination point.
8.
LIMITATION OF LIABILITY
THE
PARTIES UNDERSTAND AND AGREE THAT, NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN, NEITHER PARTY SHALL, UNDER ANY CIRCUMSTANCES, BE LIABLE TO THE OTHER
PARTY FOR CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES,
INCLUDING BUT NOT LIMITED TO LOST PROFITS, EVEN IF SUCH PARTY HAS BEEN APPRISED
OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING OR IF SUCH DAMAGES COULD HAVE
BEEN
REASONABLY FORESEEN. PHILIPS’ LIABILITY ON ANY CLAIM OF ANY KIND FOR ANY DAMAGE
OR LOSS ARISING OUT OF, RESULTING FROM, OR CONCERNING ANY ASPECT OF THIS
AGREEMENT OR FROM PROVIDED PRODUCTS FURNISHED HEREUNDER, WILL NOT EXCEED
THE
VALUE OF THE PRODUCTS SOLD BY PHILIPS PURSUANT TO THE TERMS HEREOF.
9.
RELATIONSHIP OF PARTIES
Notwithstanding
anything to the contrary contained in this Agreement, nothing herein shall
be
construed or deemed to create any of the following relationships between
the
Parties: (a) principal and agent; (b) employer and employee; (c) joint venture;
(d) partnership; or (e) franchiser and franchisee.
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
6
10.
ENTIRE AGREEMENT
10.1
This
Agreement consists of this document, as well as any previously or concurrently
executed confidentiality and/or nondisclosure agreement(s) between the Parties,
which confidentiality and/or nondisclosure agreements continue in full force
and
effect and are hereby incorporated by reference into this Agreement. As thus
defined, this Agreement sets forth the entire understanding of the Parties
regarding the subject matter hereof and supersedes all prior agreements and
understandings relating to the subject matter hereof.
10.2
Any
Purchase Orders placed by either Party under this Agreement shall be governed
only by the terms and conditions of this Agreement, notwithstanding any
preprinted terms and conditions on any such Purchase Order placed or on any
other preprinted form utilized.
10.3
This
Agreement, as now constituted or as it may subsequently have been modified,
may
not be modified except in a writing signed by both of the Parties.
11.
SEVERABILITY
If
any
provision, or portion of a provision, of this Agreement is held by a court
of
competent jurisdiction to be unenforceable because it is invalid or in conflict
with any law of any relevant jurisdiction, the validity of the remaining
provisions, or remaining portion(s) of the affected provision(s), shall not
be
affected, and the rights and obligations of the Parties shall be construed
and
enforced to the fullest extent as if the Agreement did not contain the
particular provision(s) or portion of provision(s) held to be unenforceable.
12.
WAIVER
12.1
No
waiver of any right(s) or obligation(s) under this Agreement shall be effective
unless in writing signed by both Parties.
12.2
No
waiver of any default or breach under this Agreement, whether intentional
or
not, shall be deemed to extend to any prior or subsequent default or breach
under this Agreement or affect any rights arising by virtue of any prior
or
subsequent such occurrence.
13.
SUCCESSORS & ASSIGNS
13.1
This
Agreement, and the respective rights and obligations of the Parties, shall
survive any transfer of ownership and any changes in name by either Party.
13.2
Neither Party shall assign this Agreement except for transfer of substantially
all of the assets of that Party or for a change solely in name of the Party.
14.
FORCE MAJEURE
Neither
Party shall be liable or deemed to be in default for any delay or failure
in
performance under this Agreement or interruption of service resulting directly
or indirectly by reason of, without limitation, the following: fire, flood,
earthquake, explosion or other casualty, strikes or labor disputes, disruptions
of telecommunications systems, inability to obtain supplies or power, war
or
other violence, any law, regulation, ordinance, or other requirement of any
government agency, acts of God, or any other act or condition beyond the
reasonable control of that Party; provided that the affected Party resumes
performance when reasonably able to do so.
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
7
15.
THIRD-PARTY BENEFICIARIES
No
provision of this Agreement is intended, nor will be interpreted, to provide
or
to create any third party beneficiary right or any other rights of any kind
in
any client, customer, affiliate, stockholder, employee, party, purchaser,
distributor or any other person or entity whatsoever.
16.
