<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 1997
REGISTRATION NO. 333-________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM SB-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NEUTRAL POSTURE ERGONOMICS, INC.
(Name of small business issuer in its charter)
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<S> <C> <C>
TEXAS 2522 74-2563656
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
3904 N. TEXAS AVENUE
BRYAN, TEXAS 77803
(409) 778-0502
(Address and telephone number of principal executive offices
and principal place of business)
------------------------
REBECCA E. BOENIGK
CHIEF EXECUTIVE OFFICER
NEUTRAL POSTURE ERGONOMICS, INC.
3904 N. TEXAS AVENUE
BRYAN, TEXAS 77803
(409) 778-0502
(Name, address and telephone number of agent for service)
------------------------
COPIES TO:
GREG R. SAMUEL DAVID E. MORRISON
HAYNES AND BOONE, LLP THOMPSON & KNIGHT, P.C.
901 MAIN STREET 1700 PACIFIC AVENUE
SUITE 3100 SUITE 3300
DALLAS, TEXAS 75202-3789 DALLAS, TEXAS 75201
(214) 651-5000 (214) 969-1700
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED (1) SHARE (2) PRICE (2) FEE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share . . . . . . . . . . . . . . 1,150,000 shares $6.50 $7,475,000 $2,265.15
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</TABLE>
(1) Includes shares issuable upon exercise of the Underwriter's over-allotment
option.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 of Regulation C under the Securities Act of 1933, as amended.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 14, 1997
1,000,000 SHARES
[LOGO]
NEUTRAL POSTURE ERGONOMICS, INC.
COMMON STOCK
------------------------
Of the 1,000,000 shares of Common Stock being offered hereby, 721,500
shares of Common Stock are being offered by Neutral Posture Ergonomics, Inc.
(the "Company") and 278,500 shares of Common Stock are being offered by the
Selling Shareholders. See "Principal and Selling Shareholders" and
"Underwriting." The Company will not receive any proceeds from the sale of the
Common Stock by the Selling Shareholders.
Prior to this offering, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price per
share will be between $5.50 and $6.50. For information relating to the factors
to be considered in determining the initial public offering price, see
"Underwriting." The Company has applied for inclusion of the Common Stock on
the Nasdaq Stock Market's National Market under the symbol "NTRL."
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS
OF THE COMMON STOCK OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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PROCEEDS TO
UNDERWRITING DISCOUNT PROCEEDS TO SELLING
PRICE TO PUBLIC AND COMMISSIONS (1) COMPANY (2) SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share . . . . . . . . . $__________ $__________ $__________ $__________
- ----------------------------------------------------------------------------------------------------------------
Total (3) . . . . . . . . . $__________ $__________ $__________ $__________
================================================================================================================
</TABLE>
(1) Does not reflect additional compensation to Huberman Financial, Inc. (the
"Underwriter") in the form of warrants granted to the Underwriter to
purchase 100,000 shares of Common Stock at a price of 120% of the Price to
Public exercisable over a period of four years commencing one year from
consummation of the offering (the "Underwriter's Warrants"). In addition,
the Company and the Selling Shareholders have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $__________ payable by the Company.
(3) The Company has granted the Underwriter a 45-day option to purchase up to
an additional 150,000 shares of Common Stock, solely to cover
over-allotments, if any. See "Underwriting." If the Underwriter exercises
this option in full, then the total Price to Public, Underwriting Discount
and Commissions, Proceeds to Company and Proceeds to Selling Shareholders
will be $__________, $__________, $__________ and $__________,
respectively.
The shares of Common Stock are offered by the Underwriter subject to
receipt and acceptance by the Underwriter, and subject to its right to reject
any order in whole or in part. It is expected that certificates representing
the shares of Common Stock will be ready for delivery on or about
_______________, 1997.
-----------------------
HUBERMAN FINANCIAL, INC.
The date of this Prospectus is _______________, 1997.
<PAGE> 3
[Picture of chair.]
[Picture of Dr. Jerome Congleton.]
[Jerome J. Congleton, Ph.D., P.E., C.P.E.]
[ERGO 2000(TM) Logo.]
[Picture of Earth.]
[Picture of male and female sitting in the neutral posture position.]
[Neutral Posture(R) chairs are designed to emulate the body position of
weightlessness in space, free, neutral and without stress.]
[Pictures of ComputErgo(TM).]
[ERGO 2000(TM) Logo.]
[Pictures of chairs.]
[Pictures of employees assembling chairs.]
[Neutral Posture Ergonomics, Inc. Logo]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS
AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements, including the notes thereto,
appearing elsewhere in this prospectus. Except as otherwise specified, the
information in this prospectus (i) gives effect to a 20-for-1 stock dividend
effected by the Company on August 11, 1997, (ii) assumes no exercise of the
Underwriter's over-allotment option to purchase additional shares of stock and
(iii) assumes no exercise of the Underwriter's Warrants. A reference to a
"fiscal year" by date refers to the Company's fiscal year ending June 30 of
that calendar year. "Neutral Posture" and "ComputErgo" are trademarks of the
Company.
THE COMPANY
The Company manufactures, markets and distributes ergonomic chairs
based upon patented and/or patent-pending designs of Jerome Congleton, Ph.D.,
P.E., C.P.E., an ergonomist certified by the Board of Certification in
Professional Ergonomics who serves as a design consultant to, and a director
of, the Company. Based on anthropometrics, the scientific study of the
measurements of size, weight and proportions of the human body, the Company
manufactures five series of ergonomic chairs designed to minimize the physical
stress imposed upon the human body while seated. Virtually all chairs marketed
under the Neutral Posture(R) tradename can be adjusted to accommodate the size,
weight and proportions of body types from as small as the 5th percentile female
to as large as the 95th percentile male. The Company is not aware of any other
chair on the market that (i) is designed by a certified ergonomist, (ii) is
designed based on anthropometric studies, and (iii) has interchangeable key
components such as seats, backs and arms.
The Company believes that the increase in computer users and other
domestic white collar office employees has benefitted, and the anticipated
increase in white collar office employees outside of the United States will
benefit, its ergonomic furniture business. The Company also believes that
repetitive stress injuries, which affect a number of seated workers, have
created a market demand for ergonomically designed products. According to the
U.S. Bureau of Labor Statistics, 62% of all workplace injuries in 1995 resulted
from the stress of repetitive motion on muscles and tendons. In addition,
according to the National Institute for Occupational Safety and Health,
repetitive stress injuries cost employers approximately $20 billion as a result
of 2.73 million workers' compensation claims in 1993. To address this reported
problem, the Company intends to research, create and develop additional
ergonomic products consistent with the Company's philosophy that its designs be
based on ergonomic research and anthropometric data. The Company's customers
include AT&T Cellular One, Banc One Corporation ("Banc One"), Hewlett-Packard
Company ("Hewlett-Packard"), International Business Machines Corporation
("IBM"), Intel Corporation, the Internal Revenue Service, Lockheed Martin
Corporation, Relax the Back Franchising Company ("Relax the Back"), Sprint
Corporation, the State of Washington, Union Carbide Corporation, United Parcel
Service of America, Inc. ("UPS"), the U.S. House of Representatives and U.S.
Robotics Corporation.
During the first quarter of calendar year 1998, the Company
anticipates producing a portable ergonomic workstation for the transport and
use of a laptop computer, marketed under the tradename ComputErgo(TM). This
patent-pending product is being designed to help alleviate repetitive stress
injuries associated with the emergence of "alternative officing," utilizing a
laptop computer at any locale other than the traditional office.
The Company was incorporated under the laws of the State of Texas in
1990. The Company's principal executive offices are located at 3904 N. Texas
Ave., Bryan, Texas 77803, and its telephone number is (409) 778-0502.
3
<PAGE> 5
THE OFFERING
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Common Stock offered by the Company . . . . . . . 721,500 shares
Common Stock offered by the Selling
Shareholders . . . . . . . . . . . . . . . . . . 278,500 shares
Common Stock to be outstanding
after the offering . . . . . . . . . . . . . . . 3,021,500 shares (1)
Use of proceeds . . . . . . . . . . . . . . . . . The Company intends to use the net proceeds from this
offering (i) to develop, manufacture and market
ComputErgo, (ii) to seek to obtain ISO 9000
certification, (iii) to repay notes issued by the
Company to the Selling Shareholders, (iv) to enhance
the Company's core products and to develop additional
ergonomic products, (v) to add engineering
and marketing resources, and (vi) for working capital.
The Company will not receive any proceeds from the
sale of shares of Common Stock by the Selling
Shareholders. See "Use of Proceeds" and "Certain
Transactions."
Proposed Nasdaq National Market symbol . . . . . NTRL
</TABLE>
- -------------
(1) Excludes (i) 200,000 shares of Common Stock reserved for issuance under the
Company's 1997 Omnibus Securities Plan, of which the Company intends to
issue as soon as practicable following consummation of the offering (a)
options to acquire 55,000 shares of Common Stock and (b) 20,000 shares of
restricted stock subject to vesting, (ii) 200,000 shares of Common Stock
reserved for issuance pursuant to options outstanding under the Company's
Amended and Restated 1996 Nonqualified Stock Option Plan, (iii) 150,000
shares of Common Stock subject to the Underwriter's over-allotment option,
and (iv) 100,000 shares of Common Stock subject to the Underwriter's
Warrants. See "Management -- 1997 Omnibus Securities Plan,"
"Management -- Amended and Restated 1996 Nonqualified Stock Option Plan"
and "Underwriting."
4
<PAGE> 6
SUMMARY FINANCIAL DATA
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YEAR ENDED JUNE 30,
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
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1996 1997
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INCOME STATEMENT DATA:
Net sales . . . . . . . . . . . . . . . . . $ 11,064 $ 12,089
Cost of sales . . . . . . . . . . . . . . . 7,683 7,594
-------- ----------
Gross profit . . . . . . . . . . . . . . . . 3,381 4,495
Selling, general and
administrative expense . . . . . . . . . . 2,980 3,414
-------- ----------
Operating income . . . . . . . . . . . . . . 401 1,081
Interest expense and other, net . . . . . . 58 78
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Income before income taxes . . . . . . . . . 343 1,003
Pro forma income tax expense (1) . . . . . . 128 293
-------- ----------
Pro forma net income(1) . . . . . . . . . . $ 215 $ 710
======== ==========
Pro forma earnings per share(1)(2) . . . . . $ .27
----------
Pro forma common shares outstanding(2) . . . 2,607,167
==========
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JUNE 30, 1997
(IN THOUSANDS)
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ACTUAL PRO FORMA (3) AS ADJUSTED (4)
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BALANCE SHEET DATA:
Working capital . . . . . . . . . . . . . . $ 591 $ 611 $ 3,591
Total assets . . . . . . . . . . . . . . . . 3,698 3,718 6,698
Long-term debt, less current portion . . . . 607 1,250 607
Shareholders' equity . . . . . . . . . . . . 1,599 976 4,599
</TABLE>
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(1) Effective as of April 1, 1996, the Company elected to operate as a
Subchapter S corporation under Subchapter S of the Internal Revenue Code of
1986, as amended (the "Code"), and comparable provisions of certain state
tax laws. The amounts shown reflect pro forma provisions for state and
federal income taxes as if the Company had been subject to such income
taxation during the entire fiscal years 1996 and 1997. See "Termination of
Subchapter S Corporation Status" and Note 4 of the Notes to Financial
Statements.
(2) Gives effect as of June 30, 1997, to the issuance of 107,167 shares of
Common Stock in the offering, representing the portion of the shares
offered hereby required to be sold for the account of the Company at an
assumed initial public offering price of $6.00 (the midpoint of the range
of initial public offering prices set forth on the cover page of the
prospectus) in order to fund the repayment of the Company's promissory
notes in the aggregate principal amount of $643,000 to the Selling
Shareholders as the distribution of the estimated remaining accumulated
Subchapter S corporation earnings through June 30, 1997, a portion of which
is intended to be used by the Selling Shareholders to pay their estimated
federal income taxes attributable to the Company's Subchapter S earnings.
(3) Gives effect to (i) the issuance in August 1997 of the notes payable to the
Selling Shareholders described in footnote (2) of this table, and (ii) the
establishment of an estimated net deferred tax asset of $20,000 related to
future deductible temporary differences arising from termination of the
Company's Subchapter S corporation election under Subchapter S of the Code
and comparable provisions of certain state income tax laws. See
"Termination of Subchapter S Corporation Status," "Use of Proceeds,"
"Capitalization" and Note 8 of the Notes to Financial Statements.
(4) Adjusts the pro forma amounts to reflect the sale of the shares offered
hereby and the application of the estimated net proceeds therefrom. See
"Termination of Subchapter S Corporation Status," "Use of Proceeds,"
"Capitalization" and Note 8 of the Notes to Financial Statements.
5
<PAGE> 7
RISK FACTORS
In addition to the other information contained in this prospectus,
prospective investors should consider the following factors in evaluating the
Company and its business before purchasing any of the shares of Common Stock
offered hereby.
UNCERTAINTY OF LISTING ON NASDAQ STOCK MARKET'S NATIONAL MARKET. The
Board of Directors of the National Association of Securities Dealers Automated
Quotation System ("Nasdaq") recently approved changes in the initial listing
and listing maintenance standards required for Nasdaq Stock Market's National
Market. The proposed rule changes are currently under consideration by the
Securities and Exchange Commission (the "Commission"), which could approve,
alter or reject these changes at any time. If the proposed regulation is
approved at any time after trading has commenced, it is proposed that any
companies applying for listing after such proposals were submitted to the
Commission (including the Company) would be provided 90 days to comply with the
increased initial listing standards. At the present time, the Company would be
unable to meet the proposed increased initial listing standards and will remain
unable to meet such initial listing standards unless, and until, its "net
tangible assets" (as defined by Nasdaq) increase significantly. Consequently,
there is a significant risk that the Common Stock will be delisted from the
Nasdaq Stock Market's National Market. Additionally, although the Company
currently meets the proposed increased listing maintenance standards, there is
a significant risk that the Company could be delisted if it falls below such
increased listing maintenance standards. If the Common Stock were delisted for
any of the foregoing reasons, the Company would seek listing on Nasdaq Stock
Market's SmallCap Market and there would be a significant risk that the
liquidity of the Common Stock would diminish.
STRONG COMPETITION IN THE CONTRACT FURNITURE INDUSTRY. The contract
furniture industry is highly competitive, with a significant number of
competitors offering similar products. Many of the Company's competitors are
large and have significantly greater financial, marketing, manufacturing and
technical resources than those of the Company. The Company's most significant
competitors include Steelcase, Inc., Herman Miller, Inc. and Haworth, Inc.
These competitors have a substantial volume of furniture installed at
businesses throughout the country, providing a continual source of demand for
further products and enhancements. Moreover, the products of these competitors
have strong acceptance in the marketplace, and such competitors could develop
alternative product designs which could give them a competitive advantage over
the Company. The Company also competes with numerous smaller ergonomic
furniture companies such as HAG, Inc., Grahl Industries, Inc. and Bodybilt,
Inc., a wholly-owned subsidiary of Ergobilt, Inc. ("Bodybilt"). In addition,
the Company faces significant price competition from its competitors and may
encounter competition from new market entrants. There can be no assurance that
the Company will be able to compete successfully in the future.
DEPENDENCE ON KEY PERSONNEL. The Company's future success will depend
on the continued efforts of Dr. Jerome Congleton, consultant, Rebecca E.
Boenigk, Chairman of the Board and Chief Executive Officer, David W. Campbell,
President, Gregory A. Katt, Vice President, Chief Financial Officer and
Secretary/Treasurer, and David W. Ebner, Vice President of Operations. Dr.
Congleton has a consulting agreement with the Company that expires July 1,
2007. Mrs. Boenigk and Messrs. Campbell, Katt and Ebner have employment
agreements with the Company which contain non-compete and non-solicitation
clauses and expire July 1, 2000, subject to automatic one-year extensions
unless either party gives 60 days' notice of its intention not to renew. The
Company maintains key person life insurance on Dr. Congleton, Mrs. Boenigk and
Mr. Campbell. The loss of the services of one or more key personnel could have
a material adverse effect on the Company. The Company's success also depends
on its ability to retain its key management, marketing and sales personnel and
to attract, assimilate and retain qualified personnel at a reasonable cost.
There can be no assurance that the Company will be successful in attracting,
assimilating and retaining such personnel. See "Management."
PRODUCT CONCENTRATION; NEW PRODUCTS. At the present time, the
Company's products are primarily limited to five series of ergonomic office
chairs marketed under the Neutral Posture tradename. The Company is subject to
the risk that demand for its existing products may be diminished by changing
market conditions, consumer preferences or competition, any of which could
6
<PAGE> 8
have a material adverse effect on the Company. There can be no assurance that
the Company will be able to develop additional ergonomic products or that a
market would develop for any such products. Significant expenditures will be
necessary for the Company to offer new products, and it may take an extended
period of time for revenues to cover expenses. In addition, new products may
have quality or other defects in the early stages of introduction that were not
anticipated in the design of those products. The Company cannot determine the
effect on operating results of unanticipated complications in product
introductions. If the Company is able to develop new products, there can be no
assurance that they will achieve market acceptance or otherwise be successfully
introduced. Any such failure may have a material adverse effect on the
Company. See "Business -- Products."
RELIANCE ON INTELLECTUAL PROPERTY. The Company owns a United States
patent and several trademarks in order to protect certain of its chair designs
and other intellectual property. The Company's patent covering virtually all
of the Neutral Posture chairs expires in October 2003. Because the Company's
chairs can be manufactured with a relatively small investment in
infrastructure, expiration of the patent in 2003 will thereafter leave the
Company with few, if any, entry barriers against existing furniture
manufacturers or new market entrants that desire to make competitive chairs
based on the design encompassed by such patent.
The Company does, however, have several patents pending, including the
patent application covering ComputErgo, and the Company possesses a wide array
of unpatented proprietary know-how and common law trademarks. The Company's
ability to compete effectively with other companies depends, to a significant
extent, on its ability to maintain the proprietary nature of its intellectual
property. There can be no assurance as to the degree of protection offered by
the claims of the patent and various trademarks or the likelihood that patents
or trademarks will be issued on pending or contemplated applications. If the
Company were unable to maintain the proprietary nature of its intellectual
property with respect to its current or any future products, it could have a
material adverse effect on the Company. See "Business -- Patents and
Trademarks."
There can be no assurance that any patents or trademarks that the
Company has or may obtain will not be challenged, invalidated, canceled,
narrowed or circumvented, or that the rights granted thereunder will provide
significant proprietary protection of competitive advantages to the Company.
There can be no assurance that, if challenged, the Company's patent or
trademarks would be held valid by a court of competent jurisdiction. In
addition, the Company's competitors may have filed for patent protection which
is not as yet a matter of public knowledge. Moreover, a court could interpret
a third party's patents broadly so as to cover some of the Company's products.
The Company has sought and intends in the future to enforce its
intellectual property rights. In May 1997, the Company initiated arbitration
proceedings against Bodybilt claiming, among other things, patent infringement.
In a separate litigation matter, Bodybilt is disputing the validity of the
assignment from Dr. Congleton to the Company of the Company's patent covering
virtually all of the Company's chairs. If such assignment is proved to be
invalid, the Company may need to rely on its license to use such patent. A
1991 settlement agreement conditions such license on the Company being
majority-owned by Rebecca E. Boenigk and Jaye E. Congleton, a limitation which
would significantly limit the Company's ability to obtain additional equity
capital in the future. See "Legal Proceedings."
DEPENDENCE ON SUPPLIERS AND SUBCONTRACTORS. The Company's largest
supplier, Leggett & Platt, Inc., is currently the only source of a key
component for Neutral Posture chairs. While the Company has not had any
adverse experience with this supplier, the Company has no binding supply
contract with Leggett & Platt, Inc. Unless alternative supply sources are
identified, the Company could be subject to pricing risks, delivery delays and
quality control problems, or even unavailability of the component, any of which
could have a material adverse effect on the Company. Commencing in October
1997, the Company intends that Shepherd Products, Inc. ("Shepherd") will begin
to manufacture the majority of the Company's seats and backs. Any disruption
in the ability of Shepherd to manufacture such key components would have a
material adverse effect on the Company.
ECONOMIC FACTORS AFFECTING THE CONTRACT FURNITURE INDUSTRY.
Fluctuations in industry revenues may be driven by a variety of macroeconomic
factors, such as white collar employment levels,
7
<PAGE> 9
corporate cash flows, and non-residential commercial construction, as well as
industry factors such as corporate reengineering and restructuring, technology
demands, ergonomic, health and safety concerns and corporate relocations.
There can be no assurance that current or future economic or industry trends
will not adversely affect the Company.
DIFFICULTY OF MANAGING EXPANDING OPERATIONS. Since August 1992, the
Company has experienced substantial growth. If the Company continues to grow,
the Company's ability to manage growth successfully will require it to continue
to improve its operations and financial management and to train, motivate,
assimilate and effectively manage its employees. The Company's failure to
manage growth successfully could have a material adverse effect on the Company.
The Company's future success also depends on its continuing ability to attract,
assimilate and retain highly qualified managerial personnel. Competition for
such personnel is intense, and there can be no assurance that the Company will
retain its key managerial employees or that it will be successful in
attracting, assimilating or retaining highly qualified managerial and
engineering personnel in the future.
DEPENDENCE ON SIGNIFICANT CUSTOMERS. The Company's largest customers,
the General Services Administration ("GSA"), UPS, Banc One, Relax the Back, the
State of Washington and Hewlett-Packard accounted for approximately 16.2%,
10.4%, 6.2%, 5.4%, 5.3% and 4.9%, respectively, of its total revenues in fiscal
year 1997. The Company's contract with the GSA which is subject to
renegotiation or termination at the convenience of the GSA expires on January
20, 2001. The Company has no binding contracts with UPS, Banc One, Relax the
Back, the State of Washington or Hewlett-Packard. One of the Company's dealers
has an agreement with the State of Washington, but there is no long-term
contract between the Company and such dealer. The loss of any of these
customers, or a reduction in any of these customers' purchases, could have a
material adverse effect on the Company.
POSSIBLE ACQUISITIONS AND ALLIANCES. The Company's growth strategy
includes possible acquisitions and strategic marketing alliances to broaden its
product line. However, no assurance can be given that the Company will be able
to find attractive acquisition or alliance candidates or consummate
acquisitions or that it will successfully integrate or operate any acquired
business. In the event that the Company makes any such acquisition or
alliance, there can be no assurance that any such acquisition or alliance will
not have a material adverse effect on the Company, particularly, in the case of
acquisitions, during the period in which such operations are being integrated
into those of the Company. Furthermore, the Company's ability to make
acquisitions or enter into alliances may depend upon its ability to obtain
financing, and there can be no assurance that the Company will be able to
obtain financing on acceptable terms, if at all.
UNCERTAIN MARKET DEMAND. Public awareness of ergonomics and the
application of anthropometrics is limited. There is limited data to validate
the potential market demand for the Company's products. There can be no
assurance that this increased market demand will develop or that the Company
will be successful in marketing ergonomic contract furniture or other products.
POTENTIAL PRODUCT LIABILITY. The Company is subject to product
liability claims as a result of alleged product design and manufacturing
defects. The Company could be liable for product liability claims for failure
to provide appropriate literature warnings or directions with its products.
The Company also could be liable for product liability claims for defective
products or components as a result of its participation in the distribution of
products or components, even if the Company did not actually design,
manufacture or assemble the products or components. Although the Company has
not experienced any material loss due to product liability claims to date and
currently maintains product liability insurance coverage that it considers
appropriate, there can be no assurance that the amount or scope of the coverage
maintained by the Company will be adequate to protect it in the event a
significant product liability claim is asserted successfully.
WARRANTY LIABILITY. Various components of the Company's chairs are
warranted against defects in materials or work quality for up to five years.
The Company has not experienced any material loss from warranty claims to date
and maintained a reserve, at June 30, 1997, of $131,000 for such claims. There
can be no assurance, however, that material warranty claims will not be
asserted in the future or, if asserted, that the Company's reserve will be
adequate.
8
<PAGE> 10
RISK OF ENVIRONMENTAL LIABILITIES. The past and present business
operations of the Company and the past and present ownership and operation of
the manufacturing plant on real property owned by the Company are subject to
extensive and changing federal, state, local and foreign environmental laws and
regulations, including those relating to discharges to air, water and land, the
handling and disposal of solid and hazardous waste and the cleanup of
properties affected by hazardous substances. The Company cannot predict what
environmental legislation or regulations will be enacted in the future, how
existing or future laws or regulations will be administered or interpreted or
what environmental conditions on its real property may be found to exist.
Compliance with more stringent laws or regulations, or stricter interpretation
of existing laws, may require additional expenditures by the Company, some of
which may be material.
CONTROL BY INSIDERS. Following completion of this offering, the
Company's directors, executive officers and their relatives will control
approximately 69.0% (65.9% if the Underwriter's over-allotment option is
exercised in full) of the Company's outstanding voting securities and will be
in a position to elect the Company's directors and officers, to control the
policies and operations of the Company and to determine the outcome of
corporate transactions or other matters submitted for shareholder approval.
These matters may include mergers, consolidations, the sale of the Company's
assets or a change in control of the Company. The existence of these levels
of ownership concentrated in a few persons makes it unlikely that any other
holder of Common Stock will be able to affect the management or direction of
the Company.
SEASONALITY. Historically, the Company's business has been subject to
seasonality. Typically, the Company's revenue is greater during the second and
third quarters of the Company's fiscal year. These seasonal fluctuations in
sales are due to customer ordering patterns that emphasize purchases in these
two quarters. The Company's results of operations would be adversely and
disproportionately affected if customer ordering patterns were substantially
lower than those normally expected during these two fiscal quarters. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
BENEFITS OF OFFERING TO SELLING SHAREHOLDERS. The Selling
Shareholders will realize benefits from the offering that will not be received
by persons purchasing Common Stock in the offering. Such benefits include the
Company's use of $643,000 of the net proceeds from the offering to repay notes
issued by the Company to the Selling Shareholders. The Selling Shareholders
also will benefit from the increased marketability of their shares of Common
Stock and the sale of certain of their shares of Common Stock in the offering.
The aggregate purchase price of the Selling Shareholders' shares was
approximately $167,500. The shares of Common Stock held by the Selling
Shareholders will have an aggregate market value (based upon an assumed
initial offering price of $6.00 per share, the midpoint of the range of
initial public offering prices set forth on the cover page of the prospectus)
immediately following the offering of $12,129,000 (excluding options held by
Mr. Campbell), thereby causing substantial dilution to the persons acquiring
Common Stock in the offering. See "Certain Transactions -- Issuance of Notes
to Selling Shareholders," "Use of Proceeds" and "Principal and Selling
Shareholders."
ABSENCE OF PRIOR PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE.
Prior to this offering, there has been no public market for the Common Stock,
and there can be no assurance that an active trading market will develop or be
sustained after this offering. Accordingly, no assurance can be given as to
the liquidity of the Common Stock or the price at which any sales may occur.
The future market price of the Common Stock could be subject to wide
fluctuations in response to a variety of events, including quarter-to-quarter
variations in operating results, news announcements, trading volume, general
market trends, and other factors. In the event the Company's operating results
are below the expectations of the public market investors in one or more future
quarters, it is likely that the price of the Common Stock would be materially
adversely affected. The initial public offering price of the Common Stock has
been determined by negotiations between the Company and the Underwriter and may
not be indicative of the market price of the Common Stock after this offering.
See "Underwriting."
SHARES ELIGIBLE FOR FUTURE SALE. Upon completion of this offering,
the Company will have outstanding 3,021,500 shares of Common Stock (3,171,500
shares of Common Stock if the
9
<PAGE> 11
Underwriter's over-allotment option is exercised in full) excluding (i) 200,000
shares of Common Stock reserved for issuance under the Company's 1997 Omnibus
Securities Plan, of which the Company intends to issue as soon as practicable
following consummation of the offering (a) options to acquire 55,000 shares of
Common Stock and (b) 20,000 shares of restricted stock subject to vesting, (ii)
200,000 shares of Common Stock reserved for issuance pursuant to options
outstanding under the Company's Amended and Restated 1996 Nonqualified Stock
Option Plan and (iii) 100,000 shares of Common Stock subject to the
Underwriter's Warrants. The shares sold in this offering may be publicly
offered and sold without restriction unless they are purchased by "affiliates"
of the Company. Shares of Common Stock outstanding prior to completion of this
offering will be "restricted securities" under the Securities Act of 1933, as
amended (the "Securities Act"). These "restricted securities" may be publicly
sold only if they are registered under the Securities Act or pursuant to an
applicable exemption from the registration requirements of the Securities Act,
including Rule 144 thereunder. The Company, its executive officers, directors
and current principal shareholders have agreed that, without the prior written
consent of the Underwriter, they will not, directly or indirectly, sell or
otherwise dispose of any of such shares until the Company has released earnings
for fiscal year 1999. No prediction can be made as to the effect, if any, that
future sales of shares, or the availability of shares for future sales, will
have on the market price of the Common Stock. The sale of substantial amounts
of Common Stock, or the perception that such sales could occur, could adversely
affect the prevailing market price for the Common Stock.
DILUTION. This offering will result in immediate and substantial
dilution in net tangible book value of $4.48 per share to new investors, which
amount represents the difference between an assumed initial public offering
price of $6.00 per share (the midpoint of the range of initial public offering
prices set forth on the cover page of the prospectus) and the pro forma net
tangible book value per share after this offering. See "Dilution."
RESTRICTIONS ON PAYMENT OF DIVIDENDS; ABSENCE OF DIVIDENDS. The terms
of the Company's revolving credit facility with its bank lender (the "Revolving
Credit Facility") restrict, among other things, the ability of the Company to
pay dividends. The Company does not anticipate paying any cash dividends on
the Common Stock in the foreseeable future, other than the notes payable to the
Selling Shareholders. See "Dividend Policy."
ANTI-TAKEOVER PROVISIONS. The Amended and Restated Articles of
Incorporation and Amended and Restated Bylaws of the Company include certain
provisions that may be deemed to have anti-takeover effects and may delay,
defer or prevent a takeover attempt that a shareholder of the Company might
consider to be in the best interests of the Company or its shareholders. These
provisions: (i) classify the Company's Board of Directors into three classes,
each of which will serve for different three year periods, (ii) provide that
only the Board of Directors, the Chairman of the Board, or the beneficial
owners of 25% or more of the outstanding voting capital stock may call special
shareholders' meetings, (iii) require the vote of the holders of at least
two-thirds of the outstanding shares of each class of the Company's capital
stock then entitled to vote thereon for the shareholders to amend or repeal the
Amended and Restated Bylaws or certain provisions of the Amended and Restated
Articles of Incorporation, (iv) require the vote of at least two-thirds of the
members of the Board of Directors to amend or repeal the Amended and Restated
Bylaws, and (v) establish certain advance notice procedures for nomination of
candidates for election as directors and for shareholder proposals to be
considered at shareholders' meetings. See "Description of Capital Stock --
Special Provisions of the Amended and Restated Articles of Incorporation and
Amended and Restated Bylaws." The requirement that the vote of the holders of
at least two-thirds of the outstanding shares of each class of the Company's
capital stock is necessary for the shareholders to amend or repeal the Amended
and Restated Bylaws or certain provisions of the Amended and Restated Articles
of Incorporation may adversely affect the extent to which shareholders exercise
control over the Company.
ACTUAL RESULTS MAY DIFFER FROM FORWARD LOOKING STATEMENTS. Statements
in the prospectus that reflect projections or expectations of future financial
or economic performance of the Company, and statements of the Company's plans
and objectives for future operations, including those relating to the Company's
products and services, are "forward looking" statements. No assurance can be
given that actual results or events will not differ materially from those
projected, estimated, assumed or anticipated in any such forward looking
statements. Important factors that could result
10
<PAGE> 12
in such differences, in addition to the validity of patents, availability of
key component parts and other risk factors identified above, include: general
economic conditions in the Company's markets, including inflation, recession,
interest rates and other economic factors; casualty to or other disruption of
the Company's production facility and equipment; delays and disruptions in the
shipment of the Company's products and raw materials; and other factors that
generally affect businesses.
11
<PAGE> 13
TERMINATION OF SUBCHAPTER S CORPORATION STATUS
Since April 1, 1996, the Company has been treated for federal income
tax purposes as a Subchapter S corporation under Subchapter S of the Code. Since
such date, the Company has not been subject to federal income tax, but its
earnings have been included in the taxable income of the Company's shareholders.
The Company has made distributions to its shareholders to enable them to pay
their income tax liabilities attributable to the Company's earnings. For the
period from April 1, 1996 through June 30, 1997, the Company had declared
distributions of $323,000 and had paid $223,000 of this amount to its
shareholders. The Company's status as a Subchapter S corporation will terminate
upon completion of this offering (the "Termination Date"). In August 1997, the
Company issued notes in the aggregate principal amount of $643,000 to the
Selling Shareholders for the estimated remaining accumulated Subchapter S
earnings through June 30, 1997, a portion of which is intended to be used by the
Selling Shareholders to pay their estimated federal income taxes attributable to
the Company's Subchapter S earnings. See "Certain Transactions -- Issuance of
Notes to Selling Shareholders." The notes will be paid from a portion of the
net proceeds of this offering. Similar distributions and issuances will not be
made to the purchasers of the Common Stock in this offering. See "Use of
Proceeds." The Company will be responsible for the payment of all federal
income taxes on the Company's earnings beginning on the Termination Date and
continuing thereafter.
