Exhibit 10.3
AMENDMENT NO. 3 TO THE MASTER SERVICES
AND SUPPLY AGREEMENT BETWEEN
FORD MOTOR COMPANY AND PEOPLEPC, INC.
This Amendment No. 3 ("Third Amendment") is made effective this 18th day of
July, 2001, by and between Ford Motor Company ("Ford"), a Delaware corporation,
located at Xxx Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, and PeoplePC, Inc.
("PeoplePC"), a Delaware corporation with offices at 000 Xxxx Xxxxxx, Xxxxx
0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000.
WHEREAS, Ford and PeoplePC entered into a Master Services and Supply
Agreement dated April 4, 2000 (the "Master Agreement"), relating to the Ford
Employee Connectivity Program ("FECP"); and
WHEREAS, on September 29, 2000, PeoplePC, Ford, and Ford Motor Credit
Company ("Ford Credit") entered into an "Addendum to Master Services and Supply
Agreement," pursuant to which PeoplePC agreed to make Ford Motor Credit Company
the exclusive provider of Financial Services presented to customers under a
customer and dealer employee program contemplated by Ford and Ford Credit; and
WHEREAS, on June 30, 2000, PeoplePC and Ford entered into "Amendment No. 1"
to the Master Agreement, pursuant to which Ford entered into several financial
commitments necessary for PeoplePC to obtain financing for the FECP; and
WHEREAS, on July 14, 2000, PeoplePC and Ford restated Amendment No. 1; and
WHEREAS, on July 18, 2000, PeoplePC and Ford further restated Amendment No.
1; and
WHEREAS, on March 19, 2001, PeoplePC and Ford entered into Amendment No. 2
to the Master Agreement (Upgrade Rebates); and
WHEREAS, PeoplePC has incurred expenses in preparing for rollouts of the
FECP in countries other than the United States (the "International Rollout
Expenses"); and
WHEREAS, PeoplePC has asserted a claim against Ford under the Master
Agreement as detailed in the PeoplePC invoice number 1226CCC01 dated December
26, 2000 (the "Additional Costs"); and
WHEREAS, Ford and PeoplePC wish to settle all past, present, and future
claims related to the International Rollout Expenses, Additional Costs, and
products supplied and services rendered by PeoplePC prior to the effective date
of this Third Amendment; and
WHEREAS, the parties wish further to amend the Master Agreement;
NOW, THEREFORE, the parties agree to amend the Master Agreement as follows:
1. The following sections will be deleted from the Master Agreement:
2.3; 3.1 through 3.4; 4.1; 4.2; 5.2; 6.3; and 6.5. No surviving provision of the
Master Agreement, as
amended, will be construed to obligate Ford after the effective date of this
Amendment to purchase PeoplePC Solutions from PeoplePC, or to limit Ford in
purchasing similar products and services elsewhere.
2. Settlement of Claims.
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x. Xxxx will promptly pay to PeoplePC the amount of $6,600,000, in
full and complete satisfaction of any obligation or duty owed by Ford and/or the
Ford Affiliates (and any claim arising out of a breach of such obligation or
duty) relating to (i) the International Rollout Expenses; (ii) damages and costs
incurred by PeoplePC in preparing for the rollout of the FECP in any country in
the world, or relating to Ford's cancellation or deferment of any such rollout;
(iii) the Additional Costs; and (iv) products supplied and services rendered by
PeoplePC under the Master Agreement prior to the effective date of this Third
Amendment, excepting only (A) obligations to pay Ford's portion of the unpaid
and outstanding purchase prices of any PeoplePC Solutions sold and delivered
under the Master Agreement; (B) Ford's liability under Section 8(c) of Exhibit A
to the Master Agreement; and (C) payment of invoice no. 1100-04 dated July 9,
2001, in the amount of $35, 920.81.
b. Upon execution of this Third Amendment, Ford will promptly pay to
PeoplePC the amounts referred to in Section 2.a(iv)(C) above.
3. Rescission of May 9, 2001 Letter. Ford hereby rescinds that certain
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letter dated May 9, 2001, from Xxxx Xxxxx to Xxxx Xxxxx, without any prejudice
to the future assertion of the claims or assertions presented therein.
4. Sales Taxes.
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a. The following words are added to the end of Section 8(c) of
Exhibit A:
"Ford and Ford Affiliates will have no liability for interest and
penalties imposed by any taxing authority regarding the obligations of
this Paragraph, except to the extent that such interest and penalties
are caused by the actions or omissions of Ford."
b. The following Paragraphs shall be added under Section 8
"Invoices, Payment" of Exhibit A:
"Notwithstanding that certain letter dated May 7, 2001 from
Xxxxxxx Xxxxxxxxx to Xxxx Xxxxx, Ford acknowledges that it will
reimburse PeoplePC for any sales tax liability (excluding any
applicable interest and/or penalties) legally assessed against PeoplePC
by California and/or any other state on sales transactions under the
Master Agreement. Such reimbursement will extend to sales taxes that
may be assessed against PeoplePC both on the purchase price of
PeoplePC's "Desk Top Basic" and to the purchase price of any Solution
Upgrades selected by the employee.