NOTICES
Any
notices hereunder shall be given in writing at the address of each Party
set
forth in the initial paragraph of this Agreement, or to such other address
as
either Party may substitute by written notice to the other. Notice shall
be
deemed served when delivered or, if delivery is not accomplished by reason
of
some fault of the addressee, when tendered.
|
Xxxxx
Xxxxxxx
|
Philips
|
|
|
Attn:
Xxxxxx Xxxxxxxx
|
Attn:
Consumer Care Manager
|
|
|
President
|
Consumer
Lifestyle
|
|
|
Xxxxx
Xxxxxxx
|
Philips
Electronics NA Corporation
|
|
|
0000
Xxxxx Xxxx 84, #12
|
0000
Xxxxxx Xxxxxx
|
|
|
Xx
Xxxxxxxxxx, XX 00000
|
Xxxxxxxx,
XX 00000
|
|
|
Attn:
Xxxxxx Xxxxxx
|
||
|
Chief
Operating Officer
|
||
|
Encompass
Group
|
||
|
0000
Xxxxx Xxxxxxx
|
||
|
Xxxxxxxxxxxxx,
XX 00000
|
17.
COMPLIANCE WITH LAWS
17.1
Each
Party shall comply with all applicable national, state and local laws and
regulations including but not limited to laws and regulations governing the
manufacture, processing, distribution, transportation, labeling, handling,
discharge, treatment, disposal, recycling, reclamation, use or other activity
relating to the Parts, as for which each Party is responsible due to the
exercise of full control.
17.2
The
Parts may require a valid export license issued by the U.S. Department of
Commerce prior to the export of such from the United States. As a condition
of
sale, Xxxxx Xxxxxxx will abide by all U.S. Export Administration regulations,
including compliance requirements to obtain a valid export license whenever
applicable.
18.
GOVERNING LAW
This
Agreement shall be governed by and construed under, and any dispute hereunder
shall be resolved in accordance with, the laws of the State of NY, without
regard for its conflicts of laws provisions. Any action against either Party
under this Agreement or arising from activities provided hereunder must be
brought within one year after the cause of action accrues and shall be brought
in the courts of the State of NY.
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
8
19.
SURVIVING OBLIGATIONS
The
Parties understand and acknowledge that their responsibilities and obligations
regarding confidentiality and confidential information, as well as those
other
obligations which by their nature would survive termination of contract,
shall
survive the termination of this Agreement for a period of two years.
20.
BINDING DOCUMENTS
20.1
If
this Agreement is executed in multiple counterparts, the Parties agree that
any
of such executed counterparts constitutes a valid and binding contract and
that,
collectively, such counterparts constitute one and the same contract.
20.2
Any
signed copy of this Agreement via facsimile or other process that accurately
transmits the original document shall be considered an original document.
21.
APPENDICES
|
1.
|
Parts
inventory (Part number, quantity, ump code, subclass code. date
of birth,
standard cost, EOL indicator, past 12 months demand, extended
cost)
|
|
1.1.
|
Mechanicsburg
inventory
|
|
1.2.
|
Ozark
available inventory
|
|
2.
|
Panel
crate (Crate size, discount, quantity, extended
cost)
|
|
3.
|
Broken
products list (model, quantity, price, discount, extended
cost)
|
|
4.
|
Defective
product at PTS (Part number,
quantity)
|
|
5.
|
Open
orders for Buyers needs (purchase order number, Part number, quantity,
supplier, order date, expected receipt date, standard cost, purchase
order
price)
|
|
6.
|
Service
xxxx of material (“SBOM”) - (model number, serial number, location code,
Part number, description).
|
|
7.
|
Parts
substitution list (Part number, substitution Part number , hard/soft
sub
criteria)
|
|
8.
|
Part
suppliers (Part number, supplier funloc, supplier part
number)
|
|
9.
|
Supplier
contracts terms and conditions
|
|
10.
|
Supplier
warranty conditions
|
|
11.
|
Suggested
Parts price matrix and discount table, Buyer list and discount
code
|
|
12.
|
New
and defective Part return process
|
|
13.
|
Packaging
specifications
|
|
14.
|
Xxxxx
Xxxxxxx obligation for Part
shortage
|
|
15.
|
Reporting
formats
|
|
16.
|
KPI’s
|
|
17.
|
Monthly
BRM discussion topics
|
|
18.
|
Nondisclosure
Agreement
|
22.
