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PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED PORTIONS HAVE BEEN REPLACED WITH THE CODE, "[** **]".
Exhibit 10.13
PROGRAM SERVICES AGREEMENT
This Program Services Agreement (the "Agreement") dated and effective as
of July 1, 2000 (the "Effective Date") is by and between Toshiba America
Information Systems, Inc. ("TOSHIBA"), a California corporation with its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
Direct Alliance Corporation ("DAC"), an Arizona corporation, with its principal
place of business at 8123 Hardy, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. Insight Enterprises,
Inc., a Delaware corporation, having its principal place of business at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Parent") is also a party for the limited
purposes described in Section 22.
RECITALS
A. DAC is a direct marketer, which provides outsourcing services for
information technology products, consisting of marketing, sales, and fulfillment
functions. DAC is a wholly owned subsidiary of Parent.
B. TOSHIBA desires to outsource on a non-exclusive basis certain aspects
of a direct-channel sales operation and wishes to engage DAC in such efforts.
The parties understand that the Program described in this Agreement will not
involve the storage or warehousing, by DAC, of products for sale, except for
returns. However, TOSHIBA may elect to change the fulfillment relationship in
the future as defined in Section 2.1.
IN CONSIDERATION of the respective commitments of the parties, as set
forth in this Agreement, DAC shall furnish certain services to TOSHIBA and
TOSHIBA shall make payments to DAC in exchange for such services, all as set
forth in this Agreement and the Exhibits, Attachments and Schedules attached
hereto, and in connection therewith the parties agree as follows:
1. TERM.
The initial term of this Agreement shall begin on July 1, 2000 and shall
expire at the close of business on June 30, 2002. TOSHIBA may, at its sole
option, extend this agreement for an additional nine (9) month term. Exercise of
such extension will be provided in writing to DAC no later than January 31,
2002. Thereafter, this Agreement shall renew by mutual agreement for an
additional one year period subject to the terms agreed herein. Additionally,
either party may terminate this Agreement as provided in Section 12.
2. THE PROGRAM.
2.1 The Program is described in further detail in the Program Description,
which is attached to this Agreement as Exhibit A. The parties acknowledge that
Exhibit A is subject to further revision, and that in the event of a conflict
between the terms of Exhibit A and the body of this Agreement, the body of this
Agreement shall prevail. Additions or changes to the services, policies
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or procedures, which may be jointly developed and agreed to from time to time by
DAC and TOSHIBA, may be added to the Program only when set forth in writing and
executed by both parties.
2.2 DAC acknowledges that it is an independent contractor retained by
TOSHIBA for the limited purpose of performing its duties pursuant to this
Agreement. DAC agrees not to modify any representations, equipment
specifications, or stated performance parameters provided by TOSHIBA without
TOSHIBA's prior written consent.
3. DEFINITIONS.
3.1 "Allocated Fees" shall mean the fees described in Section 4.4.
3.2 A "Change of Control" shall be deemed to have occurred if (i) a merger
or consolidation of DAC or Parent with any other entity occurs, (ii) a complete
liquidation of DAC or Parent is completed, or (iii) controlling interest of
DAC's or Parent's assets or voting stock are sold, exchanged or otherwise
disposed of.
3.3 "DAC" shall mean Direct Alliance Corporation; provided, however, that
Parent shall be liable for any obligations or liabilities of DAC that arise in
connection with this Agreement as provided in Section 22 hereto.
3.4 "Event of Default" shall mean (a) a failure by DAC to comply with any
material provision of this Agreement, which TOSHIBA declares to be an Event of
Default; (b) DAC becomes insolvent, becomes subject to any bankruptcy proceeding
or makes an assignment for the benefit of creditors, or a receiver or similar
officer is appointed to take charge of all or a substantial part of DAC's
assets; (c) DAC assigns or attempts to assign, or subcontracts or attempts to
subcontract, any of its rights or obligations under this Agreement to a third
party without TOSHIBA's prior written approval; or (d) a Change of Control
occurs without compliance by DAC or Parent, as appropriate with the provisions
of Section 22.
3.5 "Goods" shall mean, individually and/or collectively, all TOSHIBA
Products and TOSHIBA Materials and any products or materials manufactured by
third parties that are purchased by TOSHIBA for the purpose of fulfilling orders
to TOSHIBA customers.
3.6 "TOSHIBA" shall mean Toshiba America Information Systems, Inc. and its
permitted assigns.
3.7 "TOSHIBA Authorized Signer" shall mean one of the TOSHIBA employees
listed in Section 20.
3.8 "TOSHIBA Materials" shall mean, individually and/or collectively, all
parts, materials or components supplied by TOSHIBA, which are returned by
customers and stored or
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warehoused by DAC for purposes of the Program. Such TOSHIBA Materials may be
manufactured by TOSHIBA or an OEM of TOSHIBA.
3.9 "TOSHIBA Products" shall mean, individually and/or collectively, all
products supplied by TOSHIBA which are to be stored or warehoused by DAC for
purposes of the Program. Such TOSHIBA Products may be manufactured by TOSHIBA or
an OEM of TOSHIBA.
3.10 All references to the term "monthly" will mean the calendar month,
except as otherwise stated herein.
3.11 "Net Sales" shall mean the total of all invoiced sales of Goods by
DAC, less taxes, less any returns for credit during that same sales period and
as adjusted for exchanges.
3.12 "Parent" shall mean Insight Enterprises, Inc., a Delaware
corporation.
3.13 "Performance Fees" shall mean the fees described in Section 4.5.
3.14 "Program" shall mean the services that will be provided by DAC
pursuant to this Agreement, plus certain policies and procedures that relate to
such services, as described in Exhibit A.
3.15 "Start-up Fees" shall mean the fees described in Section 4.1.
3.16 "Variable Fees" shall mean the fees described in Section 4.3.
4. PAYMENTS AND INVOICING.
In general, it is intended that, unless otherwise provided in this
Agreement, all reasonable Program expenditures incurred by DAC on behalf of the
Program, shall be paid or reimbursed by TOSHIBA (upon receipt of an invoice with
the appropriate purchase order number identified on such invoice), at DAC's
cost; provided, however, that TOSHIBA shall not be required to pay or reimburse
any expense greater than $5,000 for which DAC did not obtain prior written
approval, as provided in this Section 4. Additionally, Performance Fees will be
paid to DAC by TOSHIBA as remuneration for services provided for Program
activities.
4.1 Start-up Fees. The parties agree that the start-up costs incurred by
DAC in support of the Program will be paid by TOSHIBA as further provided in
this Section 4.1.
4.1.1 DAC estimates that Program start-up costs will be (i) [**1**]
for the costs outlined below, plus (ii) costs incurred by DAC in response to
additional Program requirements approved by TOSHIBA in writing, plus (iii) costs
incurred by DAC for salary/wages and burden associated with personnel hires in
support of the Program that are approved in writing by TOSHIBA.
The [**1**] Program start-up fee described in (i) consists of the
following items:
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HMAX system access fee.....................................[**1**]
HTaxware software license fee..............................[**1**]
HMAX Server Hardware.......................................[**1**]
HMax Back Up Server........................................[**1**]
HXML Web Programming.......................................[**1**]
HMiscellaneous IT..........................................[**1**]
HHuman Resources...........................................[**1**]
Total (i) start-up costs.............................[**1**]
4.1.2 DAC shall present for approval by TOSHIBA Personnel
Requisitions for all Program start-up related hiring and Program Requisitions
for all other Program related expenses, including any items not specifically
described in Section 4.1.1 above, before making any expenditures related to the
Program. TOSHIBA's approval of any requisition presented to TOSHIBA shall
constitute a promise to pay for the personnel, items or services indicated.
4.1.3 TOSHIBA agrees to pay [**2**] defined as 75% of the [**2**]
invoiced on DAC invoice 0400 dated April 21, 2000. These charges are for
start-up fees defined in Section 4.1.1 above and the Letter of Intent (LOI)
between TOSHIBA and DAC dated March 31, 2000. TOSHIBA agrees to pay the
remaining 25% defined as [**2**] of the[**2**] start-up fee upon Program
commencement, defined as the first day of order processing. Any additional
start-up expenses not defined in Sections 4.1.1 or 4.1.2 will be due DAC, within
normal invoice terms, provided such expenses are defined by DAC and approved in
writing by a TOSHIBA Authorized Signer.
(1) If the Taxware software costs less than [**3**] DAC will
refund the difference to TOSHIBA. If the Taxware software costs more than
[**3**] TOSHIBA will reimburse DAC for the additional expense incurred in
acquiring the software. DAC will provide TOSHIBA with the Taxware invoice
if the costs exceed [**3**].
(2) If the Program requires an expenditure by DAC of less than
[**3**] for electronic commerce and operating system hardware and
software, DAC will refund the difference to TOSHIBA. If the Program
requires additional system hardware or software, including a Program MAX
operating system server and associated equipment, which costs DAC more
than the [**3**] allocated, TOSHIBA agrees to pay DAC for the additional
costs incurred that are approved by TOSHIBA in writing. NOTE: DAC has
offered pricing for a backup server which TOSHIBA has decided to include
in the start-up expenses.
(3) Web Programming labor and expenses of [**3**] includes all
labor and expenses associated with start-up of the XML to TOSHIBA's front
end website including miscellaneous web development activities. TOSHIBA
agrees
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to pay DAC for all additional start-up costs that are requested by DAC and
approved in writing by TOSHIBA.
(4) TOSHIBA will provide DAC with desktop PC's in sufficient
quantity to support the Program. DAC will purchase and separately ▇▇▇▇
TOSHIBA for its standard network card defined as Intel 10/100 Management
Pro Card or equivalent. DAC shall be allowed to install its standard
application software suite, at no cost to TOSHIBA, which shall remain in
the possession of DAC for the term of the Program. TOSHIBA shall have no
right of ownership or liability whatsoever with respect to the application
software, including but not limited to ensuring that software or other
hardware is compatible with the desktop computers. At the termination of
Program DAC shall uninstall its software but TOSHIBA may retain, at its
option, any installed hardware components.
(5) TOSHIBA shall retain ownership in all hardware purchased
by DAC on behalf of TOSHIBA, provided TOSHIBA reimburses DAC for the cost
in accordance with this Agreement, or supplied by TOSHIBA and dedicated to
the Program. Upon termination of this Agreement, DAC shall cooperate in
removal of such hardware from its premises, and shall reimburse TOSHIBA
for the reasonable cost of all hardware which it cannot account for.
4.1.4 TOSHIBA agrees to pay all other TOSHIBA-approved Program
start-up expenditures on net [**4**]-day terms from date of invoice. Such
expenditures will only be made and billed by DAC after written approval by
TOSHIBA via a Program or Personnel Requisition.
4.2 Capital Expenditures. Based on anticipated Program requirements, no
additional capital expenditures that are the responsibility of TOSHIBA are
anticipated except those associated with, and indicated as, Start-up Fees.