PeoplePC will share with Ford all relevant information and
documents concerning any communications with or requests for
information from state or local sales tax authorities, and consult with
Ford regarding the appropriate approaches toward resolving and
minimizing sales tax liabilities in each state. Any such information
and documents will be submitted to Ford for its review, prior to
releasing the
requested data to the applicable taxing authority. PeoplePC agrees to
provide Ford with notice of all proposed sales tax assessments received
as a result of any audit, examination, or other actions of any state or
local taxing authority which may result in an assessment of sales tax,
at least 30 days prior to any expiration of applicable statutory appeal
deadlines or at least 30 days before any proposed resolution of an
assessment which may occur before the issuance of a statutory
assessment. Except in the case of Direct Pay states (see next
paragraph), reimbursement of any tax assessment will be contingent upon
final proof of payment of the assessed tax by PeoplePC. The parties
will cooperate to promptly resolve all sales tax issues resulting from
sales made under the Master Agreement.
Ford will issue to PeoplePC copies of Ford's Direct Pay Permits
for the following states: Georgia, Illinois, Indiana, Kentucky,
Michigan, Minnesota, Missouri, New Jersey, New York, Ohio, Tennessee,
and Virginia. Pursuant to the direct pay authority granted to it by
these states, Ford has responsibility for any use taxes due and
PeoplePC may rely on the Direct Pay Permits in not billing sales taxes
on transactions with Ford."
5. During the Term of the Master Agreement, Ford will place PeoplePC's
"smiley face" logo (in the expanded form incorporating the name "PeoplePC") on
the following components of the enrollment materials that Ford sends to Eligible
Employees: front outside of envelope and letter or principal communication
addressed to Eligible Employee. The logo will be printed in a reasonably
prominent font size and position. At least 15 days prior to the first printing
of such enrollment materials, and each time the font size, position, or
appearance of the logo is changed, Ford will deliver such materials to PeoplePC
for its review and approval, which approval will not be unreasonably withheld.
PeoplePC represents and warrants that it owns or has the right to authorize Ford
to use the logo in such fashion. PeoplePC shall provide Ford with proof that it
has the right to use the logo in each country in which Ford delivers enrollment
materials to Eligible Employees. "Proof" shall consist either of evidence of
trademark registration or other document demonstrating such right to use, or the
opinion of PeoplePC's counsel that PeoplePC has such right to use. Such opinion
of counsel will be in a form approved by Ford, such approval not to be
unreasonably withheld. In the absence of such proof for a particular country,
Ford will have no obligation to use the logo on such materials in that country.
PeoplePC will indemnify Ford for and hold it harmless from any loss, damage,
judgment, expense, including reasonable counsel fees, settlement or recovery
arising from or related to any breach or alleged breach of any of the foregoing
warranty.
6. References.
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a. Within fifteen business days after the effective date of this
Third Amendment, Ford shall provide to PeoplePC (i) a letter of appreciation
from Xxxx Xxxxx in mutually acceptable form and (ii) written, not-unfavourable,
and substantive comments that PeoplePC may use to describe its participation in
the FECP. PeoplePC may show to others the letter of appreciation; provided, that
PeoplePC does not edit or redact the letter. Upon notice to Ford in each
instance, PeoplePC may use the substantive comments from Ford through April 4,
2003 in printed marketing materials; provided, that Ford approves of the
comments in the context of the particular marketing materials. Ford shall have
three business days from receipt hereof to approve or disapprove of use of the
comments in context; if Ford does not respond in writing or
by email to PeoplePC within three days from receipt thereof of such notice, Ford
will be deemed to have approved of such usage. PeoplePC is required to use each
substantive comment in its entirety, without summarizing, abbreviating, adding
to, or modifying the comment in any way.
b. PeoplePC may also, from time to time, request additional
references from Ford regarding PeoplePC's performance under the Master
Agreement. Such requests shall be directed to Xxx Xxxxxxxxx or a successor
designated by Ford. Ford will not unreasonably refuse to accommodate such
requests.
7. No Other Modifications. Except as provided above, the terms and
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conditions of the Master Agreement remain unchanged. In the event of any
inconsistency or conflict between the terms and conditions of the Master
Agreement and the terms and conditions of this Amendment No. 3, the terms and
condition of this Amendment No. 3 will control. Where applicable, the defined
terms in the Master Agreement will have the same meaning in this Amendment No.
3.
IN WITNESS WHEREOF, the parties have caused this Third Amendment to be duly
executed by an authorized representative to be effective as of the date first
written above.
FORD MOTOR COMPANY PEOPLEPC, INC.
By: _____________________________ By: ________________________________
Its: ____________________________ Its: ________________________________
By: ______________________________
Its: _____________________________