USE OF PROCEEDS
The net proceeds from the sale of the shares of Common Stock offered
by the Company are estimated to be approximately $3.6 million (approximately
$4.5 million if the Underwriter's over-allotment option is exercised in full),
assuming an initial public offering price of $6.00 per share (the midpoint of
the range of initial public offering prices set forth on the cover page of the
prospectus) and after deducting the underwriting discount and other estimated
offering expenses. The Company will not receive any of the proceeds of any
sale of shares of Common Stock by the Selling Shareholders.
Of the net proceeds to the Company, the Company plans to use a portion
of the net proceeds of the offering to (i) develop, manufacture and market
ComputErgo, (ii) repay notes issued by the Company to the Selling Shareholders
for the estimated remaining accumulated Subchapter S earnings through June 30,
1997, a portion of which is intended to be used by the Selling Shareholders to
pay their estimated federal income taxes attributable to the Company's
Subchapter S earnings, which bear interest at a rate per annum of 7.5% and are
due upon consummation of the offering, (iii) enhance the Company's core products
and to develop additional ergonomic products, (iv) seek to obtain ISO 9000
certification, an internationally developed set of manufacturing facility
quality criteria, of its manufacturing process, (v) enhance the Company's
marketing efforts by, among other things, hiring two regional sales managers,
(vi) hire engineering personnel and (vii) fund its working capital requirements.
Pending application of the net proceeds from this offering, the Company plans to
invest all net proceeds in short-term, interest-bearing, investment grade
securities.
DIVIDEND POLICY
The Company intends to retain all earnings to provide funds for its
operations and expansion, and therefore does not anticipate paying cash
dividends or making any other distributions on its shares of Common Stock in
the foreseeable future. The terms of the Revolving Credit Facility restrict
the Company's ability to pay dividends to its shareholders. The Company's
future dividend policy will be determined by its Board of Directors based on
various factors, including the Company's operating results, financial
condition, business opportunities, capital requirements, credit restrictions
and such other factors as the Board of Directors may deem relevant.
The Company has been treated for federal income tax purposes as a
Subchapter S corporation under the Code since April 1, 1996. As a result,
earnings of the Company have been subject to taxation at the shareholder level
rather than the corporate level for federal income tax purposes since April 1,
1996. For the period from April 1, 1996 through June 30, 1997, the Company had
declared distributions of $323,000 and had paid $223,000 of this amount to its
shareholders. The Company's status as a Subchapter S corporation will terminate
on the Termination Date. In August 1997, the Company issued notes in the
aggregate principal amount of $643,000 to the Selling Shareholders for the
estimated remaining accumulated Subchapter S earnings through June 30, 1997, a
portion of which is intended to be used by the Selling Shareholders to pay their
estimated federal income taxes attributable to the Company's Subchapter S
earnings. However, no Subchapter S corporation distributions will be made to
the existing shareholders in connection with the Company's
12
<PAGE> 14
earnings for any period beginning on or after the Termination Date. See
"Certain Transactions" and "Termination of Subchapter S Corporation Status."
13
<PAGE> 15
DILUTION
At June 30, 1997, the Company had a pro forma net tangible book value
of approximately $976,000, or approximately $.42 per share of Common Stock.
Pro forma net tangible book value per share of Common Stock equals the amount
of total assets of the Company less intangible assets, less total liabilities,
divided by the aggregate number of shares of Common Stock outstanding as of June
30, 1997. After giving effect to the sale of shares of Common Stock offered
hereby at an assumed initial public offering price of $6.00 per share, the
midpoint of the range of initial public offering prices set forth on the cover
page of the prospectus (and assuming the Underwriter's over-allotment option is
not exercised), and the application of the estimated net proceeds therefrom, the
pro forma net tangible book value of the Company at June 30, 1997, would have
been approximately $4.6 million, or $1.52 per share. This represents an
immediate increase in net tangible book value of $1.10 per share to existing
shareholders, and an immediate dilution of $4.48 per share to new investors
purchasing shares at the assumed initial public offering price. The following
table illustrates the per share dilution to new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share . . . . . . . . . . . . . . . . . . $ 6.00
Pro forma net tangible book value per share before offering . . . . . . . . . . $ .42
Increase in net tangible book value per share attributable to new investors . . 1.10
----------
Pro forma net tangible book value per share after offering . . . . . . . . . . . . 1.52
----------
Dilution in net tangible book value per share to new investors (1) . . . . . . . . . $ 4.48
==========
</TABLE>
- ---------------------
(1) If the Underwriter's over-allotment option is exercised in full, dilution
to new investors will be $4.29 per share.
The following table summarizes the differences in the number of shares
of Common Stock purchased from the Company, the total consideration paid to the
Company and the average price paid per share by the existing shareholders and
by the new investors purchasing shares in this offering at an assumed initial
public offering price of $6.00 per share, the midpoint of the range of initial
public offering prices set forth on the cover page of the prospectus (before
deducting underwriting discounts and commissions and estimated offering
expenses):
<TABLE>
<CAPTION>
SHARES PURCHASED (1)(2) TOTAL CONSIDERATION (1) AVERAGE
----------------------------- -------------------------- PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
--------------- ---------- ------ ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders . . . . . . 2,300,000 76.1% $ 167,500 3.7% $ .07
New investors . . . . . . . . . . 721,500 23.9% 4,329,000 96.3% 6.00
--------- ----- ----------- -----
Total . . . . . . . 3,021,500 100.0% $ 4,496,500 100.0%
========= ===== =========== =====
</TABLE>
- ---------------------
(1) If the Underwriter's over-allotment option is exercised in full, then the
number of shares of Common Stock held by existing shareholders will be
reduced to 72.5% of the total number of shares of Common Stock to be
outstanding after this offering, and the number of shares of Common Stock
held by new investors will be increased to 871,500 shares, or 27.5% of the
total number of shares of Common Stock to be outstanding after this
offering. The table excludes (i) 200,000 shares of Common Stock reserved
for issuance under the Company's 1997 Omnibus Securities Plan, of which the
Company intends to issue as soon as practicable following consummation of
the offering (a) options to acquire 55,000 shares of Common Stock, and (b)
20,000 shares of restricted stock subject to vesting, (ii) 200,000 shares of
Common Stock reserved for issuance pursuant to options outstanding under the
Company's Amended and Restated 1996 Nonqualified Stock Option Plan and (iii)
100,000 shares of Common Stock subject to the Underwriter's Warrants. See
"Principal and Selling Shareholders," "Management -- 1997 Omnibus Securities
Plan," "Management -- Amended and Restated 1996 Nonqualified Stock Option
Plan" and "Underwriting."
(2) Sales by the Selling Shareholders in this offering will reduce the number
of shares held by existing shareholders to 2,021,500 shares, or 66.9% of
the total number of shares of Common Stock to be outstanding after this
offering, and will increase the number of shares held by new investors to
1,000,000 shares, or 33.1% of the total number of shares of Common Stock to
be outstanding after this offering.
14
<PAGE> 16
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
June 30, 1997 (i) on an actual basis, (ii) on a pro forma basis, and (iii) as
adjusted to reflect the sale of Common Stock offered by the Company hereby at
an assumed initial public offering price of $6.00 per share (the midpoint of
the range of initial public offering prices set forth on the cover page of the
prospectus) and the application of net proceeds therefrom as described under
"Use of Proceeds." This information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and the notes thereto.
<TABLE>
<CAPTION>
JUNE 30, 1997
(IN THOUSANDS)
---------------------------------------
ACTUAL PRO FORMA(1) AS ADJUSTED(2)
------- ------------ --------------
<S> <C> <C> <C>
Short-term debt
Current portion of long-term debt . . . . . . . . . . $ 26 $ 26 $ 26
======= ======= ========
Long-term debt, less current portion . . . . . . . . . . $ 607 $ 607 $ 607
Notes payable to the Selling Shareholders . . . . . . . . -- 643 --
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized; no shares issued . . . . . . . . . . . . -- -- --
Common stock, $.01 par value, 14,000,000 shares
authorized; 2,300,000 shares issued and outstanding,
actual and pro forma; 3,021,500 shares issued and
outstanding, as adjusted . . . . . . . . . . . . . . 23 23 30
Additional paid-in capital . . . . . . . . . . . . . . 382 382 3,998
Retained earnings . . . . . . . . . . . . . . . . . . 1,373 750 750
Notes receivable - shareholders . . . . . . . . . . . (96) (96) (96)
Deferred compensation . . . . . . . . . . . . . . . . (83) (83) (83)
------- ------- --------
Total shareholders' equity . . . . . . . . . . . 1,599 976 4,599
------- ------- --------
Total capitalization . . . . . . . . . . . . . . $ 2,206 $ 2,226 $ 5,206
======= ======= ========
</TABLE>
- ------------------------
(1) Gives effect to (i) the issuance in August 1997 of certain promissory notes
in the aggregate principal amount of $643,000 to the Selling Shareholders
for the estimated remaining accumulated Subchapter S earnings through June
30, 1997, a portion of which is intended to be used by the Selling
Shareholders to pay their estimated federal income taxes attributable to
the Company's Subchapter S earnings, and (ii) the establishment of an
estimated net deferred tax asset of $20,000 related to future deductible
temporary differences arising from termination of the Company's Subchapter
S corporation election under Subchapter S of the Code and comparable
provisions of certain state income tax laws. See "Termination of
Subchapter S Corporation Status," "Use of Proceeds," "Capitalization" and
Note 8 of the Notes to Financial Statements.
(2) Adjusts the pro forma amounts to reflect the sale of the shares offered
hereby and the application of the estimated net proceeds therefrom. See
"Termination of Subchapter S Corporation Status," "Use of Proceeds,"
"Capitalization" and Note 8 of the Notes to Financial Statements.
15
<PAGE> 17
SELECTED FINANCIAL DATA
The following selected financial data are derived from the audited
financial statements. This data should be read in conjunction with the
financial statements and the notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
in this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE DATA)
---------------------------------
1996 1997
---------- ----------
<S> <C> <C>
INCOME STATEMENT DATA:
Net sales . . . . . . . . . . . . . . . . . $ 11,064 $ 12,089
Cost of sales . . . . . . . . . . . . . . . 7,683 7,594
---------- ----------
Gross profit . . . . . . . . . . . . . . . . 3,381 4,495
Selling, general and
administrative expense . . . . . . . . . . 2,980 3,414
---------- ----------
Operating income . . . . . . . . . . . . . . 401 1,081
Interest expense and other, net . . . . . . 58 78
---------- ----------
Income before income taxes . . . . . . . . . 343 1,003
Pro forma income tax expense (1) . . . . . . 128 293
---------- ----------
Pro forma net income(1) . . . . . . . . . . $ 215 $ 710
========== ==========
Pro forma earnings per share(1)(2) . . . . . $ .27
----------
Pro forma common shares outstanding(2) . . . 2,607,167
==========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997
(IN THOUSANDS)
-----------------------------------------------------
ACTUAL PRO FORMA (3) AS ADJUSTED (4)
------------ -------------- ---------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital . . . . . . . . . . . . . . $ 591 $ 611 $ 3,591
Total assets . . . . . . . . . . . . . . . . 3,698 3,718 6,698
Long-term debt, less current portion . . . . 607 1,250 607
Shareholders' equity . . . . . . . . . . . . 1,599 976 4,599
</TABLE>
- --------------------------
(1) Effective as of April 1, 1996, the Company elected to operate as a
Subchapter S corporation under Subchapter S of the Code and comparable
provisions of certain state tax laws. The amounts shown reflect pro forma
provisions for state and federal income taxes as if the Company had been
subject to such income taxation during the entire fiscal years 1996 and
1997. See "Termination of Subchapter S Corporation Status" and Note 4 of
the Notes to Financial Statements.
(2) Gives effect as of June 30, 1997, to the issuance of 107,167 shares of
Common Stock in this offering, representing the portion of the shares
offered hereby required to be sold for the account of the Company at an
assumed initial public offering price of $6.00 (the midpoint of the range
of initial public offering prices set forth on the cover page of the
prospectus) in order to fund the repayment of the Company's promissory
notes in the aggregate principal amount of $643,000 to the Selling
Shareholders as the distribution of the estimated remainder of the
Company's accumulated Subchapter S corporation earnings through June 30,
1997, a portion of which is intended to be used by the Selling
Shareholders to pay their estimated federal income taxes attributable to
the Company's Subchapter S earnings.
(3) Gives effect to (i) the issuance in August 1997 of the notes payable to the
Selling Shareholders described in footnote (2) of this table, and (ii) the
establishment of an estimated net deferred tax asset of $20,000 related to
future deductible temporary differences arising from termination of the
Company's Subchapter S corporation election under Subchapter S of the Code
and comparable provisions of certain state income tax laws. See
"Termination of Subchapter S Corporation Status," "Use of Proceeds,"
"Capitalization" and Note 8 of the Notes to Financial Statements.
(4) Adjusts the pro forma amounts to reflect the sale of the shares offered
hereby and the application of the estimated net proceeds therefrom. See
"Termination of Subchapter S Corporation Status," "Use of Proceeds,"
"Capitalization" and Note 8 of the Notes to Financial Statements.
16
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements of the Company and notes thereto and the other financial
information included elsewhere in this prospectus.
GENERAL. The Company generates revenue through sales of its products
to corporate customers and retailers through independent sales representatives,
who generally are paid a commission for each unit sold. These independent
sales representatives channel sales through dealers located throughout the
United States who acquire the products from the Company at a discount from
suggested retail and then resell the products to the ultimate customers.
The Company's gross profit increased approximately 33% in fiscal year
1997 from the prior fiscal year. The Company attributes this increase in gross
profit to a significant shift in the Company's strategic focus to (i) selling
to dealers through independent sales representatives, instead of selling
directly to end-users, (ii) upgrading the quality of its independent sales
representatives, and (iii) selling higher priced products.
RESULTS OF OPERATIONS. The following table sets forth the percentage
relationship to net sales of certain items in the Company's statements of
income for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------
1996 1997
----------- ------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0%
Cost of sales . . . . . . . . . . . . . . . . . . . . 69.4 62.8
----------- ------------
Gross profit . . . . . . . . . . . . . . . . . . . . 30.6 37.2
Selling, general and administrative expenses . . . . 26.9 28.3
----------- ------------
Operating income . . . . . . . . . . . . . . . . . . 3.7 8.9
=========== ============
</TABLE>
FISCAL YEAR ENDED JUNE 30, 1997 COMPARED TO FISCAL YEAR ENDED
JUNE 30, 1996
Net Sales. Net sales for fiscal year 1997 were $12.1 million,
increasing $1.0 million, or approximately 9.3%, from net sales of $11.1 million
for fiscal year 1996. The net sales growth principally resulted from the
shift in product mix to sales of higher priced chairs. Total units sold
remained relatively constant. Consistent with the Company's strategy, however,
the Company reduced its concentration in sales volume to a large lower margin
customer while increasing its units sold to all other customers by 24%.
Gross Profit. Gross profit for fiscal year 1997 was $4.5 million,
increasing $1.1 million, or 32.9%, from gross profit of $3.4 million for fiscal
year 1996. Gross margin increased to 37.2% for fiscal year 1997 from 30.6% for
fiscal year 1996. These increases were achieved through the shift in product
mix discussed in "Net Sales" above.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $3.4 million for fiscal year 1997, increasing
approximately $433,000, or 14.6%, from $3.0 million for fiscal year 1996. As a
percentage of sales, the Company's selling, general and administrative expenses
increased to 28.3% for fiscal year 1997 from 26.9% for fiscal year 1996. The
increases were due to slight salary increases as a result of additional
personnel, increases in payments made pursuant to the Company's cash bonus
plan, increased commission rates on sales and an increase in legal fees of
approximately $270,000 related to arbitration and litigation involving a
competitor.
17
<PAGE> 19
Operating Income. As a result of the foregoing, operating income for
fiscal year 1997 was $1.1 million, increasing approximately $681,000, or
approximately 170%, from $401,000 for fiscal year 1996. As a percentage of
sales, operating income increased to 8.9% for fiscal year 1997 from 3.6% in
fiscal year 1996.
QUARTERLY RESULTS OF OPERATIONS. The Company's quarterly
results of operations may vary significantly depending on factors such as the
timing of large customer orders and variations in the Company's sales product
mix. The results of any particular quarter may not be indicative of the
results for the full year or any future period. Historically, the Company has
experienced seasonal fluctuations in sales and operating income because more
orders are shipped during the second and third quarters of each fiscal year.
The following table sets forth certain unaudited quarterly financial
information for the periods presented which reflect, in the opinion of
management, all adjustments which the Company considers necessary for a fair
presentation of the information set forth therein.
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PERCENTAGES)
FISCAL YEAR 1996 FISCAL YEAR 1997
-------------------------------------------- ----------------------------------------------
SEPT 30, DEC 31, MARCH 31, JUNE 30, SEPT 30, DEC 31, MARCH 31, JUNE 30,
1995 1995 1996 1996 1996 1996 1997 1997
-------- -------- --------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales . . . . . . . $ 2,638 $ 3,190 $ 2,886 $ 2,350 $ 2,970 $ 3,052 $ 3,272 $ 2,795
Cost of sales . . . . . 1,993 2,084 1,956 1,650 1,849 1,972 2,033 1,740
-------- -------- --------- ------- -------- -------- -------- --------
Gross profit . . . . . 645 1,106 930 700 1,121 1,080 1,239 1,055
Selling, general and
administrative . . . 555 783 841 801 849 859 814 892
-------- -------- --------- ------- -------- -------- -------- --------
Net operating income 90 323 89 (101) 272 221 425 163
Interest expense and
other, net . . . . . 16 15 33 (6) 36 30 31 (19)
-------- -------- --------- ------- -------- -------- -------- --------
Income before taxes 74 308 56 (95) 236 191 394 182
Pro forma income
tax (1) . . . . . . . . 27 114 22 (35) 87 (7) 146 67
-------- -------- --------- ------- -------- -------- -------- --------
Pro forma net income $ 47 $ 194 $ 34 $ (60) $ 149 $ 198 $ 248 $ 115
======== ======== ========= ======= ======== ======== ======== ========
Gross margin percentage. 24.5% 34.7% 32.3% 29.8% 37.7% 35.4% 37.8% 37.8%
Operating income
percentage . . . . . 3.4% 10.1% 3.1% (4.3%) 9.2% 7.2% 13.0% 5.8%
</TABLE>
- -------------------
(1) Beginning with the quarter ended June 30, 1996 through the quarter ended
June 30, 1997, pro forma income taxes are reflected as if the Company were
not a Subchapter S corporation and, therefore, were subject to federal
and state income taxation.
LIQUIDITY AND CAPITAL RESOURCES. The Company's principal sources of
capital are net cash provided by operating activities and availability of funds
under the Revolving Credit Facility. The Company's primary capital
requirements are to fund component parts inventory, receivables, research and
development activities, product improvements and shareholder distributions of
Subchapter S earnings.
Cash provided by operating activities totaled $1.4 million (before pro
forma income taxes) for fiscal year 1997, as compared to cash used for
operating activities of $108,000 for fiscal year 1996. The increase in cash
flow was primarily the result of the increased profit margin and changes in
working capital based on improved cash flow management.
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<PAGE> 20
Cash used in investing activities totaled $464,000 for fiscal year
1997 and was primarily comprised of miscellaneous capital expenditures. Cash
used in investing activities totaled $754,000 for fiscal year 1996 and was
comprised primarily of the acquisition of the Company's current land and
building for $625,000 and capital expenditures by the Company. During fiscal
year 1998, the Company expects to continue to make capital expenditures in
connection with manufacturing equipment and computer hardware and software
improvements.
Financing activities used funds totaling approximately $1.1 million
for fiscal year 1997 and provided funds of approximately $900,000 for fiscal
year 1996. In fiscal year 1997, the Company used cash flow from operations to
repay existing debt and make cash distributions to the Selling Shareholders to
pay federal income taxes related to the net income attributable to them as
shareholders of a Subchapter S corporation for federal income tax purposes.
The funds provided for fiscal year 1996 were used to fund interim working
capital needs and the acquisition of the existing building at which the Company
headquarters are located.
The average number of days of trade accounts receivable outstanding
was 42 and 40 for fiscal year 1997 and fiscal year 1996, respectively. The
Company typically sells its products on net 30 day terms and seeks to minimize
its credit risk by performing credit checks. The Company has from time to time
turned overdue accounts receivable over to collection agencies. Bad debt
expense for both periods was negligible.
The Company manages its inventory to maintain a level which meets its
short-term manufacturing needs. Inventory turned 12.0 times in fiscal year 1997
and 12.7 times in fiscal year 1996. With this turnover, the Company had
approximately 30 days' worth of component parts inventory on hand during both
periods. These low levels of inventory allow the Company to dedicate less
working capital to inventory, thereby lowering line-of-credit borrowing,
interest, insurance and property tax expenses.
The Company currently maintains a $2.0 million Revolving Credit
Facility. This facility is utilized to fund operating activities, including
financing inventory and increases in receivables, and has been used for
shareholder distributions. Loans made pursuant to the Revolving Credit
Facility may be borrowed, repaid and reborrowed from time to time until
termination of the Revolving Credit Facility on January 21, 1999. Indebtedness
under the Revolving Credit Facility bears interest at the lender's base rate
plus one-half of 1% per annum and is secured by a first lien on accounts
receivable, chattel paper, contract rights, equipment and fixtures, inventory
and general intangibles. The amount available under the Revolving Credit
Facility is determined based upon a percentage of eligible receivables. At
June 30, 1997, the interest rate was 9.0% and no amount was outstanding under
the Revolving Credit Facility.
In addition, the Company maintains a term credit facility (the "Term
Facility") in the amount of $500,000. This Term Facility is restricted to
financing equipment or mold purchases. Indebtedness under the Term Facility
would bear interest at the lender's base rate plus one-half of 1% per annum and
is secured by accounts receivable, chattel paper, contract rights, equipment
and fixtures, inventory and general intangibles. At June 30, 1997, no amount
had ever been borrowed under the Term Facility.
At June 30, 1997, the Company had two loans outstanding in the amounts
of $144,000 and $482,000 bearing interest at, respectively, 8.25% and 9.75% per
annum incurred in connection with the Company's acquisition in 1996 of the land
and building currently used by the Company. Both notes are secured by the
land, building and certain equipment, require monthly principal and interest
payments and mature in 2001.
In August 1997, the Company issued notes in the aggregate principal
amount of $643,000 to the Selling Shareholders for the estimated remaining
accumulated Subchapter S earnings through June 30, 1997, a portion of which is
intended to be used by the Selling Shareholders to pay their estimated federal
income taxes attributable to the Company's Subchapter S earnings. These notes
bear interest at rate of 7.5% per annum and are due upon consummation of the
offering.
In January 1997, the Company entered into an agreement with a third
party to design and produce injection molds to be utilized in the production
process for approximately $400,000. The Company had paid approximately
$150,000 through June 30, 1997 and expects to pay the remaining $250,000 upon
completion of these molds in October 1997.
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<PAGE> 21
The Company believes that cash flow from operations, together with the
net proceeds from this offering and its unused capacity under the Revolving
Credit Facility (after giving effect to the application of proceeds from this
offering), should be sufficient to fund its payment of the notes payable to the
Selling Shareholders, anticipated operating needs and capital expenditures
through fiscal year 1998. However, because the Company's future operating
results will depend on a number of factors, including the demand for the
Company's products, the level of competition and general economic conditions
and other factors beyond the Company's control, there can be no assurance that
the Company's capital resources will be sufficient to fund the Company's
operations beyond such date.
NEW ACCOUNTING STANDARDS. In February 1997, the Financial Accounting
Standards Board ("FASB") issued Statement No. 128, Earnings per Share, which is
required to be adopted for fiscal years ending after December 15, 1997. At
that time, the Company will be required to change the method currently used to
compute earnings per share and to restate all prior periods. Under the new
requirements for calculating basic earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement No. 128 on the
calculation of basic earnings per share and fully diluted earnings per share
for fiscal years 1997 and 1996 will not be material.
In June 1997, the FASB issued SFAS 130, "Reporting Comprehensive
Income" and SFAS 131, "Disclosures about Segments of an Enterprise and Related
Information". Both standards became effective for fiscal years beginning after
December 15, 1997. Early adoption of SFAS 130 is permitted, and early
adoption of SFAS 131 is encouraged. The reporting changes resulting from both
of these standards on the Company will be immaterial.
20
<PAGE> 22
BUSINESS
The Company manufactures, markets and distributes ergonomic chairs
based upon patented and/or patent-pending designs of Jerome Congleton, Ph.D.,
P.E., C.P.E., an ergonomist certified by the Board of Certification in
Professional Ergonomics who serves as a design consultant to, and a director
of, the Company. Based on anthropometrics, the scientific study of the
measurements of size, weight and proportions of the human body, the Company
manufactures five series of ergonomic chairs designed to minimize the physical
stress imposed upon the human body while seated. Virtually all chairs marketed
under the Neutral Posture tradename can be adjusted to accommodate the size,
weight and proportions of body types from as small as the 5th percentile female
to as large as the 95th percentile male. The Company is not aware of any other
chair on the market that (i) is designed by a certified ergonomist, (ii) is
designed based on anthropometric studies, and (iii) has interchangeable key
components such as seats, backs and arms.
The Company believes that the increase in computer users and other
domestic white collar office employees has benefitted, and the anticipated
increase in white collar office employees outside of the United States will
benefit, its ergonomic furniture business. The Company also believes that
repetitive stress injuries, which affect a number of seated workers, have
created a market demand for ergonomically designed products. According to the
U.S. Bureau of Labor Statistics, 62% of all workplace injuries in 1995 resulted
from the stress of repetitive motion on muscles and tendons. In addition,
according to the National Institute for Occupational Safety and Health,
repetitive stress injuries cost employers approximately $20 billion as a result
of 2.73 million workers' compensation claims in 1993. To address this reported
problem, the Company intends to research, create and develop additional
ergonomic products consistent with the Company's philosophy that its designs be
based on ergonomic research and anthropometric data. The Company's customers
include AT&T Cellular One, Banc One, Hewlett-Packard, IBM, Intel Corporation,
the Internal Revenue Service, Lockheed Martin Corporation, Relax the Back,
Sprint Corporation, the State of Washington, Union Carbide Corporation, UPS,
the U.S. House of Representatives and U.S. Robotics Corporation.
INDUSTRY OVERVIEW. The Company's ergonomic chairs compete in the
seating segment of the office furniture market. This segment represented
approximately 25.4% of industry sales in the United States or $2.5 billion in
calendar year 1996 and is the second largest industry segment. The Company's
share of the seating market segment was less than one-half of 1% on a dollar
basis in calendar year 1996. According to the Business and Institutional
Furniture Manufacturer's Association ("BIFMA"), the U.S. office furniture
market had estimated sales of $10.0 billion in calendar year 1996. The dollar
value of U.S. office furniture industry shipments has increased in each of the
past 15 years, with the exception of 1991, and, according to BIFMA estimates,
had grown at a compound annual rate of approximately 7.2% over the three year
period ended December 31, 1996.
GROWTH STRATEGY. The Company believes that it is well-positioned to
achieve further growth in revenues, profitability and market share. The key
elements of the Company's growth strategy include the following:
o CREATE INNOVATIVE NEW PRODUCTS AND BROADEN PRODUCT LINE
The Company plans to take a more active approach with respect
to the development of additional ergonomic products while continuing
to aggressively market its Neutral Posture chairs. In furtherance of
this strategy, the Company plans to introduce ComputErgo, a portable
computer workstation, during the first quarter of calendar year 1998.
In addition, the Company intends to seek opportunities to develop
products that are complementary to the Company's business and
philosophy to leverage its marketing, sales and distribution systems.
The Company has budgeted a portion of the net proceeds of the offering
to hire engineering personnel, who it believes will play a vital role
in creating new products and product enhancements. See "Use of
Proceeds."
21
<PAGE> 23
o ENHANCE MANUFACTURING PROCESS
The Company plans to increase its productivity through
strategies designed to improve its manufacturing process. The Company
intends to invest a portion of the net proceeds of the offering to
improve tooling used in production of its core products to reduce
production costs and improve product quality. In addition, the
Company also will seek to obtain ISO 9000 certification, an
internationally developed set of manufacturing facility quality
criteria. The Company believes that becoming ISO 9000 certified will
ensure continued quality in the Company's current operations.
o EXPAND EXISTING DISTRIBUTION CHANNELS
Historically, the majority of the Company's sales were made
directly to corporate customers, but a growing percentage of the
Company's sales is being made through dealers. Generally, the
Company's products are marketed by its approximately 50 independent
sales representatives and its sales are channeled through a network of
approximately 320 dealers. To promote customer satisfaction, these
independent sales representatives also are responsible for maintaining
corporate end-user relationships with or on behalf of the dealers.
The Company intends to expand its business with dealers locally,
regionally, nationally and internationally. The Company also intends
to use a portion of the net proceeds of the offering to enhance its
marketing efforts by, among other things, hiring two regional sales
managers.
The Company believes that it will extend its reach to
additional customer groups, including the home office segment, through
the Relax the Back relationship. On January 12, 1997, Relax the Back
granted the Company the exclusive worldwide right to manufacture
ergonomic office seating that bears the Relax the Back trademark and
the Relax the Back design. Relax the Back has exclusive rights to
certain component designs manufactured by the Company. The Relax the
Back stores are independently owned and operated and may elect on a
store-by-store basis whether to sell the Company's chairs. As of June
30, 1997, 82% of the Relax the Back stores carried the Company's
chairs under the Relax the Back trademark.
The Company also markets the Neutral Posture chair in a
catalog published by Boise Cascade Office Products and is scheduled to
be published in Corporate Express' catalog by January 1998. The
Company believes that catalogs provide a convenient and cost-effective
way for businesses to purchase ergonomic furniture and that, over
time, it may become a preferred avenue for certain customers to order
ergonomic products such as the Neutral Posture chair.
o BUILD CONSUMER RECOGNITION BY INCREASING PUBLIC AWARENESS OF
BENEFITS OF ERGONOMIC PRODUCTS
The Company intends to expand consumer recognition of its
products in the marketplace by increasing awareness of the benefits of
ergonomic products generally and also by publicizing the quality of
the Company's products within the ergonomic products industry. The
Company intends to accomplish this by (i) creating an internet web
site by September 1997, which will provide general information about
ergonomics and the Company's products, (ii) sponsoring speaking
engagements by the Company's consultant, Dr. Jerome Congleton, to
organizations such as the Texas Back Institute and the National
Exhibition of Contract Furnishings ("NEOCON"), and (iii) conducting
seminars for dealer groups led by the Chairman of the Board and Chief
Executive Officer, Rebecca E. Boenigk. By focusing on these goals,
the Company seeks to enhance consumer recognition for ergonomic
products in new and emerging markets in addition to improving consumer
recognition in current markets.
PRODUCTS. The concept for Neutral Posture chairs arose from Dr.
Congleton's research, which is derived from National Aeronautics and Space
Administration ("NASA") data concerning the human body's reaction to
weightlessness. His research determined that in weightless conditions the body
would naturally assume a neutral position in which no tendons are extended or
retracted and in which
22
<PAGE> 24
the muscles experience no strain. This neutral position can be simulated by
relaxing all muscles while floating face down in water and represents the human
body's "neutral posture" position. Neutral Posture ergonomic chairs have up to
12 independent adjustments, allowing an individual to assume this stress-free
posture. A recent, year-long study commissioned by the Cincinnati Service
Center of the Internal Revenue Service ("IRS") published in September 1995
determined that ergonomic programs are an important tool in the improvement of
overall organizational productivity. More specifically, the IRS study reported
that the use of Neutral Posture chairs corresponded with a drop in the number
of physiological signs of musculoskeletal disorders. The IRS study also
reported that the Neutral Posture chair increased the employees' comfort and
maintained productivity in the workplace.
Neutral Posture chairs having contoured seats, which constituted over
95% of the Company's chairs sold in fiscal year 1997, are made with
multi-densities of foam to distribute the user's body weight over a greater
surface area than conventional seating. Additionally, the angle between the
backrest and the seat structure of these chairs can be adjusted to approximate
the posture that the body assumes naturally in the gravity-free environment of
space. Five different seat designs and five different backrest styles provide
additional comfort to meet the personal preferences of customers of various
sizes and shapes. The backrests also contain multi-densities of foam that are
shaped to provide maximum support in the lumbar area. The air lumbar pump,
available on four of the Company's five series of chairs, inflates the lumbar
area, allowing the backrest to conform even more closely to the unique
curvature of each person's back.
Neutral Posture chairs require minimal assembly by the customer and
are delivered with a computer diskette and/or owner's manual that provides each
customer with a visual explanation of how to adjust the chair for maximum
comfort. All frame parts, mechanisms, bases, casters, cylinders, seat pans,
backrests, armrests, foam and J-shaped back uprights of a Neutral Posture chair
are warranted against defects in materials and workmanship for a period of five
years from the date of delivery to the purchaser.