Capital expenditures not included in the Program Start-up Fees shall be treated
as Allocated Fees and shall be capitalized by DAC for purposes of the Program.
Depreciated amounts shall be charged as Allocated Fees as items are depreciated.
Upon termination of this Agreement, TOSHIBA will take ownership of such
equipment as defined in Section 12.4.
4.2.1 Each capital equipment requirement will be submitted by DAC to
TOSHIBA for written approval on a "Program Requisition Form" (a copy of which is
attached as Exhibit "D"), before a corresponding expenditure is made. All
reasonably required information will be included in each request to permit
TOSHIBA to make an informed decision. If TOSHIBA agrees in advance it is
necessary to make a capital purchase in support of the Program, DAC may lease
real and personal property for Program uses. DAC agrees that TOSHIBA will have
no liability with respect to any lease for a term greater than the length of
this Agreement unless this Agreement is extended or renewed for an additional
term; however, DAC shall take commercially reasonable efforts to mitigate
damages. The form of any lease must be approved in advance by TOSHIBA. Approval
of a lease or capital expenditure by TOSHIBA shall signify its agreement to make
payments as contemplated by this Section 4.2.
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4.2.2 DAC will also invoice TOSHIBA as Allocated Fees for all
Program-related lease payments and the TOSHIBA approved carrying costs
associated with the non-depreciated capital expenditures at the end of each
calendar month. Such fees will be payable [**5**] days from date of such
invoice.
4.3 Variable Fees. All fees billed by DAC to TOSHIBA pursuant to this
Agreement shall be Variable Fees except for Allocated and Performance Fees as
defined in Sections 4.4 and 4.5. Any item billed as an Allocated or Performance
Fee will not also be billed as a Variable Fee.
4.3.1 Variable Fees will be submitted by DAC to TOSHIBA for
approval, showing either individual items or categories, or both, on a Program
Requisition Form. Such fees will be payable [**6**] days from date of such
invoice. Variable Fees for services may be submitted by DAC and approved by
TOSHIBA on a per unit basis with an unknown volume or quantity (such as outbound
freight, telephone rates); or Variable Fees may be submitted by DAC and approved
by TOSHIBA for a Program requirement on a per occurrence basis (such as business
related travel, special services requested by TOSHIBA and the like); or Variable
Fees may be submitted based on a service occurrence that is outside the standard
scope of services covered under Allocated Fees (such as a request to mail 50,000
letters to Program customers). To maximize Program performance capabilities,
Variable Fees less that $1,500 per occurrence and $5,000 per month, shall not
require submission or subsequent approval of a Program Requisition Form. Except
as provided in Section 9.1 of Exhibit A, all approvals to incur Variable Fees
may be modified or cancelled by TOSHIBA at any time on ten (10) days notice,
provided that TOSHIBA will be responsible for all Variable Fees reasonably
incurred by DAC prior to modification or cancellation.
4.3.2 Variable Fees shall include a flat fee of [**7**] per
Program-dedicated employee, per month (which amount covers general day-to-day
overhead, such as postage, printing, fax and other items).
4.3.3 Additionally, DAC shall ▇▇▇▇ as Variable Fees an employee
benefits burden of 19% of each Program-dedicated employee's salary, commission
and bonus.
4.3.4 Requests by DAC for increases in employee compensation and
increases in staffing positions and associated compensation for additional
dedicated Program personnel must be submitted on a Personnel Requisition Form, a
copy of which is attached as Exhibit "E".
4.3.5 Variable Fees for third-party products offered in the Program
and supplied by DAC will be at cost. DAC shall ▇▇▇▇ for such third party
products on the 15th and 30th of each month with terms of Net 15 days from
receipt of notice.
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4.3.6 All reasonable inbound freight cost, if any, associated with
third party products offered in the Program and supplied by DAC, will be passed
to TOSHIBA on an after-the-fact basis, at DAC's cost.
4.3.7 All reasonable packaging material cost, if any, associated
with Program shipments and supplied by DAC, will be passed to TOSHIBA on an
after-the-fact basis, at DAC's cost.
4.3.8 DAC will not purchase any third-party products for inventory
without TOSHIBA's prior written approval. DAC may be requested to apply its
buying relationship with distribution channel partners or material manufacturers
for the purpose of providing a direct ship fulfillment arrangement to TOSHIBA
customers. All product costs for such arrangements will be at DAC's cost, as
provided and agreed to in advance by TOSHIBA.
4.3.9 All Variable Fees shall be invoiced at DAC's cost, except with
respect to products or services acquired from vendors/suppliers that have
contracts with DAC which prohibit disclosure of DAC's costs. Currently, Federal
Express, UPS, ▇▇▇▇▇▇ Micro, Tech Data, Merisel, AT&T and Cable and Wireless,
have contracts that prohibit the disclosure of DAC's costs. With respect to
products or services from such vendors, DAC will provide, in advance, a rate or
cost that TOSHIBA can use to determine whether TOSHIBA can provide the service
or product at a lower rate or cost. TOSHIBA then shall determine either to
obtain such services or products from DAC or elect to have DAC secure the
services or products through TOSHIBA.
4.3.10 Compensation (salary, bonus and the amounts contemplated by
Sections 4.3.2 and 4.3.3) for dedicated Program employees and materials shall be
billed as Variable Fees two times each month, on the dates of DAC's normal
payroll payments. Such fees will be payable within [**8**] days from date of
each such invoice.
4.3.11 Any Variable Fees that have been approved, but are not billed
in, or with respect to, the month incurred, shall not be deemed non-billable in
a later month because of the delay; provided, however, that TOSHIBA shall not be
responsible for any penalties for late payments or any late charges on such
amounts until the passage of [**9**] days from date of the invoice.
4.3.12 Variable Fees may include a flat fee of [**10**] per eligible
person per month for "Sales Promotion Fees" for the period of July 1, 2000
through March 31, 2001. Effective April 1, 2001, until termination of this
Agreement, the Sales Promotion Fee shall be [**10**] per eligible person per
month. Eligible persons include Program-dedicated Sales and Sales Support
personnel, defined as persons with the title Supervisor and below. DAC will
provide TOSHIBA in advance with details of the Associate of Month/Year program
so that TOSHIBA has full knowledge of the program, including how such funds will
be spent.
4.4 Allocated Fees. Allocated Fees shall be equal to the amount shown on
Exhibit "B" and cover the items listed in such Exhibit.
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4.4.1 Allocated Fees associated with "Non-dedicated Program
Management Personnel" and "DAC-affiliate Allocated Costs," as that terminology
is used in Exhibit "B", shall not exceed the dollar amount set forth for those
items in Exhibit "B" during the time period from July 1, 2000 through the close
of business on June 30, 2002 and if applicable the nine month extension period
as provided for in Section 1. Allocated fees will be reviewed and mutually
agreed upon in writing prior to the one year extension as provided for in
Section 1.
4.4.2 Allocated Fees for "Expense for Sales/Administrative and
Distribution Facilities Space," as that terminology is used in Exhibit "B", may
be adjusted only by written agreement based on Program or dedicated Program
Personnel modifications requested by TOSHIBA.
4.4.3 Allocated Fees shall be billed monthly. Such fees will be
payable within [**11**] days from date of such invoice.
4.4.4 Any Allocated Fees that are not billed in, or with respect to,
the month incurred, shall not be deemed non-billable in a later month because of
the delay; provided, however, that TOSHIBA shall not be responsible for any
penalties for late payments or any late charges on such amounts.
4.5 Performance Fees. Performance Fees shall be paid by TOSHIBA to DAC as
remuneration for Program services. Performance Fees shall consist of a fixed
monthly fee, a fee calculated as a percentage of Net Sales fee, and if requested
and approved by TOSHIBA, a marketing services fee.
4.5.1 TOSHIBA shall pay DAC a fixed monthly fee of [**12**] per
month for the term of the Agreement. [**12**] Such fees will be invoiced monthly
and will be payable within [**12**] days from date of such invoice. [**12**]
4.5.2 Additionally, TOSHIBA shall pay DAC a monthly percentage of
Net Sales. It is contemplated that at least three order sources will exist in
the Program.
(1) 'Unassisted sales' are defined as sales resulting from
consumer orders placed through the Accessories Website or TOSHIBA's
internet website. Such consumer customers will be identified as
having three line addresses (i.e. excludes any reference to a
business or similar entity in a fourth address line).
(2) 'House sales' are defined as sales to specific protected
TOSHIBA accounts which are established by mutual agreement.
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(3) 'Assisted sales' are those sales not classified as
"Unassisted sales" or "House sales" as defined in sections A or "B"
above.
TOSHIBA shall pay DAC an amount equivalent to [**13**] of
Assisted Net Sales until June 30, 2002. If TOSHIBA exercises its
option to extend the term of this Agreement for an additional 9
months the monthly percentage fee for this period shall be [**13**]
of Assisted Net Sales. If the term of this Agreement is renewed for
an additional 1 year after the 9 month extension the monthly
percentage of Net Sales shall be [**13**] during the renewal period.
TOSHIBA shall pay DAC an amount equivalent to [**13**] of Net
Sales for Unassisted or House sales, including those routed through
MAX either from TOSHIBA's internet website, the Accessories Website
or from TOSHIBA's order processing system.
4.5.3 Additionally, TOSHIBA shall pay a marketing services fee, per
the following schedule depending on marketing services as requested in writing
by TOSHIBA and performed by DAC. Catalog design shall be priced at cost plus
[**14**], catalog printing at cost plus [**14**], and database consulting at
cost plus [**14**].
4.5.4 The fees described in Sections 4.5.2 and 4.5.3 for the
previous month shall be invoiced by DAC on or about the first day of the
following month. Such fees will be payable within [**15**] days from date of
such invoice.
4.5.5 From time to time TOSHIBA may decide to transition an account
from one subsidiary to another or to an affiliate. TOSHIBA will establish an
inter-company process to accomplish this transition. [**16**]
4.6 Metrics. On or before September 30, 2000 based on an analysis of
Program performance and other pertinent performance, the parties will mutually
determine the top ten metrics and assign appropriate weighting values and rating
scales to each (the "Metrics"), which will be set forth in Exhibit "C".
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4.7 Invoices.
4.7.1 Each invoice shall be subject to verification by TOSHIBA with
regard to the accuracy of the amount invoiced by DAC. Invoices shall reference
the Purchase Order number, if any, and shall be submitted to Toshiba America
Information Systems, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention:
Accounts Payable.
4.7.2 All ▇▇▇▇▇▇▇▇, except as otherwise stated within this
agreement, are net [**17**] days from date of invoice. Carrying costs of
[**18**] per annum shall be calculated and billed on a monthly basis for all
undisputed invoice amounts that have been outstanding for more than [**17**]
days.