TERMINATION
Philips
may terminate the contract in the event that Xxxxx Xxxxxxx breach of this
agreement and such breach, if curable, has not been cured within 30 days
of
notice from Philips. Further, Philips may terminate this Agreement for
convenience when its business strategy requires by providing Xxxxx Xxxxxxx
with
60 days written notice, provided, however, that Philips pay to Xxxxx Xxxxxxx
an
amount equal to (I) the remaining rent obligation under the warehouse lease
Xxxxx Xxxxxxx entered into in connection with its obligations under this
Agreement, and (ii) other costs such as utilities, taxes, maintenance for
the
duration of the warehouse lease, a 30 months lease commencing in July 2008
with
a maximum of $17,500 per remaining month.
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
9
In
the
event of termination as set forth above, Philips will purchase all remaining
inventory from Xxxxx Xxxxxxx at its standard cost plus [*]*%
during
the first 60 days after the initial transfer of inventory and thereafter,
standard cost plus [*]*%
provided that Xxxxx Xxxxxxx packages parts properly to prevent damage during
shipment and transfers all sales history and SBOMs. Philips will pay for
transportation cost. The parties will mutual agree on an exit
strategy.
23.
NONSOLICITATION
For
a
period of twelve (12) months following the Effective Date, Xxxxx Xxxxxxx
agrees
to use its reasonable endeavors to insure that it and its parent and affiliates
will not solicit the services of any Philips employees without Philips prior
consent. Notwithstanding the foregoing, this Section 22 shall not prevent
Xxxxx
Xxxxxxx from (i) employing any person who contacts Xxxxx Xxxxxxx on his or
her
own initiative without solicitation by Xxxxx Xxxxxxx and (ii) making general
searches for employees by use of advertisements or the media which are not
directly targeted at the Philips employees and from employing any such persons
as a result of such searches.
IN
WITNESS WHEREOF,
the
Parties have executed this Agreement by their duly authorized representatives
on
the dates set forth below:
| Philips Consumer Lifestyle | Xxxxx Xxxxxxx, Inc. | |||
|
/s/
Xxxx Xxxxxx by Xxxx Xxxxxx
|
By:
|
/s/
Xxxxxx Xxxxxxxx
|
||
|
Name:
Xxxx Xxxxxx,
|
Name:
Xxxxxx Xxxxxxxx,
|
|||
|
Title:
Vice President Consumer Care
|
Title:
President
|
|||
|
Philips
Consumer Lifestyle
|
||||
|
By:
|
By:
|
/s/
Xxxxxx X. Xxxxxx
|
||
|
Name:
Toon Clerckx
|
Name:
Xxxxxx X. Xxxxxx,
|
|||
|
Title:
Senior Vice President & CFO
|
Title:
Chief Operating Officer
|
|||
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
10
APPENDIX
1
Parts
inventory (Part number, quantity, ump code, subclass code. date of birth,
standard cost, EOL indicator, past 12 months demand, extended cost)
|
·
|
Mechanicsburg
inventory
|
|
·
|
Ozark
available inventory
|
UMP
10:
EOL, No supply source
UMP
38:
NLA
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
2
Panel
crate (Crate size, discount, quantity, extended cost)
|
•
|
Existing
crates sold at [*]*%
of cost: LCD/PDP crates
|
|
–
|
42”
crates = $[*]*
per piece
|
|
–
|
50”
crates = $[*]*,-
per piece
|
|
–
|
63”
crates = ${*}*,-
per piece
|
|
•
|
New
crates sold at [*]*%
of cost
|
|
–
|
42”
carets = $[*]*,-
per piece
|
|
–
|
50”
crates = $[*]*,-
per piece
|
|
–
|
63”
crates = $[*]*,-
per piece
|
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
3
Broken
products list (model, quantity, price, discount, extended cost)
|
•
|
Scrap
product sales - qty*MLO*x%
|
|
–
|
2k8
product range / current year: MLO*[*]*%
|
|
–
|
2k7
product range / last year: MLO*[*]*%
|
|
–
|
2k6
product range / 2 years old: MLO*[*]*%
|
|
–
|
Etc…
with [*]*%
decrements
|
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
4
Defective
product at PTS (Part number, quantity)
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
5
Open
orders for Buyers needs (purchase order number, Part number, quantity, supplier,
order date, expected receipt date, standard cost, purchase order
price)
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
6
Service
xxxx of material (“SBOM”) – (model number, serial number, location code,
Part number, description).