Although the Company does allow pre-approved merchandise returns for a
specified period of time, the Company endeavors to minimize product returns by
offering prompt, on-site customer service and repair through its factory
personnel, its network of dealers or its independent sales representatives.
Neutral Posture chairs' interchangeable components permit easy replacement of
worn or defective components. Product returns to date have been negligible.
The designs for these chairs are based upon a patent purchased from
Dr. Congleton. Dr. Congleton, a consultant to, and director of, the Company,
has a written agreement with the Company that grants him 25% of net royalties
collected by the Company from third parties for products manufactured, used or
sold under license or sublicense of such patent. The Company does not
presently plan to license the patent to third parties except in connection with
the resolution of infringement disputes. See "Certain Transactions."
In May 1997, the Company publicly announced that it anticipates
producing a portable ergonomic workstation for the transport and use of a
laptop computer and other items that would otherwise be carried in a briefcase
which workstation is to be marketed under the tradename ComputErgo. ComputErgo
will provide laptop users with (i) a fully adjustable portable work surface
with two fold-out wings for documents, an organizer, document file pockets,
retractable power/phone cords and built-in surge protection, and (ii) a compact
carrying case on wheels with a retractable handle. This product was designed
to help alleviate repetitive stress injuries associated with the emergence of
"alternative officing," utilizing a laptop computer at any locale other than
the traditional office. In March 1997, the Company filed a patent application
relating to ComputErgo with the United States Patent and Trademark Office and
in May 1997 a prototype of ComputErgo was designed.
23
<PAGE> 25
Although further engineering of ComputErgo is necessary, the Company
anticipates producing ComputErgo by the first quarter of calendar year 1998.
Dr. Congleton, a consultant to, and a director of, the Company, has a written
agreement with the Company to receive a perpetual 3% royalty of the net
sales of every ComputErgo sold by the Company. In the future, Dr. Congleton
will not receive any compensation or royalties for his designs other than (i)
his annual consulting fee, and (ii) the royalties from (a) the license from the
Company or sublicense of the patent covering virtually all of the Company's
chairs, and (b) ComputErgo sales. See "Management -- Employment and Consulting
Agreements" and "Certain Transactions." The Company will, however, also pay a
perpetual 1% royalty of the net sales of every ComputErgo sold by the Company
to Texas A&M University, Dr. Congleton's employer. The Company has been
informed that Texas A&M University will pay Dr. Congleton one-half of its 1%
royalty in accordance with its standard policy. Although the Company does
not believe that Texas A&M University has any claims to Dr. Congleton's
inventions, there can be no assurance that Texas A&M University will not assert
such claims in the future and that, if Texas A&M University does, such claims
will not be successful. In addition, a co-inventor of ComputErgo, who assigned
his interest in the related patent rights to the Company, has informally
asserted that his design company was not paid for certain development work done
on ComputErgo. See "Legal Proceedings."
RESEARCH AND DEVELOPMENT. During fiscal years 1996 and 1997, the
Company spent $352,000 and $224,000, respectively, on research and development.
The Company intends to increase its research and development expenses. See
"Use of Proceeds."
MARKETING AND SALES. Historically, the vast majority of the Company's
sales were made directly to corporate customers, but a growing percentage of
the Company's sales is being made through dealers. The Company markets its
products and services throughout the United States through approximately 50
independent sales representatives and its sales are channeled through a network
of approximately 320 dealers. The Company believes that this strategy provides
a strategic advantage relative to many of its competitors. The Company does
not directly employ the independent sales representatives, but rather uses a
commission based incentive system to maintain these relationships. The
commission based incentive system rewards not only the number of units sold,
but the profitability of those sales. The independent sales representatives
employ personalized sales techniques to maintain close contact with the
Company's current customers and develop new customers. The Company's
independent sales force receives extensive training, including annual seminars
focused on the Company's products. The Company intends to use a portion of the
net proceeds of the offering to hire two regional sales managers to provide
additional training and sales management to its independent sales
representatives.
In addition to coordinating sales efforts with the Company's
independent sales representatives, the Company's dealers generally handle
project management, installation and maintenance for an account after the
initial product selection and sale. Dealers typically purchase the product at
a discount from retail and resell the product at a higher price. The Company
is not dependent on any one of its dealers, the largest of them accounting for
less than 7% of the Company's fiscal year 1997 sales.
MANUFACTURING AND DISTRIBUTION. The Company normally operates one
shift, five days per week, at its assembly facility located in Bryan, Texas.
Approximately 31,300 chairs were manufactured during fiscal year 1997. The
Company believes that the maximum capacity of this facility based on one shift
is approximately 100,000 chairs per year. Additional capacity may be achieved
by adding additional shifts. Therefore, the Company believes that production
requirements for the foreseeable future can be satisfied with routine
additional capital investment, which is not expected to be substantial.
At its Bryan facility, the Company applies foam to seats and backs,
upholsters, assembles and does machine work. By November 1997, the Company
intends to have Shepherd injection-mold a majority of its seats and backs,
which is a more efficient and economical process than using its current
vacuum-form process. The injection molds will make an exact duplicate of the
Company's seats and backs each time by heating plastic until molten and
injecting it into a mold. This process eliminates hand-cutting the rough edges
from each seat and back, which is necessary when using vacuum forms. Vacuum
forms heat plastic until pliable and then shapes it over a mold using a suction
process. The
24
<PAGE> 26
Company believes that the use of the injection molds will reduce production
costs and improve product quality.
The Company's manufacturing goals are to: (i) continually improve
design quality, (ii) achieve the best values in purchasing, (iii) uphold
stringent quality controls, and (iv) deliver orders promptly. The Company
believes its production standards are exceptional, with in excess of 99%
customer acceptance for fiscal year 1997. The Company manufactures Neutral
Posture chairs primarily to meet customer orders placed with the Company, which
it believes minimizes finished goods inventory levels.
RAW MATERIALS AND SUPPLIERS. The Company has formed close working
relationships with its main suppliers and maintains a low level of inventory.
The Company uses a variety of materials in its manufacturing, including
plastic, foam, steel, fabrics, leathers and upholstery. Management currently
maintains no long-term supply contracts and believes that the supply sources
for these materials are adequate. Certain components of Neutral Posture
chairs, principally the adjustment mechanism, are made by third party
manufacturers to the Company's specifications. The Company is dependent upon
its suppliers for timely delivery and product quality. While the Company's
strategy is to maintain multiple sources of supply, the Company's largest
supplier, Leggett & Platt, Inc., is currently the only source of the adjustment
mechanism, a key component of the Neutral Posture chair. The adjustment
mechanism is proprietary to the Company. While the Company has not had any
adverse experience with this supplier, the Company does not have a binding
supply contract with Leggett & Platt, Inc.
DESIGN CAPABILITIES. The Company is committed to the creation and
design of quality ergonomic products. Since its inception, the Company has
relied upon the design capabilities of Dr. Jerome Congleton and Rebecca
Boenigk.
CUSTOMERS. The Company has a diversified customer base. The
Company's largest customer group, the various facilities of the GSA, accounted
for 16.2% of the Company's sales for fiscal year 1997. The Company's contract
with the GSA which is subject to renegotiation or termination at the
convenience of the GSA expires on January 20, 2001. In addition to the GSA,
the Company's largest customers include UPS, Banc One, Relax the Back, the
State of Washington and Hewlett-Packard, whose individual sales for fiscal year
1997 represented 10.4%, 6.2%, 5.4%, 5.3% and 4.9%, respectively, of the
Company's total revenues. The Company does not have a binding contract with
UPS, Banc One, Relax the Back, the State of Washington or Hewlett-Packard. One
of the Company's dealers has an agreement with the State of Washington, but
there is no long-term contract between the Company and such dealer. See "Risk
Factors -- Dependence on Significant Customers."
PATENTS AND TRADEMARKS. The Company owns a United States patent on
which virtually all of the Company's chairs are based and several trademarks.
The Company's patent covering virtually all of the Neutral Posture chairs
expires in October 2003. For a discussion of legal proceedings, see "Business
- -- Legal Proceedings." Neutral Posture(R), ComputErgo(TM), ERGO 2000(TM),
Establishing the Standard of Acceptability(TM) are trademarks of the Company.
In addition, the Company has several pending patent applications, including the
patent application covering ComputErgo, and possesses a wide array of
unpatented proprietary know-how and common law trademarks. The Company's
success and its ability to compete are dependent in part upon its proprietary
technology. While the Company relies on patent, trademark, trade secret and
copyright laws to protect its technology, the Company believes that factors
such as the technological, creative and design skills of its personnel, new
product developments, frequent product enhancements, name recognition and
reliable product maintenance are also essential to establishing and maintaining
a technology leadership position. There can be no assurance that others will
not develop technologies that are similar or superior to the Company's
technology. See "Risk Factors -- Reliance on Intellectual Property."
BACKLOG. As of June 30, 1997, the Company's backlog of unfilled
orders was $385,000. At June 30, 1996, the backlog totaled $418,000. The
Company expects to fill all outstanding unfilled orders within one month,
except as extended by customer requested ship dates. The Company manufactures
substantially all of its products to existing orders and, as a result, backlog
is not a significant factor used to predict the Company's long term business
prospects.
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<PAGE> 27
PROPERTIES. The Company's manufacturing and assembly operations are
conducted in its approximately 46,000 square-foot Bryan, Texas facility. The
Company also leases an approximately 1,400 square-foot showroom in the Chicago
Merchandise Mart and an approximately 100 square-foot showroom in Washington,
DC.
COMPETITION. The Company faces significant competition in the contract
furniture market. Neutral Posture chairs compete on the basis of design,
health benefits, comfort, quality, durability, service and price. Existing
and future competitors within the office furniture industry, including Herman
Miller, Inc., Steelcase Inc. and Haworth, Inc., offer or will offer ergonomic
products. There is also competition from numerous other ergonomic furniture
companies such as HAG Inc., Grahl Industries, Inc. and Bodybilt. Certain of
these competitors have much greater financial and other resources and offer a
broader product line than the Company. The Company believes, however, that
smaller competitors are often constrained by a lack of capital, access to
distribution channels, manufacturing capabilities and/or management expertise.
The Company believes that employers will increasingly seek its
products to enhance employee comfort and productivity through ergonomic design.
The Company believes that the following aspects of its manufacturing,
marketing, sales, distribution and customer service are its competitive
strengths: (i) its products are based on patented and/or patent-pending product
designs, (ii) interchangeable seat, back and arm components accommodate a
worker's physical attributes, which is advantageous to a large scale purchaser
of contract furniture, (iii) interchangeable components facilitate on-site
service and repair, and (iv) the Company offers extensive training to its end
users, dealers and independent sales representatives about ergonomics, reducing
stress in the workplace and how to use the Neutral Posture chair.
EMPLOYEES. As of June 30, 1997, the Company employed 72 full-time
employees, of whom 11 were in management, 14 were in administrative positions
and 47 were in production. None of the Company's employees is subject to any
collective bargaining agreement, and management considers its relations with
its employees to be good.
ENVIRONMENTAL MATTERS. The Company believes that it is substantially
in compliance with all applicable laws and regulations for the protection of
the environment and the health and safety of its employees based upon existing
facts known to management. Compliance with federal, state, local and foreign
environmental regulations relating to the discharge of substances into the
environment, the disposal of hazardous wastes and other related activities may
have an impact on the operations of the Company, but has, since the formation
of the Company in 1990, been accomplished without having a material adverse
effect on the Company. There can be no assurance that such regulations will
not change in the future or that the Company will not incur material costs as a
result of such regulations. The Company's ultimate goal is to reduce and,
wherever possible, eliminate the use and creation of hazardous waste in its
manufacturing processes.
LEGAL PROCEEDINGS. Other than routine litigation matters, the Company
is currently involved, both directly and indirectly, in three litigation
matters. Two of the matters involve the Company's intellectual property rights
and the third involves an alleged infringement on a third party's right of
publicity. The first two matters bring into question the Company's right to own
and enforce United States Patent No. 4,552,404 (the "Patent") which covers the
design of virtually all of the Neutral Posture chairs. In addition, a
ComputErgo designer has asserted a claim for payment for certain services, and
the Company also is involved from time to time in various routine legal
proceedings incidental to the conduct of its business.
Litigation Involving the Company's Patent. Dr. Jerome Congleton, to
whom the Patent was originally issued in 1985, reacquired the Patent in 1991 in
connection with the settlement of litigation with Bodybilt. Such settlement
restricted Dr. Congleton to granting only two licenses of the Patent. In 1991,
Dr. Congleton licensed the right to use the Patent to Bodybilt and to the
Company provided, among other things, that in each case such licensee, the
Company and Bodybilt, not sell or transfer more than 50% of its assets or
outstanding shares of stock. The initial public offering of common stock of
Bodybilt caused the license from Dr. Congleton to Bodybilt to become null and
void. Shortly after the termination of Bodybilt's license, Dr. Congleton
assigned his entire interest in the Patent to the
26
<PAGE> 28
Company. Bodybilt disputes the validity of this assignment, and filed suit on
April 1, 1997, against Dr. Congleton in the United States District Court for
the Southern District of Texas. Bodybilt asserts that Dr. Congleton breached
the Bodybilt license agreement when he assigned the Patent to the Company.
Bodybilt seeks a declaratory judgment as to Dr. Congleton's obligations and
limitations under the Settlement Agreement executed in 1991, recision of the
1991 patent assignment to Dr. Congleton and indemnification for any patent
infringement claims asserted by the Company against Bodybilt. Although the
Company is not named as a party to the lawsuit, the lawsuit disputes the
Company's exclusive rights to own and enforce the Patent and the Company has
agreed to pay Dr. Congleton's defense costs. The Company believes this lawsuit
to be meritless, but a contrary ruling could have a material adverse effect on
the Company.
On May 21, 1997, the Company initiated arbitration proceedings against
Bodybilt claiming patent infringement, breach of contract, tortious
interference, slander, trade libel and unfair competition. The Company
believes that substantially all of the chairs sold by Bodybilt are designed in
such a manner that they infringe the Patent. The Company intends to enforce
what it believes to be exclusive ownership rights to the Patent by seeking
injunctive relief as well as damages. The demand for arbitration was filed with
the American Arbitration Association pursuant to a mandatory arbitration clause
included in the settlement agreement executed in 1996 between the Company and
Bodybilt.
The Armstrong Litigation. On January 24, 1997, a former astronaut,
Neil Armstrong filed suit against the Company in the United States District
Court for the Northern District of California. Mr. Armstrong complains of the
Company's alleged use of his likeness in advertising literature distributed by
the Company. Mr. Armstrong alleges that, in using his picture without his
consent, the Company violated his statutory and common-law right to privacy.
Additionally the complaint alleges Lanham Act violations, unfair competition,
negligence and intentional infliction of emotional distress and seeks
preliminary and permanent injunctive relief as well as both actual and punitive
damages. Mr. Armstrong has a history of vigorously enforcing his publicity
rights, and as such, there are several precedential settlements that should set
a benchmark for a possible judgment against the Company. Based on these prior
settlement figures, the Company believes that any judgment or settlement will
fall within the range of the Company's insurance coverage under its applicable
policy. Therefore, the Company believes that the suit will not have a material
adverse effect on the Company.
ComputErgo. Ronald Kemnitzer, a co-inventor of ComputErgo who
assigned his interest in the related patent rights to the Company, has
informally asserted that his design company, Kemnitzer Design, Inc. ("KDI"),
was not paid for the second phase of certain design and development work done
on ComputErgo. Although the Company paid KDI for the first phase of such work,
it did not enter into a written contract for the second phase (as required by
the KDI proposal) and the Company engaged another design company to perform
such work. To date, neither KDI nor Mr. Kemnitzer has made any written demand
for payment for its work under any patent issued with respect to ComputErgo.
The Company believes Mr. Kemnitzer's assertion is meritless.
27
<PAGE> 29
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS. The names of the directors and
executive officers of the Company upon completion of the offering and their
respective ages and positions are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
Rebecca E. Boenigk 33 Chairman of the Board, Chief Executive Officer and Director
David W. Campbell 54 President and Director
David W. Ebner 36 Vice President of Operations
Gregory A. Katt 39 Vice President, Chief Financial Officer and Secretary/Treasurer
Dr. Jerome J. Congleton 53 Director
Ronald L. Jones 54 Director
James W. Thompson 45 Director
Cynthia Pladziewicz 40 Director
</TABLE>
It is anticipated that prior to the first annual meeting of
shareholders of the Company following the offering, the directors of the
Company will increase the size of the Company's Board of Directors from six
directors to seven directors and another director who is not an officer or
employee of the Company will be elected to fill the vacancy.
Rebecca E. Boenigk co-founded the Company in 1990 and has served as
Chairman of the Board and Chief Executive Officer since 1996 and served as
President from 1990 to 1996. She currently serves in the class of directors
whose terms expire at the 2000 annual meeting of shareholders. Mrs. Boenigk
also serves on the Industry Advisory Board of the National Science Foundation
Industry/ University Cooperative Research Center in Ergonomics at Texas A&M
University. Mrs. Boenigk is a member of the Human Factor and Ergonomic
Society. In 1997, Mrs. Boenigk was awarded, along with her mother, Jaye
Congleton, Ernst and Young's Entrepreneur of the Year award in manufacturing in
the Houston region. Mrs. Boenigk is the daughter of Dr. Jerome Congleton, a
director of, and consultant to, the Company.
David W. Campbell has served as President and a director of the
Company since April 1, 1996, and serves in the class of directors whose terms
expire at the 1998 annual meeting of shareholders. Prior to assuming these
positions, from 1994 to 1996, Mr. Campbell was a principal with Pate, Winters
and Stone, Management Consultants. From 1989 to 1994, Mr. Campbell served as a
Division President of Scotsman Industries, Inc., a publicly held manufacturer
and marketer of refrigeration products primarily for the food service industry.
From 1987 to 1989, Mr. Campbell served as a Division President of Household
Manufacturing, a division of Household International, Inc., a financial,
retailing and manufacturing conglomerate. Additionally, from 1980 to 1987, Mr.
Campbell served as President, Chief Executive Officer and a director of Booth,
Inc., a publicly traded manufacturer of soft drink dispensing equipment.
David W. Ebner has served as Vice President of Operations since 1995.
From 1994 to 1995, Mr. Ebner served as the Company's Plant Manager. From 1982
to 1994, Mr. Ebner was the Manager of Facilities and Operations for CompuAdd,
Inc., a computer manufacturer and retailer.
Gregory A. Katt has served as Vice President and Chief Financial
Officer of the Company since May 1997 and as Secretary/Treasurer of the Company
since August 1997. Mr. Katt served as Treasurer of American Exploration
Company, a publicly traded oil and gas exploration and production company, from
June 1995 to May 1997 and as its Director of Corporate Reporting, Budgeting and
Tax from June 1992 to June 1995.
Dr. Jerome J. Congleton became a director of the Company in August
1997 and serves in the class of directors whose terms expire at the 1999 annual
meeting of shareholders. Dr. Congleton is also a consultant to the Company.
Dr. Congleton is the inventor of the Neutral Posture chair and has been an
associate professor in the Safety Engineering Program at Texas A&M University
since 1983 and a founder and co-director of the National Science Foundation
Industry/University Cooperative
28
<PAGE> 30
Research Center in Ergonomics at Texas A&M University since its formation in
1994. Dr. Congleton is the father of Mrs. Boenigk, the Chairman of the Board
and Chief Executive Officer of the Company.
Ronald L. Jones became a director of the Company in August 1997 and
serves in the class of directors whose terms expire at the 1999 annual meeting
of shareholders. Since March 1996, Mr. Jones has served as President and Chief
Executive Officer of Sealy Corporation, a manufacturer of mattresses and
boxsprings. From 1988 to 1996, he served as President of Masco Home
Furnishings Inc., a furniture manufacturer. Mr. Jones served as President of
HON Industries, Inc., a publicly traded national manufacturer and marketer of
office furniture, from 1982 to 1988.
James W. Thompson became a director of the Company in August 1997 and
serves in the class of directors whose terms expire at the 2000 annual meeting
of shareholders. Since December 1994, Mr. Thompson has served as President,
Chief Executive Officer and director of Vallen Corporation, a publicly held
distributor of industrial safety and health products designed for the
protection of the individual worker and the workplace environment. Mr.
Thompson joined Vallen Corporation in June 1994 as President and Chief
Executive Officer of Vallen Safety Supply Company. From 1991 to 1994, Mr.
Thompson was the Senior Group Vice President of Westburne, Inc., a publicly
traded distributor of electrical plumbing, HVAC and telecommunications
equipment.
Cynthia Pladziewicz became a director of the Company in August 1997
and serves in the class of directors whose terms expire at the 1998 annual
meeting of shareholders. Since October 1995, Mrs. Pladziewicz has worked as a
psychologist at The Well Being Group where she conducts psychological
assessments and pre-surgical psychological screenings, leads psycho-educational
and support groups focused on pain management and consults with physicians
regarding patient treatment related to spine surgery programs. Mrs.
Pladziewicz is an attorney who served of counsel to Thompson & Knight, P.C.
from 1991 to June 1997.
COMMITTEES OF THE BOARD OF DIRECTORS. Within 90 days of the closing
of the offering, the Board of Directors will establish an Audit Committee. The
Audit Committee will consist of independent directors selected by the Board of
Directors. The functions of the Audit Committee will be to recommend annually
to the Board of Directors the appointment of the independent auditors of the
Company, discuss and review in advance the scope and the fees of the annual
audit and review the results thereof with the independent auditors, review and
approve non-audit services of the independent auditors, review compliance with
existing major accounting and financial reporting policies of the Company,
review the adequacy of the financial organization of the Company and review
management's procedures and policies relating to the adequacy of the Company's
internal accounting controls and compliance with applicable laws relating to
accounting practices.
The Board of Directors does not currently have a Compensation
Committee but anticipates establishing one within 90 days of the closing of the
offering. Prior to the offering, the Company's senior management was directly
involved in setting compensation for the Company's executives. The functions
of the Compensation Committee will be to review and approve annual salaries,
bonuses, and grants of stock options pursuant to the Company's 1997 Omnibus
Securities Plan and to review and approve the terms and conditions of all
material employee benefit plans or changes thereto. The Compensation Committee
will consist of independent directors selected by the Board of Directors.
COMPENSATION OF DIRECTORS. Directors who are not also employees of
the Company will receive options to purchase 5,000 shares of Common Stock at an
exercise price equal to the initial public offering price. Such options will
vest one year after the date of grant. See "Management -- 1997 Omnibus
Securities Plan." Such directors will also be paid a fee of $1,000 per board
meeting attended and $750 per board committee meeting attended and will be
reimbursed for out-of-pocket expenses incurred for attendance at such meetings.
Other than with respect to reimbursement of expenses, directors who are
employees of the Company will not receive additional compensation for their
services as a director.
EXECUTIVE COMPENSATION. The following table sets forth, for the year
ended June 30, 1997, individual compensation information for the Chief
Executive Officer of the Company and each of the
29
<PAGE> 31
other most highly compensated executive officers of the Company who were
serving as executive officers at June 30, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPEN-
ANNUAL COMPENSATION SATION AWARDS
----------------------------- -------------------- ALL OTHER
FISCAL SALARY SECURITIES UNDERLY- COMPENSA-
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) ING OPTIONS (#) TION ($)
--------------------------------------- ---- ------- ------ -------------------- ---------
<S> <C> <C> <C> <C> <C>
Rebecca E. Boenigk . . . . . . . . . . 1997 200,000 78,179 0 13,938 (1)
Chairman of the Board and
Chief Executive Officer
David W. Campbell . . . . . . . . . . 1997 120,000 50,406 0 6,100 (2)
President
Jaye E. Congleton (3) . . . . . . . . . 1997 120,000 60,140 0 12,000 (4)
Executive Vice President and
Secretary
</TABLE>
- ----------------
(1) Amounts in this column consist of (i) the estimated dollar value of the
benefit to the executive officer of Company- paid premiums on split-dollar
life insurance policies on the life of the executive in the amount of
$12,000 and (ii) the estimated dollar value of the benefit to the executive
officer of the personal use of the Company's automobile in the amount of
$1,938.
(2) Amounts in this column consist of the estimated dollar value of the benefit
to the executive officer and his spouse of Company-paid premiums on life
insurance policies on the life of the executive.
(3) Mrs. Congleton resigned as an officer and director on August 1, 1997.
(4) Amounts in this column consist of the estimated dollar value of the benefit
to the executive officer of Company-paid premiums on split-dollar life
insurance policies on the life of the executive.
EMPLOYMENT AND CONSULTING AGREEMENTS. The Company has entered into
employment agreements with Rebecca Boenigk, the Company's Chairman of the Board
and Chief Executive Officer, David W. Campbell, the Company's President, David
W. Ebner, the Company's Vice President of Operations, and Gregory A. Katt, the
Company's Vice President, Chief Financial Officer and Secretary/Treasurer, for
a term expiring on July 1, 2000, subject to automatic one-year extensions
unless either party gives 60 days written notice of its intention not to renew.
The agreement with Mrs. Boenigk provides for a base salary of $200,000, with an
annual bonus based on the attainment of targets set by the Board of Directors.
The agreement with Mr. Campbell provides for a base salary of $135,000 and an
annual bonus based on the attainment of targets set by the Board of Directors.
The agreement with Mr. Ebner provides for a base salary of $75,000 and an
annual bonus based on the attainment of targets set by the Board of Directors.
The agreement with Mr. Katt provides for a base salary of $75,000 and an
annual bonus based on the attainment of targets set by the Board of Directors.
Officers' salaries may be increased at the discretion of the Board of
Directors. The agreements contain non-compete (during the term of the
agreement and 18 months thereafter) and confidentiality provisions.
In addition, the Company has entered into a Consulting Agreement,
dated as of July 1, 1997, with Dr. Jerome Congleton. Pursuant to this
agreement, Dr. Congleton receives an annual fee of $90,000 and the agreement
terminates on July 1, 2007. The agreement may be terminated at any time by the
written mutual agreement of Dr. Congleton and the Company.
All compensation decisions concerning executive officers have been
made by the Board of Directors. See "Management -- Executive Compensation."
401(K) PLAN. The Company intends, but has not taken any steps, to
implement a 401(k) plan for its employees in the foreseeable future.
30
<PAGE> 32
CASH BONUS PLAN. The Company has a discretionary cash bonus plan
under which, based on the profitability of the Company, it has in the past and
expects in the future to pay bonuses to officers and employees of the Company.
Bonuses paid are at the discretion of the management of the Company and must be
approved by the Board of Directors.
AMENDED AND RESTATED 1996 NONQUALIFIED STOCK OPTION PLAN. The Board
of Directors and the shareholders approved the Company's Amended and Restated
1996 Nonqualified Stock Option Plan (the "Stock Option Plan") effective as of
April 29, 1996. As of June 30, 1997, the Company had outstanding options
representing 200,000 shares of Common Stock, representing all of the shares
available under the Stock Option Plan. If at any time within five years after
the original date of grant of any option under the Stock Option Plan, the
Company files a registration statement under the Securities Act, in respect of
an underwritten public offering of its common stock, the Company, at its own
expense, shall register option shares purchased by an optionee, concurrently
with the registration of such other common stock. If all the option shares
have not been registered by optionees within five years after the original date
of any option under the Stock Option Plan, the Company shall file a
registration statement under the Securities Act within 120 days after the
expiration of such five year period. Except for the shares of Common Stock
offered by Mr. Campbell and Mr. Ebner hereby, such registration rights have
been waived for this offering.
1997 OMNIBUS SECURITIES PLAN. The Board of Directors and the
shareholders of the Company approved the Company's 1997 Omnibus Securities Plan
(the "Plan") for the employees, directors and consultants of the Company. The
number of shares of Common Stock reserved for issuance under the Plan is
200,000 shares, of which the Company intends to issue as soon as practicable
following consummation of the offering (a) options to acquire 55,000 shares of
Common Stock and (b) 20,000 shares of restricted stock subject to vesting.
The Plan will be administered by the Compensation Committee of the Board of
Directors. The Compensation Committee may grant stock based compensation to
Plan participants, including nonqualified stock options, incentive stock options
within the meaning of Section 422 of the Code, stock appreciation rights and
restricted stock. In the event of a change of control, all unmatured
installments of any incentive stock option, non-qualified stock option,
restricted stock or stock appreciation right outstanding will automatically be
accelerated and vested or exercisable in full. A change in control of the
Company is deemed to occur upon any of the following events: (i) any
consolidation, merger or share exchange of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which shares of the
Company's Common Stock would be converted into cash, securities or other
property, other than a consolidation, merger or share exchange of the Company in
which the holders of the Company's Common Stock immediately prior to such
transaction have the same proportionate ownership of Common Stock of the
surviving corporation immediately after such transaction; (ii) any sale, lease,
exchange or other transfer (excluding transfer by way of pledge or
hypothecation) in one transaction or a series of related transactions, of all or
substantially all of the assets of the Company; (iii) the shareholders of the
Company approve any plan or proposal for the liquidation or dissolution of the
Company; (iv) the cessation of control (by virtue of their not constituting a
majority of directors) of the Board by the individuals (the "Continuing
Directors") who (x) at the date of the Plan were directors or (y) become
directors after the date of the Plan and whose election or nomination for
election by the Company's shareholders, was approved by a vote of at least
two-thirds of the directors then in office who were directors at the date of the
Plan or whose election or nomination for election was previously so approved;
(v) the acquisition of beneficial ownership (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
an aggregate of 20% of the voting power of the Company's outstanding voting
securities by any person or group (as such term is used in Rule 13d-5 under the
Exchange Act) who beneficially owned less than 15% of the voting power of the
Company's outstanding voting securities on the date of the Plan, or the
acquisition of beneficial ownership of an additional 5% of the voting power of
the Company's outstanding voting securities by any person or group who
beneficially owned at least 15% of the voting power of the Company's outstanding
voting securities on the date of the
31
<PAGE> 33
Plan, provided, however, that notwithstanding the foregoing, an acquisition
shall not constitute a change of control if the acquiror is (x) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
and acting in such capacity, (y) a subsidiary of the Company or a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of voting securities of
the Company or (z) any other person whose acquisition of shares of voting
securities is approved in advance by a majority of the Continuing Directors; or
(vi) in a Title 11 bankruptcy proceeding, the appointment of a trustee or the
conversion of a case involving the Company to a case under Chapter 7.
STOCK OPTIONS. The following table shows for each of the named
executive officers the number of shares covered by both exercisable and
non-exercisable stock options as of June 30, 1997, and the values for
"in-the-money" options, based on the positive spread between the exercise price
of any such existing stock options and the year-end value of the Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
JUNE 30, 1997 JUNE 30, 1997
----------------------------- -----------------------------
SHARES VALUE
ACQUIRED ON REALIZED
NAME EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David Campbell . . . 100,000 $227,500 0 200,000 $0 $1,155,000
</TABLE>
- --------------------
(1) Aggregate market value (based on value of $2.50 per share) of the shares
covered by the options, less aggregate exercise price payable by the named
executive officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS. During fiscal year 1997, the Company had no separate
compensation or stock option committee or other board committee performing
equivalent functions, and these functions were performed by Mrs. Boenigk. The
Company expects to form a Compensation Committee within 90 days of the closing
of the offering.
32
<PAGE> 34
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of the date of this
prospectus, and as adjusted to reflect the sale of the shares of Common Stock
offered hereby, by (i) each person who is known by management to be the
beneficial owner of more than 5% of the outstanding Common Stock, (ii) the
Selling Shareholders, (iii) each of the Company's directors and executive
officers, and (iv) all directors and executive officers of the Company as a
group. See "Management" and "Certain Transactions" for a description of the
Selling Shareholder's position, office or other material relationship with the
Company within the past three years. Unless otherwise indicated, each person
listed in the table has or will have sole voting and investment power over the
Common Stock that the person beneficially owns, subject to community property
laws where applicable and subject to the footnotes to this table.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
SHARES BENEFICIALLY OWNED OWNED
PRIOR TO OFFERING AFTER OFFERING
------------------------- ------------ ----------------------
PERCENT OF SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER CLASS BEING SOLD NUMBER OF CLASS
------------------------------------------------- ---------- ------------ ------------ --------- -----------
<S> <C> <C> <C> <C> <C>
Rebecca E. Boenigk (1) (2) . . . . . . . . . . . 960,000 38.4% 76,800 883,200 27.4%
David W. Campbell (1) (3) . . . . . . . . . . . . 400,000 16.0% 80,000 320,000 9.9%
Dr. Jerome J. Congleton (1) (4) . . . . . . . . . 885,760 35.4% -- 814,900 25.3%
Ronald L. Jones (5) (6) . . . . . . . . . . . . . -- -- -- -- --
James W. Thompson (6) (7) . . . . . . . . . . . . -- -- -- -- --
Cynthia Pladziewicz (6) (8) . . . . . . . . . . . -- -- -- -- --
Gregory A. Katt (1) . . . . . . . . . . . . . . . -- -- -- -- --
David W. Ebner (1) . . . . . . . . . . . . . . . 100,000 4.0% 20,000 80,000 2.5%
Jaye E. Congleton (1) (9) . . . . . . . . . . . . 885,760 35.4% 70,860 814,900 25.3%
Catherine J. Coker (1) (10) . . . . . . . . . . . 114,240 4.6% 11,420 91,400 2.8%
Eric N. Coker (1) (11) . . . . . . . . . . . . . 114,240 4.6% 11,420 91,400 2.8%
C. Michele Zincke (1) . . . . . . . . . . . . . . 40,000 1.6% 8,000 32,000 *
All directors and executive officers as a group
(a total of 9 persons) (6) (12) . . . . . . . 2,345,760 93.8% 278,500 2,098,100 65.1%(12)
</TABLE>
- --------------------
* Represents beneficial ownership of less than 1%.