4.8 Sales and Property Taxes. DAC will calculate and charge sales, use and
transaction privilege taxes, on behalf of TOSHIBA, for specific states at
TOSHIBA's request. TOSHIBA will be responsible for the remittance of any sales,
use, transaction privilege or property taxes arising from Program activities to
the appropriate government agency and for any penalties or interest imposed in
connection with such taxes, unless such penalties or interest is a result of
DAC's failure to provide such information to TOSHIBA in a timely manner, in
which case such amounts shall be DAC's responsibility. In situations in which
services are performed as required by this Agreement, TOSHIBA will bear all
applicable sales and property taxes and will bear all state or federal income
tax liability allocable to TOSHIBA pertaining to Goods. In order for the Program
to be operational by the scheduled date, TOSHIBA agrees to use Taxware software
for the collection of sales and use taxes. However, TOSHIBA may choose to use
its own tax calculation system provided TOSHIBA is responsible for all
procurement and implementation costs associated with making its software
compatible with DAC's MAX system. Without limiting the generality of the
foregoing, unless TOSHIBA notifies DAC in writing and in a timely manner in
advance of when the activities of either TOSHIBA or any of its affiliates will
or might reasonably be expected to result in the assertion by any taxing
authority that DAC should collect taxes with respect to sales into any state,
country or territory, DAC shall not be penalized or held responsible for any
failure to collect such taxes and TOSHIBA shall hold DAC harmless with respect
thereto. If a state determines that TOSHIBA must pay state sales use or other
transaction privilege taxes for previous sales, TOSHIBA will be responsible for
paying or contesting such taxes in the legally prescribed manner and will hold
DAC harmless from and against any liability in connection therewith (other than
as provided above).
[**19**]
5. STAFFING OF PERSONNEL.
5.1 Program staffing and associated compensation will be suggested by DAC
to ensure the TOSHIBA Program is at a competitive level with programs of similar
size, purpose, objectives, and scope and approved in writing by TOSHIBA. No
staffing and/or compensation modifications will be made without TOSHIBA's
written approval and said approval will result in TOSHIBA's recognition and
agreement to pay for the approved additional costs, or recognize the additional
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savings associated with the change. Compensation packages and compensation
adjustments must be approved in writing by TOSHIBA either specifically, or by
approval of DAC's policies. TOSHIBA recognizes that DAC policy allows for a
compensation increase of up to [**20**] per non-sales representative on the
anniversary of employment date.
5.2 Each party agrees to identify a contact to provide the necessary
support in implementation of Program business requirements and in the
performance of Program activities. TOSHIBA will also make available to DAC or
provide at DAC's site, a program manager, a credit supervisor/manager, and
credit/leasing personnel (as needed) and provide product training. Each party
will provide reasonable written notice to the other party before making any
changes in the contact or other key personnel.
5.3 Personnel supplied by DAC are DAC's employees and shall not for any
purpose be considered employees or agents of TOSHIBA. DAC shall have all
management authority with respect to DAC's employees and DAC assumes full
responsibility for the actions of such personnel while performing services
pursuant to this Agreement.
5.4 Personnel supplied by TOSHIBA are TOSHIBA's employees and shall not
for any purpose be considered employees or agents of DAC. TOSHIBA assumes full
responsibility for the actions of such personnel while performing services
pursuant to this Agreement, whether or not any of such services are performed on
premises owned, leased or maintained by DAC, provided that DAC shall have
standard obligations under applicable law to TOSHIBA's employees on DAC's owned,
leased or maintained premises, as business invitees.
5.5 It is understood that neither party's employees or subcontractors
shall have any rights or privileges under any of the other party's employee
benefits programs.
5.6 DAC agrees to perform its standard employee investigations with
respect to all prospective employees dedicated to the Program, which
investigation shall, at a minimum, include a background investigation, drug
testing and certain skills tests. TOSHIBA agrees to pay a fee of $[**21**] for
the investigation of each prospective employee, which amounts shall be billed
with other Variable Fees on a monthly basis. DAC shall indemnify, defend, and
hold harmless TOSHIBA in the event someone disqualified from employment takes
legal action against TOSHIBA alleging discriminatory hiring practices related to
DAC's use of its background investigation.
TOSHIBA reserves the right to audit background investigation results at
any time during the term of this Agreement. Investigations by DAC shall comply
with all applicable federal, state and local laws for background investigations.
All use of such information must be in compliance with applicable federal, state
and local laws.
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6. COMPLIANCE WITH THE LAW; SOFTWARE.
6.1 DAC agrees to make, file and retain (for the periods required by law)
all required federal, state, and local reports and records, to withhold all
proper payroll deductions, and to pay all premiums in connection with social
security and workers compensation insurance; all federal, state and local
payroll and withholding taxes, and all other charges and taxes attributable to
the performance of its duties under this Agreement and in connection with the
Program.
6.2 In its performance under this Agreement, DAC will comply with all
applicable laws and regulations pertaining to the services rendered under this
Agreement, including all federal, state or local laws and regulations relating
to the performance of telemarketing services or to hiring and employment
practices.
6.3 Upon request by TOSHIBA, DAC shall certify compliance with such
applicable laws and regulations, and provide such evidence of compliance as
TOSHIBA may reasonably request. TOSHIBA shall have the right to audit DAC's
books and records for the Program, and at TOSHIBA's expense once per fiscal
year, for the purpose of assuring compliance with the obligations described in
this Section 6. In connection with the employment of DAC's dedicated personnel
assigned to perform work hereunder, DAC will cooperate with all federal, state
and local authorities in the conduct of any audits for the purpose of
determining DAC's compliance with this Section 6.
6.4 TOSHIBA may make available certain rights to use or license software
with the TOSHIBA Products. No rights are granted to DAC with respect to the use
or license of any such software by reason of this Agreement, except as required
by law. DAC shall not copy, modify, transcribe, store, translate, reverse
engineer, sell, lease, or otherwise transfer or distribute any such software
except in accordance with this Agreement. Any improper use of such software
shall be deemed an Event of Default.
7. CONSIGNED INVENTORY
From time to time, Goods, including returned Goods, will be delivered to
DAC in connection with the Program. Such Goods will be consigned to DAC solely
for use in meeting the requirements of this Agreement and as further defined
below:
7.1 TOSHIBA will at all times retain title to the Goods consigned to DAC
under this Agreement. DAC agrees that the Goods will only be utilized to fulfill
the terms of this Agreement and the Goods will not be leased, rented, consigned,
sold, or otherwise conveyed or transferred to any third party unless expressly
authorized in writing by TOSHIBA. DAC shall not allow or permit any lien,
security interest or other encumbrance to be placed on or otherwise affect the
Goods other than security interests and other encumbrances granted to TOSHIBA.
TOSHIBA will, at any time, be entitled to the prompt return of such Goods at
TOSHIBA's expense. DAC agrees that it will give TOSHIBA reasonable prior notice
of filing of any voluntary petition, and prompt notice of the filing
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or any involuntary petition, under any bankruptcy laws. DAC shall not include
any of the Goods in DAC's bankruptcy estate.
7.2 TOSHIBA shall assume risk of loss for Goods returned to DAC until such
Goods are actually delivered to DAC. Upon delivery to DAC, DAC shall secure the
Goods under all reasonable and appropriate care that DAC uses for its own
property, but in no event less than a reasonable degree of care, to prevent any
damage, loss, deterioration, or the like to the Goods. Subject to Section 7.5,
DAC assumes all risk of loss or damage to the Goods while the Goods are in DAC's
possession. DAC's obligation in this regard shall be satisfied if the Goods are
delivered to a carrier acceptable to TOSHIBA for shipment to TOSHIBA or any
designee, agent or customer of TOSHIBA in the same condition as when delivered
to DAC except for minor packaging damage. Once DAC has delivered any Goods to a
common carrier approved by TOSHIBA and such approved carrier takes possession of
and verifies in writing that it has received such goods, TOSHIBA shall have the
risk of loss, and shall insure and pay for shipment of such Goods. DAC shall
make commercially reasonable efforts to package with the intention of preventing
loss of TOSHIBA Goods while in transit. Subject to Section 7.5, if any Goods
shipped by DAC are returned to DAC for any reason, DAC shall reassume risk of
loss or damage beyond the condition such goods are received by DAC once they are
redelivered.
7.3 Except as may be necessary to protect and preserve such Goods with
prior approval by TOSHIBA (which notification will be in writing except when
exigent circumstances justify oral notification), DAC will not relocate any
TOSHIBA-owned Goods to a facility other than the location specified in this
Agreement. TOSHIBA will have the right to inspect any substitute facility and
reserves the right to refuse to allow the use of any such facility that does not
meet the standard requirements of TOSHIBA. In the event of unauthorized movement
of to a substitute facility, DAC assumes full responsibility and is liable to
reimburse TOSHIBA the value of such Goods (as determined by reference to the
value of such Goods at time of consignment to DAC) for any loss due to damage,
theft or any infidelity, conversion and/or misappropriation whether or not known
to DAC, including loss or shortage disclosed upon taking inventory. In addition,
DAC will pay all necessary freight and/or other expenses incurred in replacing
such Goods. DAC will notify TOSHIBA promptly of the new location of any Goods
which are moved without TOSHIBA's prior authorization.
7.4 DAC will not alter, modify or change any Goods unless expressly
authorized in writing by TOSHIBA. In the event of any unauthorized alteration,
modification or change, TOSHIBA will not be liable for any loss, claim, damage
or delay caused thereby or arising therefrom and DAC will restore Goods to their
original condition before returning them to TOSHIBA or providing them to
customers.
7.5 Subject to [**22**] shrinkage of the merchandise value of the Goods
which have been consigned to DAC after DAC has validated the inventory, DAC
agrees to manage, control, audit, and secure all Goods to ensure accurate
inventory and full accountability of all Goods in its facilities. DAC agrees to
tag the Goods physically to identify them as owned by TOSHIBA and
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return such products to TOSHIBA, distributors or product manufacturers, as
determined by mutually agreed to business rules, and segregate them
electronically from any Goods that are not owned by TOSHIBA within DAC's
facilities.
7.6 Except as provided in this Section 7.6, TOSHIBA's right and access to
all Goods consigned under this Agreement will be unconditional and unrestricted.
Any entry by TOSHIBA to DAC's facility for the purpose of reviewing consigned
Goods will be in the presence of an authorized DAC employee and during DAC's
normal business hours.
7.7 It is the intent of the parties that this consignment constitutes a
true consignment and not a consignment for security. Nonetheless, if this
consignment is construed as a consignment for security instead of a true
consignment, in order to secure DAC's obligations hereunder, DAC hereby grants
to TOSHIBA a security interest and purchase money security interest in all
Goods. TOSHIBA may take any action (without notice, presentment, demand,
protest, notice of protest or dishonor, notices of acceleration or notice of
intent to accelerate, all of which DAC hereby waives) afforded a secured party
under the Uniform Commercial Code upon the occurrence of a material violation by
DAC of its obligations under this Section 7, and upon such occurrence, all
obligations of DAC due to TOSHIBA hereunder shall, upon notice by TOSHIBA,
become immediately due and payable; provided, if the violation giving rise to
the foregoing remedies is attributable to DAC's insolvency or any bankruptcy
related proceeding affecting DAC, all obligations of DAC to TOSHIBA shall
automatically become due and payable. DAC agrees to sign financing statements,
continuation statements and such other instruments as TOSHIBA may reasonably
request to maintain a first priority, perfected security interest in the Goods
(if this consignment is construed as a consignment for security instead of a
true consignment).