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
7
Parts
substitution list (Part number, substitution Part number , hard/soft sub
criteria)
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
8
Part
suppliers (Part number, supplier funloc, supplier part number)
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
9
Supplier
contacts terms and conditions
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
10
Supplier
warranty conditions
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
11
Suggested
Parts price matrix and discount table, Buyer list and discount code
Suggested
Parts sales price matrix
|
[Cost
x]
|
Remotes
|
<100$ ASC price
|
>100$
|
Panels
|
Philips Price codes
|
|||||||||||
|
ASC
pricing
|
$
|
[*}*
flat
rate
|
X[*]*
|
X[*]*
|
X[*]*
|
L
|
||||||||||
| $ |
1 minimum price
|
|||||||||||||||
|
Discount
table
|
||||||||||||||||
|
[ASC
price x]
|
Remotes
|
<100$
|
>100$
|
Panels
|
Philips Price codes
|
|||||||||||
|
Master
distributor
|
X[*]*
|
X[*]*
|
X[*]*
|
X[*]*
|
I,
T
|
|||||||||||
|
Distributor
|
X[*]*
|
X[*]*
|
X[*]*
|
X[*]*
|
C,
K, M
|
|||||||||||
|
Non
auth ASC
|
X[*]*
|
X[*]*
|
X[*]*
|
X[*]*
|
B,
F
|
|||||||||||
|
List
price
|
X[*]*
|
X[*]*
|
X[*]*
|
X[*]*
|
A
|
|||||||||||
Buyers
name – price code list:
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
12
New
and
defective Part return process
PHILIPS
|
New*
|
(Restock)
|
Defective**
|
DUD***
|
||||||
|
Consumer
|
30
days
|
15
|
%
|
90
days
|
90
days
|
||||
|
ASC
|
30
days
31
-90 days
|
0
15
|
%
|
90
days
|
90
days
|
||||
|
ASC
Select
+
Aaron’s
|
60
days
61
-90 days
91
- 120 days
|
0
15
†
|
%
|
90
days
|
90
days
|
||||
|
Master
Distributor
|
30
days
|
15
|
%
|
120
days
|
120
days
|
||||
|
|
National
Parts
Fidelitone
|
30
days
|
15
|
%
|
120
days
|
120
days
|
|||
|
ASD
|
Circuit
City
Rent-A-Center
|
|
30
days
31
-90 days
|
|
0
15
|
%
|
90
days
|
|
90
days
|
|
*
|
Only
new returns have restocking fees. Fees will be waived
if:
|
|
|
1)
|
Wrong
part was shipped
|
|
|
2)
|
Wrong
part was given by Tech Support
|
|
|
**
|
All
defective returns must have a reorder
|
|
|
***
|
All
parts with a DUD value are shipped with a prepaid return
label
|
|
|
†
|
Note:
Approval required
|
|
|
CONFIDENTIAL
|
April
11, 2008
|
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX 13
Packaging
specifications
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
14
Xxxxx
Xxxxxxx obligation for part shortages
Xxxxx
Xxxxxxx agrees to pay Philips a, percentage as set forth below, of the consumer
exchange product value, based on Philips’ then current factory price (“MLO”), in
case of (i) product exchanges due to Parts on backorder or (ii) Parts no
longer
available (“NLA”). The payment percentage is linked to the improvement results
from the monthly business review meeting (“BRM”) and specified below. Payment
will be initiated through Philips invoice.
In
case
the repair is not cost effective due to unreasonable Parts sales pricing
by
Xxxxx Xxxxxxx, Philips will have opportunity to buy this Parts from Xxxxx
Xxxxxxx at the current book value of Xxxxx Xxxxxxx.