(1) The business address for the named person is 3904 N. Texas Avenue, Bryan,
Texas 77803.
(2) Does not include the shares owned by Rebecca E. Boenigk's mother, Jaye E.
Congleton, as to which Mrs. Boenigk disclaims beneficial ownership.
(3) Includes options to purchase 200,000 shares of Common Stock that will
become exercisable upon consummation of the offering pursuant to the
Amended and Restated 1996 Nonqualified Stock Option Plan.
(4) Includes the shares owned by Dr. Jerome Congleton's wife, Jaye E.
Congleton, as to which Dr. Congleton disclaims beneficial ownership.
Does not include the shares owned by Dr. Congleton's daughter, Rebecca E.
Boenigk, as to which Dr. Congleton disclaims beneficial ownership.
(5) The business address for the named person is 1228 Euclid Avenue, 10th
Floor, Halle Building, Cleveland, Ohio 44115.
(6) Does not include options to be granted upon consummation of the offering
to Mrs. Pladziewicz and Messrs. Jones and Thompson under the 1997 Omnibus
Securities Plan representing the right to acquire 5,000 shares of Common
Stock each.
(7) The business address for the named person is 1333 Northwest Freeway,
Houston, Texas 77040.
(8) The business address for the named person is 6300 West Parker Road,
Plano, Texas 75093.
(9) Does not include the shares owned by Jaye E. Congleton's daughter,
Rebecca E. Boenigk, as to which Mrs. Congleton disclaims beneficial
ownership.
33
<PAGE> 35
(10) Includes the shares owned by Catherine J. Coker's husband, Eric N. Coker,
as to which Mrs. Coker disclaims beneficial ownership. Does not include
the shares owned by Mrs. Coker's mother, Jaye E. Congleton, as to which
Mrs. Coker disclaims beneficial ownership.
(11) Includes the shares owned by Eric N. Coker's wife, Catherine J. Coker, as
to which Mr. Coker disclaims beneficial ownership.
(12) If the Underwriter's over-allotment option is exercised in full, the
percentage of shares to be beneficially owned by the directors and
executive officers as a group after the offering will be 62.2%.
34
<PAGE> 36
CERTAIN TRANSACTIONS
ISSUANCE OF NOTES TO SELLING SHAREHOLDERS. In August 1997, the
Company issued notes to the Selling Shareholders for the estimated remaining
accumulated Subchapter S earnings through June 30, 1997, a portion of which is
intended to be used by the Selling Shareholders to pay their estimated federal
income taxes attributable to the Company's Subchapter S earnings. Such notes
bear interest at a rate of 7.5% per annum and mature on the date of the
consummation of the offering. The Company intends to use $643,000 of the net
proceeds of the offering to repay the notes to Selling Shareholders.
COMPANY LOANS. In June 1996 and April 1997, the Company made loans
pursuant to notes in the amounts of $32,225 and $106,225, respectively, to Mr.
Campbell, President and director of the Company, in connection with the
exercise of a portion of his stock options. The notes bear interest at a rate
of 7.5% per annum and mature on December 31, 2000 and December 31, 2001,
respectively.
In June 1996, the Company made a loan pursuant to a note in the amount
of $32,225 to Mr. Ebner, Vice President of Operations of the Company, in
connection with the exercise his stock options. The note bears interest at a
rate of 7.5% per annum and matures on December 31, 2000.
ROYALTIES. In March 1997, Dr. Congleton assigned the rights, title
and interest in the Patent to the Company in exchange for $30,000 and 25% of
net royalties collected by the Company from third parties for products
manufactured, used or sold under license or sublicense of the Patent. Dr.
Congleton also has a written agreement with the Company that grants him a
perpetual 3% royalty on the net sales of every ComputErgo sold by the
Company.
GUARANTEES. The Revolving Credit Facility is guaranteed by Mrs.
Boenigk and Mrs. Congleton. No amounts were outstanding under the Revolving
Credit Facility loan at June 30, 1997. Upon consummation of the offering, Mrs.
Boenigk's and Mrs. Congleton's personal guarantees will be released by the
lender.
DISTRIBUTIONS. For the period between April 1, 1996 through June 30,
1997, the Company had declared distributions of $323,000 and had paid $223,000
of this amount to its shareholders in connection with their estimated federal
income tax obligations attributable to the Company's earnings, of which Mrs.
Boenigk, Mrs. Congleton, Mrs. Coker, Mrs. Zincke and Messrs. Campbell, Ebner
and Coker received $140,945, $130,046, $8,386, $5,873, $14,682, $14,682 and
$8,386, respectively.
OTHER RELATIONSHIPS. Cynthia Pladziewicz, a director of the Company,
served of counsel to Thompson & Knight, P.C. during fiscal year 1997. The
Company intends to retain Thompson & Knight, P.C. to perform certain blue sky
research and filing in connection with the offering.
FUTURE TRANSACTIONS. Although the Company has no present intention to
do so, it may in the future enter into other transactions incident to its
business with its directors, officers, shareholders and other affiliates. The
Company's policy is that any transaction in the future with an affiliated
entity, executive officer, shareholder or director will be subject to review
and approval by a majority of the Company's directors who have no interest in
the transaction and such transaction will be on no less favorable terms than
the Company could obtain from unaffiliated parties.
35
<PAGE> 37
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of (i) 14,000,000
shares of Common Stock, par value $.01 per share and (ii) 1,000,000 shares of
preferred stock, par value $.01 per share. On June 30, 1997, there were seven
holders of record of Common Stock with 2,300,000 shares outstanding, and no
shares of preferred stock were outstanding.
COMMON STOCK. Holders of shares of Common Stock are entitled to share
ratably in such dividends as may be declared by the Board of Directors and paid
by the Company out of funds legally available therefor, subject to prior rights
of any outstanding shares of any preferred stock. See "Dividend Policy." In
the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Company, holders of shares of Common Stock are entitled to share
ratably in assets remaining after payment of all liabilities and liquidation
preferences, if any, of any preferred stock.
Except as otherwise required by law or the Amended and Restated
Articles of Incorporation, the holders of Common Stock are entitled to one vote
per share on all matters voted on by shareholders, including the election of
directors. Holders of shares of Common Stock have no preemptive, cumulative
voting, subscription, redemption, or conversion rights. The rights,
preferences, and privileges of holders of Common Stock are subject to the
rights, preferences, and privileges granted to the holders of any series of
preferred stock which the Company may issue in the future.
PREFERRED STOCK. The Board of Directors may, without further action
by the Company's shareholders, from time to time, direct the issuance of fully
authorized shares of preferred stock in one or more series and may, at the time
of issuance, determine the powers, rights, preferences, and limitations of each
series. Satisfaction of any dividend preferences on outstanding shares of
preferred stock would reduce the amount of funds available for the payment of
dividends on Common Stock. Also, holders of preferred stock would be entitled
to receive a preference payment in the event of any liquidation, dissolution,
or winding up of the Company before any payment is made to the holders of
Common Stock. Under certain circumstances, the issuance of such preferred
stock may render more difficult or tend to discourage a merger, tender offer,
or proxy contest, the assumption of control by a holder of a large block of the
Company's securities, or the removal of incumbent management.
SPECIAL PROVISIONS OF THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION AND AMENDED AND RESTATED BYLAWS. The Amended and Restated
Articles of Incorporation and Amended and Restated Bylaws of the Company
include certain provisions that could have anti-takeover effects. The
provisions are intended to enhance the likelihood of continuity and stability
in the composition of, and in the policies formulated by, the Board of
Directors. These provisions also are intended to help ensure that the Board of
Directors, if confronted by a surprise proposal from a third party that has
acquired a block of Common Stock of the Company, will have sufficient time to
review the proposal, to develop appropriate alternatives to the proposal, and
to act in what the Board of Directors believes to be the best interests of the
Company and its shareholders. These provisions of the Amended and Restated
Articles of Incorporation may not be amended or repealed by the shareholders of
the Company except upon the vote of the holders of at least two-thirds of the
outstanding shares of each class of the Company's capital stock then entitled
to vote thereon. The following is a summary of the provisions contained in the
Company's Amended and Restated Articles of Incorporation and Amended and
Restated Bylaws and is qualified in its entirety by reference to such documents
in the respective forms filed as exhibits to the Registration Statement of
which this prospectus forms a part.
AMENDMENT OF BYLAW PROVISIONS. The Amended and Restated Articles of
Incorporation provides that Bylaw provisions may be adopted, altered, amended,
or repealed only by the affirmative vote of (i) at least two-thirds of the
members of the Board of Directors who are elected by the holders
36
<PAGE> 38
of Common Stock or (ii) the holders of at least two-thirds of the outstanding
shares of each class of the Company's capital stock then entitled to vote
thereon.
CLASSIFIED BOARD OF DIRECTORS. The Amended and Restated Articles of
Incorporation provides for a Board of Directors divided into three classes of
directors serving staggered three-year terms. The classification of directors
has the effect of making it more difficult for shareholders to change the
composition of the Board of Directors in a short period of time. At least two
annual meetings of shareholders, instead of one, will generally be required to
effect a change in a majority of the Board of Directors.
NUMBER OF DIRECTORS; FILLING VACANCIES; REMOVAL. The Amended and
Restated Articles of Incorporation provides that the number of directors is
currently six, which number may be increased or decreased pursuant to the
Amended and Restated Bylaws of the Company but in no event will be less than
the minimum number required by law. The Company's Amended and Restated Bylaws
provide that the Board of Directors, acting by majority vote of the directors
then in office, may fill any newly created directorship or vacancies on the
Board of Directors.
The Company's Amended and Restated Articles of Incorporation provides
that a director may be removed with or without cause. "Cause" is defined in
the Amended and Restated Articles of Incorporation to mean that a director (i)
has been convicted of a felony by a court of competent jurisdiction and such
conviction is no longer subject to direct appeal, (ii) has missed three
consecutive meetings of the Board of Directors, or (iii) has been adjudged by a
court of competent jurisdiction to be liable for gross negligence or misconduct
in the performance of his duties to the Company in a matter of substantial
importance to the Company, and such adjudication has become final and
non-appealable. These provisions will preclude a shareholder from
simultaneously removing incumbent directors without cause and gaining control
of the Board of Directors by filling the vacancies created by such removal with
its own nominees.
SPECIAL MEETINGS. The Amended and Restated Bylaws and Amended and
Restated Articles of Incorporation provide that special meetings of
shareholders may be called by a majority of the Board of Directors, the
Chairman of the Board of Directors, or by any holder or holders of at least 25%
of any class of the Company's outstanding capital stock then entitled to vote
at the meeting.
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR
NOMINEES. The Amended and Restated Bylaws establish an advance notice
procedure with regard to business proposed to be submitted by a shareholder at
any annual or special meeting of shareholders of the Company, including the
nomination of candidates for election as directors. The procedure provides
that a written notice of proposed shareholder business at any annual meeting
must be received by the Secretary of the Company not more than 180 days nor
less than 120 days before the first anniversary of the prior year's annual
meeting or, in the event of a special meeting, not more than 10 days after the
notice of the special meeting.
Notice to the Company from a shareholder who proposes to nominate a
person at a meeting for election as a director must contain all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act, including such persons's
written consent to being named in a proxy statement as a nominee and to serving
as a director if elected.
The chairman of a meeting of shareholders may determine that a person
is not nominated in accordance with the nominating procedure, in which case
such person's nomination will be disregarded. If the chairman of a meeting of
shareholders determines that other business has not been properly brought
before such meeting in accordance with the Bylaw procedures, such business will
not be conducted at the meeting. Nothing in the nomination procedure or the
business will
37
<PAGE> 39
preclude discussion by any shareholder of any nomination or business properly
made or brought before the annual or any other meeting in accordance with the
foregoing procedures.
LIMITATIONS ON DIRECTORS' LIABILITY. The Company's Amended and
Restated Articles of Incorporation provides that the liability of the directors
of the Company to the Company or its shareholders for monetary damages for acts
or omissions occurring in their capacity as directors shall be limited to the
fullest extent permitted by the laws of the State of Texas and any other
applicable law, as such laws now exist and to such greater extent as they may
provide in the future. This elimination of liability for monetary damages
permitted by Texas law does not alter the standard of conduct with which
directors must comply nor does it affect the availability of equitable relief
to the Company and its shareholders.
TRANSFER AGENT AND REGISTRAR. The transfer agent and registrar for
the Common Stock is Harris Trust and Savings Bank.
38
<PAGE> 40
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have outstanding
Underwriter's over-allotment option is exercised in full) excluding (i)
200,000 shares of Common Stock reserved for issuance under the Company's 1997
Omnibus Securities Plan, of which the Company intends to issue as soon as
practicable following consummation of the offering (a) options to acquire
55,000 shares of Common Stock and (b) 20,000 shares of restricted stock
subject to vesting, (ii) 200,000 shares of Common Stock reserved for issuance
pursuant to options outstanding under the Company's Amended and Restated 1996
Nonqualified Stock Option Plan and (iii) 100,000 shares of Common Stock subject
to the Underwriter's Warrants. Of these shares of Common Stock, all of the
1,000,000 shares sold in this offering may be publicly offered and sold without
restriction, unless they are purchased by affiliates of the Company. Shares of
Common Stock outstanding prior to completion of this offering will be
"restricted securities" under the Securities Act (the "Restricted Shares"). The
Restricted Shares may be sold only if they are registered under the Securities
Act or pursuant to an applicable exemption from the registration requirements
of the Securities Act, including Rule 144 or Rule 701 thereunder. Each of the
Selling Shareholders of the Company has agreed that he or she will not,
directly or indirectly, offer, sell, pledge, contract to sell, transfer the
economic risk of ownership in, make any short sale, or otherwise dispose of
shares of Common Stock or securities convertible into or exercisable or
exchangeable for or any rights to purchase or acquire Common Stock, without the
consent of the Underwriter prior to the release of the Company's audited
financial results for fiscal year 1999. See "Underwriting."
In general, under Rule 144 as currently in effect, affiliates of the
Company or a person (or persons whose shares are aggregated) who has
beneficially owned Restricted Shares for at least one year but less than two
years is entitled to sell within any three-month period a number of shares that
does not exceed the greater of 1% of the then outstanding shares of the Common
Stock or the average weekly trading volume in the Common Stock during the four
calendar weeks preceding such sale. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements and the availability of
current public information about the Company. No sales are permitted under
Rule 144 until the Company has been subject to reporting with the Commission
for at least 90 days. Any person (or persons whose shares are aggregated) who
is not deemed to have been an "affiliate" of the Company at any time during the
90 days preceding a sale, and who has beneficially owned Restricted Shares for
at least two years, would be entitled to sell such shares under Rule 144
without regard to the volume or manner of sale limitations referred to above.
Subject to certain limitations on the aggregate offering price of a
transaction and other conditions, Rule 701 may be relied upon with respect to
the resale of securities originally purchased from the Company by its
employees, directors, officers, consultants or advisors before the date the
Company becomes subject to the reporting requirements of the Exchange Act
pursuant to written compensatory benefit plans or written contracts relating to
the compensation of such persons. Securities issued in reliance on Rule 701
are restricted securities and, beginning 90 days after the date of this
Prospectus, may be sold by persons other than affiliates subject only to the
manner of sale provisions of Rule 144 and by affiliates under Rule 144 without
compliance with its two-year minimum holding period requirements. Such
securities will be subject, however, to any lock-up agreements related to such
securities.
The Company intends to file a registration statement on Form S-8
covering sales of shares issued upon exercise of any securities issued under
the Company's 1997 Omnibus Securities Plan. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and "Underwriting."
39
<PAGE> 41
No prediction can be made as to the effect, if any, that future sales
of shares, or the availability of shares for future sales, will have on the
market price of the Common Stock. The sale of substantial amounts of Common
Stock, or the perception that such sales could occur, could adversely affect
the prevailing market price for the Common Stock.
40
<PAGE> 42
UNDERWRITING
The Underwriter has agreed, subject to the terms and conditions of the
Underwriting Agreement, to purchase from the Company 1,000,000 shares of Common
Stock. The nature of the obligations of the Underwriter is such that if any of
such shares are purchased, all must be purchased.
The Underwriter initially proposes to offer the shares of Common Stock
offered hereby to the public at the price to public set forth on the cover page
of this prospectus. The Underwriter may allow a concession to selected dealers
who are members of the National Association of Securities Dealers, Inc.
("NASD") not in excess of $____ per share, and the Underwriter may allow, and
such dealers may reallow, to members of the NASD a concession not in excess of
$____ per share. After the public offering, the price to public, the
concession and the reallowance may be changed by the Underwriter.
The Company has granted an option to the Underwriter, exercisable
within 45 days after the date of this prospectus, to purchase up to an
additional 150,000 shares of Common Stock at the initial price to the public,
less the underwriting discount, set forth on the cover page of this prospectus.
The Underwriter may exercise the option only for the purpose of covering
over-allotments.
The Company has also agreed to grant to the Underwriter warrants to
purchase up to 100,000 shares of Common Stock. The Underwriter's Warrants will
not be registered. The Underwriter's Warrants will be exercisable for a period
of four years, commencing one year after the date of this prospectus, at an
initial per share exercise price equal to 120% of the price to the public set
forth on the cover page of this prospectus. Neither the Underwriter's Warrants
nor the shares of Common Stock issuable upon exercise thereof may be
transferred, assigned or hypothecated until one year from the date of this
prospectus, except that they may be assigned, in whole or in part, to any
successor, officer, director, member or partner of the Underwriter. If the
holder or holders of the Underwriter's Warrants notify the Company of their
intention to exercise all or a portion of the Underwriter's Warrants and such
exercise would cause Mrs. Boenigk and Mrs. Congleton to collectively own less
than 50% of the Company's outstanding Common Stock, the Company may, before the
exercise of the Underwriter's Warrants, redeem the Underwriter's Warrants that
were being exercised by paying to the holder or holders the difference between
the exercise price of the Underwriter's Warrant and the last reported sales
price for the Common Stock on the date that notice of intention to exercise is
given to the Company. The Company must notify the holder or holders of its
intention to redeem the Underwriter's Warrants being tendered for exercise
within 24 hours of its receipt of notice and consummate the cash redemption
within five days of receipt of notice.
The holders of the Underwriter's Warrants will have no voting,
dividend or other rights as shareholders of the Company unless and until the
exercise of the Underwriter's Warrants. The number of securities deliverable
upon any exercise of the Underwriter's Warrants or its underlying securities
and the exercise price of the Underwriter's Warrants are subject to adjustment
to protect against any dilution upon the occurrence of certain events,
including issuance of stock dividends, stock splits, subdivision or combination
of outstanding stock and reclassification of stock.
During and after the offering, the Underwriter may purchase and sell
the Common Stock in the open market. These transactions may include
over-allotment and stabilizing transactions in connection with the offering.
The Underwriter may also impose a penalty bid, whereby selling concessions
allowed to broker-dealers in respect of the Common Stock sold in the offering
for their account may be reclaimed by the Underwriter if such Common Stock is
repurchased by the Underwriter in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Common Stock, which may be higher than the price that might otherwise prevail
in the open market, and, if commenced, may be discontinued at any time.
41
<PAGE> 43
The Company, its executive officers, directors and principal
shareholders have agreed that until the Company has released earnings for
fiscal year 1999, they will not, directly or indirectly, offer, sell, contract
to sell, grant any option to sell, or otherwise dispose of shares of Common
Stock or other securities which are substantially similar to the Common Stock
or securities convertible into or exercisable or exchangeable for or any rights
to purchase or acquire Common Stock or securities which are substantially
similar to the Common Stock without the prior written consent of the
Underwriter.
Prior to this offering, there has been no market for the Common Stock
and there can be no assurance that a regular trading market will develop upon
the completion of this offering. The initial public offering price was
determined by negotiations between the Company and the Underwriter. The
primary factors considered in determining such offering price included the
history of and prospects for the industry in which the Company competes, market
valuation of comparable companies, market conditions for public offerings, the
history of and prospects for the Company's business, the Company's past and
present operations and earnings and the trend of such earnings, the prospects
for future earnings of the Company, the Company's current financial position,
an assessment of the Company's management, the general condition of the
securities markets, the demand for similar securities of comparable companies
and other relevant factors.
The Company and the Selling Shareholders have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act or to contribute to payments which the Underwriter may be
required to make in respect thereof.
The Underwriter has advised the Company that it does not expect any
sales by the Underwriter to accounts over which it exercises discretionary
authority.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered
hereby will be passed upon for the Company by Haynes and Boone, LLP, Dallas,
Texas. Certain legal matters in connection with this offering will be passed
upon for the Underwriter by Thompson & Knight, P.C., Dallas, Texas.
EXPERTS
The financial statements of the Company as of June 30, 1997 and for
each of the two years then ended, included in this prospectus have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report
appearing herein and have been so included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on
Form SB-1 (the "Registration Statement") under the Securities Act, with respect
to the shares of Common Stock offered hereby. This prospectus constitutes a
part of the Registration Statement and does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted
from this prospectus as permitted by the rules and regulations of the
Commission. Statements contained in this prospectus as to the contents of any
contract, agreement or other document referred to herein are not necessarily
complete and, where such agreement or other document is an exhibit to the
Registration Statement, each such statement is qualified in all respects by the
provisions of such exhibit, to which reference is hereby made for a full
statement of the provisions thereof. For further information with respect to
the Company and the Common Stock, reference is hereby made to the Registration
Statement and to the exhibits thereto.
42
<PAGE> 44
The Registration Statement and the exhibits may be inspected, without
charge, and copies may be obtained, at prescribed rates, at the public
reference facilities of the Commission maintained at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, DC 20549, or on the internet at
http://www.sec.gov. Copies of the Registration Statement and the exhibits may
also be inspected, without charge, at the Commission's regional offices at 7
World Trade Center, Suite 1300, New York, New York 10048, and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. In addition, copies of the
Registration Statement and the exhibits may be obtained by mail, at prescribed
rates, from the Public Reference Branch of the Commission at 450 Fifth Street,
N.W., Washington, DC 20549.
As a result of this offering, the Company will become subject to the
information and periodic reporting requirements of the Exchange Act, and, in
accordance therewith, will file periodic reports, proxy statements and other
information with the Commission. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the public
reference facilities and regional offices referred to above. The Company
intends to furnish its shareholders with annual reports containing audited
financial statements certified by independent public accountants and with
quarterly reports containing unaudited financial statements for the first three
quarters of each fiscal year.
43
<PAGE> 45
NEUTRAL POSTURE ERGONOMICS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITORS' REPORT.................................................................................. F-2
FINANCIAL STATEMENTS AND NOTES:
Balance Sheet as of June 30, 1997.......................................................................... F-3
Statements of Income for the Years Ended June 30, 1996 and 1997............................................ F-4
Statements of Shareholders' Equity for the Years Ended June 30, 1996 and 1997.............................. F-5
Statements of Cash Flows for the Years Ended June 30, 1996 and 1997........................................ F-6
Notes to Financial Statements.............................................................................. F-7
</TABLE>
F-1
<PAGE> 46
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Neutral Posture Ergonomics, Inc.:
We have audited the accompanying balance sheet of Neutral Posture Ergonomics,
Inc. as of June 30, 1997, and the related statements of income, shareholders'
equity and cash flows for each of the two years in the period then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of June 30, 1997, and the
results of its operations and its cash flows for each of the two years in the
period then ended in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
August 11, 1997
F-2
<PAGE> 47
NEUTRAL POSTURE ERGONOMICS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, 1997
------------------------------
PRO FORMA
HISTORICAL (NOTE 8)
------------- -------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 294,014 $ 294,014
Accounts receivable - less allowance for doubtful accounts of
$68,000 (Notes 3 and 6) 1,124,227 1,124,227
Inventories (Note 3) 507,577 507,577
Deferred income tax benefits (Notes 4 and 8) -- 20,000
Prepaid expenses and other 156,947 156,947
------------- -------------
Total current assets 2,082,765 2,102,765
PROPERTY AND EQUIPMENT - Net (Notes 2 and 3) 1,434,939 1,434,939
NOTES RECEIVABLE - shareholders (Note 5) 118,175 118,175
DEPOSITS AND OTHER 62,162 62,162
------------- -------------
TOTAL $ 3,698,041 $ 3,718,041
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt (Note 3) $ 26,077 $ 26,077
Accounts payable 755,264 755,264
Accrued liabilities 563,135 563,135
Income taxes payable (Note 4) 47,706 47,706
Distributions payable to shareholders 100,000 100,000
------------- -------------
Total current liabilities 1,492,182 1,492,182
LONG-TERM DEBT - Less current portion (Note 3) 606,591 606,591
NOTES PAYABLE TO SHAREHOLDERS (Note 8) -- 643,000
COMMITMENTS AND CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY (Note 5):
Common stock: $.01 par value; 14,000,000 shares authorized,
2,300,000 shares issued and outstanding 23,000 23,000
Additional paid-in capital 382,000 382,000
Retained earnings (Note 8) 1,373,238 750,238
Accounts and notes receivable - shareholders (95,845) (95,845)
Deferred compensation - stock options granted (83,125) (83,125)
------------- -------------
Total shareholders' equity 1,599,268 976,268
------------- -------------
TOTAL $ 3,698,041 $ 3,718,041
============= =============
</TABLE>
See notes to financial statements.
F-3
<PAGE> 48
NEUTRAL POSTURE ERGONOMICS, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------
1996 1997
------------ ------------
<S> <C> <C>
NET SALES (Note 6) $ 11,063,868 $ 12,089,262
COST OF SALES 7,682,754 7,594,322
------------ ------------
GROSS PROFIT 3,381,114 4,494,940
OPERATING EXPENSES:
Selling 967,223 1,232,346
General and administrative 2,013,330 2,181,314
------------ ------------
Total 2,980,553 3,413,660
------------ ------------
OPERATING INCOME 400,561 1,081,280
OTHER INCOME (EXPENSE):
Interest expense (83,418) (138,869)
Interest income 733 13,764
Other 24,957 46,893
------------ ------------
Total (57,728) (78,212)
------------ ------------
INCOME BEFORE INCOME TAXES 342,833 1,003,068
PRO FORMA INCOME TAXES (Notes 1 and 4) 127,593 292,693
------------ ------------
PRO FORMA NET INCOME $ 215,240 $ 710,375
============ ============
PRO FORMA NET INCOME PER COMMON SHARE $ .27
============
PRO FORMA WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING (Note 8) 2,607,167
============
</TABLE>
See notes to financial statements.
F-4
<PAGE> 49
NEUTRAL POSTURE ERGONOMICS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ACCOUNTS AND
COMMON ADDITIONAL NOTES TOTAL
SHARES COMMON PAID-IN RETAINED RECEIVABLE - DEFERRED SHAREHOLDERS'
ISSUED STOCK CAPITAL EARNINGS SHAREHOLDERS COMPENSATION EQUITY
--------- --------- --------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JULY 1, 1995 2,000,000 $ 20,000 $ 80,000 $ 443,146 $ (43,345) $ -- $ 499,801
Stock options granted to employees (Note 5) -- -- 237,500 -- -- (237,500) --
Exercise of stock options (Note 5) 200,000 2,000 43,000 -- (35,000) -- 10,000
Amortization of deferred compensation -- -- -- -- -- 106,875 106,875
Pro forma net income -- -- -- 215,240 -- -- 215,240
Pro forma income tax adjustment (Note 4) -- -- -- 1,000 -- -- 1,000
--------- --------- --------- ----------- --------- --------- -----------
BALANCE AT JUNE 30, 1996 2,200,000 22,000 360,500 659,386 (78,345) (130,625) 832,916
Exercise of stock options (Note 5) 100,000 1,000 21,500 -- (17,500) -- 5,000
Amortization of deferred compensation -- -- -- -- -- 47,500 47,500
Shareholder distributions -- -- -- (323,000) -- -- (323,000)
Pro forma net income -- -- -- 710,375 -- -- 710,375
Pro forma income tax adjustment (Note 4) -- -- -- 326,477 -- -- 326,477
--------- --------- --------- ----------- --------- --------- -----------
BALANCE AT JUNE 30, 1997 2,300,000 $ 23,000 $ 382,000 $ 1,373,238 $ (95,845) $ (83,125) $ 1,599,268
========= ========= ========= =========== ========= ========= ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 50
NEUTRAL POSTURE ERGONOMICS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-----------------------------
1996 1997
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Pro forma net income $ 215,240 $ 710,375
Noncash items in net income:
Depreciation - property and equipment 109,560 158,308
Amortization of deferred compensation 106,875 47,500
Amortization of patent and licensing agreement -- 5,072
(Gain) loss on disposal of property and equipment 11,090 (1,610)
Deferred income tax benefit (8,036) --
Changes in operating working capital:
Accounts receivable (202,444) (7,522)
Inventories 54,819 (64,863)
Prepaid expenses and other (45,111) (92,301)
Accounts payable (504,030) 362,025
Accrued liabilities 227,998 268,601
Income taxes payable (6,663) 40,658
Notes receivable - shareholders (29,450) (88,725)
Deposits and other (37,405) 26,871
------------ ------------
Pro forma net cash from (used for) operating activities (107,557) 1,364,389
Pro forma income tax expense 1,000 326,477
------------ ------------
Historical net cash from (used for) operating activities (106,557) 1,690,866
------------ ------------
INVESTING ACTIVITIES:
Additions to property and equipment (754,181) (431,717)
Proceeds from sale of property and equipment -- 17,590
Acquisition of patent and licensing agreement -- (50,000)
------------ ------------
Net cash used for investing activities (754,181) (464,127)
------------ ------------
FINANCING ACTIVITIES:
Issuance of debt 889,621 --
Payments on debt -- (754,348)
Distributions to shareholders -- (223,000)
Contributions on exercise of stock options 10,000 5,000
------------ ------------
Net cash from (used for) financing activities 899,621 (972,348)
------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS 38,883 254,391
CASH AND CASH EQUIVALENTS:
Beginning of year 740 39,623
------------ ------------
End of year $ 39,623 $ 294,014
============ ============
SUPPLEMENTAL INFORMATION:
Interest paid $ 76,525 $ 145,472
============ ============
Income taxes paid $ 151,972 $ 4,000
============ ============
Noncash investing and financing:
Property and equipment additions for long-term debt $ -- $ 8,833
============ ============
Note receivable for stock issued on exercise of options $ 35,000 $ 17,500
============ ============
</TABLE>
See notes to financial statements.
F-6
<PAGE> 51
NEUTRAL POSTURE ERGONOMICS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996 AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS - Neutral Posture Ergonomics, Inc. (the "Company") designs and
manufactures ergonomic chairs, and sells to wholesale and retail
customers nationwide. The Company's manufacturing facility is located in
Bryan, Texas, and its primary product showroom is located at the
Merchandise Mart in Chicago, Illinois. The Company has been operating
under an exclusive license, along with one other licensee, until February
1997, when the Company became the sole licensee, for use of a specified
patent in applications to industrial, laboratory and office chair use;
this license may not be assigned or transferred. In March 1997, the
Company acquired the patent (Note 7).
FINANCIAL STATEMENT PREPARATION requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingencies at the date of the financial statements
and the reported amounts of revenues and expenses for the periods.
Differences from those estimates are recognized in the period they become
known.
REVENUES are recognized as sales when products are shipped and title
passes. As revenues are recognized, estimated warranty expenses are
provided.
CASH EQUIVALENTS are highly liquid investments with maturities at date of
acquisition of three months or less.
INVENTORIES, consisting primarily of raw materials, are stated at the
lower of cost (on the first-in, first-out method) or market.
PROPERTY AND EQUIPMENT are stated at cost less accumulated depreciation
and amortization. Depreciation and amortization are provided using the
straight-line method over estimated useful lives ranging from three to
seven years, or the related lease term if shorter.
FINANCIAL INSTRUMENTS consist of cash, accounts and notes receivable,
payables and debt, the carrying values of which are a reasonable estimate
of their fair values due to their short maturities or current interest
rates.
RESEARCH AND DEVELOPMENT COSTS are expensed as incurred and were $352,000
and $224,000 in fiscal 1996 and 1997, respectively.
FEDERAL INCOME TAXES are not recorded by the Company for fiscal 1997 and
a portion of fiscal 1996 because, effective April 1, 1996, the Company
has elected taxation status as an S corporation under the Internal
Revenue Code, with profits and losses reportable by the shareholders in
their individual income tax returns. Deferred income taxes were provided
prior to April 1, 1996, under the asset and liability method for
temporary differences in the recognition of income and expense for tax
and financial reporting purposes.