7.8 Liability for Goods.
7.8.1 The parties agree that DAC's care, custody, and control
("Care, Custody, and Control") over Goods shall commence when DAC takes
possession of such Goods at the DAC facilities and continue until DAC has
delivered such Goods to a common carrier approved by TOSHIBA and such approved
carrier takes possession of and verifies in writing that it has received such
Goods. DAC will not tender Goods valued in excess of $5,000,000 on any one
conveyance without prior notification and written approval by TOSHIBA Risk
Management.
7.8.2 DAC shall reconcile all inbound shipments of Goods (except
Goods returned from customers) with expected shipments, carrier delivery order,
bills of lading and packing lists and shall notify TOSHIBA Transportation
Department within 48 hours of product receipt at DAC's facility of any variance
in quantity of the Goods received and all observable defects or damages in the
Goods. For the purposes of this Agreement, "observable defects" shall mean only
those defects plainly and readily visible to the human eye and requiring no
technical skills or background to discover upon a visual inspection. DAC shall
maintain accurate inventory record counts and record all observable defects in
the Goods. DAC will not be liable for concealed or unobservable damage
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to the Goods and will not be required to open packages solely for the purpose of
checking for damage.
From time to time DAC shall receive Goods that are returned from
Program customers. DAC shall make commercially reasonable efforts to document
the condition of the cartons and contents upon receipt. TOSHIBA will be
responsible to provide DAC with policies and practices to follow in the event of
Program returns. Such policies will be in writing and shall be deemed
incorporated into this Agreement.
7.8.3 After adjustment for permissible shrinkage, DAC will be liable
for the first [**23**] per occurrence of loss or damage occurring with respect
to TOSHIBA-owned Goods under DAC's Care, Custody, and Control. TOSHIBA at its
sole option and expense will be responsible to obtain additional inventory
insurance to cover any loss above [**23**] for goods under DAC's Care, Custody
and Control.
8. RECORDS, AUDITS AND INSPECTIONS.
8.1 TOSHIBA reserves the right to audit DAC's facilities once per year in
relation to this Agreement to verify performance of services defined herein
and/or to perform physical inventory counts or audits of Goods it handles on
TOSHIBA's behalf. TOSHIBA will perform said audits during DAC's normal business
hours. DAC shall fully cooperate with TOSHIBA employees and representatives in
this regard. All of such audits and inspections shall be at TOSHIBA's expense.
8.2 DAC shall maintain accounting records during the term of this
Agreement and for three years thereafter, in a consistent form to substantiate
DAC's charges hereunder. TOSHIBA and its designated representatives shall have
the right to audit and review DAC's sales and customer credit records and all
other records relevant to the calculation of payments pursuant to this Agreement
once per year, except with respect to the Variable Fees described in Section
4.3.2 and 4.3.3 and those fees which cannot be disclosed because of contract
restrictions, as described in Section 4.3.9, upon reasonable prior notice,
during normal business hours, during the term of this Agreement and for one year
after completion of this Agreement. All fees and costs incurred by TOSHIBA in
connection with any such audit and review shall be paid by TOSHIBA, unless such
audit and review reveals that TOSHIBA was overcharged by more than 5% in which
event DAC shall reimburse TOSHIBA for the reasonable costs of such audit and
review. The foregoing shall not confer any rights for TOSHIBA to obtain or
require DAC to disclose third party information to TOSHIBA which DAC has
contractually agreed not to disclose.
9. QUALITY ASSURANCE.
DAC's quality assurance policy focuses on root cause corrective action and
continuous quality improvement concepts and methodology. DAC agrees to manage
distribution operations (returns processing) to documented process
specifications that meet standard TOSHIBA operational requirements. DAC's sales
and administration functions will comply with business rules and process
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specifications approved by TOSHIBA. DAC agrees to monitor routinely all aspects
of the Program to ensure the highest level of quality.
10. INSURANCE AND STATUTORY OBLIGATIONS.
DAC shall, at its own expense, maintain during the term of this Agreement
or for such periods beyond said Term as specified herein at least the forms and
amounts of insurance set forth below.
(1) Commercial general liability insurance, including contractual
liability under DAC's indemnification, for bodily injury and property
damage at limits of $1,000,000 per occurrence and $1,000,000 in the
aggregate.
(2) Worker's compensation insurance in such amounts as required by
applicable law. Said worker's compensation policy shall contain an
alternate employer endorsement in favor of TOSHIBA and shall include a
Waiver of Subrogation. Employer's liability insurance in the amount of not
less than $500,000 per accident, $500,000 per policy limit, and $500,000
for each employee.
(3) Automobile liability for all motor vehicles, whether owned,
non-owned or hired by DAC or its employees or subcontractors, with a
combined single limit of $2,000,000 per occurrence for bodily injury and
property damage.
(4) Fidelity bond or crime policy covering DAC's employees in the
amount of $2,000,000 per occurrence. Said bond or policy will be endorsed
to cover employees leased by DAC.
(5) Excess liability insurance in the amount of $1,000,000 per
occurrence to cover claims covered by commercial general liability,
automobile liability, and employers' liability insurance that extend above
the liability levels set forth above.
(6) Business Personal Property of TOSHIBA in the amount of
$10,000,000 per occurrence.
(7) DAC will submit to TOSHIBA Procurement Department "Certificates
of Insurance" evidencing coverage requirements of this Section 10.
(8) DAC will effect all insurance by valid and enforceable policies
issued by insurer(s) of responsibility and authorized to do business in
the appropriate jurisdiction, which insurer(s) will have a Best's rating
of not less than A VII.
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(9) DAC will cause the insurance, except for the insurance provided
for in paragraph (ii) above, to be endorsed and name TOSHIBA, its
officers, directors, and employees an additional insured as their interest
may appear.
(10) All insurance maintained by DAC may be carried under blanket
policies.
(11) DAC will cause the insurance to be subject to provisions to the
effect that the coverage contained therein will not be suspended, voided,
canceled, reduced in coverage limits, or materially changed without first
providing 30 days prior written notice from the insurance agent or broker
to TOSHIBA.
(12) With any proposed change to or replacement of any required
insurance coverage, an amended Certificate of Insurance relating to such
changed or replacement insurance coverage will be delivered by DAC to
TOSHIBA at least 30 days prior to the effective date of such change or
replacement.
(13) Subject to Section 7.8.3, DAC shall keep the consigned Goods
insured at the full market value thereof, less any deductible, against
damage, destruction and loss of every kind while the Goods are in DAC's
possession.
11. WARRANTIES.
11.1 TOSHIBA Products which have been sold through the Program on behalf
of TOSHIBA will be warranted by TOSHIBA in accordance with the end user warranty
documentation packaged within the TOSHIBA Products. DAC shall have sole
responsibility for any representations or warranty it makes to a customer to the
extent it differs from TOSHIBA's written end-user warranty documentation or
directions from TOSHIBA Authorized Signers.
11.2 Products not manufactured by TOSHIBA, yet sold as a part of the
Program, will be warranted by the manufacturer in accordance with each
manufacturer's published coverage. Neither TOSHIBA nor DAC shall be required to
respond to requests for service with respect to such products other than to
provide specific telephone numbers for the Program customers to call.
11.3 DAC warrants that the Program services will be performed in
accordance with Exhibit A and consistent with the highest professional
standards.
11.4 DAC represents and warrants that it is the owner of the MAX system or
otherwise has the right to grant to TOSHIBA the access set forth in this
Agreement without violating any rights of any third party, and there is
currently no actual or threatened suit by any such third party based on an
alleged violation of such right by DAC. DAC will provide TOSHIBA at no
additional charge with standard maintenance and support for MAX, including new
releases, updates, changes,
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modifications and/or enhancements which DAC elects to incorporate into and make
a part of MAX and which DAC elects to make available to its general customer
base.
11.5 DAC warrants that the MAX software will meet the specifications of
the Program as described in Exhibit A. If the MAX software fails to meet the
foregoing warranty, DAC will at its option repair or replace such products or
provide corrective services at its own expense. The parties shall also negotiate
in good faith an operational warranty/performance metric for the MAX software,
including a penalty for failure to meet the warranty/metric. In the event the
parties cannot mutually agree upon the terms of such warranty/metric and penalty
within fifteen (15) days after the Effective Date, TOSHIBA may, in its sole
discretion, extend the time for such negotiations or terminate this Agreement
without further liability.
11.6 TOSHIBA MAKES NO WARRANTIES TO DAC WITH RESPECT TO TOSHIBA PRODUCTS
OR THIRD PARTY PRODUCTS SOLD THROUGH THE PROGRAM. EXCEPT AS SPECIFICALLY
PROVIDED IN THIS AGREEMENT, THERE ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED,
BY DAC OR TOSHIBA INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. TOSHIBA AND DAC EXPRESSLY DISCLAIM ANY WARRANTIES NOT
STATED OR REFERRED TO HEREIN.
12. DEFAULT AND TERMINATION.
12.1 Default. DAC shall be considered in default of this Agreement if work
peformed by DAC fails in any material way to conform to the requirements of this
Agreement, in which case TOSHIBA may at its option (i) request DAC to re-perform
such work at no additional charge to TOSHIBA , (ii) request a refund of time
paid for unacceptable work or free future hours mutually agreed upon between DAC
and TOSHIBA, or (iii) declare that such failure is an Event of Default as
defined in Section 3.4.
12.2 Termination for Cause. TOSHIBA may terminate this Agreement upon an
Event of Default, for cause, by giving DAC 60 days written notice, provided that
TOSHIBA may immediately terminate this Agreement if an Event of Default, as
defined in Section 3.4(b), occurs to DAC or Parent. DAC may terminate this
Agreement upon material breach by TOSHIBA, for cause, by giving TOSHIBA 60 days
written notice. During the notice period, the terminating party shall give, if
it has not already done so, the other party reasonable opportunity to cure its
deficiencies in meeting its obligations under the Agreement. If a prior cure
period was not previously provided and the breaching party is able to cure its
deficiencies to the reasonable satisfaction of the terminating party, the
Agreement shall continue in effect as if no notice was given.
12.3 Termination After a Change in Control. TOSHIBA may terminate this
Agreement after a Change in Control by giving DAC 45 days written notice.
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12.4 Reimbursement upon Termination. TOSHIBA makes no guarantees, express
or implied, regarding the profitability of any business that DAC may expect from
TOSHIBA as a result of this Agreement. Upon the expiration or termination of the
Program, DAC shall, at the request of TOSHIBA, assign to TOSHIBA, and TOSHIBA
may assume any leases of personal property made on behalf of the Program. Unless
this Agreement is terminated for Cause pursuant to Section 12.2, upon the
expiration or termination of this Agreement, TOSHIBA shall reimburse DAC for all
non-depreciated capital expenditures made on behalf of the Program, and to the
extent contemplated in Section 4.2.1, shall pay and indemnify DAC against all
real and personal property leases incurred in connection with the Program. Upon
such assumption and reimbursement all leased or owned personal property with
respect to which such payments were made shall become the property of TOSHIBA.