The
percentage of the MLO Xxxxx Xxxxxxx will pay to Philips is:
|
a.
|
[*]*%
-
Xxxxx Xxxxxxx agrees to pay Philips [*]*%
of consumer product exchange value in case a Part is end of life
(“EOL”),
NLA or with no supply source at moment of transfer as highlighted
in
Appendix 1, or when Parts availability is outside of the control
of Xxxxx
Xxxxxxx like no EOL notice given by Philips, or supplier or parts
not made
available by supplier after proven multiple (4) escalations by
phone and
email to supplier and on time escalation to Philips of supplier
performance issues.
|
|
b.
|
[*]*%
-
The first 30 days after issues arise and presented in monthly BRM.
Xxxxx
Xxxxxxx is obligated to present a detailed analysis and a corrective
action plan in order to solve the products exchanges before the
end of the
month. If the issue is related to Philips, the issue will be taken
under
point a).
|
|
c.
|
[*]*%
-
Days 31-60 after issue was raised and presented during BRM and
corrective
action did not resolve issue.
|
|
d.
|
[*]*%
-
Days 61-90 after issue was raised and presented during BRM and
corrective
action did not resolve issue.
|
|
e.
|
[*]*%
-
Days 91-120 after issue was raised and presented during BRM and
corrective
action did not resolve issue..
|
|
f.
|
[*]*%
-
Days 121 and onwards after issue was raised and presented during
BRM and
corrective action did not resolve
issue.
|
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
15
Reporting
formats
a).
Free of charge part receipts & sales
Monthly
|
Purch
Doc
Number
|
Description
|
Philips
P/N
|
Vendor
Name
|
Vendor
Material
Number
|
Rec
Qty
|
Delivery
date
|
LSDB
price
(at
date of
receipt)
|
PO
Ext
value
|
Philips
invoice value
(50%
of PO Ext value)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
b).
Consumer Product exchange
Weekly
|
Philips P/N
|
Description
|
Vendor Name
|
Vendor
Material
Number
|
Code (NLA,
EOL, NoSource)
|
Standard
Cost
|
On Hand
Qty
|
Back Order
Pos
|
Back order
pcs
|
Extended
cost
|
Date of Birth
|
||||||||||
|
List
at moment of transfer: NLA (no stock), EOL/No source - with stock
until stock is depleated.
|
||||||||||||||||||||
|
310432842631
|
CBA SERV
S
|
Xxxxxx
|
EOL
|
198.31
|
1
|
251
|
469
|
93007.39
|
2005
|
|||||||||||
|
List
updates by VB: EOL miss due to no Philips announcement
|
||||||||||||||||||||
|
List
updates VB: Temp issue list on supplier performance after
escalation
|
||||||||||||||||||||
|
310432842631
|
|
CBA SERV
S
|
|
|
|
|
|
|
|
|
|
|||||||||
c).
Order book
Open
orders: Weekly
|
Purch
Doc
Number
|
Description
|
Philips
P/N
|
Vendor
Name
|
Vendor
Material
Number
|
PO Type
|
Order Qty
|
Rec Qty
|
PO Qty
Open
|
%
Complete
|
Order
Date
|
continue..
|
|||||||||||
|
7801061717
|
INVERTER
|
99651000804
|
LG
Philips
|
6632L-045
|
NEW
|
20
|
0
|
20
|
0
|
% |
2007-09-18
|
|||||||||||
|
REP
|
||||||||||||||||||||||
|
WAR
|
|
Ship
Date
|
Delivery
Due
Date
|
PO
value
|
Est Stock
Avail Date
|
Days
Past
Due
|
B/O Pcs
|
3-Month
demand
history
|
6-Month
demand
history
|
12-Month
demand
history
|
Date Of Birth
|
Vendor
confirmated
delivery
date
|
In
Transit
(Y/N)
|
|||||||||||
|
2007-10-02
|
|
2007-10-10
|
|
$ 258.40
|
|
0
|
|
159
|
|
0
|
|
0
|
|
0
|
|
0
|
|
2007-08-29
|
|
|
||
NEW –
New buy orders
REP
–
Repair orders with no warranty
WAR
–
Repair orders with warranty
Closed
orders: monthly
|
Purch Doc
Number
|
Description
|
Philips P/N
|
Vendor
Name
|
Vendor Material
Number
|
PO
Type
|
Order
Qty
|
Rec
Qty
|
PO Qty
Open
|
%
Complete
|
Order
Date
|
Receipt
Date
|
|||||||||||
|
NEW
|
||||||||||||||||||||||
|
REP
|
||||||||||||||||||||||
|
|
|
|
|
|
WAR
|
|
|
|
|
|
|
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
d).