PRO FORMA INCOME TAXES represent the applicable pro forma adjustments for
federal and state income taxes as if the Company had not been treated as
an S Corporation in fiscal 1997 and a portion of fiscal 1996. Upon
completion of the public offering, the Company will terminate its status
as an S Corporation and will be subject to such income taxes.
F-7
<PAGE> 52
PRO FORMA NET INCOME PER COMMON SHARE is based on the weighted average
number of common shares and common equivalent shares from dilutive stock
options outstanding during the period. The shares outstanding also
include the pro forma effects for the estimated portion of the shares
(107,167) in the public offering that would fund S Corporation
distributions related to operations through June 30, 1997, estimated to
be $643,000 (Note 8). Share and per-share amounts have been adjusted
retroactively for the 20-for-1 stock dividend (accounted for as a stock
split) which was effected in August 1997.
STOCK-BASED COMPENSATION arising from stock option grants is accounted
for by the intrinsic value method under Accounting Principles Board
Opinion No. 25 ("APB No. 25"). Statement of Financial Accounting
Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-Based
Compensation," requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require)
compensation cost to be measured based on the fair value of the equity
instrument awarded. As permitted by SFAS No. 123, the Company continues
to apply APB No. 25 to its stock-based compensation awards to employees
and discloses the required pro forma effect on net income and earnings
per share (Note 5).
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
JUNE 30,
1997
----------
<S> <C>
Land $ 90,250
Building 534,750
Building improvements 119,099
Machinery and equipment 415,368
Furniture and fixtures 305,240
Automobiles and trucks 111,362
----------
1,576,069
Less accumulated depreciation 366,467
----------
Total 1,209,602
Deposits on machinery and equipment 225,337
----------
Property and equipment - net $1,434,939
==========
</TABLE>
F-8
<PAGE> 53
3. DEBT AND CREDIT FACILITIES
Long-term debt consists of the following:
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
<S> <C>
Revolving line of credit, up to $2,000,000; interest at prime plus .5% (9% at
June 30, 1997) payable monthly;
principal due January 21, 1999 $ --
Note payable to bank in monthly installments of $5,300, including interest at
9.75% for the first 12 months and variable thereafter,
maturing in May 2001 481,732
Term loan payable in monthly installments of $1,456, including
interest at 8.25%, maturing in May 2011 143,824
Capital lease obligation, payable in variable monthly installments through
October 1999, net of $891 discount based on interest
at 10%, collateralized by the leased equipment 7,112
--------
Total long-term debt 632,668
Less current portion 26,077
--------
Long-term debt - less current portion $606,591
========
</TABLE>
Annual maturities of long-term debt - less current portion at June 30,
1997, are as follows:
<TABLE>
<S> <C>
Year ending June 30:
1999 $ 28,650
2000 29,093
2001 431,453
2002 8,087
2003 8,780
Thereafter 100,528
--------
Total $606,591
========
</TABLE>
Borrowings under the revolving line of credit are subject to borrowing
base requirements and are collateralized by accounts receivable and
inventories. The line of credit is subject to a quarterly commitment fee
of .25% per annum on the difference between the commitment amount and the
aggregate principal balance. The current credit facility is guaranteed by
the two majority shareholders and terminates on January 21, 1999.
Under the same facility, the Company has available a term line of credit
up to $500,000 with interest payable monthly at prime plus .5%, with a
maturity not in excess of five years, to finance the acquisition of
additional machinery, equipment and molds to be used in the Company's
operations. At June 30, 1997, no such loan was outstanding.
In May 1996, the Company purchased an office, warehouse and manufacturing
facility for $626,431. The Company issued a $500,000 variable interest
rate note and a term note of $150,000 for capital improvements on the
building. The notes are collateralized by the building, certain equipment
and the assignment of certain insurance proceeds.
F-9
<PAGE> 54
The revolving line of credit and the notes require maintenance of
specified levels of tangible net worth and other financial covenants and
restrict additional borrowings, the purchase and disposal of assets, the
payment of dividends, the purchase of treasury stock and other specified
changes in the Company's business.
4. INCOME TAXES
Since April 1, 1996, the Company has elected taxation status as an S
corporation under the Internal Revenue Code, with profits and losses
reportable by the shareholders in their individual income tax returns.
Accordingly, there is no provision for federal income taxes in fiscal
1997 and a portion of fiscal 1996. The remaining net deferred tax asset
of $2,004 at April 1, 1996, is written off to tax expense in fiscal 1996.
Upon completion of the public offering, the Company will terminate its
status as an S Corporation.
Pro forma income tax adjustments represent the additional provision
necessary for federal and state income taxes to be at the statutory rate
in effect (at an effective rate of 37% before tax credits) as if the
Company had not been treated as an S Corporation in fiscal 1997 and a
portion of fiscal 1996.
Pro forma income tax expense consists of the following:
<TABLE>
<CAPTION>
1996 1997
----------- ------------
<S> <C> <C>
Historical current (federal and state) tax expense $ 134,629 $ 44,658
Deferred tax benefit (8,036) -
Pro forma federal income tax adjustment 1,000 326,477
Historical current federal tax refunds from research and
development tax credits related to prior years - (78,442)
------------- ------------
$ 127,593 $ 292,693
============= ============
</TABLE>
Significant items comprising the Company's deferred tax asset and
liability in fiscal 1996, include differences primarily arising from
allowances and accrued liabilities not currently deductible for tax
purposes and for certain equipment additions that were currently
deductible for tax purposes.
5. STOCK OPTION PLAN
In April 1996, the Company adopted a Nonqualified Stock Option Plan (the
"Plan") to remain in effect for ten years or expiration of the latest
option period, whichever is later. The Plan authorizes the board of
directors to grant up to 700,000 option shares. The Plan contains
provisions upon dissolution, liquidation or merger of the Company to
allow for immediate exercise of all issued and outstanding options. Upon
adoption of the Plan in April 1996, the Company granted 500,000 options
at $0.225 exercise price per share of which 200,000 options vested when
granted and were exercised in June 1996, and the remaining 300,000
options vest in equal amounts over a period of three years. At April 30,
1997, an additional 100,000 options were exercised; at June 30, 1997,
200,000 options are outstanding and not exercisable, and 200,000 options
are reserved for future option issuances.
Under the terms of the option grants, at the election of the optionees,
the Company loaned to the optionees amounts to cover a portion of the
exercise price of the options and the related tax effects, and received
from the optionees notes receivable of $64,450 and $106,225 in fiscal
1996 and 1997, respectively. These recourse notes bear interest at 7.5%,
payable annually, and mature in 2000 and 2001.
F-10
<PAGE> 55
The Company applies the provisions of APB No. 25 and related
Interpretations in accounting for its stock option plan. Deferred
compensation of $237,500 was recorded for the 500,000 options granted,
based on the $0.475 per share excess of the estimated fair value of the
stock of $0.70 per share over the exercise price, and is amortized over
the vesting period of one to three years. Amortization of deferred
compensation of $106,875 and $47,500 for fiscal 1996 and 1997,
respectively, is included in selling, general and administrative
expenses. Had compensation cost for the Company's stock option plan been
determined based on the fair value of the options at the grant date
consistent with the method prescribed by SFAS No. 123, the Company's pro
forma net income would have been reduced by $14,000 and $6,000 for fiscal
1996 and 1997, respectively.
The fair value of options granted in fiscal 1996 was estimated at $0.535
per share on the date of grant using the Black-Scholes option-pricing
model with the following assumptions: risk-free interest rate of 6.32%,
no dividend yield, expected lives of five years and no expected
volatility (because the Company's stock was not publicly traded).
6. CONCENTRATION OF RISKS
The Company's revenues are derived principally from uncollateralized
sales of chairs to customers.
Revenues and accounts receivable from significant customers represent the
following percentages of the Company's net sales and accounts receivable:
<TABLE>
<CAPTION>
1996 1997
------------------------ -----------------------
ACCOUNTS ACCOUNTS
SALES RECEIVABLE SALES RECEIVABLE
<S> <C> <C> <C> <C>
General Services Administration 14% 12% 16% 15%
United Parcel Services 23% 15% 10% 5%
</TABLE>
Because of the availability of other customers, management does not
believe that the loss of any single customer would adversely affect the
Company's operations.
7. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES - The Company leases two showroom facilities under
agreements classified as operating leases. These agreements require the
Company to pay all executory costs (such as utilities and maintenance)
incurred by the landlord. In July 1996, the Company terminated its lease
of warehouse and office facilities due to the acquisition of new
facilities in Bryan, Texas, in May 1996 (Note 3). The Company also has
entered into operating leases for some of its office equipment.
Future minimum payments under all noncancelable operating lease
obligations, including an estimated pro rata share of operating expenses,
as of June 30, 1997, are as follows:
<TABLE>
<CAPTION>
Year ending June 30:
<S> <C>
1998 $ 55,881
1999 54,818
2000 56,419
2001 52,635
2002 38,691
--------
Total minimum lease payments $258,444
========
</TABLE>
F-11
<PAGE> 56
Rent expense for fiscal 1996 and 1997, totaled $63,211 and $26,007,
respectively, which includes the Company's share of executory costs
associated with its office leases.
TOOLING AND LICENSES - In January 1997, the Company entered into an
agreement with a third party to design and develop the molds to be
utilized in the production process for approximately $400,000. The
Company has paid approximately $150,000 through June 30, 1997, and
expects to pay the remaining $250,000 upon completion of the molds in
October 1997.
ROYALTIES - In March 1997, the Company acquired the patent (Note 1) from
Jerome C. Congleton for $30,000 and future royalties and now holds all
rights to the patent. Royalties are based on 25% of net royalties
collected by the Company from third parties for products manufactured,
used or sold under license or sublicense of the patent.
LEGAL PROCEEDINGS - The Company is a party to certain legal proceedings
related to patents and other matters arising in the ordinary course of
business. Although the Company cannot predict the outcome of such
proceedings with certainty, the Company does not expect the outcome of
these proceedings, either individually or in the aggregate, to have a
material adverse impact on its financial position.
8. PRO FORMA BALANCE SHEET AND COMMON SHARES OUTSTANDING
The pro forma balance sheet at June 30, 1997, presents the effects, on a
pro forma basis, of the following transactions: (a) the distribution of
the estimated remaining S Corporation earnings through June 30, 1997, to
the current shareholders through issuance of notes payable to
shareholders of $643,000 in August 1997 and (b) the estimated net
deferred tax asset of $20,000 related to future deductible temporary
differences arising from termination of the Company's S Corporation
election.
The pro forma weighted average common shares outstanding include the
estimated shares in the public offering (107,167 at an assumed price of
$6.00 per share) that will be sufficient to fund the repayment of the
$643,000 notes payable to shareholders.
******
F-12
<PAGE> 57
[Picture of a chair]
[Pictures of the assembly line]
[Picture of ComputErgo(TM)]
[Pictures of an airport, airplane and a hand on a laptop computer.]
<PAGE> 58
================================================================================
No dealer, salesperson, or other person has been authorized to give
any information or to make any representations other than those contained in
this prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company or the Underwriter.
This prospectus does not constitute an offer to sell or the solicitation of an
offer to buy any of the securities to which it relates in any state to any
person to whom it is unlawful to make such offer or solicitation in such state.
Neither the delivery of this prospectus nor any sale hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Termination of Subchapter S Corporation Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . 17
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Principal and Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Shares Eligible for Future Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Index to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
-----------------
Until ___________, 1997 (25 days after the date of this prospectus),
all dealers effecting transactions in the common stock, whether or not
participating in this distribution, may be required to deliver a prospectus.
This delivery requirement is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
================================================================================
================================================================================
1,000,000 SHARES
[LOGO]
NEUTRAL POSTURE
ERGONOMICS, INC.
Common Stock
-----------------
PROSPECTUS
-----------------
HUBERMAN FINANCIAL, INC.
____________________, 1997
================================================================================
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Amended and Restated Articles of Incorporation of the Company
provides that the Company shall indemnify its directors and officers to the
fullest extent permitted by the Texas Business Corporation Act (the "TBCA").
Pursuant to the provisions of Article 2.02-1 of the TBCA, the Company has the
power to indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending, or completed action, suit, or proceeding by
reason of the fact that he is or was a director, officer, employee, or agent of
the Company, against any and all expenses, judgments, fines, and amounts paid
in settlement actually incurred in connection with such action, suit, or
proceeding. The power to indemnify applies only if such person acted in good
faith and in a manner he reasonably believed to be in the best interest, or not
opposed to the best interest, of the Company and with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
The statute further provides that the indemnification authorized
thereby shall not be deemed exclusive of any other rights to which any such
officer or director may be entitled under any bylaws, agreements, resolution of
shareholders or directors, or otherwise.
The Company's Amended and Restated Articles of Incorporation also
provides that the liability of the directors of the Company to the Company or
its shareholders for monetary damages for acts or omissions occurring in their
capacity as directors shall be limited to the fullest extent permitted by the
laws of the State of Texas and any other applicable law, as such laws now exist
and to such greater extent as they may provide in the future.
Upon the consummation of the offering, the Company expects to have in
place directors' and officers' liability insurance which will provide coverage
for the directors and officers and the Company for securities-related exposures
arising out of an offering document and open market securities transactions.
In addition, coverage will be provided for the directors and officers for
certain non-securities related acts.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been advised
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
ITEM 2. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee . . . . . . . . . . . . . . . . . . . . . $2,265.15
NASD Filing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,247.50
Nasdaq National Market Listing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,107.50
Printing Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000.00
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000.00
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000.00
Fees of Transfer Agent and Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000.00
Miscellaneous Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,379.85
-----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $360,000.00
===========
</TABLE>
II-1
<PAGE> 60
All of the above expenses except the Securities and Exchange Commission
registration fee, the NASD filing fee and NASDAQ National Market listing fee
are estimated. All of the above expenses will be paid by the Company.
ITEM 3. UNDERTAKINGS.
The small business issuer hereby undertakes:
(1) That the small business issuer will provide to the Underwriter at the
closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.
(2) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the small business issuer will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(3) That the small business issuer will:
(a) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the small business issuer under Rule 424(b)(1), or
(4) or 497(h) under the Securities Act as part of this registration
statement as of the time the Commission declared it effective.
(b) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and the offering of the securities at that time as the initial
bona fide offering of those securities.
ITEM 4. UNREGISTERED SECURITIES ISSUED OR SOLD WITHIN ONE YEAR.
The Company issued 100,000 shares of Common Stock to David W. Campbell
in exchange for $45,000 upon exercise of options granted under the Amended and
Restated 1996 Nonqualified Stock Option Plan. Such issuance was offered in
reliance upon Rule 701 of the Securities Act which exempts issuances under
compensatory benefit plans.
II-2
<PAGE> 61
ITEM 5. INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<S> <C> <C>
1.1*** -- Form of Underwriting Agreement
2.1* -- Amended and Restated Articles of Incorporation of the Company
2.2*** -- Bylaws of the Company
3.1*** -- Specimen Common Stock Certificate
6.1*** -- Employment Agreement, dated as of July 1, 1997, between the Company and Rebecca
E. Boenigk
6.2*** -- Employment Agreement, dated as of July 1, 1997, between the Company and David W.
Campbell
6.3*** -- Employment Agreement, dated as of July 1, 1997, between the Company and David W.
Ebner
6.4*** -- Employment Agreement, dated as of July 1, 1997, between the Company and Gregory
A. Katt
6.5*** -- Consulting Agreement, dated as of July 1, 1997, between the Company and
Dr. Jerome Congleton
6.6*** -- Letter Agreement, dated as of December 20, 1996, between the Company and
Shepherd Products, Inc.
6.7* -- Agreement, dated as of February 21, 1995, between the Company and the General
Services Administration
6.8*** -- Contract Agreement, dated as of January 12, 1997, between the Company and Relax
the Back Franchising Company
6.9*** -- Trademark License, dated as of January 12, 1997, between the Company and Relax
the Back Franchising Company
6.10* -- Promissory Note, dated as of April 30, 1997, issued by David W. Campbell in
favor of the Company
6.11* -- Promissory Note, dated as of June 30, 1996, issued by David W. Campbell in favor
of the Company
6.12* -- Promissory Note, dated as of June 30, 1996, issued by David W. Ebner in favor of
the Company
6.13*** -- Promissory Note, dated as of August 1, 1997, issued by the Company in favor of
the Selling Shareholders
6.14* -- Loan Agreement, dated as of December 30, 1996, between the Company and Comerica-
Bank Texas
6.15*** -- Split Dollar Insurance Agreement, dated as of April 28, 1997, between the
Company and Rebecca E. Boenigk
6.16*** -- Life Insurance Agreement, dated as of February 20, 1997, between the Company and
David W. Campbell
6.17*** -- Split Dollar Insurance Agreement, dated as of June 26, 1995, between the Company
and Jaye E. Congleton
6.18*** -- Split Dollar Insurance Agreement, dated as of January 21, 1997, between the
Company and David W. Ebner
6.19*** -- Key Man Insurance Agreement, dated as of April 28, 1997, between the Company and
Rebecca Boenigk
6.20*** -- Key Man Insurance Agreement, dated as of February 20, 1997, between the Company
and David W. Campbell
6.21*** -- Key Man Insurance Agreement, dated as of March 3, 1997, between the Company and
Dr. Jerome J. Congleton
6.22*** -- Neutral Posture Ergonomics, Inc. Amended and Restated 1996 Nonqualified Stock
Option Plan, dated as of August 11, 1997
6.23*** -- Neutral Posture Ergonomics, Inc. 1997 Omnibus Securities Plan, dated as of July
1, 1997
6.24*** -- Underwriter's Warrants
</TABLE>
II-3
<PAGE> 62
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<S> <C> <C>
6.25* -- Agreement, dated as of March 5, 1997, between the Company and Jerome J.
Congleton
6.26*** -- Royalty Agreement, dated as of July 1, 1997, between the Company and Jerome J.
Congleton
10.1* -- Consent of Deloitte & Touche LLP
10.2*** -- Consent of Haynes and Boone, LLP (included in Exhibit 5.1)
11.1*** -- Opinion of Haynes and Boone, LLP
12.1* -- Power of Attorney (included on signature page to this Registration Statement on
Form SB-1)
</TABLE>
- -------------
* Filed herewith.
** Filed herewith and confidential treatment requested for certain portions
pursuant to the Commission's Rule 406.
*** To be filed by amendment.
II-4
<PAGE> 63
SIGNATURES AND POWER OF ATTORNEY
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form SB-1 and authorized
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, State of Texas, on the 14th
day of August, 1997.
NEUTRAL POSTURE ERGONOMICS, INC.
By: /s/ Rebecca E. Boenigk
-----------------------------------
Rebecca E. Boenigk
Chairman of the Board
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Rebecca E. Boenigk and David W.
Campbell, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign, execute and file with the Securities and
Exchange Commission and any state securities regulatory board or commission any
documents relating to the proposed issuance and registration of the securities
offered pursuant to this Registration Statement on Form SB-1 under the
Securities Act of 1933, as amended, including any amendment or amendments
relating thereto (and any additional Registration Statement related hereto
permitted by Rule 462(b) promulgated under the Securities Act of 1933, as
amended, including any amendment or amendments relating thereto), with all
exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done.
In accordance with to the requirements of the Securities Act of 1933,
as amended, this Registration Statement on Form SB-1 was signed by the
following persons in the capacities stated below on the 14th day of August,
1997:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Rebecca E. Boenigk Chairman of the Board, Chief
- --------------------------------------------------- Executive Officer and Director
Rebecca E. Boenigk (Principal Executive Officer)
/s/ David W. Campbell President and Director
- ---------------------------------------------------
David W. Campbell
/s/ Gregory A. Katt Vice President, Chief Financial
- --------------------------------------------------- Officer and Secretary/Treasurer
Gregory A. Katt (Principal Financial and
Accounting Officer)
/s/ Jerome J. Congleton Director
- ---------------------------------------------------
Jerome J. Congleton
</TABLE>
II-5
<PAGE> 64
<TABLE>
<S> <C>
/s/ Ronald L. Jones Director
- ---------------------------------------------------
Ronald L. Jones
/s/ James W. Thompson Director
- ---------------------------------------------------
James W. Thompson
/s/ Cynthia Pladziewicz Director
- ---------------------------------------------------
Cynthia Pladziewicz
</TABLE>
II-6
<PAGE> 65
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<S> <C> <C>
1.1*** -- Form of Underwriting Agreement
2.1* -- Amended and Restated Articles of Incorporation of the Company
2.2*** -- Bylaws of the Company
3.1*** -- Specimen Common Stock Certificate
6.1*** -- Employment Agreement, dated as of July 1, 1997, between the Company and Rebecca
E. Boenigk
6.2*** -- Employment Agreement, dated as of July 1, 1997, between the Company and David W.
Campbell
6.3*** -- Employment Agreement, dated as of July 1, 1997, between the Company and David W.
Ebner
6.4*** -- Employment Agreement, dated as of July 1, 1997, between the Company and Gregory
A. Katt
6.5*** -- Consulting Agreement, dated as of July 1, 1997, between the Company and
Dr. Jerome Congleton
6.6*** -- Letter Agreement, dated as of December 20, 1996, between the Company and
Shepherd Products, Inc.
6.7* -- Agreement, dated as of February 21, 1995, between the Company and the General
Services Administration
6.8*** -- Contract Agreement, dated as of January 12, 1997, between the Company and Relax
the Back Franchising Company
6.9*** -- Trademark License, dated as of January 12, 1997, between the Company and Relax
the Back Franchising Company
6.10* -- Promissory Note, dated as of April 30, 1997, issued by David W. Campbell in
favor of the Company
6.11* -- Promissory Note, dated as of June 30, 1996, issued by David W. Campbell in favor
of the Company
6.12* -- Promissory Note, dated as of June 30, 1996, issued by David W. Ebner in favor of
the Company
6.13*** -- Promissory Note, dated as of August 1, 1997, issued by the Company in favor of
the Selling Shareholders
6.14* -- Loan Agreement, dated as of December 30, 1996, between the Company and Comerica-
Bank Texas
6.15*** -- Split Dollar Insurance Agreement, dated as of April 28, 1977, between the
Company and Rebecca E. Boenigk
6.16*** -- Life Insurance Agreement, dated as of February 20, 1997, between the Company and
David W. Campbell
6.17*** -- Split Dollar Insurance Agreement, dated as of June 26, 1995, between the Company
and Jaye E. Congleton
6.18*** -- Split Dollar Insurance Agreement, dated as of January 21, 1997, between the
Company and David W. Ebner
6.19*** -- Key Man Insurance Agreement, dated as of April 28, 1997, between the Company and
Rebecca Boenigk
6.20*** -- Key Man Insurance Agreement, dated as of February 20, 1997, between the Company
and David W. Campbell
6.21*** -- Key Man Insurance Agreement, dated as of March 3, 1997, between the Company and
Dr. Jerome J. Congleton
6.22*** -- Neutral Posture Ergonomics, Inc. Amended and Restated 1996 Nonqualified Stock
Option Plan, dated as of August 11, 1997
6.23*** -- Neutral Posture Ergonomics, Inc. 1997 Omnibus Securities Plan, dated as of July
1, 1997
6.24*** -- Underwriter's Warrants
6.25* -- Agreement, dated as of March 5, 1997, between the Company and Jerome J.
Congleton
</TABLE>
<PAGE> 66
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<S> <C> <C>
6.26*** -- Royalty Agreement, dated as of July 1, 1997, between the Company and Jerome J.
Congleton
10.1* -- Consent of Deloitte & Touche LLP
10.2*** -- Consent of Haynes and Boone, LLP (included in Exhibit 5.1)
11.1*** -- Opinion of Haynes and Boone, LLP
12.1* -- Power of Attorney (included on signature page to this Registration Statement on
Form SB-1)
</TABLE>
- ----------------------
* Filed herewith.
** Filed herewith and confidential treatment requested for certain portions
pursuant to the Commission's Rule 406.
*** To be filed by amendment.
<PAGE> 1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
NEUTRAL POSTURE ERGONOMICS, INC.
Neutral Posture Ergonomics, Inc., a Texas corporation (the "Corporation"),
pursuant to the provisions of Article 4.07 of the Texas Business Corporation
Act (the "Act"), hereby adopts these Amended and Restated Articles of
Incorporation of the Corporation which accurately copy the Articles of
Incorporation of the Corporation and all amendments thereto that are in effect
to date and as further amended hereby as hereinafter set forth and which
contain no other change in any provision thereof.
ARTICLE I
The name of the Corporation is Neutral Posture Ergonomics, Inc.
ARTICLE II
The Articles of Incorporation of the Corporation, as amended to date, are
amended by these Amended and Restated Articles of Incorporation as follows:
The amendments made by these Amended and Restated Articles of
Incorporation (the "Amendments") alter or change Articles Two through Eight of
the Articles of Incorporation, as amended to date. The full text of each
provision altered or added is as set forth in Article Six hereof.
ARTICLE III
The Amendments have been effected in conformity with the provisions of the
Act and these Amended and Restated Articles of Incorporation were duly adopted
by the shareholders of the Corporation on the 11th day of August, 1997.
ARTICLE IV
The number of shares of the Corporation outstanding at the time of such
adoption was 115,000 shares of Common Stock and the number of shares entitled
to vote on the Amended and Restated Articles of Incorporation was 115,000
shares. All of the shareholders have signed a written consent to the adoption
of such Amended and Restated Articles of Incorporation pursuant to Article 9.10
of the Act and any written notice required by Article 9.10 has been given.
<PAGE> 2
ARTICLE V
Upon the filing of the Amended and Restated Articles of Incorporation with
the Secretary of State of Texas (the "Effective Time") and without any action
of the holders of the Company's outstanding Common Stock:
(1) Each outstanding share of Common Stock, par value $1.00 per share
("Current Common Stock") shall be automatically reclassified as
and changed and converted into one share of Common Stock, par
value $0.01 per share ("New Common Stock").
(2) Each certificate that represents shares of Current Common Stock
outstanding immediately prior to the Effective Time shall
thereafter be deemed to represent the same number of shares of
New Common Stock. Each person who is a holder of record of
outstanding shares of Current Common Stock at the Effective Time
shall thereafter be entitled to surrender to the Company a
certificate or certificates representing such shares and shall be
entitled to receive therefor a certificate or certificates
representing the number of shares of New Common Stock represented
by the surrendered certificate or certificates.
(3) The reclassification of the Common Stock at the Effective Time
effects a decrease in stated capital of the Company in the amount
of $113,850 (representing a decrease from $115,000 to $1,150),
which shall be transferred to the surplus of the Company.
ARTICLE VI
The Articles of Incorporation of the Corporation and all amendments
thereto are hereby superseded by the following Amended and Restated Articles of
Incorporation, which accurately copy the entire text thereof and as amended
hereby:
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
NEUTRAL POSTURE ERGONOMICS, INC.
ARTICLE ONE
NAME
The name of the Corporation is Neutral Posture Ergonomics, Inc.
2
<PAGE> 3
ARTICLE TWO
DURATION
The period of duration of the Corporation is perpetual.
ARTICLE THREE
PURPOSES
The purposes for which the Corporation is organized is the transaction of
any or all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
The Corporation shall possess all powers necessary, proper and appropriate
to effect and achieve any or all of the purposes for which the Corporation is
organized.
ARTICLE FOUR
CAPITAL STOCK
A. The aggregate number of shares that the Corporation shall have authority
to issue is Fifteen Million (15,000,000) shares, classified as (i) 14,000,000
shares of common stock, par value $0.01 per share ("Common Stock") and (ii)
1,000,000 shares of preferred stock, par value $0.01 per share ("Preferred
Stock).
B. The designations and the powers, preferences, rights, qualifications and
limitations of the shares of Common Stock and Preferred Stock are as follows:
(1) PREFERRED STOCK. The Preferred Stock may be authorized for
issuance from time to time by the Board of Directors in one or more series.
The designation of each such series, the number of shares to be included in
each series, and the preferences, conversion and other rights, voting powers
restrictions, limitations as to dividends and terms and conditions of
redemption shall be as set forth in resolutions adopted by the Board of
Directors and included in a statement filed as required by law from time to
time prior to the issuance of any shares of such series. Subject to the
express limitations, if any, of any series of Preferred Stock of which shares
are outstanding at the time, the Board of Directors is authorized, by the
adoption of resolutions, to increase or decrease (but not below the number of
shares of Preferred Stock of such series then outstanding) the number of shares
of Preferred Stock of such series and to alter the designation of or, classify
or reclassify, any unissued shares of Preferred Stock of any series from time
to time, by setting or changing the preferences, conversion or other rights,
voting powers restrictions, limitations as to dividends or other distributions
qualifications or terms and conditions of redemption of such series.
3
<PAGE> 4
(2) COMMON STOCK.
(a) Each share of Common Stock of the Corporation shall have
identical rights and privileges in every respect. The holders of shares of
Common Stock shall be entitled to vote upon all matters submitted to a vote of
the shareholders of the Corporation and shall be entitled to one vote for each
share of Common Stock held.
(b) Subject to the prior rights and preferences, if any,
applicable to shares of the Preferred Stock or any series thereof, the holders
of shares of the Common Stock shall be entitled to receive such dividends
(payable in cash, stock, or otherwise) as may be declared thereon by the Board
of Directors at any time and from time to time out of any funds of the
Corporation legally available therefor.
(c) In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation, after distribution in full of
the preferential amounts, if any, to be distributed to the holders of shares of
the Preferred Stock or any series thereof, the holders of shares of the Common
Stock shall be entitled to receive all of the remaining assets of the
Corporation available for distribution to its shareholders, ratably in
proportion to the number of shares of the Common Stock held by them. A
liquidation, dissolution, or winding-up of the Corporation, as such terms are
used in this paragraph (c), shall not be deemed to be occasioned by or to
include any merger of the Corporation with or into any other corporation or
corporations or other entity or a sale, lease, exchange, or conveyance of all
or a part of the assets of the Corporation.
C. No shareholder of the Corporation shall have any preemptive or other
light to acquire additional, unissued or treasury, shares of the Corporation,
whether now or hereafter authorized, or any securities convertible into,
exchangeable for or carrying any right to acquire any shares of any class of
the Corporation.
D. No shareholder shall have the right to cumulate votes at any election
for Directors of the Corporation or for any other purpose.
ARTICLE FIVE
MINIMUM CAPITAL
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000.00) consisting of money, labor done, or property actually
received.
4
<PAGE> 5
ARTICLE SIX
REGISTERED OFFICE AND AGENT
The street address of the registered office of the Corporation is 3904 N.
Texas Avenue, Bryan, Texas 77803 and the name of the registered agent at such
address is Rebecca Boenigk.
ARTICLE SEVEN
BOARD OF DIRECTORS
The number of Directors of the Corporation is currently six, which number
may be increased or decreased pursuant to the Bylaws of the Corporation but in
no event shall be less than the minimum number required by the Act. Each
Director shall hold office for the term determined as specified below and until
his or her successor shall have been elected and qualified. The names and
addresses of the persons serving as the current Directors are:
Rebecca Boenigk, 3904 N. Texas Avenue
Class III Director Bryan, Texas 77803
David Campbell, 3904 N. Texas Avenue
Class I Director Bryan,Texas 77803
Jerome Congleton, 3904 N. Texas Avenue
Class II Director Bryan, Texas 77803
Ronald Jones, 1228 Euclid Avenue
Class 11 Director 10th Floor, Halle Building
Cleveland, OH 44115
James Thompson, 1333 Northwest Freeway
Class III Director Houston, Texas 77040
Cindy Pladziewicz, 6300 West Parker Road
Class I Director Plano, Texas 75093
The following provisions shall apply to the Directors of the
Corporation:
A. The Directors of the Corporation (other than any Directors who may be
elected solely by holders of any series of Preferred Stock) shall be divided
into three classes, designated "Class I," "Class II," and "Class III,"
respectively. If the total number of Directors equals a number divisible by
three, then the number of Directors in each of Class I, Class II, and Class III
shall be that number of Directors equal to the total number of Directors
divided by three. If, however, the total number of Directors
5
<PAGE> 6
equals a number that is not divisible by three, each such class of Directors
shall consist of that number of Directors as nearly equal in number as
reasonably possible to the total number of Directors divided by three, as
determined by the Board of Directors in advance of each respective election of
Directors by holders of shares of capital stock of the Corporation then
entitled to vote in such election. The term of office of the initial Class I
Directors shall expire at the 1998 annual meeting of shareholders, the term of
office of the initial Class 11 Directors shall expire at the 1999 annual
meeting of shareholders and the term of office of the initial Class III
Directors shall expire at the 2000 annual meeting of shareholders, with each
Director to hold office until his successor shall have been duly elected and
qualified. At each annual meeting of shareholders, commencing with the 1998
annual meeting, Directors elected to succeed those Directors whose terms then
expire shall be elected for a term of office to expire at the third succeeding
annual meeting of shareholders after their election, with each Director to hold
office until his successor shall have been duly elected and qualified.