If TOSHIBA decides to dispose of any of such property, DAC shall be given the
opportunity to participate as a potential buyer in connection with any such
sale, but TOSHIBA shall not be obligated to give DAC any preference in
connection with any such sale.
13. FORCE MAJEURE.
Neither party shall be liable or responsible for any failure to comply
with any provision of this Agreement to the extent any such failure is caused
directly or indirectly by fire; earthquake; natural disaster; adverse weather
conditions; strike, union, or other labor problems; war (whether or not
declared); riot; insurrection; government restrictions; or other acts or other
causes beyond the control of or without fault on the part of such party;
provided, however, that the performance of a party shall not be excused as a
result of a lack of financial resources or strike, union, or other labor
problems occurring with respect to its own employees or work force. Upon the
occurrence of any event of the type referred to herein, such party shall give
prompt notice thereof to the other party, together with a description of such
event and the duration for which such party expects its ability to comply with
the provisions of this Agreement to be affected thereby. Such party shall
thereafter devote its reasonable best efforts to remedy, to the extent possible,
the condition giving rise to such event and to resume performance of its
obligations hereunder as promptly as possible. In the event an event of the type
referred to herein prevents performance of a party's obligations for more than
45 days then the other party may immediately terminate this Agreement without
future liability.
14. GENERAL INDEMNIFICATION
DAC and TOSHIBA shall defend, indemnify and hold harmless, the other and
its employees, officers, directors and agents from and against all fines, suits,
proceedings, claims, demands, debts, obligations, liabilities or actions of any
kind by anyone (including reasonable attorneys' fees and costs) allegedly
arising from or connected with (i) violations by the indemnifying party of any
law, ordinance, rule or regulation of the United States or any state or city or
other governmental body, (ii) the indemnifying party's actions or omissions in
connection with this Agreement, (iii) any breach of a representation or warranty
by or any breach or default in the performance of any obligation of the
indemnifying party under the provisions of this Agreement, (iv) the negligence
of the indemnifying party, (v) the activities or operations of the indemnifying
party, its employees, officers, directors or agents, while it or any of them are
performing the indemnifying party's obligations under this
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Agreement, and (vi) the employment relationship (including the termination
thereof) between DAC or TOSHIBA and any of its employees.
15. LIMITATION OF LIABILITY.
EXCEPT FOR A BREACH OF SECTION 18 BELOW, IN NO EVENT WILL EITHER PARTY BY
LIABLE FOR INDIRECT, SPECIAL, OR CONSEQUENTIAL (INCLUDING LOST SALES OR LOST
PROFITS), TO ANYONE ARISING OUT OF THIS AGREEMENT OR THE USE OF THE GOODS, EVEN
IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
NOTWITHSTANDING THE FOREGOING, THE OPERATION OF THIS LIMITATION SHALL NOT IMPEDE
OR OTHERWISE LIMIT EITHER PARTY'S PERFORMANCE OF THE THIRD PARTY INDEMNIFICATION
OBLIGATIONS SET FORTH IN SECTIONS 14 AND 17 HEREOF.
16. TRADEMARKS AND RELATED MATTERS.
16.1 TOSHIBA will furnish DAC with the TOSHIBA guidelines for the use of
its trademarks or trade names in connection with this Agreement. The TOSHIBA
Corporate Communications Department shall be the sole source for DAC of TOSHIBA
logo artwork. No other source will be considered approved pursuant to this
Agreement.
16.2 DAC is authorized to use the TOSHIBA logo and trademark only to the
extent necessary to meet the required Program service specifications and only in
accordance with TOSHIBA's guidelines. No other rights with respect to the
trademarks, service marks, trade names or brand names of either TOSHIBA or DAC
are conferred on the other party, either expressly or by implication, by this
Agreement.
16.3 TOSHIBA and DAC recognize the other party's ownership of and title to
its respective trademarks, service marks, trade names and brand names, and the
goodwill attaching thereto, and agrees that any goodwill which accrues because
of the other party's use of the trademarks, service marks, trade names or brand
names, or because of any other activity involving the promotion of the other
party's products or services, will vest in and become the property of the owner.
Each party agrees not to contest or take any action to contest the other party's
trademarks, service marks or trade names or to use, employ or attempt to
register any trademark, service ▇▇▇▇ or trade name which is confusingly or
deceptively similar to the other party's trademarks, service marks or trade
names.
16.4 Permission granted relative to the trademarks, service marks, trade
names or brand names of the other party shall terminate with the expiration or
termination of this Agreement. Both parties immediately shall cease approved use
of the trademarks, service marks, trade names and brand names of the other party
upon expiration or termination of this Agreement.
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17. DEFENSE OF INTELLECTUAL PROPERTY CLAIMS.
Without limiting the generality of Section 14, TOSHIBA will defend,
indemnify and hold harmless DAC against a claim that TOSHIBA Products or TOSHIBA
Materials infringe any United States intellectual property rights of a third
party, including any patent or copyright, and will pay resulting costs, damages
and attorneys' fees finally awarded by a court, provided that (i) DAC promptly
notifies TOSHIBA in writing of the claim; (ii) TOSHIBA has sole control of the
defense and all related settlement discussions; and (iii) DAC cooperates with
TOSHIBA, at TOSHIBA's expense, in the defense of such claim.
If the TOSHIBA Products or TOSHIBA Materials or the operation thereof
become, or in the opinion of TOSHIBA are likely to become, the subject of such a
claim, DAC will permit TOSHIBA, at the sole option and expense of TOSHIBA,
either to procure the right for DAC to continue marketing and selling the
TOSHIBA Products or to replace or modify them so that they become
non-infringing. If neither of the foregoing alternatives is available on terms
which are reasonable, in the sole judgment of TOSHIBA, DAC will return the
TOSHIBA Products upon written request by TOSHIBA, at TOSHIBA's expense.
TOSHIBA shall have no liability for any claim to the extent it is based
upon the combination, operation or use of any TOSHIBA Product supplied hereunder
with equipment, data or programming not supplied by TOSHIBA, or based upon any
alteration or modification of TOSHIBA Products.
Without limiting the generality of Section 14, DAC will defend, indemnify
and hold harmless TOSHIBA against any claim that (a) the MAX system, (b) all
other software and tools owned, developed or otherwise used by DAC in connection
with performing the Program services, and (c) any work product delivered to
TOSHIBA (except for text, pictures, sound, graphics, video and other data
supplied by TOSHIBA and integrated into the work product) in connection with the
Accessories Website, infringes on any patent, copyright, trademark, trade secret
or other intellectual property right, including without limitation business
process patents that may include MAX as part of a business software solution,
and will pay resulting costs, damages, and attorney's fees finally awarded by a
court, provided that (i) TOSHIBA promptly notifies DAC in writing of the claim;
(ii) DAC has sole control of the defense and all related settlement discussions;
and (iii) TOSHIBA cooperates with DAC, at DAC's expense, in the defense of such
claims.
If any of the foregoing is likely to become, the subject of such a claim,
TOSHIBA will permit DAC, at the sole option and expense of DAC, either to
procure the right for TOSHIBA to continue using such items, or to replace or
modify the items so that it becomes non-infringing. If neither of the foregoing
alternatives is available on terms which are reasonable, in the sole judgment of
TOSHIBA, TOSHIBA may terminate this Agreement without further liability.
DAC shall have no liability for any claim to the extent it is based upon
the combination, operation or use of the MAX system or any of the other
foregoing items by TOSHIBA with any other software except for software which is
contemplated for use in connection with the Program, or based
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upon any alteration or modification of the MAX system or any of the other
foregoing items that has not been authorized in writing by DAC.
THE FOREGOING STATES THE ENTIRE OBLIGATION OF BOTH PARTIES WITH RESPECT TO
INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS.
18. CONFIDENTIAL INFORMATION.
18.1 Generally, each of the parties understands that, during the term of
this Agreement, it will encounter certain confidential and proprietary
information belonging to the other party. TOSHIBA's information will relate
primarily to its customer list and sales databases, as developed and expanded
pursuant to this Agreement, products, pricing, and manufacturing techniques and
arrangements. DAC's information, on the other hand, will be in the nature of its
electronic fulfillment system, processes and related business rules, software,
and specific manuals and instructions to its employees relating to its direct
sales and related operations, including without limitation modifications to such
software, manuals and instructions during the term of this Agreement.
18.2 DAC acknowledges that the confidential information, including without
limitation, customer lists, customer data and database information, information
about products, and patented and copyrighted materials, owned, licensed or
developed by TOSHIBA, whether or not registered, published, confidential or
suitable for registration or copyright, and the goodwill associated with them,
are and shall remain the sole and exclusive property of TOSHIBA, and that all of
the foregoing made available to DAC are provided or revealed to DAC in trust and
confidence. All information and knowledge about TOSHIBA and its products,
services, standards, specifications, and pricing, which are not in the public
domain, previously known by DAC or generally known in the industry, and such
other information and material as TOSHIBA may designate as confidential, shall
be deemed confidential for purposes of this Agreement. DAC agrees to keep all
such information confidential and to use it only for the purposes authorized by
TOSHIBA. DAC agrees that during and after the termination of this Agreement
neither DAC nor any of its agents or employees shall copy or disclose to any
other person, or use for any purpose other than as contemplated by this
Agreement, any confidential information received from TOSHIBA. Without limiting
the generality of the foregoing, DAC acknowledges that all of TOSHIBA's customer
data and database information is considered confidential and proprietary to
TOSHIBA and will not be shared with, or otherwise used by, any other Insight
Enterprises, Inc. company, DAC program or other entity.
18.3 TOSHIBA acknowledges that the manuals, instructions, software,
electronic fulfillment system, processes and related business rules, and
copyrighted materials, owned, licensed or developed by DAC, whether or not
registered, published, confidential or suitable for registration or copyright,
and the goodwill associated with them, are and shall remain the sole and
exclusive property of DAC, and that all of the foregoing made available to
TOSHIBA are provided or revealed to TOSHIBA in trust and confidence. All
information and knowledge about DAC and its procedures, techniques, sales
methods and employee lists, which are not in the public domain or generally
known in the industry, and such other information and material as DAC may
designate as confidential, shall
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be deemed confidential for purposes of this Agreement. TOSHIBA agrees to keep
all such information confidential and to use it only for the purposes authorized
by DAC. TOSHIBA agrees that during and after the termination of this Agreement
neither TOSHIBA nor any of its agents or employees shall copy or disclose to any
other person, or use for any purpose other than as contemplated by this
Agreement, any confidential information received from DAC.