Supplier performance and past due orders
Monthly
|
On
Time Performance
|
|||||||||||||||||||||||||
|
TARGET
|
95%
|
|
Oct
’07
|
Nov
’07
|
Dec
’07
|
Jan
’08
|
Feb
’08
|
Mar
’08
|
Etc..
|
||||||||||||||||
|
LG
PHILIPS LCD CO LTD
|
100
|
%
|
100
|
%
|
100
|
%
|
63
|
%
|
76
|
%
|
87
|
%
|
|||||||||||||
|
Past
Due Occurrences
|
|||||||||||||||||||||||||
|
TARGET
|
0
|
Oct
’07
|
Nov
’07
|
Dec
’07
|
Jan
’08
|
Feb
’08
|
Mar
’08
|
||||||||||||||||||
|
LG
PHILIPS LCD CO LTD
|
0
|
1
|
8
|
6
|
4
|
3
|
|||||||||||||||||||
e).
Parts backorders
Weekly
|
Philips P/N
|
Description
|
Vendor
Name
|
Vendor
Material
Number
|
Standard
Cost
|
On Hand
Qty
|
Extended
cost
|
Back
order POs
total
|
Back order
POs
>30 days
|
Back order
pcs
total
|
Back
order pcs
|
Date of
Birth
|
|||||||||||
|
310432842631
|
|
CBA SERVS
|
|
|
|
198.31
|
|
1
|
|
93007.39
|
|
251
|
|
25
|
|
469
|
|
25
|
|
2005
|
f). Parts supply performance to Buyers
Weekly
rolling month
|
Supply performance
|
Target
|
Actual
0807
|
Actual
0907
|
Actual
1007
|
Actual
1107
|
Actual
1207
|
Actual
0108
|
Actual
0208
|
Notes
|
|||||||||||||||||||
|
Parts
Order Fill Percentage (within 1 day of receipt)
|
89
|
%
|
91
|
%
|
90
|
%
|
89
|
% |
87
|
%
|
88
|
%
|
87
|
%
|
89
|
%
|
||||||||||||
|
Parts
Order Fill Percentage (10 days after receipt)
|
96
|
%
|
99
|
%
|
98
|
%
|
97
|
%
|
95
|
%
|
96
|
%
|
95
|
%
|
97
|
%
|
||||||||||||
|
Turnaround
Time Performance (Receipt of Order to Shipment within 1 business
day)
|
99
|
%
|
99
|
%
|
99
|
%
|
99
|
%
|
99
|
%
|
99
|
%
|
100
|
%
|
100
|
%
|
||||||||||||
g). Inventory
Weekly
|
Philips P/N
|
Description
|
Vendor
Name
|
Vendor
Material
Number
|
On Hand
Qty
|
LSDB
price
|
Standard
Cost
|
Base
price
|
Date of
birth
|
Ext
cost
|
UMP code
(NLA, EOL,
no source)
|
Substitution
part
|
12 Months
demand:
Apr
|
Mar
|
Feb … etc
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX 16
KPI’s
|
KPI’s
|
Target
|
Month
|
|
|
Notes
|
|||||||||||
|
Delivery:
Parts Order Fill Percentage (within 1 day of receipt)
|
>=89
|
%
|
||||||||||||||
|
Delivery:
Parts Order Fill Percentage (10 days after receipt)
|
>=96
|
%
|
||||||||||||||
|
Performance
(Receipt of Order to Shipment within 1 business day)
|
>=99
|
%
|
||||||||||||||
|
Inventory
risk: Back-orders total
|
<=2000
PCS
|
|||||||||||||||
|
Inventory
risk: Back-orders> 30 days
|
<=200
PCS
|
|||||||||||||||
|
Supply:
Order past dues
|
0
|
|||||||||||||||
|
Supply:
On time performance
|
>=95
|
%
|
||||||||||||||
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
17
Monthly
BRM discussion topics
KPI
performance
Improvement
plan
Inventory
level
Order
book
Supplier
performance
Free
of
charge Part receipts
Discretionary
account status
Obsolescence
accrual
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
APPENDIX
18
Nondisclosure
Agreement
Initial
Philips___ET___
Initial
Xxxxx Baldwin___RC___