B. In the event of any increase or decrease in the authorized number of
Directors: (i) each Director then serving shall nevertheless continue as
Director of the class of which such Director is a member until the expiration of
such Director's term of such Director's prior death, retirement, resignation or
removal; and (ii) except to the extent that an increase or decrease in the
authorized number of Directors occurs in connection with the rights of holders
of Preferred Stock to elect additional Directors, the newly created or
eliminated Directorships resulting from any increase or decrease shall be
apportioned by the Board of Directors among the three classes so as to keep the
number of Directors in each class as nearly equal as possible.
C. A Director may be removed from office with or without cause only by the
affirmative vote of the holders of at least two-thirds of the outstanding
shares of each class of capital stock of the Corporation then entitled to vote
at an election of such Directors. Except as may otherwise be provided by law,
cause for removal shall exist only if the Director whose removal is proposed
(a) has been convicted of a felony by a court of competent jurisdiction and
such conviction is no longer subject to direct appeal, (b) has been adjudged by
a court of competent jurisdiction to be liable for gross negligence or
misconduct in the performance of his duties to the Corporation in a matter of
substantial importance to the Corporation, and such adjudication has become
final and non-appealable, or (c) has missed three consecutive meetings of the
Board of Directors.
ARTICLE EIGHT
LIABILITY OF DIRECTORS
The liability of the Directors of the Corporation to the Corporation or
its shareholders for monetary damages for acts or omissions occurring in their
capacity as Directors shall be limited to the fullest extent permitted by the
laws of the State of Texas and any other applicable law, as such laws now exist
and to such greater extent as they may provide in the future.
6
<PAGE> 7
Any repeal or modification of this Article shall operate prospectively
only and shall not adversely affect any limitation of liability which then
exists as a result hereof.
ARTICLE NINE
INDEMNIFICATION
The Corporation shall indemnify and advance expenses to and may provide
indemnity insurance for persons who are named in any lawsuits or other
proceedings as a result of their service to the Corporation as Directors or
officers of the Corporation to the fullest extent permitted by the laws of the
State of Texas as such laws may now or hereafter exist. The Corporation may,
but is not required to, indemnify, advance expenses to, and provide indemnity
insurance for, persons who are named in any lawsuits or other proceedings as a
result of their service to the Corporation as employees or agents of the
Corporation to the fullest extent permitted by the laws of the State of Texas
as such laws may now or hereafter exist.
Any repeal or modification of this Article shall operate prospectively
only and shall not adversely affect the rights existing at the time of such
repeal or modification of any of the aforementioned persons.
ARTICLE TEN
SPECIAL MEETINGS OF SHAREHOLDERS
Special meetings of shareholders of the Corporation may only be called by
the Board of Directors pursuant to a resolution adopted by a majority of the
Directors then serving, by the Chairman of the Board of Directors, or by any
holder or holders of at least twenty-five percent (25%) of the outstanding
shares of capital stock of the Corporation then entitled to vote on any matter
for which the respective special meeting is being called.
ARTICLE ELEVEN
ACTION BY CONSENT OF SHAREHOLDERS
Any action required by the Texas Business Corporation Act to be taken at
any annual or special meeting of shareholders, or any action which may be taken
at any annual or special meeting of shareholders, may be taken without a
meeting, without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holder or
holders of shares having not less than the minimum number of votes that would
be necessary to take such action at a meeting at which the holders of all
shares entitled to vote on the action were present and voted.
7
<PAGE> 8
ARTICLE TWELVE
AMENDMENT OF BYLAWS
All the powers of the Corporation, insofar as the same may be lawfully
vested by this Amended and Restated Articles of Incorporation in the Board of
Directors, are hereby conferred upon the Board of Directors. In furtherance
and not in limitation of that power, the Board of Directors shall have the
power, upon the affirmative vote of at least two-thirds (2/3) of the Directors
then serving to make, adopt, alter, amend, and repeal from time to time the
bylaws of the Corporation and to make from time to time new bylaws of the
Corporation (subject to the right of the shareholders entitled to vote thereon
to adopt, alter, amend, and repeal bylaws made by the Board of Directors or to
make new bylaws); provided, however, that the shareholders of the Corporation
shall be entitled to adopt, alter, amend, or repeal bylaws made by the Board of
Directors or to make new bylaws solely upon the affirmative vote of the holders
of at least two-thirds (2/3) of the outstanding shares of each class of capital
stock of the Corporation then entitled to vote thereon.
ARTICLE THIRTEEN
AMENDMENT OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION
Notwithstanding any other provisions of this Amended and Restated Articles
of Incorporation or any provision of law which might otherwise permit a lesser
vote or no vote, the affirmative vote of the holders of at least two-thirds
(2/3) of the outstanding shares of each class of capital stock of the
Corporation then entitled to vote thereon shall be required to amend, alter, or
repeal any one or more of Articles SEVEN, EIGHT, NINE, TEN, ELEVEN, TWELVE AND
THIRTEEN of this Amended and Restated Articles of Incorporation.
8
<PAGE> 9
IN WITNESS WHEREOF, and in accordance with Article 4.07D of the Act, the
undersigned has executed these Amended and Restated Articles of Incorporation
as of the 11th day of August, 1997.
By: /s/ REBECCA BOENIGK
--------------------------
Rebecca Boenigk,
Chief Executive Officer
9
<PAGE> 1
EXHIBIT 6.7
[LOGO]
NEUTRAL POSTURE ERGONOMICS, INC. o GOVERNMENT CONTRACTS OFFICE
6445 Cardinal Lane o Columbia, MD 21044 o 410-715-1266 o Fax 410-992-7051
28 January, 1997
Ms Terri Roby
Contracts Specialist
Furniture Systems Management Division
National Furniture Center
GSA-FSS - Room 403 - CM Bldg 4
Washington, DC 20406
REFERENCE: Price Increases for Contract GS-29F-0140C
(extended)
Dear Ms Roby:
Per our telephone conversation, please find Neutral Posture's new retail
pricing that is effective 2/1/97 along with the letter that was sent to all NPE
Dealers notifying them of the increase. I am also enclosing proposed new
pricing for the above cited contract that was derived by applying the agreed
upon discount to these new retail prices. Please note that this is NPE's first
price increase in over five years.
Regarding NPE's commercial pricing practices, this letter certifies that no
change has occurred in the data since the completion of the initial
negotiation. As the price increases average 3%, and as they are going into
effect during the second 12-month period of the contract, we believe that our
request for this price increase is in full compliance with the Economic Price
Adjustment portion of the contract. (pp63-64)
All other items, terms, and conditions of the contract remain unchanged. Your
prompt attention to this request will be greatly appreciated so that we can
print and distribute new authorized price lists.
Sincerely,
/s/ MARTIN GEAR
- -----------------------------
Martin Gear
Manager for Federal
Government Contracts
Neutral Posture Ergonomics, Inc.
NEUTRAL POSTURE ERGONOMICS, INC.
----------------------------------------
3904 N. Texas Ave. o Bryan, Texas 77803 o 409-778-0502 o Fax 409-778-0408
www.neutralposture.com
<PAGE> 2
NEUTRAL POSTURE ERGONOMICS, INC
[LOGO]
January 21, 1997
Here is the new pricing, as promised. I can send it to you on disk or email it
to you. If you have any questions please let me know. Once again, this is
effective February 1, 1997.
New literature is in process and will be available no later than March 1, 1997.
/s/ Michelle
- ----------------
Michelle
NEUTRAL POSTURE ERGONOMICS, INC.
------------------------------------
3904 N. Texas Ave. o Bryan, Texas 77803 o 409-778-0502 o Fax 409-778-0408
www.neutralposture.com
<PAGE> 3
RETAIL
1997 Pricing Effective 2/1/97
<TABLE>
<CAPTION>
Model Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Grade 6
<S> <C> <C> <C> <C> <C> <C>
4400 $960.00 $1,010.00 $1,060.00 $1,110.00 $1,160.00 $1,560.00
4405 $740.00 $790.00 $840.00 $890.00 $940.00 $1,340.00
4500 $980.00 $1,030.00 $1,080.00 $1,130.00 $1,180.00 $1,580.00
4505 $760.00 $810.00 $860.00 $910.00 $960.00 $1,360.00
4600 $980.00 $1,030.00 $1,080.00 $1,130.00 $1,180.00 $1,580.00
4605 $760.00 $810.00 $860.00 $910.00 $960.00 $1,360.00
4700 $980.00 $1,030.00 $1,080.00 $1,130.00 $1,180.00 $1,580.00
4705 $760.00 $810.00 $860.00 $910.00 $960.00 $1,360.00
4800 $1,020.00 $1,070.00 $1,120.00 $1,170.00 $1,220.00 $1,620.00
4805 $800.00 $850.00 $900.00 $950.00 $1,000.00 $1,400.00
5400 $1,000.00 $1,050.00 $1,100.00 $1,150.00 $1,200.00 $1,600.00
5405 $780.00 $830.00 $880.00 $930.00 $980.00 $1,380.00
5500 $1,020.00 $1,070.00 $1,120.00 $1,170.00 $1,220.00 $1,620.00
5505 $800.00 $850.00 $900.00 $950.00 $1,000.00 $1,400.00
5600 $1,020.00 $1,070.00 $1,120.00 $1,170.00 $1,220.00 $1,620.00
5605 $800.00 $850.00 $900.00 $950.00 $1,000.00 $1,400.00
5700 $1,020.00 $1,070.00 $1,120.00 $1,170.00 $1,220.00 $1,620.00
5705 $800.00 $850.00 $900.00 $950.00 $1,000.00 $1,400.00
</TABLE>
Neutral Posture Ergonomics In Confidential 1/17/97 Page 1
<PAGE> 4
RETAIL
1997 Pricing Effective 2/1/97
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
5800 $1,060.00 $1,110.00 $1,160.00 $1,210.00 $1,260.00 $1,660.00
5805 $840.00 $890.00 $940.00 $990.00 $1,040.00 $1,440.00
6400 $1,105.00 $1,155.00 $1,205.00 $1,255.00 $1,305.00 $1,705.00
6405 $885.00 $935.00 $985.00 $1,035.00 $1,085.00 $1,485.00
6500 $1,125.00 $1,175.00 $1,225.00 $1,275.00 $1,325.00 $1,725.00
6505 $905.00 $955.00 $1,005.00 $1,055.00 $1,105.00 $1,505.00
6600 $1,125.00 $1,175.00 $1,225.00 $1,275.00 $1,325.00 $1,725.00
6605 $905.00 $955.00 $1,005.00 $1,055.00 $1,105.00 $1,505.00
6700 $1,125.00 $1,175.00 $1,225.00 $1,275.00 $1,325.00 $1,725.00
6705 $905.00 $955.00 $1,005.00 $1,055.00 $1,105.00 $1,505.00
6800 $1,165.00 $1,215.00 $1,265.00 $1,315.00 $1,365.00 $1,765.00
6805 $945.00 $995.00 $1,045.00 $1,095.00 $1,145.00 $1,545.00
8400 $1,105.00 $1,155.00 $1,205.00 $1,255.00 $1,305.00 $1,705.00
8405 $885.00 $935.00 $985.00 $1,035.00 $1,085.00 $1,485.00
8500 $1,125.00 $1,175.00 $1,225.00 $1,275.00 $1,325.00 $1,725.00
8505 $905.00 $955.00 $1,005.00 $1,055.00 $1,105.00 $1,505.00
8600 $1,125.00 $1,175.00 $1,225.00 $1,275.00 $1,325.00 $1,725.00
8605 $905.00 $955.00 $1,005.00 $1,055.00 $1,105.00 $1,505.00
8700 $1,125.00 $1,175.00 $1,225.00 $1,275.00 $1,325.00 $1,725.00
8705 $905.00 $955.00 $1,005.00 $1,055.00 $1,105.00 $1,505.00
8800 $1,165.00 $1,215.00 $1,265.00 $1,315.00 $1,365.00 $1,765.00
8805 $945.00 $995.00 $1,045.00 $1,095.00 $1,145.00 $1,545.00
9400 $1,415.00 $1,465.00 $1,515.00 $1,565.00 $1,615.00 $2,015.00
9405 $1,195.00 $1,245.00 $1,295.00 $1,345.00 $1,395.00 $1,795.00
9500 $1,435.00 $1,485.00 $1,535.00 $1,585.00 $1,635.00 $2,035.00
9505 $1,215.00 $1,265.00 $1,315.00 $1,365.00 $1,415.00 $1,815.00
9600 $1,435.00 $1,485.00 $1,535.00 $1,585.00 $1,635.00 $2,035.00
9605 $1,215.00 $1,265.00 $1,315.00 $1,365.00 $1,415.00 $1,815.00
9700 $1,435.00 $1,485.00 $1,535.00 $1,585.00 $1,635.00 $2,035.00
9705 $1,215.00 $1,265.00 $1,315.00 $1,365.00 $1,415.00 $1,815.00
9800 $1,475.00 $1,525.00 $1,575.00 $1,625.00 $1,675.00 $2,075.00
9805 $1,255.00 $1,305.00 $1,355.00 $1,405.00 $1,455.00 $1,855.00
</TABLE>
Neutral Posture Ergonomics In Confidential 1/17/97 Page 2
<PAGE> 5
RETAIL
1997 Pricing Effective 2/1/97
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CAL 133 $1,155.00
600 $620.00 $670.00 $720.00 $770.00 $820.00 $1,220.00
200 $410.00 $460.00 $510.00 $560.00 $610.00 $1,010.00
Arms $220.00
Cylinder $105.00
</TABLE>
Neutral Posture Ergonomics In Confidential 1/17/97 Page 3
<PAGE> 6
Contract GS-29F-0140C Pricing Effective 2/01/97
Neutral Posture Ergonomics Pricing fob DESTINATION for new GSA page 1
<TABLE>
<CAPTION>
S.I.N. MODEL GRADE LIST $ GSA $ 200 GSA $ 200+
<C> <C> <C> <C> <C> <C>
496-5 4400 ONE $960 $407 $383
TWO $1,010 $428 $403
THREE $1,060 $450 $423
FOUR $1,110 $471 $443
FIVE $1,160 $492 $463
SIX $1,560 $662 $622
496-5 4405 ONE $740 $314 $295
TWO $790 $335 $315
THREE $870 $369 $347
FOUR $890 $378 $355
FIVE $940 $399 $375
SIX $1,340 $568 $535
496-5 4500 ONE $980 $416 $391
TWO $1,030 $437 $411
THREE $1,080 $458 $431
FOUR $1,130 $479 $451
FIVE $1,180 $501 $471
SIX $1,580 $670 $630
496-5 4505 ONE $760 $322 $303
TWO $810 $344 $323
THREE $860 $365 $343
FOUR $910 $386 $363
FIVE $960 $407 $383
SIX $1,360 $577 $543
496-5 4600 ONE $980 $416 $391
TWO $1,030 $437 $411
THREE $1,080 $458 $431
FOUR $1,130 $479 $451
FIVE $1,180 $501 $471
SIX $1,580 $670 $630
496-5 4605 ONE $760 $322 $303
TWO $810 $344 $323
THREE $860 $365 $343
FOUR $910 $386 $363
FIVE $960 $407 $383
SIX $1,360 $577 $543
496-5 4700 ONE $980 $416 $391
TWO $1,030 $437 $411
THREE $1,080 $458 $431
FOUR $1,130 $479 $451
FIVE $1,180 $501 $471
SIX $1,580 $670 $630
496-5 4705 ONE $760 $322 $303
TWO $810 $344 $323
THREE $860 $365 $343
FOUR $910 $386 $363
FIVE $960 $407 $383
</TABLE>
<PAGE> 7
Contract GS-29F-0140C Pricing Effective 2/01/97
Neutral Posture Ergonomics Pricing fob DESTINATION for new GSA page 2
<TABLE>
<CAPTION>
S.I.N. MODEL GRADE LIST $ GSA $ 200 GSA $ 200+
<C> <C> <C> <C> <C> <C>
SIX $1,360 $577 $543
496-5 4800 ONE $1,020 $433 $407
TWO $1,070 $454 $427
THREE $1,120 $475 $447
FOUR $1,170 $496 $467
FIVE $1,220 $518 $487
SIX $1,620 $687 $646
496-5 4805 ONE $800 $339 $319
TWO $850 $361 $339
THREE $900 $382 $359
FOUR $950 $403 $379
FIVE $1,000 $424 $399
SIX $1,400 $594 $559
496-5 5400 ONE $1,000 $424 $399
TWO $1,050 $445 $419
THREE $1,100 $467 $439
FOUR $1,150 $488 $459
FIVE $1,200 $509 $479
SIX $1,600 $679 $638
496-5 5405 ONE $780 $331 $311
TWO $830 $352 $331
THREE $880 $373 $351
FOUR $930 $395 $371
FIVE $980 $416 $391
SIX $1,380 $585 $551
496-5 5500 ONE $1,020 $433 $407
TWO $1,070 $454 $427
THREE $1,120 $475 $447
FOUR $1,170 $496 $467
FIVE $1,220 $518 $487
SIX $1,620 $687 $646
496-5 5505 ONE $800 $339 $319
TWO $850 $361 $339
THREE $900 $382 $359
FOUR $950 $403 $379
FIVE $1,000 $424 $399
SIX $1,400 $594 $559
496-5 5600 ONE $1,020 $433 $407
TWO $1,070 $454 $427
THREE $1,120 $475 $447
FOUR $1,170 $496 $467
FIVE $1,220 $518 $487
SIX $1,620 $687 $646
496-5 5605 ONE $800 $339 $319
TWO $850 $361 $339
THREE $900 $382 $359
FOUR $950 $403 $379
</TABLE>
<PAGE> 8
Contract GS-29F-0140C Pricing Effective 2/01/97
Neutral Posture Ergonomics Pricing fob DESTINATION for new GSA page 3
<TABLE>
<CAPTION>
S.I.N. MODEL GRADE LIST $ GSA $ 200 GSA $ 200+
<C> <C> <C> <C> <C> <C>
FIVE $1,000 $424 $399
SIX $1,400 $594 $559
496-5 5700 ONE $1,020 $433 $407
TWO $1,070 $454 $427
THREE $1,120 $475 $447
FOUR $1,170 $496 $467
FIVE $1,220 $518 $487
SIX $1,620 $687 $646
496-5 5705 ONE $800 $339 $319
TWO $850 $361 $339
THREE $900 $382 $359
FOUR $950 $403 $379
FIVE $1,000 $424 $399
SIX $1,400 $594 $559
496-5 5800 ONE $1,060 $450 $423
TWO $1,110 $471 $443
THREE $1,160 $492 $463
FOUR $1,210 $513 $483
FIVE $1,260 $535 $503
SIX $1,660 $704 $662
496-5 5805 ONE $840 $356 $335
TWO $890 $378 $355
THREE $940 $399 $375
FOUR $990 $420 $395
FIVE $1,040 $441 $415
SIX $1,440 $611 $575
496-5 6400 ONE $1,105 $469 $441
TWO $1,155 $490 $461
THREE $1,205 $511 $481
FOUR $1,255 $532 $501
FIVE $1,305 $554 $521
SIX $1,705 $723 $680
496-5 6405 ONE $885 $375 $353
TWO $935 $397 $373
THREE $985 $418 $393
FOUR $1,035 $439 $413
FIVE $1,085 $460 $433
SIX $1,485 $630 $593
496-5 6500 ONE $1,125 $477 $449
TWO $1,175 $498 $469
THREE $1,225 $520 $489
FOUR $1,275 $541 $509
FIVE $1,325 $562 $529
SIX $1,725 $732 $688
496-5 6505 ONE $905 $384 $361
TWO $955 $405 $381
THREE $1,005 $426 $401
</TABLE>
<PAGE> 9
Contract GS-29F-0140C Pricing Effective 2/01/97
Neutral Posture Ergonomics Pricing fob DESTINATION for new GSA page 4
<TABLE>
<CAPTION>
S.I.N. MODEL GRADE LIST $ GSA $ 200 GSA $ 200+
<C> <C> <C> <C> <C> <C>
FOUR $1,055 $448 $421
FIVE $1,105 $469 $441
SIX $1,505 $638 $600
496-5 6600 ONE $1,125 $477 $449
TWO $1,175 $498 $469
THREE $1,225 $520 $489
FOUR $1,275 $541 $509
FIVE $1,325 $562 $529
SIX $1,725 $732 $688
496-5 6605 ONE $905 $384 $361
TWO $955 $405 $381
THREE $1,005 $426 $401
FOUR $1,055 $448 $421
FIVE $1,105 $469 $441
SIX $1,505 $638 $600
496-5 6700 ONE $1,125 $477 $449
TWO $1,175 $498 $469
THREE $1,225 $520 $489
FOUR $1,275 $541 $509
FIVE $1,325 $562 $529
SIX $1,725 $732 $688
496-5 6705 ONE $905 $384 $361
TWO $955 $405 $381
THREE $1,005 $426 $401
FOUR $1,055 $448 $421
FIVE $1,105 $469 $441
SIX $1,505 $638 $600
496-5 6800 ONE $1,165 $494 $465
TWO $1,215 $515 $485
THREE $1,265 $537 $505
FOUR $1,315 $558 $525
FIVE $1,365 $579 $545
SIX $1,765 $749 $704
496-5 6805 ONE $945 $401 $377
TWO $995 $422 $397
THREE $1,045 $443 $417
FOUR $1,095 $465 $437
FIVE $1,145 $486 $457
SIX $1,545 $655 $616
496-5 8400 ONE $1,105 $469 $441
TWO $1,155 $490 $461
THREE $1,205 $511 $481
FOUR $1,255 $532 $501
FIVE $1,305 $554 $521
SIX $1,705 $723 $680
496-5 8405 ONE $885 $375 $353
TWO $935 $397 $373
</TABLE>
<PAGE> 10
Contract GS-29F-0140C Pricing Effective 2/01/97
Neutral Posture Ergonomics Pricing fob DESTINATION for new GSA page 5
<TABLE>
<CAPTION>
S.I.N. MODEL GRADE LIST $ GSA $ 200 GSA $ 200+
<C> <C> <C> <C> <C> <C>
THREE $985 $418 $393
FOUR $1,035 $439 $413
FIVE $1,085 $460 $433
SIX $1,485 $630 $593
496-5 8500 ONE $1,125 $477 $449
TWO $1,175 $498 $469
THREE $1,225 $520 $489
FOUR $1,275 $541 $509
FIVE $1,325 $562 $529
SIX $1,725 $732 $688
496-5 8505 ONE $905 $384 $361
TWO $955 $405 $381
THREE $1,005 $426 $401
FOUR $1,055 $448 $421
FIVE $1,105 $469 $441
SIX $1,505 $638 $600
496-5 8600 ONE $1,125 $477 $449
TWO $1,175 $498 $469
THREE $1,225 $520 $489
FOUR $1,275 $541 $509
FIVE $1,325 $562 $529
SIX $1,725 $732 $688
496-5 8605 ONE $905 $384 $361
TWO $955 $405 $381
THREE $1,005 $426 $401
FOUR $1,055 $448 $421
FIVE $1,105 $469 $441
SIX $1,505 $638 $600
496-5 8700 ONE $1,125 $477 $449
TWO $1,175 $498 $469
THREE $1,225 $520 $489
FOUR $1,275 $541 $509
FIVE $1,325 $562 $529
SIX $1,725 $732 $688
496-5 8705 ONE $905 $384 $361
TWO $955 $405 $381
THREE $1,005 $426 $401
FOUR $1,055 $448 $421
FIVE $1,105 $469 $441
SIX $1,505 $638 $600
496-5 8800 ONE $1,165 $494 $465
TWO $1,215 $515 $485
THREE $1,265 $537 $505
FOUR $1,315 $558 $525
FIVE $1,365 $579 $545
SIX $1,765 $749 $704
496-6 8805 ONE $945 $401 $377
</TABLE>
<PAGE> 11
Contract GS-29F-0140C Pricing Effective 2/01/97
Neutral Posture Ergonomics Pricing fob DESTINATION for new GSA page 6
<TABLE>
<CAPTION>
S.I.N. MODEL GRADE LIST $ GSA $ -200 GSA $ 200+
<S> <C> <C> <C> <C> <C>
TWO $995 $422 $397
THREE $1,045 $443 $417
FOUR $1,095 $465 $437
FIVE $1,145 $486 $457
SIX $1,545 $655 $616
496-5 9400 ONE $1,415 $600 $565
TWO $1,465 $622 $585
THREE $1,515 $643 $604
FOUR $1,565 $664 $624
FIVE $1,615 $685 $644
SIX $2,015 $855 $804
496-5 9405 ONE $1,195 $507 $477
TWO $1,245 $528 $497
THREE $1,295 $549 $517
FOUR $1,345 $571 $537
FIVE $1,395 $592 $557
SIX $1,795 $762 $716
496-5 9500 ONE $1,435 $609 $573
TWO $1,485 $630 $593
THREE $1,535 $651 $612
FOUR $1,585 $672 $632
FIVE $1,635 $694 $652
SIX $2,035 $863 $812
496-5 9505 ONE $1,215 $515 $485
TWO $1,265 $537 $505
THREE $1,315 $558 $525
FOUR $1,365 $579 $545
FIVE $1,415 $600 $565
SIX $1,815 $770 $724
496-5 9600 ONE $1,435 $609 $573
TWO $1,485 $630 $593
THREE $1,535 $651 $612
FOUR $1,585 $672 $632
FIVE $1,635 $694 $652
SIX $2,035 $863 $812
496-5 9605 ONE $1,215 $515 $485
TWO $1,265 $537 $505
THREE $1,315 $558 $525
FOUR $1,365 $579 $545
FIVE $1,415 $600 $565
SIX $1,815 $770 $724
496-5 9700 ONE $1,435 $609 $573
TWO $1,485 $630 $593
THREE $1,535 $651 $612
FOUR $1,585 $672 $632
FIVE $1,635 $694 $652
SIX $2,035 $863 $812
</TABLE>
<PAGE> 12
Contract GS-29F-0140C Pricing Effective 2/01/97
Neutral Posture Ergonomics Pricing fob DESTINATION for new GSA page 7
<TABLE>
<CAPTION>
S.I.N. MODEL GRADE LIST $ GSA $<200 GSA $ 200+
<S> <C> <C> <C> <C> <C>
496-5 9705 ONE $1,215 $515 $485
TWO $1,265 $537 $505
THREE $1,315 $558 $525
FOUR $1,365 $579 $545
FIVE $1,415 $600 $565
SIX $1,815 $770 $724
496-5 9800 ONE $1,475 $626 $589
TWO $1,525 $647 $608
THREE $1,575 $668 $628
FOUR $1,625 $689 $648
FIVE $1,675 $711 $668
SIX $2,075 $880 $828
496-5 9805 ONE $1,255 $532 $501
TWO $1,305 $554 $521
THREE $1,355 $575 $541
FOUR $1,405 $596 $561
FIVE $1,455 $617 $581
SIX $1,855 $787 $740
</TABLE>
<PAGE> 13
Contract GS-29F-0140C Pricing Effective 2/01/97
Neutral Posture Ergonomics Pricing fob DESTINATION for new GSA page 10
<TABLE>
<CAPTION>
S.I.N. MODEL GRADE LIST $ GSA $<200 GSA $ 200+
<S> <C> <C> <C> <C> <C>
496-3 600 ONE $620 $263 $247
TWO $670 $284 $267
THREE $720 $305 $287
FOUR $770 $327 $307
FIVE $820 $348 $327
SIX $1,220 $518 $487
496-6 4500 IU ONE $1,175 $498
496-3 200 ONE $410 $174 $164
TWO $460 $195 $184
THREE $510 $216 $203
FOUR $560 $238 $223
FIVE $610 $259 $243
SIX $1,010 $428 $403
496-5 8700 ADA ONE $1,525 $647 $608
TWO $1,575 $668 $628
THREE $1,625 $689 $648
FOUR $1,675 $711 $668
FIVE $1,725 $732 $688
SIX $2,125 $902 $848
CAL 133 ONE $1,155 $490 $461
</TABLE>
<PAGE> 14
SOLICITATION NO. FCNO-93-S303-3 PAGE 49 of 123
SECTION I
CONTRACT CLAUSES
52.203-9 REQUIREMENT FOR CERTIFICATE OF PROCUREMENT INTEGRITY --
MODIFICATION (NOV 1990)
(a) Definitions. The definitions set forth in FAR 3.104-4 are hereby
incorporated in this clause.
(b) The Contractor agrees that it will execute the certification set forth
in paragraph (c) of this clause when requested by the Contracting Officer in
connection with the execution of any modification of this contract.
(c) Certification. As required in paragraph (b) of this clause, the officer
or employee responsible for the modification proposal shall execute the
following certification:
CERTIFICATE OF PROCUREMENT INTEGRITY -- MODIFICATION (NOV 1990)
(1) I, Martin Gear (Name of certifier) am the officer or employee
responsible for the preparation of this modification proposal and hereby
certify that, to the best of my knowledge and belief, with the exception of any
information described in this certification. I have no information concerning a
violation or possible violation of subsection 27(a), (b), (d), or (f) of the
Office of Federal Procurement Policy Act, as amended* (41 U.S.C. 423),
(hereinafter referred to as "the Act"), as implemented in the FAR, occurring
during the conduct of this procurement GS-29F-0140C Mod 10 (contract and
modification number).
(2) As required by subsection 27(e)(1)(B) of the Act, I further
certify that to the best of my knowledge and belief, each officer, employee,
agent, representative, and consultant of Neutral Posture (Name of Offeror) who
has participated personally and substantially in the preparation or submission
of this proposal has certified that he or she is familiar with, and will comply
with, the requirements of subsection 27(a) of the Act, as implemented in the
FAR, and will report immediately to me any information concerning a violation
or possible violation of subsections 27(a), (b), (d), or (f) of the Act, as
implemented in the FAR, pertaining to this procurement.
(3) Violations or possible violations: (Continue on plain bond
paper if necessary and label Certificate of Procurement Integrity --
Modification (Continuation Sheet), ENTER NONE IF NONE EXISTS)
NONE
-------------------------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
/s/ MARTIN GEAR Martin Gear 1/27/97
---------------------------- ---------------------------
(Signature of the Officer or (Typed Name of the Officer
Employee Responsible for the or Employee Responsible for
Modification Proposal and the Modification Proposal)
Date)
<PAGE> 15
[LOGO]
NEUTRAL POSTURE ERGONOMICS, INC. o GOVERNMENT CONTRACTS OFFICE
6445 CARDINAL LANE o COLUMBIA, MD 21044 o 410-715-1266 o FAX 410-992-7051
23 December, 1996
Ms Terri Roby
Contracts Specialist
Furniture Systems Management Divisions
National Furniture Center
GSA-FSS - Room 403 - CM Bldg 4
Washington, DC 20406
REFERENCE: Neutral Posture Ergonomics' Contract GS-29F-0140C
Dear Ms Roby:
This letter is to notify you that Effective December 15th 1996, Neutral Posture
Ergonomics ceased production of the Number 3 back. As a consequence, we would
like to delete the following products from the above referenced contract:
3405 3400 3505 3500 3605 3600
3705 3700 3805 3800
Our reason for deleting these products is lack of demand. Furthermore, we
certify:
a. That the equipment is no longer manufactured and that there are
no outstanding orders by a Government Agency. For those items
previously purchased, all services promised will be rendered.
b. A substantially equal item (to the item being deleted) at a
higher schedule price has not nor will not be added to its
schedule contract during its term.
c. All of the data submitted is accurate, complete, and current as
of the modification's effective date.
Your prompt acceptance of this modification will be greatly appreciated.
Sincerely,
/s/ MARTIN GEAR
- ----------------------------
Martin Gear
Manager for Government Sales
NEUTRAL POSTURE ERGONOMICS, INC.
--------------------------------
3904 N. TEXAS AVE. o BRYAN, TEXAS 77803 o 409-788-0502 o FAX 409-778-0408
www.neutralposture.com
<PAGE> 16
<TABLE>
<S> <C> <C> <C>
====================================================================================================================================
1. CONTRACT ID CODE PAGE OF PAGES
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1
- ------------------------------------------------------------------------------------------------------------------------------------
2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable)
TWO (2)
- ------------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY CODE 7. ADMINISTERED BY (If other than Item 6) CODE
----------------- -----------------
GENERAL SERVICES ADMINISTRATION, FSS
NATIONAL FURNITURE CENTER (3FNS)
SUITE 403
WASHINGTON, DC 20406
- ------------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, country, State and ZIP Code) (X) 9A. AMENDMENT OF SOLICITATION NO.
---
NEUTRAL POSTURE ERGONOMICS, INC.
6445 CARDINAL LANE -------------------------------------------
COLUMBIA, MD 21044 9B. DATED (SEE ITEM 11)
------------------------------------------------
10A. MODIFICATION OF CONTRACT/ORDER NO.
X GS-29F-0140C
-------------------------------------------
10B. DATED (SEE ITEM 13)
- -----------------------------------------------------------------------------------
CODE FACILITY CODE
- ------------------------------------------------------------------------------------------------------------------------------------
11. THIS ITEM ONLY APPLIES TO AMENDMENT OF SOLICITATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers
[ ] is extended, [ ] is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:
(a) By completing Items 8 and 15, and returning ____________ copies of the amendment; (b) By acknowledging receipt of this amendment
on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and
amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already
submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified.