18.4 Either party may disclose confidential information to the other
either orally or in writing (including graphic material). When disclosed in
writing, the information shall be labeled "Confidential." When disclosed orally,
such information shall be identified as "Confidential" at the time of
disclosure. The party receiving any such oral information agrees to label
clearly "Confidential" all information reduced by it to writing as a result of
such oral disclosures.
18.5 The parties acknowledge that by disclosing confidential information
to each other, they are not thereby granting any express, implied, or other
license or right to the disclosee under any patents or copyrights of the
disclosing party.
18.6 Each party shall disclose the confidential information of the other
only to its employees or subcontractors having a specific need-to-know such
information for purposes related to the Program, and shall segregate such
information at all times from the confidential material of others so as to
prevent any commingling thereof. Generally, each party shall protect the
confidential information of the other party to the same extent it protects its
own confidential information, but in no event with less than a reasonable degree
of care.
18.7 For a period of three years from the date of disclosure or receipt,
each party agrees to hold all the confidential information of the other in trust
and confidence for the other party and not to use such confidential information
other than for the benefit of the owner thereof, or make copies of such
confidential information without the permission of the other party. Upon
termination or expiration of this Agreement, each party shall return to the
other or destroy all written or descriptive matter, including drawings,
blueprints, manuals, descriptions, instructions, or other papers, documents,
tapes, disks or any other media which contain any such confidential information
of the other party.
18.8 Anything herein to the contrary notwithstanding, DAC may not solicit
TOSHIBA's customers for any purpose other than to fulfill its duties and
responsibilities hereunder. If a TOSHIBA customer contacts DAC directly and
requests additional services or information from DAC regarding products which
are not the subject matter of this Agreement, DAC may communicate with such
customer regarding such request. DAC or any of its affiliates may also contact
or solicit any customer who is also a customer of TOSHIBA so long as such
customer has been acquired as a customer or otherwise identified by DAC or any
of its affiliates independently of this Agreement.
18.9 Anything herein to the contrary notwithstanding, each party agrees
that, without the express consent of the other party it will not solicit or
endeavor to entice away from the other party any employee except with the
express written consent of the other party. [**24**]
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18.10 Without limiting the generality of Section 22, the terms and
conditions of this Section 18 shall survive the expiration or termination of
this Agreement for any reason.
19. PUBLICITY.
Each of the parties agrees that it will not make any public statement
regarding this Agreement or the Program without the written approval of the
other party, which approval shall not be unreasonably withheld. Notwithstanding
any other provisions of this Agreement, neither party shall have the right to
use the other party's trademarks, service marks, trade names or brand names in
connection with any service, product, promotion, advertisement or publication
without prior written approval of the other party.
20. NOTICES AND APPROVALS.
20.1 Notices. All notices, demands and requests required or permitted by
this Agreement shall be in writing and, except as otherwise provided herein,
shall be deemed to have been given for all purposes (i) upon personal delivery,
(ii) one day after being sent, when sent by professional overnight courier
service from and to locations within the continental United States, (iii) five
days after posting when sent by United States registered or certified mail, with
postage paid, (iv) on the date of transmission when sent by confirmed facsimile,
or (v) at the time of a confirming e-mail from the receiving party, which
acknowledges an e-mail notice or request; if directed to the person or entity to
which notice is to be given at his or its address set forth in this Section or
at any other address such person or entity has designated by notice.
Address for TOSHIBA: Toshiba America Information Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: CSG Executive Vice President
With a copies to: Legal Department
▇▇▇▇ ▇▇▇▇▇, Director Inside Sales
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, VP Logistics
Toshiba America Information Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Address for DAC: DAC Corporation
Attn: President
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇-▇▇▇▇▇▇▇▇.▇▇▇
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With copies to: Insight Enterprises, Inc.
Attn: Chief Financial Officer
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
Attn: P. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
20.2 Approvals. Approvals by or binding on TOSHIBA shall be effective only
when given in writing by one of the TOSHIBA Authorized Signers:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
21. GENERAL.
21.1 Waiver. The failure of either party to insist on strict performance
of any term or condition hereof or to exercise any option contained herein,
shall not be construed as a waiver of that party's right to enforce that term of
condition in the future or any other term or condition of this Agreement in any
other instance.
21.2 Assignment. Except as provided in this Section, neither party may
assign (by operation of law or otherwise) this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other party, and
any attempt to do so without prior written approval shall be void.
Notwithstanding the foregoing, TOSHIBA may assign this Agreement to an online
commerce subsidiary or affiliate at any time upon thirty (30) days written
notice to DAC.
21.3 Attachments. All Exhibits, Attachments and Schedules to this
Agreement are incorporated herein by this reference as though fully set forth
herein. If there is any conflict, contradiction or ambiguity between the terms
and conditions in this Agreement and any of its Exhibits or Schedules, the terms
of this Agreement shall prevail.
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21.4 Entire Agreement/Amendment. This Agreement contains the entire
agreement of the parties with respect to its subject matter and shall supersede
all prior and contemporaneous agreements and understandings between the parties
respecting the subject matter hereof. This Agreement may not be changed or
terminated orally by or on behalf of any party. Additionally, except to the
extent required by law, including by any governmental agency regulating the sale
of securities, and except for disclosures to a party's employees, attorneys or
accountants, on a need-to-know basis, neither party shall disclose the terms and
conditions of this Agreement without the prior written consent of the other.
21.5 Legal Determination. This Agreement shall be construed and
enforced, and the legal relations between the parties hereto shall be
determined, in accordance with the laws of the state of California, without
reference to its conflict of laws principles.
21.6 Captions, Construction and Interpretations. The language in
all parts of this Agreement shall in all cases be construed as a whole according
to its fair meaning and not strictly for or against either party. The Section
headings contained in this Agreement are for reference purposes only and will
not affect the meaning or interpretation of this Agreement in any way. When used
without definition the words "Section," "paragraph" or "Exhibit" refer to such
portions of, or addenda to, this Agreement. All terms used in one number or
gender shall be construed to include any other number or gender as the context
may require. The parties agree that each party has reviewed this Agreement and
has had the opportunity to have counsel review the same and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in the interpretation of this Agreement or any
amendment or any exhibits thereto. Whenever the words "include," "includes," or
"including" are used in the Agreement, including any Exhibits or other addenda
hereto, they shall be deemed to be followed by the words "without limitation."
21.7 Independent Entities. TOSHIBA and DAC each have separate and
independent rights under this Agreement. Nothing contained herein shall be
construed as creating, forming, constituting or implying any agency
relationship, partnership, joint venture, merger or consolidation of TOSHIBA or
DAC for any purpose or in any respect.
21.8 Continuing Cooperation. Each party to this Agreement shall be
obligated hereunder to perform such other and further acts, including without
limitation the execution of any documents which are reasonable and may be
necessary or convenient in carrying out the purpose and intent of this
Agreement.
21.9 Severability. If a court of competent jurisdiction makes a
final determination that any term or provision hereof is invalid or
unenforceable, after the expiration of the time within which judicial review (if
permitted) of such determination may be perfected, (i) the invalid or
unenforceable term or provision shall be deemed replaced by a term or provision
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision and (ii) the remaining terms
and provisions hereof shall be unimpaired.
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21.10 Remedies Cumulative. Every right or remedy in this Agreement
conferred upon or reserved to the parties will be cumulative and will be in
addition to every right or remedy now or hereafter existing at law or in equity,
and the pursuit of any right or remedy will not be construed as an election.
21.11 Sections that Survive. If this Agreement is terminated in
accordance with the terms of Section 12, Termination, the following Sections
will survive and remain in full force and will not thereby be terminated:
11. Warranties
14. Indemnification
15. Limitation of Liability
17. Defense of Intellectual Property Claims
18. Confidential Information
19. Publicity
20. Notices and Approvals
21. General
21.12 Export Laws. Both parties agree, in all activities under this
Agreement, to conform to and abide by the export laws and regulations of the
United States including the Export Administration Act of 1979 as amended and its
implementing regulations.
21.13 Exhibits. The Program will also comply with the terms and
conditions set forth in each Exhibit, Attachment and Schedule to this Agreement,
including the following:
Exhibit A PROGRAM DESCRIPTION
Exhibit B MONTHLY ALLOCATED FEES
Exhibit C ROGRAM METRICS
Exhibit D PROGRAM REQUISITION FORM
Exhibit E PERSONNEL REQUISITION FORM
Exhibit F FINANCE REQUIREMENTS
Exhibit G SUMMARY REPORT REQUIREMENTS DOCUMENT
Exhibit H PROGRAM BUSINESS RULES
21.14 Binding Effect; Benefits. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective heirs,
successors, executors, administrators and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
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21.15 Authorizations and Signatures. By signing below, each party
represents that this Agreement has been duly authorized and constitutes an
Agreement by which it is bound.
21.16 Counterparts and Facsimile Signatures. This Agreement may be
executed simultaneously in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
agreement. This Agreement may be executed by either or both parties by either
manual or facsimile signatures.
21.17 No Disparagement. Each of the parties agrees that it will not
make any disparaging or derogatory remarks, whether oral or written, about the
other party, or its affiliates, products or services, and agrees to instruct its
employees to behave in the same manner.
22. PARENT OBLIGATIONS.
Performance Assurance. Parent hereby agrees to ensure the performance
by DAC of its obligations under this Agreement and Parent further agrees to be
jointly and severally liable for any claims against DAC or its employees,
officers, directors or agents in connection with DAC's obligations under this
Agreement.
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TOSHIBA AMERICA INFORMATION SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------------------------
Printed Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Executive Vice President, CSG
Date of Signature:
----------------------------------------
DIRECT ALLIANCE CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------------------
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
Date of Signature:
----------------------------------------
Parent acknowledges its obligations and liability as stated in Section 22 by
signing below.
INSIGHT ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: CFO
Date of Signature: 7/7/00
----------------------------------------
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EXHIBIT A
PROGRAM DESCRIPTION
All terms used herein but not defined shall have the meanings given such terms
in the Program Services Agreement among DAC, Parent and TOSHIBA.
A 1.0 OVERVIEW OF THE PROGRAM
It is anticipated that the Program, as described in detail below, will
involve the sale of TOSHIBA notebook and desktop computers and server SKU's to
end-users, SOHO, and small-to medium sized businesses.
A 2.0 [This Section Intentionally Left Blank]
A 3.0 BASIC CONCEPTS OF THE PROGRAM
3.1 Geographical Scope. Initial program sales are limited to the
United States.
3.2 Business Rules. Program sales shall be governed by the terms
of the Agreement and business rules established by TOSHIBA.
3.3 Product Offering and Pricing. Program product offering and
pricing shall be determined solely by TOSHIBA.
3.4 Program Metrics. The Program will be subject to the Program
Metrics described in Exhibit C, which may not be modified without the written
consent of both parties.
A 4.0 PROGRAM SERVICES AND RESPONSIBILITIES
The services and responsibilities of DAC described in this Section A4.0
will be provided or managed by DAC, subject to personnel requisition and program
requisition approval by TOSHIBA. Additionally, the parties understand that there
will be a ramp-up period and that all of these services may not be available at
the time the Program commences.
4.1 Marketing.
4.1.1 Program Marketing. TOSHIBA will be responsible for
all Program marketing. However, from time to time, DAC may provide some
marketing services, including database consulting, catalog design, and catalog
printing, at TOSHIBA's request.
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4.1.2 Marketing Materials. TOSHIBA will furnish to DAC all
marketing materials not developed by DAC that are appropriate in support of the
program. Additionally, TOSHIBA agrees to provide continual updates to DAC
regarding any and all marketing activity associated with the Program.
4.2 Sales.
4.2.1 Inbound telesales. DAC will assemble a dedicated
sales staff to respond to customer sales inquiries from the TOSHIBA Direct
demand generation vehicles. All calls will be answered or presented as "TOSHIBA
Direct" or another Program name selected by TOSHIBA.
4.2.2 Outbound telesales. Outbound calling efforts will
focus on increasing system sales to existing TOSHIBA Direct business customers,
acquiring new business customers and maintaining customer communications. DAC
will manage all facets of the outbound telesales program.
4.2.3 Electronic commerce and order processing. DAC will
provide linkage satisfactory to TOSHIBA from TOSHIBA's World Wide Web site,
including the Accessories Website, to DAC's MAX operating system. DAC will
provide electronic inventory information for selected EDI Partners as well as
DAC's own warehouse to the extent appropriate.
4.2.4 Sales management. DAC will provide a dedicated
Director of Sales and approximately one sales manager to manage the Program
sales process for each 10 to 12 sales representatives.
4.2.5 Open order/backlog management. Utilizing the MAX
system, dedicated Program personnel will perform a daily review of open orders
and take appropriate action to expedite shipment of customer orders.
4.2.6 Quote management. DAC will manage all open quotes in
with the goal of maximizing the Program close ratio and overall Program revenue.
4.3 Customer service. DAC will provide customer service with the
goal of ensuring the timely and satisfactory resolution of all Program customer
concerns.
4.3.1 Order status. DAC systems will provide order status
in the following areas:
-Order processing/shipping/invoicing
-Integration (to the extent provided by TOSHIBA or
its Partners)
-Federal Express delivery status
-Return merchandise status
-Detailed customer history
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4.3.2 FTC regulation management. DAC's systems will provide
for online management of FTC Mail and Telephone Order Rule requirements for all
applicable orders that do not meet customer quoted ship dates (CQSD). This
includes providing formal notices to customers when the CQSD will not be met and
proactively outbound calling customers should the CQSD expire. All sales
representatives will be trained to maintain compliance with FTC requirements.
DAC will maintain compliance with new FTC rules relating to its performance
under this Agreement including amendments to the Telephone Order Rule.
4.4 Fulfillment. TOSHIBA at its sole option may elect to engage
with DAC for Program fulfillment. Such service will be executed using DAC's
proprietary EDI direct ship capabilities to fulfill orders via selected partners
through DAC's distribution operations. Packing slips will reference the Program
name to promote the desired seamless customer environment.
4.4.1 Dedicated facilities. DAC will provide dedicated
facility areas for warehousing of TOSHIBA Products where appropriate.
4.4.2 Inventory management. DAC will provide complete
inventory management functions when inventory is carried in a DAC distribution
center. These functions include automated receiving, stocking, and cycle
counting using bar code technology in conjunction with RF (radio frequency)
capabilities and proprietary inventory management systems.
4.4.3 TOSHIBA Products stored in DAC Distribution Center.
TOSHIBA may provide TOSHIBA Products on a consigned basis. All TOSHIBA Products
provided by TOSHIBA shall contain bar codes located on the exterior of the
carton and shall reference the SKU and where applicable the serial number of the
unit. TOSHIBA shall be responsible for all supply management and product-line
management associated with TOSHIBA Products. These functions include demand
forecasting, purchase order generation, scheduling and rescheduling, ensuring
timely delivery of TOSHIBA Products and providing accurate lead-time information
and stock rotation management.
4.4.4 Third party Program products. DAC will provide to
TOSHIBA access via EDI to third-party products approved by, but not carried by,
TOSHIBA. DAC is responsible for all supply management and product line
management associated with third party Program products. These functions include
purchase order generation, scheduling and rescheduling, maximizing timely
delivery of third-party products, providing available lead-time information and
stock rotation management.
4.4.5 Supply management. DAC will provide supply management
(purchasing) support utilizing DAC's proprietary information systems to manage
Program inventory availability and status.
4.4.6 Pick-Pack-Ship. DAC will provide its proprietary
distribution management systems to facilitate returns processing. Picking,
invoicing, and shipment of replacement orders will be the responsibility of
third-party distributors selected by TOSHIBA.
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4.4.7 Serial number tracking. Where available from
distributors, serial numbers of identified SKU's will be tracked on a
unit-by-unit basis as products are shipped out to customers. Information
pertaining to serial numbers will be stored within the information system to
allow access for technical support validation and returns process management.
4.4.8 Packing slip/invoices. To encourage the seamless
structure of the Program a packing slip bearing the Program name will accompany
each shipment.
4.4.9 FedEx PowerShip system. Online delivery information
will be provided to sales representatives through the MAX operating system. The
MAX system receives continuous delivery information from the FedEx PowerShip
system.
4.4.10 Program Freight.
4.4.10.1 Inbound freight routing and associated costs
for TOSHIBA Products shall be the responsibility of TOSHIBA.
4.4.10.2 Inbound freight routing for third party
products shall be the responsibility of DAC. TOSHIBA shall be billed for all
inbound freight costs that are not included in the cost of third-party products,
at the cost determined in the manner set forth in Section 4.3.6.
4.4.10.3 Inbound freight for all customer orders
shall be the responsibility of TOSHIBA. Outbound freight may be billed to a DAC
freight account specifically set up for the Program and later billed by DAC to
TOSHIBA, at the cost determined in the manner set forth in Sections 4.3.1 and
4.3.6.
4.4.10.4 All freight revenue associated with Program
sales shall belong to TOSHIBA.
4.4.10.5 All freight expense associated with customer
returns (where permitted by TOSHIBA policy or specifically authorized by
TOSHIBA) shall be the responsibility of TOSHIBA. Customer returns freight may be
billed to a DAC freight account specifically set up for the Program and later
billed by DAC to TOSHIBA at cost.
4.4.10.6 All freight expense associated with TOSHIBA
Products or third-party product returns to TOSHIBA, its affiliates, or third
party suppliers, shall be the responsibility of TOSHIBA. Supplier returns
freight may be billed to a DAC freight account and later billed by DAC to
TOSHIBA at cost.
4.5 Integration. Program integration services will be performed by
TOSHIBA or its designee. DAC will communicate integration requirements to the
designated party by EDI.
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4.6 Technical Support. DAC will provide basic presale technical
support to facilitate product sales, subject to product training and/or product
information provided by TOSHIBA. Sales personnel will be trained and capable of
supporting customers' needs for basic questions associated with the sales
process. TOSHIBA or another vendor shall be responsible for all post-sale
Program technical support and such services are not included in the Program.
4.7 Returns Processing.
4.7.1 Returns Authorization. DAC will provide returns
management services utilizing DAC's proprietary information systems to verify
and authorize the return of Program Goods. The process will be managed according
to policies and procedures provided by TOSHIBA from time to time on 30 days
written notice. The return policy may be changed at TOSHIBA's request; however,
any requested changes may result in additional costs that must be paid by
TOSHIBA.
4.7.2 Customer Returns. Customer returns may be accepted in
accordance with the returns policy. Customer returns will be processed on a
daily basis as received, resulting in repair, credit or replacement of products
for the customer.
4.7.3 Supplier Returns. All customer returns will be
returned to the supplier of record. Supplier returns will be managed per
supplier specifications.
4.7.4 Out-of-Policy Returns. DAC will accept out-of-policy
returns only when approved by TOSHIBA on a case-by-case basis. As is the case
with all returns, TOSHIBA assumes full financial responsibility for all such
out-of-policy returns.
4.7.5 Responsibility for Returns. All product returns will
be the responsibility of TOSHIBA. This includes TOSHIBA Products and third-party
products. DAC will make reasonable efforts to return third-party products to
suppliers, but TOSHIBA will assume all responsibility for products returned
including integrated third party products (i.e., third-party products that are
installed into a TOSHIBA computer). This responsibility extends to the loss in
value to any and all TOSHIBA and third-party products.
4.8 Information Services. DAC and TOSHIBA agree to negotiate
Information Management ("IM") and technical infrastructure specifics and any
associated costs which will be added to the TOSHIBA Business Rules or Program
Requirements, including the following technical areas:
-Service level agreements for specific DAC services
-Disaster recovery infrastructure requirements to uphold
service level agreements
-Knowledge of transfer requirements from DAC to TOSHIBA if
specified or all service responsibilities are transferred
to TOSHIBA or its designated agent
-Other IM or technical requirements as discovered
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Until the parties agree to such requirements, DAC agrees to use commercially
reasonable efforts to provide IM and technical services to the reasonable
satisfaction of TOSHIBA .
4.8.1 Program Software. DAC will provide its "MAX Business
Operating System" software package to operate the Program.
4.8.2 Program Hardware. DAC will provide a
telecommunications system that will manage inbound and outbound customer calls
within the DAC facilities. This includes basic IVR management capabilities for
call processing, voice mail capability and data collection/reporting. This does
not include any special features such as sophisticated IVR or CTI applications.
DAC will provide all networking hardware associated with DAC facilities.
Notwithstanding other Sections of this contract, TOSHIBA is responsible for
hardware associated with TSR workstation computers and hardware and software
related to remote system access.
4.8.3 Electronic Mail Communication. DAC will provide
access for customers to place orders and communicate via electronic mail,
subject to TOSHIBA providing or approving a program e-mail address.
4.8.4 Credit Card Address Verification/Authorization. DAC
will provide its online address verification and transaction authorization to
facilitate order processing and customer satisfaction.
4.8.5 System Access. DAC will provide realtime, online
access to the Program information database via the business management system
software. TOSHIBA will be responsible for the PC's and other hardware and
software required to achieve the link to DAC's system.
4.8.6 EDI Capabilities. As provided in Section A4.0, DAC
will be "EDI ready" to perform business functions via EDI transmissions.
4.8.7 Telephony. TOSHIBA will pay for local, 800 number and
V.A.N. services supplied by DAC, including long-distance charges, for use in
conjunction with the Program. The Program will be menu driven with touchtone
selections for business/end user sales and customer service, providing an
expedited answer for the customer. Other services may be added to Program
touchtone menus at the request of TOSHIBA.
4.9 World Wide Web.
4.9.1 DAC will provide "Back-End" functionality for a World
Wide Web Site that will be created and maintained by TOSHIBA. Additionally, the
Program Web Site will offer secured order entry and inquiry capabilities. DAC
will administer all orders, requests and inquiries generated thereby.