- ------------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required)
- ------------------------------------------------------------------------------------------------------------------------------------
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
- ------------------------------------------------------------------------------------------------------------------------------------
(X) A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT
- --- ORDER NO. IN ITEM 10A.
- ------------------------------------------------------------------------------------------------------------------------------------
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).
- ------------------------------------------------------------------------------------------------------------------------------------
X C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: CLAUSE 552.216-71 - ECONOMIC
PRICE ADJUSTMENT DTD 10/85 (ALT 1/89) AND CONTRACTOR'S LTRS DTD 12/23/96 AND 01/28/97
- ------------------------------------------------------------------------------------------------------------------------------------
D. OTHER (Specify type of modification and authority)
- ------------------------------------------------------------------------------------------------------------------------------------
E. IMPORTANT: Contractor [ ] is not, [X] is required to sign this document and return 2 copies to the issuing office.
-----
- ------------------------------------------------------------------------------------------------------------------------------------
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter
where feasible.)
THE ABOVE NUMBERED CONTRACT FOR FEDERAL SUPPLY SCHEDULE 71, PART III, SECTION H - MISCELLANEOUS
FURNITURE -- MULTIPURPOSE SEATING, IS HEREBY MODIFIED:
PURSUANT TO THE TERMS OF CLAUSE 1-552.216-71 (10/85 -- ALT 1/01/89), ECONOMIC PRICE ADJUSTMENT
THE CONTRACT PRICES ARE INCREASED WITH THE FOLLOWING GUIDELINES:
1. INCREASES ARE MADE ON A MODEL BY MODEL BASIS.
2. IN NO CASE, MAY THE PRICE OF A MODEL INCREASE BY MORE THAN 5%.
3. IN NO CASE, MAY A MODEL INCREASE BY ANY MORE THAN IT DID IN ITS COMMERCIAL INCREASE.
Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
- ------------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print) 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Martin Gear - Mgr Gov't Sales - NPE
- ------------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR 15C. DATE SIGNED 16B. UNITED STATES OF AMERICA 16C. DATE SIGNED
/s/ Martin Gear 3/5/97 BY
- ---------------------------------------- ----------------------------------
(Signature of person authorized to sign) (Signature of Contracting Officer)
====================================================================================================================================
NSN 7540-01-152-8070 30-105 STANDARD FORM 30 (REV. 10-83)
PREVIOUS EDITION UNUSABLE Prescribed by GSA
FAR (48 CFR) 53.243
</TABLE>
<PAGE> 17
INSTRUCTIONS
Instructions for items other than those that are self-explanatory, are as
follows:
(a) Item 1. (Contract ID Code). Insert the contract type identification code
that appears in the title block of the contract being modified.
(b) Item 3. (Effective date).
(1) For a solicitation amendment, change order, or administrative change,
the effective date shall be the issue date of the amendment, change
order, or administrative change.
(2) For a supplemental agreement, the effective date shall be the date
agreed to by the contracting parties.
(3) For a modification issued as an initial or confirming notice of
termination for the convenience of the Government, the effective date
and the modification number of the confirming notice shall be the
same as the effective date and modification number of the initial
notice.
(4) For a modification converting a termination for default to a
termination for the convenience of the Government, the effective date
shall be the same as the effective date of the termination for
default.
(5) For a modification confirming the contracting officer's determination
of the amount due in settlement of a contract termination, the
effective date shall be the same as the effective date of the initial
decision.
(c) Item 6. (Issued By). Insert the name and address of the issuing office. If
applicable, insert the appropriate issuing office code in the code block.
(d) Item 8. (Name and Address of Contractor). For modifications to a contract
or order, enter the contractor's name, address, and code as shown in the
original contract or order, unless changed by this or a previous
modification.
(e) Items 9. (Amendment of Solicitation No.- Dated), and 10, (Modification of
Contract/Order No.- Dated). Check the appropriate box and in the
corresponding blanks insert the number and date of the original
solicitation, contract, or order.
(f) Item 12. (Accounting and Appropriation Data). When appropriate, indicate
the impact of the modification on each affected accounting classification
by inserting one of the following entries:
(1) Accounting classification ____________
Net increase $___________
(2) Accounting classification ____________
Net decrease $___________
NOTE: If there are changes to multiple accounting classifications that
cannot be placed in block 12, insert an asterisk and the words "See
continuation sheet".
(g) Item 13. Check the appropriate box to indicate the type of modification.
Insert in the corresponding blank the authority under which the
modification is issued. Check whether or not contractor must sign this
document. (See FAR 43.103.)
(h) Item 14. (Description of Amendment/Modification).
(1) Organize amendments or modifications under the appropriate Uniform
Contract Format (UCF) section headings from the applicable
solicitation or contract. The UCF table of contents, however, shall
not be set forth in this document.
(2) Indicate the impact of the modification on the overall total contract
price by inserting one of the following entries:
(i) Total contract price increased by $___________
(ii) Total contract price decreased by $___________
(iii) Total contract price unchanged.
(3) State reason for modification.
(4) When removing, reinstating, or adding funds, identify the contract
items and accounting classifications.
(5) When the SF 30 is used to reflect a determination by the contracting
officer of the amount due in settlement of a contract terminated for
the convenience of the Government, the entry in Item 14 of the
modification may be limited to -
(i) A reference to the letter determination; and
(ii) A statement of the net amount determined to be due in settlement
of the contract.
(6) Include subject matter or short title of solicitation/contract
where feasible.
(i) Item 16B. The contracting officer's signature is not required on
solicitation amendments. The contracting officer's signature is normally
affixed last on supplemental agreements.
STANDARD FORM 30 BACK (REV. 10-83)
<PAGE> 18
PAGE 2 Mod. 2 (NEUTRAL POSTURE ERGONOMICS) GS-29F-0140C
1. Commercial increases are calculated from the Neutral Posture
Ergonomics Pricelist dated February 1, 1997.
2. All models reflect an increase of 3% across the board.
3. Delete the models, per NPE "Suggested Retail Pricelist dated
February 1, 1997, and letter dated 12/23/96.
4. Please provide a draft copy of the new GSA brochure prior to
Re-printing. This modification will be effective upon receipt, by the
Contracting Officer, of formal written notification that reprinting and
redistribution of the Government pricelist or supplemental pricelist has been
completed.
5. All other terms, conditions, discounts, and concessions remain
the same as in the initial offer, and subsequent contract award/contract
extension, and Modification No. 1.
6. This modification is issued at no cost to either party.
<PAGE> 19
<TABLE>
<S> <C> <C> <C>
====================================================================================================================================
1. CONTRACT ID CODE PAGE OF PAGES
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1
- ------------------------------------------------------------------------------------------------------------------------------------
2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable)
ONE (1) See Block 16C
- ------------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY CODE 7. ADMINISTERED BY (If other than Item 6) CODE
----------------- -----------------
GENERAL SERVICES ADMINISTRATION, FSS
NATIONAL FURNITURE CENTER (3FNS)
SUITE 403
WASHINGTON, DC 20406
- ------------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, country, State and ZIP Code) (X) 9A. AMENDMENT OF SOLICITATION NO.
---
NEUTRAL POSTURE ERGONOMICS, INC.
6445 CARDINAL LANE -------------------------------------------
COLUMBIA, MD 21044 9B. DATED (SEE ITEM 11)
------------------------------------------------
10A. MODIFICATION OF CONTRACT/ORDER NO.
X GS-29F-0140C
-------------------------------------------
10B. DATED (SEE ITEM 13)
- ----------------------------------------------------------------------------------- 02/01/96
CODE FACILITY CODE
- ------------------------------------------------------------------------------------------------------------------------------------
11. THIS ITEM ONLY APPLIES TO AMENDMENT OF SOLICITATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers
[ ] is extended, [ ] is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:
(a) By completing Items 8 and 15, and returning ____________ copies of the amendment; (b) By acknowledging receipt of this amendment
on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and
amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already
submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified.
- ------------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required)
- ------------------------------------------------------------------------------------------------------------------------------------
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
- ------------------------------------------------------------------------------------------------------------------------------------
(X) A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT
- --- ORDER NO. IN ITEM 10A.
- ------------------------------------------------------------------------------------------------------------------------------------
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).
- ------------------------------------------------------------------------------------------------------------------------------------
X C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: MODIFICATION CLAUSE
I-FSS-630B DTD 1/19, AND CONTRACTOR'S LETTER DTD 8/8/96 AND 8/28/96.
- ------------------------------------------------------------------------------------------------------------------------------------
D. OTHER (Specify type of modification and authority)
- ------------------------------------------------------------------------------------------------------------------------------------
E. IMPORTANT: Contractor [ ] is not, [X] is required to sign this document and return 1 copies to the issuing office.
-----
- ------------------------------------------------------------------------------------------------------------------------------------
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter
where feasible.)
THE ABOVE REFERENCED CONTRACT FOR FEDERAL SUPPLY GROUP 71, PART III, SECTION H -- MISCELLANEOUS
FURNITURE - MULTIPURPOSE SEATING IS HEREBY MODIFIED AS FOLLOWS:
(SEE ATTACHED)
Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
- ------------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print) 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Martin Gear - Manager for Gov't Joseph Cross, Contracting Officer
Contracts
- ------------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR 15C. DATE SIGNED 16B. UNITED STATES OF AMERICA 16C. DATE SIGNED
/s/ Martin Gear 11/5/96 BY /s/ Joseph Cross 11/26/96
- ---------------------------------------- ----------------------------------
(Signature of person authorized to sign) (Signature of Contracting Officer)
====================================================================================================================================
NSN 7540-01-152-8070 30-105 STANDARD FORM 30 (REV. 10-83)
PREVIOUS EDITION UNUSABLE Prescribed by GSA
FAR (48 CFR) 53.243
</TABLE>
<PAGE> 20
INSTRUCTIONS
Instructions for items other than those that are self-explanatory, are as
follows:
(a) Item 1. (Contract ID Code). Insert the contract type identification code
that appears in the title block of the contract being modified.
(b) Item 3. (Effective date).
(1) For a solicitation amendment, change order, or administrative change,
the effective date shall be the issue date of the amendment, change
order, or administrative change.
(2) For a supplemental agreement, the effective date shall be the date
agreed to by the contracting parties.
(3) For a modification issued as an initial or confirming notice of
termination for the convenience of the Government, the effective date
and the modification number of the confirming notice shall be the
same as the effective date and modification number of the initial
notice.
(4) For a modification converting a termination for default to a
termination for the convenience of the Government, the effective date
shall be the same as the effective date of the termination for
default.
(5) For a modification confirming the contracting officer's determination
of the amount due in settlement of a contract termination, the
effective date shall be the same as the effective date of the initial
decision.
(c) Item 6. (Issued By). Insert the name and address of the issuing office. If
applicable, insert the appropriate issuing office code in the code block.
(d) Item 8. (Name and Address of Contractor). For modifications to a contract
or order, enter the contractor's name, address, and code as shown in the
original contract or order, unless changed by this or a previous
modification.
(e) Items 9. (Amendment of Solicitation No.- Dated), and 10, (Modification of
Contract/Order No.- Dated). Check the appropriate box and in the
corresponding blanks insert the number and date of the original
solicitation, contract, or order.
(f) Item 12. (Accounting and Appropriation Data). When appropriate, indicate
the impact of the modification on each affected accounting classification
by inserting one of the following entries:
(1) Accounting classification ____________
Net increase $___________
(2) Accounting classification ____________
Net decrease $___________
NOTE: If there are changes to multiple accounting classifications that
cannot be placed in block 12, insert an asterisk and the words "See
continuation sheet".
(g) Item 13. Check the appropriate box to indicate the type of modification.
Insert in the corresponding blank the authority under which the
modification is issued. Check whether or not contractor must sign this
document. (See FAR 43.103.)
(h) Item 14. (Description of Amendment/Modification).
(1) Organize amendments or modifications under the appropriate Uniform
Contract Format (UCF) section headings from the applicable
solicitation or contract. The UCF table of contents, however, shall
not be set forth in this document.
(2) Indicate the impact of the modification on the overall total contract
price by inserting one of the following entries:
(i) Total contract price increased by $___________
(ii) Total contract price decreased by $___________
(iii) Total contract price unchanged.
(3) State reason for modification.
(4) When removing, reinstating, or adding funds, identify the contract
items and accounting classifications.
(5) When the SF 30 is used to reflect a determination by the contracting
officer of the amount due in settlement of a contract terminated for
the convenience of the Government, the entry in Item 14 of the
modification may be limited to -
(i) A reference to the letter determination; and
(ii) A statement of the net amount determined to be due in settlement
of the contract.
(6) Include subject matter or short title of solicitation/contract
where feasible.
(i) Item 16B. The contracting officer's signature is not required on
solicitation amendments. The contracting officer's signature is normally
affixed last on supplemental agreements.
STANDARD FORM 30 BACK (REV. 10-83)
<PAGE> 21
PAGE 2 Mod. 1 (NEUTRAL POSTURE ERGONOMICS) GS-29F-0217D
1. Add the models, per NPE catalog "Suggested Retail Pricelist June 1996,
and letters dated 8/8/96 and 8/28/96. All models will be classified as SINS
496-3 and 496-5.
2. The address of NPE Headquarters has been changed to the following:
Neutral Posture Ergonomics, Inc.
3904 N. Texas Avenue
Bryan, TX 77803
(409) 778-0502
(409) 778-0408 -- Fax
3. Please provide a draft copy of the new GSA brochure prior to
Re-printing. This modification will be effective upon receipt, by the
Contracting Officer, of formal written notification that reprinting and
redistribution of the Government pricelist or supplemental pricelist has been
completed.
4. All other terms, conditions, discounts, and concessions remain the same
as in the initial offer, and subsequent contract award / and contract extension.
5. This modification is issued at no cost to either party.
<PAGE> 22
<TABLE>
<S> <C> <C> <C>
====================================================================================================================================
1. CONTRACT ID CODE PAGE OF PAGES
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1
- ------------------------------------------------------------------------------------------------------------------------------------
2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable)
ONE (1)
- ------------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY CODE 7. ADMINISTERED BY (If other than Item 6) CODE
----------------- -----------------
GENERAL SERVICES ADMINISTRATION, FSS
NATIONAL FURNITURE CENTER (3FNS)
SUITE 403
WASHINGTON, DC 20406
- ------------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, country, State and ZIP Code) (X) 9A. AMENDMENT OF SOLICITATION NO.
---
NEUTRAL POSTURE ERGONOMICS, INC.
6445 CARDINAL LANE -------------------------------------------
COLUMBIA, MD 21044 9B. DATED (SEE ITEM 11)
------------------------------------------------
10A. MODIFICATION OF CONTRACT/ORDER NO.
X GS-29F-0140C
-------------------------------------------
10B. DATED (SEE ITEM 13)
- ----------------------------------------------------------------------------------- 02/01/96
CODE FACILITY CODE
- ------------------------------------------------------------------------------------------------------------------------------------
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers
[ ] is extended, [ ] is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:
(a) By completing Items 8 and 15, and returning ____________ copies of the amendment; (b) By acknowledging receipt of this amendment
on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and
amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already
submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified.
- ------------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required)
- ------------------------------------------------------------------------------------------------------------------------------------
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
- ------------------------------------------------------------------------------------------------------------------------------------
(X) A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT
- --- ORDER NO. IN ITEM 10A.
- ------------------------------------------------------------------------------------------------------------------------------------
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).
- ------------------------------------------------------------------------------------------------------------------------------------
X C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: MODIFICATION CLAUSE
I-FSS-630B DTD 1/91, AND CONTRACTOR'S LETTER DTD 8/8/96 AND 8/28/96.
- ------------------------------------------------------------------------------------------------------------------------------------
D. OTHER (Specify type of modification and authority)
- ------------------------------------------------------------------------------------------------------------------------------------
E. IMPORTANT: Contractor [ ] is not, [X] is required to sign this document and return 1 copies to the issuing office.
-----
- ------------------------------------------------------------------------------------------------------------------------------------
14. DESCRIPTION OF AMENDMENT/MODIFICATION (organized by UCF section headings, including solicitation/contract subject matter
where feasible.)
THE ABOVE REFERENCED CONTRACT FOR FEDERAL SUPPLY GROUP 71, PART III, SECTION H -- MISCELLANEOUS
FURNITURE - MULTIPURPOSE SEATING IS HEREBY MODIFIED AS FOLLOWS:
(SEE ATTACHED)
Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
- ------------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print) 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Martin Gear - Manager for Gov't
Contracts
- ------------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR 15C. DATE SIGNED 16B. UNITED STATES OF AMERICA 16C. DATE SIGNED
/s/ MARTIN GEAR 11/5/96 BY
- ---------------------------------------- ----------------------------------
(Signature of person authorized to sign) (Signature of Contracting Officer)
====================================================================================================================================
NSN 7540-01-152-8070 30-105 STANDARD FORM 30 (REV. 10-83)
PREVIOUS EDITION UNUSABLE Prescribed by GSA
FAR (48 CFR) 53.243
</TABLE>
<PAGE> 23
PAGE 2 Mod. 1 (NEUTRAL POSTURE ERGONOMICS) GS-29F-0217D
1. Add the models, per NPE catalog "Suggested Retail Pricelist June 1996,
and letters date 8/8/96 and 8/28/96. All models will be classified as SINs
496-3 and 496-5.
2. The address of NPE Headquarters has been changed to the following:
Neutral Posture Ergonomics, Inc.
3904 N. Texas Avenue
Bryan, TX 77803
(409) 778-0502
(409) 778-0408 -- Fax
3. Please provide a draft copy of the new GSA brochure prior to
Re-printing. This modification will be effective upon receipt, by the
Contracting Officer, of formal written notification that reprinting and
redistribution of the Government pricelist or supplemental pricelist has been
completed.
4. All other terms, conditions, discounts, and concessions remain the same
as in the initial offer, and subsequent contract award / and contract extension.
5. This modification is issued at no cost to either party.
<PAGE> 24
INSTRUCTIONS
Instructions for items other than those that are self-explanatory, are as
follows:
(a) Item 1. (Contract ID Code). Insert the contract type identification code
that appears in the title block of the contract being modified.
(b) Item 3. (Effective date).
(1) For a solicitation amendment, change order, or administrative change,
the effective date shall be the issue date of the amendment, change
order, or administrative change.
(2) For a supplemental agreement, the effective date shall be the date
agreed to by the contracting parties.
(3) For a modification issued as an initial or confirming notice of
termination for the convenience of the Government, the effective date
and the modification number of the confirming notice shall be the
same as the effective date and modification number of the initial
notice.
(4) For a modification converting a termination for default to a
termination for the convenience of the Government, the effective date
shall be the same as the effective date of the termination for
default.
(5) For a modification confirming the contracting officer's determination
of the amount due in settlement of a contract termination, the
effective date shall be the same as the effective date of the initial
decision.
(c) Item 6. (Issued By). Insert the name and address of the issuing office. If
applicable, insert the appropriate issuing office code in the code block.
(d) Item 8. (Name and Address of Contractor). For modification to a contract
or order, enter the contractor's name, address, and code as shown in the
original contract or order, unless changed by this or a previous
modification.
(e) Items 9. (Amendment of Solicitation No.- Dated), and 10. (Modification of
Contract/Order No.- Dated). Check the appropriate box and in the
corresponding blanks insert the number and date of the original
solicitation, contract, or order.
(f) Item 12. (Accounting and Appropriation Data). When appropriate, indicate
the impact of the modification on each affected accounting classification
by inserting one of the following entries:
(1) Accounting classification ____________
Net increase $___________
(2) Accounting classification ____________
Net decrease $___________
NOTE: If there are changes to multiple accounting classifications that
cannot be placed in block 12, insert an asterisk and the words 'See
continuation sheet".
(g) Item 13. Check the appropriate box to indicate the type of modification.
Insert in the corresponding blank the authority under which the
modification is issued. Check whether or not contractor must sign this
document. (See FAR 43.103.)
(h) Item 14. (Description of Amendment/Modification).
(1) Organize amendments or modifications under the appropriate Uniform
Contract Format (UCF) section headings from the applicable
solicitation or contract. The UCF table of contents, however, shall
not be set forth in this document.
(2) Indicate the impact of the modification on the overall total contract
price by inserting one of the following entries:
(i) Total contract price increased by $___________
(ii) Total contract price decreased by $___________
(iii) Total contract price unchanged.
(3) State reason for modification.
(4) When removing, reinstating, or adding funds, identify the contract
items and accounting classifications.
(5) When the SF 30 is used to reflect a determination by the contracting
officer of the amount due in settlement of a contract terminated for
the convenience of the Government, the entry in Item 14 of the
modification may be limited to -
(i) A reference to the letter determination; and
(ii) A statement of the net amount determined to be due in settlement
of the contract.
(6) Include subject matter or short title of solicitation/contract
where feasible.
(i) Item 16B. The contracting officer's signature is not required on
solicitation amendments. The contracting officer's signature is normally
affixed last on supplemental agreements.
STANDARD FORM 30 BACK (REV. 10-83)
<PAGE> 25
<TABLE>
<S> <C> <C> <C>
====================================================================================================================================
1. CONTRACT ID CODE PAGE OF PAGES
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1
- ------------------------------------------------------------------------------------------------------------------------------------
2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable)
ONE (1)
- ------------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY CODE 7. ADMINISTERED BY (If other than Item 6) CODE
----------------- -----------------
GENERAL SERVICES ADMINISTRATION, FSS
NATIONAL FURNITURE CENTER (3FNS-CO)
SUITE 403
WASHINGTON, DC 20406
- ------------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, country, State and ZIP Code) (X) 9A. AMENDMENT OF SOLICITATION NO.
---
NEUTRAL POSTURE ERGONOMICS, INC.
6445 CARDINAL LANE -------------------------------------------
COLUMBIA, MD 21044 9B. DATED (SEE ITEM 11)
------------------------------------------------
10A. MODIFICATION OF CONTRACT/ORDER NO.
X GS-29F-0140C
-------------------------------------------
10B. DATED (SEE ITEM 13)
- -----------------------------------------------------------------------------------
CODE FACILITY CODE 02/21/95
- ------------------------------------------------------------------------------------------------------------------------------------
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers
[ ] is extended, [ ] is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:
(a) By completing Items 8 and 15, and returning ____________ copies of the amendment; (b) By acknowledging receipt of this amendment
on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and
amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already
submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified.
- ------------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required)
- ------------------------------------------------------------------------------------------------------------------------------------
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
- ------------------------------------------------------------------------------------------------------------------------------------
(X) A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT
- --- ORDER NO. IN ITEM 10A.
- ------------------------------------------------------------------------------------------------------------------------------------
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).
- ------------------------------------------------------------------------------------------------------------------------------------
X C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: Mutual Agreement of the Parties,
and by Authority of the Contracting Officer FAR 1.602-1.
- ------------------------------------------------------------------------------------------------------------------------------------
D. OTHER (Specify type of modification and authority)
- ------------------------------------------------------------------------------------------------------------------------------------
E. IMPORTANT: Contractor [ ] is not, [X] is required to sign this document and return 2 copies to the issuing office.
-----
- ------------------------------------------------------------------------------------------------------------------------------------
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter
where feasible.)
THE ABOVE REFERENCED CONTRACT FOR FSC 71, PART III, SECTION H -- MISCELLANEOUS FURNITURE -
MULTIPURPOSE SEATING, IS HEREBY MODIFIED AS FOLLOWS:
(SEE ATTACHED)
Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
- ------------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print) 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Martin Gear - Manager for Government Contracts
Neutral Posture Ergonomics, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR 15C. DATE SIGNED 16B. UNITED STATES OF AMERICA 16C. DATE SIGNED
/s/ MARTIN GEAR 1/29/96 BY /s/ THERESA A. KEITH
- ---------------------------------------- ----------------------------------
(Signature of person authorized to sign) (Signature of Contracting Officer)
====================================================================================================================================
NSN 7540-01-152-8070 30-105 STANDARD FORM 30 (REV. 10-83)
PREVIOUS EDITION UNUSABLE Prescribed by GSA
FAR (48 CFR) 53.243
</TABLE>
<PAGE> 26
MODIFICATION NO.1 NEUTRAL POSTURE ERGONOMICS GS-29F-0140C Page 2
THIS MODIFICATION BECOMES EFFECTIVE UPON THE DATE SIGNED BY THE CONTRACTING
OFFICER.
SPECIAL ITEM NUMBER AWARDED: 496-3,496-5, and 496-6
BASE DISCOUNT: 57.5
CONTRACT ESTIMATED DOLLAR VOLUME: $4.4 Million (5 Years)
MAXIMUM ORDER: $200,000.00
BASE FIGURE OF AGGREGATE DISCOUNT: None
WITH RELATION TO THE 1% INDUSTRIAL FUNDING FEE (TO BE REMITTED TO GSA
QUARTERLY), THE PRICES/DISCOUNTS OFFERED TO THE GOVERNMENT ARE:
(X) inclusive of the Industrial Funding Fee
( ) not inclusive of the Industrial Funding Fee and the contractor
has agreed to absorb the cost.
Collection of Industrial Funding Fee will be accomplished by:
( ) combining industrial funding fees into one payment for contractors
with multiple contracts
.....or
(X) remitting separate payments for individual contracts
Please specify the name, address, telephone number and fax
number of the individual(s) who will be responsible for the GSA Form
72A reports and the IFF remittances.
Martin Gear telephone: 410-715-1266
fax: 410-992-7051
6445 Cardinal Lane
Columbia, MD 21044
<PAGE> 27
MODIFICATION NO. 1 NEUTRAL POSTURE ERGONOMICS GS-29F-0140C PAGE 3
DELETE ALL REFERENCES TO THE REQUOTE PROCEDURES THROUGHOUT THE ENTIRE
SOLICITATION
PAGE 46 SECTION H SPECIAL CONTRACT REQUIREMENTS:
DELETE: General Provisions governing the Requote Procedure for Requirements
Exceeding the Maximum Order limitation (MOL)
PAGE 46 SECTION H, OPEN SEASON FOR CONTRACT MODIFICATIONS, PAR. (H):
Delete: All request to modify the contract will be accepted only during the
established "open season" periods identified below.
Insert: All request to modify the contract will be accepted only during the
established "open window" periods identified below.
DOCUMENTS INCORPORATED AND MADE A PART OF THIS CONTRACT ARE: Amendment Number
9, Standard Form 33 that reflects a closing date of November 17, 1995, 3:30 PM
local time, signed and certified test reports or certifications as required by
the solicitation dated 11/1/95, and correspondence dated 12/18/95 and 1/24/96.
All other terms and conditions of the contract remain unchanged.
<PAGE> 28
<TABLE>
<S> <C> <C> <C>
====================================================================================================================================
1. CONTRACT ID CODE PAGE OF PAGES
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1
- ------------------------------------------------------------------------------------------------------------------------------------
2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable)
ONE (1)
- ------------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY CODE 7. ADMINISTERED BY (If other than Item 6) CODE
----------------- -----------------
GENERAL SERVICES ADMINISTRATION, FSS
NATIONAL FURNITURE CENTER (3FNS-CO)
SUITE 403
WASHINGTON, DC 20406
- ------------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, country, State and ZIP Code) (X) 9A. AMENDMENT OF SOLICITATION NO.
---
NEUTRAL POSTURE ERGONOMICS, INC.
6445 CARDINAL LANE -------------------------------------------
COLUMBIA, MD 21044 9B. DATED (SEE ITEM 11)
------------------------------------------------
10A. MODIFICATION OF CONTRACT/ORDER NO.
X GS-29F-0140C
-------------------------------------------
10B. DATED (SEE ITEM 13)
- ----------------------------------------------------------------------------------- 02/21/95
CODE FACILITY CODE
- ------------------------------------------------------------------------------------------------------------------------------------
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers
[ ] is extended, [ ] is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:
(a) By completing Items 8 and 15, and returning ____________ copies of the amendment; (b) By acknowledging receipt of this amendment
on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and
amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already
submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified.
- ------------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required)
- ------------------------------------------------------------------------------------------------------------------------------------
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
- ------------------------------------------------------------------------------------------------------------------------------------
(X) A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT
- --- ORDER NO. IN ITEM 10A.
- ------------------------------------------------------------------------------------------------------------------------------------
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).
- ------------------------------------------------------------------------------------------------------------------------------------
C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: Mutual Agreement of the Parties,
X and by Authority of the Contracting Officer FAR 1.602-1.
- ------------------------------------------------------------------------------------------------------------------------------------
D. OTHER (Specify type of modification and authority)
- ------------------------------------------------------------------------------------------------------------------------------------
E. IMPORTANT: Contractor [ ] is not, [X] is required to sign this document and return 2 copies to the issuing office.
-----
- ------------------------------------------------------------------------------------------------------------------------------------
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter
where feasible.)
THE ABOVE REFERENCED CONTRACT FOR FSC 71, PART III, SECTION H -- MISCELLANEOUS FURNITURE -
MULTIPURPOSE SEATING, IS HEREBY MODIFIED AS FOLLOWS:
(SEE ATTACHED)
Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
- ------------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print) 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Martin Gear - Mgr Government Contracts
Neutral Posture Ergonomics, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR 15C. DATE SIGNED 16B. UNITED STATES OF AMERICA 16C. DATE SIGNED
/s/ MARTIN GEAR 2/23/96 BY /s/ THERESA A. KEITH
- ---------------------------------------- ----------------------------------
(Signature of person authorized to sign) (Signature of Contracting Officer)
====================================================================================================================================
NSN 7540-01-152-8070 30-105 STANDARD FORM 30 (REV. 10-83)
PREVIOUS EDITION UNUSABLE Prescribed by GSA
FAR (48 CFR) 53.243
</TABLE>
<PAGE> 29
<TABLE>
<S> <C> <C> <C>
====================================================================================================================================
1. CONTRACT ID CODE PAGE OF PAGES
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1
- ------------------------------------------------------------------------------------------------------------------------------------
2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable)
ONE (1)
- ------------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY CODE 7. ADMINISTERED BY (If other than Item 6) CODE
----------------- -----------------
GENERAL SERVICES ADMINISTRATION, FSS
NATIONAL FURNITURE CENTER (3FNS-CO)
SUITE 403
WASHINGTON, DC 20406
- ------------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, country, State and ZIP Code) (X) 9A. AMENDMENT OF SOLICITATION NO.
---
NEUTRAL POSTURE ERGONOMICS, INC.
6445 CARDINAL LANE -------------------------------------------
COLUMBIA, MD 21044 9B. DATED (SEE ITEM 11)
------------------------------------------------
10A. MODIFICATION OF CONTRACT/ORDER NO.
X GS-29F-0140C
-------------------------------------------
10B. DATED (SEE ITEM 13)
- ----------------------------------------------------------------------------------- 02/21/95
CODE FACILITY CODE
- ------------------------------------------------------------------------------------------------------------------------------------
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers
[ ] is extended, [ ] is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:
(a) By completing Items 8 and 15, and returning ____________ copies of the amendment; (b) By acknowledging receipt of this amendment
on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and
amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already
submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified.
- ------------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required)
- ------------------------------------------------------------------------------------------------------------------------------------
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
- ------------------------------------------------------------------------------------------------------------------------------------
(X) A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT
- --- ORDER NO. IN ITEM 10A.
- ------------------------------------------------------------------------------------------------------------------------------------
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).
- ------------------------------------------------------------------------------------------------------------------------------------
X C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: Mutual Agreement of the Parties,
and by Authority of the Contracting Officer FAR 1.602-1.
- ------------------------------------------------------------------------------------------------------------------------------------
D. OTHER (Specify type of modification and authority)
- ------------------------------------------------------------------------------------------------------------------------------------
E. IMPORTANT: Contractor [ ] is not, [X] is required to sign this document and return 2 copies to the issuing office.
------
- ------------------------------------------------------------------------------------------------------------------------------------
14. DESCRIPTION OF AMENDMENT/MODIFICATION (organized by UCF section headings, including solicitation/contract subject matter
where feasible.)
THE ABOVE REFERENCED CONTRACT FOR FSC 71, PART III, SECTION H -- MISCELLANEOUS FURNITURE -
MULTIPURPOSE SEATING, IS HEREBY MODIFIED AS FOLLOWS:
(SEE ATTACHED)
Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
- ------------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print) 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Martin Gear - Manager for Government Contracts
Neutral Posture Ergonomics, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR 15C. DATE SIGNED 16B. UNITED STATES OF AMERICA 16C. DATE SIGNED
/s/ MARTIN GEAR 1/29/96 BY
- ---------------------------------------- ----------------------------------
(Signature of person authorized to sign) (Signature of Contracting Officer)
====================================================================================================================================
NSN 7540-01-152-8070 30-105 STANDARD FORM 30 (REV. 10-83)
PREVIOUS EDITION UNUSABLE Prescribed by GSA
FAR (48 CFR) 53.243
</TABLE>
<PAGE> 30
INSTRUCTIONS
Instructions for items other than those that are self-explanatory, are as
follows:
(a) Item 1. (Contract ID Code). Insert the contract type identification code
that appears in the title block of the contract being modified.