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4.9.2 DAC will provide an interim solution for TOSHIBA
relating to its permanent World Wide Web site by providing TOSHIBA with the
website content substantially in the form found currently at
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ ("Accessories Website"). The interim solution as
further described below in Section 4.9.1 will be reviewed on or before October
1, 2000 to determine if TOSHIBA's permanent World Wide Web site is operational.
Should TOSHIBA's permanent World Wide Web site not be operational by October 1,
2000, Toshiba and DAC will work together in good faith to determine the best
course of action.
4.9.3 DAC hereby transfers to TOSHIBA all right, title and
interest in and to the ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ domain name, and shall
cooperate with TOSHIBA in effecting such transfer.
4.9.4 TOSHIBA will have sole approval rights over the
Accessories Website content. From time to time, DAC shall make maintenance
modifications and customizations to the Accessories Website in accordance with
TOSHIBA's directions and subject to acceptance by TOSHIBA with TOSHIBA-approved
Program resources. Such modifications shall be implemented within two (2)
business days or as soon as commercially practicable, considering Program
e-commerce workload, priorities and resources as directed and approved by
TOSHIBA, for scheduled content updates. Any extraordinary modifications will be
handled as Variable Fees, and DAC will propose a budget and timeframe for
completing the modifications.
4.9.5 Until directed otherwise, DAC will host the
Accessories Website at no extra charge, in accordance with the following hosting
standards:
(i) The Accessories Website servers shall be publicly
available to users 99.0% of the time in any thirty (30) day
period, taking into account scheduled and unscheduled
maintenance time. Before October 1, 2000, the parties will
review this subsection for possible adjustment.
(ii) DAC shall make a complete backup of the
Accessories Website every day. As reasonably requested by
TOSHIBA, DAC shall deliver to TOSHIBA electronic log files and
website activity reports for the Accessories Website.
(iii) DAC shall take best efforts to prevent
unauthorized access to restricted areas of the Accessories
Website and any databases or other sensitive material
generated from or used in conjunction with the website, and
shall immediately notify TOSHIBA of any known security
breaches or holes.
4.10 Reporting.
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4.10.1 Online Reporting. DAC will make available to TOSHIBA
24-hour online access to a menu of reports. Standard report formats will exist
for the report types listed below:
-Sales
-Fulfillment
-Inventory Management
-Returns
-Accounting
4.10.2 Periodic Reporting. DAC will provide all Program data
to TOSHIBA with reasonable frequency, as determined by the parties, via the
universal data extract (UDE).
4.11 Accounting/Credit. DAC will handle all collections (including
returned checks) and credit approvals as outlined further in Exhibit F. The
exception will be any credit approval over $50,000. DAC will do the initial
research on exceptions and make a recommendation to TOSHIBA's designated on-site
credit manager. The information should include credit application, financials,
copy of D & B report and any other data that DAC's personnel think relevant.
TOSHIBA shall also be responsible for all losses arising from credit decisions
and fraud or misrepresentation by customers or potential customers.
4.11.1 Credit responsibility. TOSHIBA will assume
responsibility for all credit extended in connection with the Program. DAC's
systems will be tailored to follow the credit rules defined by TOSHIBA. In order
for the Program to be operational by the scheduled date, TOSHIBA agrees to use
First of Omaha as the Program's credit card processor.
4.11.2 Credit process management. DAC will provide staff to
manage and expedite the credit process, including facilitation of leasing with
the goal of providing efficient and expedited service. DAC will establish and
follow credit processing rules acceptable to TOSHIBA. These rules will, in part,
prohibit the misuse by DAC employees of credit card numbers. DAC will also
maintain a complete on-line account histories to allow for quick and accurate
processing of customer credit requests. TOSHIBA will provide onsite credit
personnel to facilitate credit decisions for terms, problematic orders, and
leasing services. TOSHIBA will be responsible for all Program related credit
card processing fees utilizing the systems and processes developed by DAC.
4.11.3 Financing methods. Subject to TOSHIBA's credit
policies, DAC will provide Program capability for the following financing
methods.
-Credit cards. (Mastercard, Visa, American Express and
Discover)
-Purchase orders. Purchase orders will be accepted from
approved customers.
-Prepaid orders/wire transfers.
-Leasing.
A 5.0 PRODUCT OFFERINGS
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5.0 Product offering.
5.1 Accessories. The Program offering will consist of
options/accessories identified by TOSHIBA. TOSHIBA has final approval of all
products offered through the Program.
5.2 Software. Selected TOSHIBA and third-party software will also
be offered through the Program as approved by TOSHIBA .
5.3 Hardware. The Program will carry current TOSHIBA desktop,
portable and server SKU's as determined by TOSHIBA .
A 6.0 STAFFING AND TRAINING
6.0 Staffing and training.
6.1 Staff. Except as otherwise provided herein, DAC will provide
staffing for the Program. DAC will provide dedicated and shared resources to
support the program as agreed by both parties.
6.1.1 All dedicated program personnel shall be approved, in
writing, via a Personnel Requisition Form (Exhibit E) prior to hiring (See
Section 4.3.4 of the Agreement).
6.1.2 All shared program personnel shall be approved, in
writing via a Program Requisition Form, prior to providing service or support to
the program.
6.2 Training. DAC will provide initial and ongoing sales training,
as follows:
-Computer and telephone systems
-Telephone skills training
-Operating system (MAX) training
-Basic computer systems
-Consultative sales skills training
6.3 TOSHIBA Training and Systems. TOSHIBA will provide one onsite
training person and the following training and systems:
Product training with respect to the TOSHIBA Products.
A 7.0 PROGRAM HOURS OF OPERATION. The contemplated Program hours of operation
are Monday through Friday, 8:00 a.m. to 8:00 p.m. Eastern Standard Time and
Saturday, 9:00 a.m. to 2:00 p.m. TOSHIBA may modify these hours of by giving DAC
60-days written notice.
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A 8.0 PROGRAM START DATE. The Program start date is July 1, 2000.
A 9.0 ADDITIONAL PROGRAM TERMS AND CONDITIONS.
9.1 Certain Variable Fees Calculations. The charges for certain
variable costs, as set forth below, are understood by the parties to be
appropriate in connection with the Program. Such items are provided by way of
example only, and are not intended to be all-inclusive. Such expenditures are
variable or semi-variable in nature and are associated with Program sales
volume. From time to time, TOSHIBA may request adjustments to staffing levels in
these areas to reflect changes in business activity (with a minimum 30-day
notice to adjust headcount). Non-staffing related variable costs can be expected
to adjust to the appropriate Program activity level automatically. The parties
understand that the employment costs set forth below, which generally will be
charged as Variable Fees, will include an additional benefits burden of
[**25**], plus an overhead burden of [**25**] per month for each dedicated
Program employee. Additionally, actual compensation will vary according to the
employment market and other circumstances and the items listed below are only
good-faith current estimates by DAC.
-Inbound Sales Representatives: [**26**] per month base salary, plus
commission of [**26**] of Net Sales.
-Senior Inbound Sales Managers: [**26**] per month, plus [**26**] of
managed Net Sales.
-Inbound Sales Managers: [**26**] per month, plus [**26**] of managed
Net Sales.
-Director of Sales: [**26**] per month base salary, plus commission of
[**26**] of managed Net Sales.
-Outbound Sales Representatives: [**26**] per month base salary, plus
commission of [**26**] of Net Sales.
-Senior Outbound Sales Manager: [**26**] per month, plus [**26**] of
managed Net Sales.
-Outbound Sales Managers: [**26**] per month, plus [**26**] of managed
Net Sales.
-Customer Service Representatives: [**26**] per month base salary.
-Customer Service Manager: [**26**] per month, plus [**26**] per month
maximum bonus incentive potential.
-Distribution Center Specialist: [**26**], plus [**26**] per month
maximum bonus incentive potential.
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-Distribution Center Supervisor: [**26**] per month, plus [**26**] per
month maximum bonus incentive potential.
-Packaging costs: Per Program requirements and usage.
9.3 Other Transactions. TOSHIBA will remain responsible for any
and all costs related to transactions (including but not limited to returns
outside of standard Program return policies, special services and the like)
which are outside of DAC's policies for the Program and which TOSHIBA approves
in writing.
9.4 MAX Software. The Program will be operated through the use of
DAC's existing proprietary UNIX-based MAX software package. The MAX software
package will be and remain the exclusive property of ▇▇▇.
-▇▇-
▇▇
▇▇▇▇▇▇▇ ▇
MONTHLY ALLOCATED FEES
1.0 Non-dedicated Program Management Personnel:
1.1 Sales
1.1.1 Senior Vice President Sales [**27**]
1.1.2 Administration Staff [**27**]
[**27**]
1.2 Operations
1.2.1 Vice President of Operations [**27**]
[**27**]
1.3 Product Management
1.3.1 Purchasing Manager [**27**]
[**27**]
1.4 Distribution (Returns Mgmt.)
1.4.1 Distribution Manager [**27**]
[**27**]
1.5 Accounting
1.5.1 Controller [**27**]
1.5.2 Director Accounting Services [**27**]
1.5.3 Accounting Manager [**27**]
1.5.4 Payroll Supervisor [**27**]
1.5.5 A/R Supervisor [**27**]
[**27**]
1.6 Human Resources
1.6.1 Human Resource Manager [**27**]
1.6.2 Human Resource Recruiter [**27**]
1.6.3 Human Resources Staff [**27**]
[**27**]
1.7 Training
1.7.1 Trainer [**27**]
[**27**]
1.8 Security [**27**]
42
1.9 Information Technology
1.9.1 Director IT [**27**]
1.9.2 Manager IT [**27**]
1.9.3 Web Manager [**27**]
1.9.4 Manager IS [**27**]
[**27**]
1.10 General and Administrative
1.10.1 President [**27**]
1.10.2 Senior Vice President [**27**]
1.10.3 Administrative Staff [**27**]
[**27**]
1.11 Facility Administration
1.11.1 Facility Administrator [**27**]
1.11.2 Facility Staff [**27**]
[**27**]
2.0 Expense for sales/administrative and distribution facility space:
2.1 Administrative [**28**] [**28**]
2.2 Distribution/Returns (1,500 sq. ft.) [**28**]
3.0 DAC affiliate allocated costs:
3.1 IEI Legal [**29**]
3.2 IEI Information Systems [**29**]
3.3 IEI General and Administrative [**29**]
Monthly allocated fees are for those persons and services TOSHIBA and DAC agree
are required to support the program. In no event will the total allocated fees
exceed the cost for such person or services involved in the program.
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43
EXHIBIT C
PROGRAM METRICS
To be mutually determined.
44
EXHIBIT D
PROGRAM REQUISITION FORM
(Not Provided)
45
EXHIBIT E
PERSONNEL REQUISITION FORM
(Not Provided)
46
EXHIBIT F
FINANCE REQUIREMENTS
(Not Provided)
47
EXHIBIT G
SUMMARY REPORT REQUIREMENTS DOCUMENT
(Not Provided)
48
EXHIBIT H
PROGRAM BUSINESS RULES
(Not Provided)