(b) Item 3. (Effective date).
(1) For a solicitation amendment, change order, or administrative change,
the effective date shall be the issue date of the amendment, change
order, or administrative change.
(2) For a supplemental agreement, the effective date shall be the date
agreed to by the contracting parties.
(3) For a modification issued as an initial or confirming notice of
termination for the convenience of the Government, the effective date
and the modification number of the confirming notice shall be the
same as the effective date and modification number of the initial
notice.
(4) For a modification converting a termination for default to a
termination for the convenience of the Government, the effective date
shall be the same as the effective date of the termination for
default.
(5) For a modification confirming the contracting officer's determination
of the amount due in settlement of a contract termination, the
effective date shall be the same as the effective date of the initial
decision.
(c) Item 6. (Issued By). Insert the name and address of the issuing office. If
applicable, insert the appropriate issuing office code in the code block.
(d) Item 8. (Name and Address of Contractor). For modifications to a contract
or order, enter the contractor's name, address, and code as shown in the
original contract or order, unless changed by this or a previous
modification.
(e) Items 9. (Amendment of Solicitation No.- Dated), and 10. (Modification of
Contract/Order No.- Dated). Check the appropriate box and in the
corresponding blanks insert the number and date of the original
solicitation, contract, or order.
(f) Item 12. (Accounting and Appropriation Data). When appropriate, indicate
the impact of the modification on each affected accounting classification
by inserting one of the following entries:
(1) Accounting classification ____________
Net increase $___________
(2) Accounting classification ____________
Net decrease $___________
NOTE: If there are changes to multiple accounting classifications that
cannot be placed in block 12, insert an asterisk and the words "See
continuation sheet".
(g) Item 13. Check the appropriate box to indicate the type of modification.
Insert in the corresponding blank the authority under which the
modification is issued. Check whether or not contractor must sign this
document. (See FAR 43.103.)
(h) Item 14. (Description of Amendment/Modification).
(1) Organize amendments or modifications under the appropriate Uniform
Contract Format (UCF) section headings from the applicable
solicitation or contract. The UCF table of contents, however, shall
not be set forth in this document.
(2) Indicate the impact of the modification on the overall total contract
price by inserting one of the following entries:
(i) Total contract price increased by $___________
(ii) Total contract price decreased by $___________
(iii) Total contract price unchanged.
(3) State reason for modification.
(4) When removing, reinstating, or adding funds, identify the contract
items and accounting classifications.
(5) When the SF 30 is used to reflect a determination by the contracting
officer of the amount due in settlement of a contract terminated for
the convenience of the Government, the entry in Item 14 of the
modification may be limited to -
(i) A reference to the letter determination; and
(ii) A statement of the net amount determined to be due in settlement
of the contract.
(6) Include subject matter or short title of solicitation/contract
where feasible.
(i) Item 16B. The contracting officer's signature is not required on
solicitation amendments. The contracting officer's signature is normally
affixed last on supplemental agreements.
STANDARD FORM 30 BACK (REV. 10-83)
<PAGE> 31
MODIFICATION NO.1 NEUTRAL POSTURE ERGONOMICS GS-29F-0140C PAGE 2
THIS MODIFICATION BECOMES EFFECTIVE UPON THE DATE SIGNED BY THE CONTRACTING
OFFICER
SPECIAL ITEM NUMBERS AWARDED: 496-3, 496-5, AND 496-6
BASE DISCOUNT: 57.5%
CONTRACT ESTIMATED DOLLAR VOLUME: $4.4 MILLION (5 YEARS)
MAXIMUM ORDER: $200,000.00
BASE FIGURE OF AGGREGATE DISCOUNT: NONE
WITH RELATION TO THE 1% INDUSTRIAL FUNDING FEE (TO BE REMITTED TO GSA
QUARTERLY), THE PRICES/DISCOUNTS OFFERED TO THE GOVERNMENT ARE:
(X) inclusive of the Industrial Funding Fee.
( ) not inclusive of the Industrial Funding Fee and the
contractor has agreed to absorb the cost.
COLLECTION OF INDUSTRIAL FUNDING FEE WILL BE ACCOMPLISHED BY:
( ) combining industrial funding fees into one payment for
contractors with multiple contracts
........or
(X) remitting separate payments for individual contracts
Please specify the name, address, telephone number and fax number of
the individual(s) who will be responsible for the GSA Form 72A
reports and the IFF remittances:
Martin Gear telephone: 410-715-1266
6445 Cardinal Lane fax: 410-992-7051
Columbia, MD 21044
<PAGE> 32
MODIFICATION NO. 1 NEUTRAL POSTURE ERGONOMICS GS-29F-0140C PAGE 3
DELETE ALL REFERENCES TO THE REQUOTE PROCEDURES THROUGHOUT THE ENTIRE
SOLICITATION
PAGE 46 SECTION H SPECIAL CONTRACT REQUIREMENTS:
DELETE: General Provisions governing the Requote Procedure for Requirements
Exceeding the Maximum Order limitation (MOL)
PAGE 46 SECTION H, OPEN SEASON FOR CONTRACT MODIFICATIONS, PAR. (H):
Delete: All request to modify the contract will be accepted only during the
established "open season" periods identified below.
Insert: All request to modify the contract will be accepted only during the
established "open window" periods identified below.
DOCUMENTS INCORPORATED AND MADE A PART OF THIS CONTRACT ARE: Amendment Number 9,
Standard Form 33 that reflects a closing date of November 17, 1995, 3:30 PM
local time, signed and certified test reports or certifications as required by
the solicitation dated 1/26/96, and correspondence dated 11/7/95, 1/25/96 and
1/26/96.
All other terms and conditions of the contract remain unchanged.
<PAGE> 33
<TABLE>
<S> <C> <C> <C>
====================================================================================================================================
1. CONTRACT ID CODE PAGE OF PAGES
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1 123
- ------------------------------------------------------------------------------------------------------------------------------------
2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable)
9
- ------------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY CODE 7. ADMINISTERED BY (If other than Item 6) CODE
----------------- -----------------
GENERAL SERVICES ADMINISTRATION
FEDERAL SUPPLY SERVICE
NATIONAL FURNITURE CENTER - 3FNS
WASHINGTON, DC 20406
- ------------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, country, State and ZIP Code) (X) 9A. AMENDMENT OF SOLICITATION NO.
---
CEC: 61134982 X FCNO-93-S303-3
-------------------------------------------
Neutral Posture Ergonomics, Inc. 9B. DATED (SEE ITEM 11)
Federal Government Sales Office
6445 Cardinal Lane ------------------------------------------------
Columbia, MD 21044 10A. MODIFICATION OF CONTRACT/ORDER NO.
-------------------------------------------
10B. DATED (SEE ITEM 13)
- -----------------------------------------------------------------------------------
CODE FACILITY CODE
- ------------------------------------------------------------------------------------------------------------------------------------
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
[X] The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers
[ ] is extended, [ ] is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:
(a) By completing Items 8 and 15, and returning ____________ copies of the amendment; (b) By acknowledging receipt of this amendment
on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and
amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already
submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified.
- ------------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required)
- ------------------------------------------------------------------------------------------------------------------------------------
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
- ------------------------------------------------------------------------------------------------------------------------------------
(X) A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT
- --- ORDER NO. IN ITEM 10A.
- ------------------------------------------------------------------------------------------------------------------------------------
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).
- ------------------------------------------------------------------------------------------------------------------------------------
C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:
- ------------------------------------------------------------------------------------------------------------------------------------
D. OTHER (Specify type of modification and authority)
- ------------------------------------------------------------------------------------------------------------------------------------
E. IMPORTANT: Contractor [ ] is not, [ ] is required to sign this document and return ____ copies to the issuing office.
- ------------------------------------------------------------------------------------------------------------------------------------
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter
where feasible.)
THE ABOVE REFERENCED FEDERAL SUPPLY SCHEDULE SOLICITATION COVERING FSC GROUP 71, PART III,
SECTION H - MISCELLANEOUS FURNITURE, MULTI-PURPOSE FURNITURE, IS HEREBY AMENDED AS FOLLOWS:
This open season is being issued in accordance with FSS Acquisition Letter 95-4. New offers are being solicited for the
open season period beginning February 1, 1996 (or Date of Award, whichever is later) through January 31, 2001.
OFFERS SUBMITTED IN RESPONSE TO THIS PACKAGE ARE DUE NOVEMBER 8, 1995, NO LATER THAN 3:30 PM.
(SEE ATTACHED)
Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
- ------------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print) 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
Martin Gear - Manager for Federal
Government Contracts - NPE
- ------------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR 15C. DATE SIGNED 16B. UNITED STATES OF AMERICA 16C. DATE SIGNED
/s/ MARTIN GEAR 11/1/95 BY
- ---------------------------------------- ----------------------------------
(Signature of person authorized to sign) (Signature of Contracting Officer)
====================================================================================================================================
NSN 7540-01-152-8070 30-105 STANDARD FORM 30 (REV. 10-83)
PREVIOUS EDITION UNUSABLE Prescribed by GSA
FAR (48 CFR) 53.243
</TABLE>
<PAGE> 34
PAGE 2 of 123
1. This package incorporates changes issued under amendments one through
eight and updates the basic solicitation. New offerors and current contractors
need only to submit (in duplicate) copies of this open season package. All
current contractors are required to update the information in this open season
package. If all terms and conditions under their contract is the same and there
has been no change in the discount schedule and marketing data sheets (DSMD),
contractors need only to certify (in writing) all of the terms and conditions
are the same and there has been no change in their discounting practices nor
has the relationship with the identified most favored customer changed. If
there have been changes that would affect the governments relationship relative
to the most favored customer, contractors must complete the DSMD sheets found
in the open season package.
2. OFFERS SUBMITTED IN RESPONSE TO THIS SOLICITATION WILL OPEN/CLOSE AT
THE FSS BID ROOM. THE FOLLOWING ADDRESS MUST BE USED:
General Services Administration
IFB/RFP: FCNO-93-S303-3
FSS Bid Room (C-39)
1941 Jefferson Davis Hwy
Arlington, VA 22202
OFFERS MUST BE RECEIVED AT THIS ADDRESS BY THE DATE AND TIME ESTABLISHED FOR
RECEIPT.
3. There are many new or revised clauses in this package such as Option to
Extend the Term of the Contract (for five years), Maximum Order Clause,
Industrial Funding Clauses and GSA Advantage. All offerors are cautioned to
read each carefully and become familiar with the requirements.
4. Offers will be considered for Big and Tall Chairs.
5. CP-FSS-3 IMPACT OF NONMANDATORY USE ON QUANTITIES ORDERED
(JAN 1994)
This is the first contract period for which this schedule is nonmandatory on
all users. The impact of this change on the quantities ordered under this
contract is unknown.
6. CP-FSS-4 CREDIT CARD ORDERS (DEC 1989)
Offerors willing to accept the Government Commercial Credit Card for payment
for goods ordered by the Government are encouraged to note the appropriate
revision to the clause entitled. "Packing List". Subject clause, which is
incorporated by reference in the GSA Form 3507, Supply Contract Clauses,
requires the Contractor to include the name and telephone number of the credit
cardholder, and the term "Credit Card" on each packing list or shipping
document whenever the order was placed using the credit card.
7. CP-FSS-5 CREDIT CARD CLEARING HOUSE (DEC 1989)
For purposes of this solicitation, the clearing house identifies the nationally
accepted credit card payment network being used by the Government commercial
credit card contractor. (See Federal Supply Schedule IG 615, Government
Commercial Credit Card Service.) The clearing house through which credit card
payments will be processed is VISA.
<PAGE> 35
8. CP-FSS-6 ELECTRONIC DATA INTERCHANGE (EDI) ORDERING
(JAN 1994)
Offerors are advised that the Federal Supply Service is expanding use of
electronic communications to exchange business documents. The Placement of
Orders clause contained in this contract provides that orders may be placed
using Electronic Data Interchange (EDI) procedures.
9. CP-FSS-7 NONRESPONSIBLE OFFERORS (NOV 1991)
Offerors are cautioned that failure to comply with all of the
pricing/discounts/sales terms and conditions negotiated into any contracts
awarded as a result of this solicitation, or the submission of
pricing/discounts/sales information considered in the award of a contract which
subsequently prove to be defective, and/or a contractor's failure to maintain
adequate records as required by the Examination of Records Clause may subject
the Contractor to: (1) cancellation of the contract pursuant to Clause
I-FSS-690, Cancellation; (2) termination of the contract for default pursuant
to Clause 52.249-8, Default (Fixed-Price Supply and Service); and/or (3) a
claim for defective pricing pursuant to Clause M-FSS-330, Basis for Price
Negotiation. Any such administrative actions may also thereafter affect
responsibility determinations for future contracts sought by the supplier (FAR
9.406-2). In addition, repeated instances of defective pricing determinations
may also subject the offeror to suspension or debarment actions pursuant to FAR
9.0406-2.
10. CP-FSS-8 PILOT TEST - REDUCED DATA REQUIREMENTS (APR 1994)
The General Services Administration is testing a reduced data collection
requirement in this solicitation. Vendors whose projected sales are not
expected to exceed $5 million, determined in accordance with the provision at
M-FSS-331, Projected Sales, may submit offers in accordance with the provisions
at M-FSS-333, Reduced Data Disclosure.
11. CP-FSS-11 LATE PROPOSALS (MAR 1990)
Offers (proposals) must be received in the place and by the date and time
specified in Item 9 of Standard Form 33, Page one (1) of this solicitation. The
cautionary note in Item 9 of SF 33 references FAR 52.215-10, which is
incorporated as Article 8 of GSA Form 3502, Solicitation Provisions. This
provision, entitled "Late Submissions, Modifications, and Withdrawals of
Proposals," provides that late proposals will not be considered for award
except in certain circumstances.
<PAGE> 36
PAGE 4 of 123
GENERAL CHECKLIST FOR COMPLETION OF SOLICITATION
Before submitting your proposal have you:
Read the solicitation in its entirety?
Signed and dated each proposal?
Submitted two copies of the proposal, one an original with an original
signature?
Noted any new clauses?
Noted that all product test reports should be submitted with your offer?
Filled-in all clauses and forms?
Prepared two commercial pricelists in accordance with clause M-FSS-329,
annotating SIN's offered and excluding items not offered?
Supplied data to support difference between discount offered Government and
best commercial discount if government discount is less?
Submitted a subcontracting plan if large business with contract expected to
exceed $500,000?
If a dealer - submitted a letter from the manufacturer per clause I-FSS-642?
- submitted a letter of supply from manufacturer per clause
I-FSS-644?
- outlined all dealer functions?
<PAGE> 37
SOLICITATION NO. FCNO-93-S303-3 PAGE 5 of 123
SECTION A
SOLICITATION/CONTRACT FORM
52.216-1 TYPE OF CONTRACT (APR 1984)
The Government contemplates award of a Indefinite Delivery - Indefinite
Quantity contract resulting from this solicitation.
52.219-22 SIC CODE AND SMALL BUSINESS SIZE STANDARD (JAN 1991)
(a) The standard industrial classification (SIC) code for this acquisition
is 2522.
(b) (1) The small business size standard is 500.
(2) The small business size standard for a concern which submits an offer
in its own name, other than on a construction or service contract, but which
proposes to furnish a product which it did not itself manufacture, is 500
employees.
A-FSS-1 PREFACE TO SECTION A (APR 1993)
In addition to Standard Form 33, page one of this solicitation, this Section A
includes clauses and special notices relating to: (a) entries on Standard Form
33; (b) GSA forms incorporated by reference; (c) requirements applicable to the
submission of offers; (d) provisions and clauses contained in other sections
which restrict the eligibility for award of contracts; and (e) other
informational highlights. Offerors are cautioned to carefully review the
additional notices, instructions, and conditions relating to the submission of
offers and the award of contracts as contained in Section L of this
solicitation, and in the referenced form containing solicitation provisions
(i.e., GSA Form 3501, Solicitation Provisions (Sealed Bids), or GSA Form 3502,
Solicitation)
A-FSS-2-F (OCT 1988)
FEDERAL SUPPLY SCHEDULE CONTRACT FOR:
FSC GROUP: 71, Part III, Section H
COMMODITY: Miscellaneous Furniture - Multipurpose Seating
CLASS(ES): 7110
PERIOD: February 1, 1996 OR DATE OF AWARD, WHICHEVER IS LATER, THROUGH January
31, 2001.
A-FSS-3 NOTICE: REQUESTS FOR EXPLANATION OR INFORMATION (FEB 1991)
(See Article 4 of GSA Form 3501 or 3502, as applicable.)
Oral or written requests for explanation or information regarding this
solicitation should be directed to:
GENERAL SERVICES ADMINISTRATION
<PAGE> 38
SOLICITATION NO. FCNO-93-S303-3 PAGE 6 of 123
NATIONAL FURNITURE CENTER (3FNS)
CRYSTAL MALL BUILDING 4, SUITE 403
WASHINGTON, DC 20406
or
Phone (person and number indicated in Block 10, on page 1, Standard Form 44 (SF
33), of this solicitation.
IMPORTANT: DO NOT ADDRESS OFFERS, MODIFICATIONS OR WITHDRAWALS TO ABOVE
ADDRESS. USE ADDRESS IN BLOCK 8, SF 33, AND FOLLOW INSTRUCTIONS IN ARTICLE 6 OF
GSA FORM 3501 OR 3502, AS APPLICABLE.
A-FSS-4-A SOLICITATION COPIES (APR 1993)
(a) To conserve paper and reduce Government costs of printing and mailing,
only one copy of this solicitation is mailed to addresses on our bidders'
mailing list. If additional copies are required (see block 9, page 1, for
number of copies to be submitted), you may reproduce them yourself, provided
they are complete in every respect, or you may obtain them from the address
specified below:
General Services Administration
FSS Bid Room(C-39)
1941 Jefferson Davis Highway
Arlington, VA 22202
Tel: 703-305-6211
Tel: 703-305-6145
(b) When making duplicate copies for submission to GSA, offerors are
strongly urged to use two-sided copying to reproduce those pages of the
original solicitation which are printed front-to-back. One-sided pages shall be
reproduced one side only, in the same manner as contained in the original
solicitation.
A-FSS-12 TIME FOR ACCEPTANCE OF OFFERS (OCT 1988)
Offerors are requested to allow a minimum of 120 calendar days within which
offers may be accepted. IF NO TIME IS SPECIFIED IN THE SPACE PROVIDED THEREFOR
ON PAGE 1 IT WILL BE CONSIDERED THAT 120 CALENDAR DAYS ARE INTENDED.
A-FSS-22 GSA FORM 3502, SOLICITATION PROVISIONS (DEC 1991)
(a) GSA Form 3502, Solicitation Provisions (Negotiated), February 1991
edition, is incorporated by reference and made a part of this solicitation.
Upon request, a copy of this form will be furnished by the Contracting Officer.
(b) Certain provisions contained in this form are inapplicable to this
solicitation. These provisions, which are self-deleting, are identifiable
either by language contained in the title of the provision, or by a statement
included in parentheses following the title. In addition, statements regarding
the applicability of certain other provisions contained in the form may be
included elsewhere in this solicitation.
<PAGE> 39
SOLICITATION NO. FCNO-93-S303-3 PAGE 7 of 123
A-FSS-23 GSA FORM 3507, SUPPLY CONTRACT CLAUSES (FEB 1995)
(a) GSA Form 3507, Supply Contract Clauses, October 1991 edition, is
incorporated by reference and made a part of this solicitation/contract. Upon
request, a copy of this form will be furnished by the Contracting Officer.
(b) Various clauses contained in this form are inapplicable to this
solicitation and/or resultant contracts. These clauses, which are
self-deleting, are identifiable either by language contained in the text of the
clause, or by a parenthetical statement inserted after the title of (or
elsewhere in) the clause. In addition, statements regarding the applicability
of certain other clauses contained in this form may be included elsewhere in
this solicitation.
(c) GSA Form 3507 is modified as set forth below.
(1) Clause 52.209-6, Protecting the Government's Interest when
Contracting with Contractors Debarred, Suspended, or Proposed for Debarment, is
amended by changing the date of the clause to (NOV 1992), and in paragraph (a),
second sentence, by removing the words "has been" and inserting in their place
the word "is".
(2) Clause 52.215-1, Examination of Records by Comptroller General,
is amended as follows: the date of the clause is revised to read "(FEB 1993)";
paragraph (a) is revised by removing the dollar amount "$10,000", and inserting
in its place the words "the small purchase limitation in Part 13 of the Federal
Acquisition Regulation (FAR)"; paragraph (b) is revised by removing the words
"Federal Acquisition Regulation (FAR)", and inserting in their place the
abbreviation "FAR"; and paragraph (c)(1) is revised by removing the dollar
amount "$10,000", and inserting in its place the words "the FAR Part 13 small
purchase limitation".
(3) Clauses 52.219-9 and 52.219-9 (Alternate I), Small Business And
Small Disadvantaged Business Subcontracting Plan, are deleted. These FAR
clauses have been superseded by clauses 552.219-9 and 552.219-9 (Alternate I),
Small Business Subcontracting Plan (JUN 1994), which apply, respectively, to
negotiated and sealed bid solicitations, and are prescribed in the General
Services Administration Acquisition Regulation (GSAR). The appropriate GSAR
clause will be included in Section I of this solicitation if the clause is
applicable to this solicitation.
(4) Clause 52.219-16, Liquidated Damages--Small Business
Subcontracting Plan (AUG 1989), is deleted. This clause has been superseded by
552.219-16, Liquidated Damages--Small Business Subcontracting Plan (JUN 1994),
which is included in Section I of this solicitation if the clause is applicable
to this solicitation.
(5) Clause 52.222-35, Affirmative Action for Special Disabled and
Vietnam Era Veterans (APR 1984), is deleted. This clause has been superseded by
the clause 52.222-35, Affirmative Action for Special Disabled and Vietnam Era
Veterans (APR 1984) (Deviation), which is included in Section I of this
solicitation.
(6) Clause 52.223-3, Hazardous Material Identification and Material
Safety Data (DEC 1989--Deviation), is deleted. This clause has been superseded
by 52.223-3, Hazardous Material Identification and Material Safety Data (NOV
1991) (ALTERNATE I--NOV 1991), which is included in full text in Section I of
this solicitation if the clause is applicable to this solicitation and
resultant contracts.
(7) Clause 52.225-3, Buy American Act--Supplies (JAN 1989), is
deleted. An updated version (JAN 1994) of this clause will be included in
Section I of this solicitation if applicable to the procurement. (NOTE: For
most procurements to which the Buy American Act applies, this clause has been
superseded by the clause at FAR 52.225-21, Buy American Act--North American
Trade Agreement Act--Balance of Payments Program).
(8) Clause 52.225-11, Restrictions of Certain Foreign Purchases
(APR 1991), is deleted. This clause has been superseded by 52.225-11,
Restrictions on Certain Foreign Purchases (MAY 1992), which is included in full
text in Section I of this solicitation.
(9) Clause 52.233-1, Disputes, is deleted. This clause has been
superseded by 52.233-1, Disputes (MAR 1994), which is included in full text in
Section I of this solicitation.
<PAGE> 40
SOLICITATION NO. FCNO-93-S303-3 PAGE 8 of 123
(10) Clause 52.246-16, Responsibility for Supplies. The
applicability statement inserted in parentheses following the title of the
clause is deleted. This clause applies to all supply contracts, including
multiple-award Federal Supply Schedule contracts.
(11) Clause 522-210-76, Charges for Marking, is revised by removing
the figure "$20.00", and inserting in its place the figure "$40.00".
(12) Clause 552.210-78, Charges for Packaging and Packing, is
revised by removing the figure "$20.00", and inserting in its place the figure
"$40.00".
(13) Clause 552.223-72, Nonconforming Hazardous Materials, is
amended by changing the date of the clause to (MAR 1992), and by revising
paragraph (b) of the clause to read as follows:
(b) "Hazardous materials," as used in this clause, includes
any material defined as hazardous under the latest version of Federal Standard
No. 313 (including adopted during the term of the contract).
(14) Clause 552.225-9, Trade Agreements Act (OCT 1990), is deleted.
This clause has been superseded by 552.225-9, Trade Agreements Act (DEC 1994),
which is included in full text in Section I of this solicitation if the clause
is applicable to this solicitation and resultant contracts.
A-FSS-40 INFORMATION COLLECTION REQUIREMENTS (OCT 1988)
The information collection requirements contained in this solicitation/contract
that are not required by regulation have been approved by the Office of
Management and Budget pursuant to the Paperwork Reduction Act and assigned OMB
Control No. 3090-0163.
<PAGE> 41
SOLICITATION NO. FCNO-93-S303-3 PAGE 9 of 123
SECTION B
SUPPLIES OR SERVICES AND PRICES/COSTS
<PAGE> 42
PAGE 10 of 123
Estimated Requirements:
The figures in the column entitled Purchase show purchases in dollars as
reported by the current contractors. This amount represents sales thru May
1995. No guarantee is given that any quantities will be purchased. The absence
of a figure indicates that neither reports of previous purchases not estimates
of requirements are available.
<TABLE>
<CAPTION>
Adjacent to Purchases
Special Special Items Delivery
Purchases Item No. Supplies or Services Offered (Days ARO) Brand Name
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR ALL CATEGORIES OF ITEMS
Exposed "Shell" design chairs, sofas,
loveseats, sleepers, stools, (excluding bar
stools) and any other types of seating are
available on other GSA Federal Supply
Schedules, are not permitted on this Federal
Supply Schedule.
All accessories for the respective Special
Item Numbers (SINs) will be accepted. If
additional arms or bases are offered for any
SIN, the schedule brochure shall show the
items and indicate separate model numbers.
The offeror shall submit test reports or
certifications for each seating series or line
offered. The test reports shall include the
make and model number of the tested item, test
dates, test standard, and other information
necessary to demonstrate compliance.
Certifications shall include the make and
model number of the tested item and shall
state that the item was tested and complied
with all of the testing requirements. The
reports or certifications must be signed by the
person conducting the test.
Unless otherwise specified, representative
samples may be used for testing within a
single line or series of seating. Except as
otherwise specified herein, the representative
sample will be at the manufacturer's
discretion and will represent the worst case
for the applicable test. The test reports or
certifications will list the model numbers or
series that are represented. Offerors who
desire to be listed as complying with the
flammability
</TABLE>
<PAGE> 43
PAGE 11 of 123
<TABLE>
<S> <C> <C> <C> <C> <C>
requirements of the State of California
Technical Information Bulletin 133 must
submit test reports certifying compliance
with both sections A & B. The General
Services Administration will specifically
list products that meet that standard under
a separate category.
All vendors submitting flammability and
performance test reports are not more than
three years old when submitted at bid closing.
New tests shall be conducted and test reports
shall be submitted to GSA within five years of
the original test dates or if any changes to
the components or construction occur during
the contract period. If the vendor is ISO 9001
registered within two years of the bid
closing, no new tests are required. A copy of
the most recent ISO registration shall be
submitted. If the vendor is not ISO 9001
registered, new tests are required.
GSA reserves the right to require submission
of test reports for any item which a
certification was submitted in lieu of
testing.
- --------------------------------------------------------------------------------------------------------------------------------
MULTIPLE SEATING
Multiple seating systems must be available in
four or more place units. Ganged stacking
chairs will not be accepted for this SIN. The
following classifications of multiple seating
are acceptable.
$ 5,713,124.00 496-1 Beam and Platform Seating:
Individual seating units with or without
attached tables supported on a solid common or
mechanically attached/joined beams, platforms
or benches.
- --------------------------------------------------------------------------------------------------------------------------------
$ 4,117,719.00 496-1b Common or Loaner Leg Seating:
Individual seating units with or without
attached tables combining mutual structural
support members, such as a leg, side frame, or
side panel.
- --------------------------------------------------------------------------------------------------------------------------------
$ 332,957.00 496-2 Multiple Seating-Molded Units or Fully Upholstered
Seating - Heavy Duty, High Abuse, Contract, or
Institutional Type:
The molded units must have no assembled parts
except the base and shall be either 3/16 inch
minimum polyvinyl skin
</TABLE>
<PAGE> 44
PAGE 12 of 123
<TABLE>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
thickness overall, completely flexible except
base, or solid, rigid and smooth with rounded
corners, without cracks or crevices to collect
soil. The upholstered furniture must be
freestanding, modular, multiple seating or
without tables that allow combining individual
pieces into multiple configurations, ("L",
"S", "U" or other)
- --------------------------------------------------------------------------------------------------------------------------------
MULTI-PURPOSE SEATING
$ 1,063,994.00 496-3 Seating, Multi-Purpose Use (Stationary and Mobile):
Chair bases may be rotary with a minimum four 1-90 Days ARO Neutral Posture
leg pedestal, sled base, cantilever, "O" frame
or straight leg style. All bases shall have
casters or non-rusting glides that protect the
bottom of the chair and the floor surface. The
bases shall be constructed of solid wood,
laminate or metal with a rust preventive
finish. No fully upholstered chair legs or
bases are allowed. Rotary chairs shall have a
manually adjustable or non adjustable (fixed)
seat height. Secretarial or clerical chairs
are not allowed.
- --------------------------------------------------------------------------------------------------------------------------------
$ 10,053,929.00 496-4 Seating, Multi-Purpose Use (Period Style)
Reproduction or adaptation chairs utilizing
authentic designs from a diversity of
cultures, (such as English, European,
American, and Oriental). These various styles
relating to specific design characteristics
are usually identified with the ruling
monarchs or a leading cabinet maker and may
range from the formal court designs of the
period to the highly individualized
interpretations by county provincial
cabinetmakers. Secretarial/clerical chairs are
not allowed.
- --------------------------------------------------------------------------------------------------------------------------------
ERGONOMIC AND INTENSIVE USE CHAIRS
$ 54,284,436.00 496-5 Ergonomically Designed Chairs:
Chairs shall be ergonomically designed. The
chairs shall be rotary and have seat and/or 1-90 Days ARO Neutral Posture
back tilt. The chairs shall have pneumatics
seat height adjustment with a range of not
less than 75mm (3 inches). The chairs may be
with or without arms. The chairs
</TABLE>
<PAGE> 45
PAGE 13 of 123
<TABLE>
<S> <C> <C> <C> <C> <C>
shall have, at a minimum, five leg pedestal
base equipped with casters. The chairs shall
not have footrings or foot rest.
- --------------------------------------------------------------------------------------------------------------------------------
$ 616,469.00 496-6 Rotary, Intensive Use Chairs:
The chairs shall be rotary and shall have seat
and/or back tilt. The chairs shall have, at a 1-90 Days ARO Neutral Posture
minimum, five prong pedestal with casters. The
chairs shall have pneumatic seat height
adjustment with an adjustment range of not
less than 100mm (4 inches). The chairs may be
with or without arms. The chairs shall meet
all of the requirements of GSA specification
FNEW 83-269E dated October 31, 1989.
- --------------------------------------------------------------------------------------------------------------------------------
Stacking Chairs
$ 16,575,607.00 496-7 Stacking Chairs:
The chairs may be upholstered. Kneelers will
not be accepted.
- --------------------------------------------------------------------------------------------------------------------------------
$ 1,052,123.00 496-8 Dollies or Trucks:
Trucks or Dollies designed specifically to
support the offered Stacking chairs.
- --------------------------------------------------------------------------------------------------------------------------------
$ 1,153,044.00 496-9 Bar Stools:
The stools shall be freestanding, with a foot
rest. Floor mounted models will not be
accepted. The Bar Stools may be with or
without arms, backs, or upholstery. All bases
shall have non-rusting glides that protect the
bottom of the chair and the floor surface.
</TABLE>
<PAGE> 46
PAGE 14 of 123
TEST REQUIREMENTS
REQUIREMENT FOR SUBMISSION OF SEATING FLAMMABILITY AND PERFORMANCE TEST
RESULTS:
Complete flammability test results, California Technical Information Bulletin
117 or First Generation Voluntary Upholstered Furniture Flammability Standard
for Business and Institution Markets (BIFMA) F-1-1978 (Rev. A80), shall be
submitted for all seating being offered.
Complete performance test results (ANSI/BIFMA X5.4-1983) shall be submitted for
all multiple seating being offered under SIN's 496-1a through 496-2.
Complete performance test results (ANSI/BIFMA X5.1-1993) shall be submitted for
all rotary, pedestal base chairs offered, except intensive use chairs and bar
stools.
A signed and certified FNEW-83-269E test report shall be submitted for each
model offered for SIN 496-6. Representative samples may not be used.
CHECKLIST
(TEST REPORT SUBMITTAL)
Signed and dated test reports for each type of component upholstery material
must meet the acceptable levels for the below described applicable test
sections of the cited flammability standard. Do not submit items that fail any
test.
Flammability test reports for the California Technical Bulletin 117 must be
submitted on the standard forms provided in this solicitation. Test reports in
any other format will not be accepted. Please advise the testing laboratory
that your firm is a prospective GSA contractor and furnish the laboratory
testing official with applicable standard forms.
Performance test reports may be submitted on the testing facility's standard
form. They shall include the make and model number of the tested item and state
whether the item complied with all of the performance test requirements. The
reports must be signed by the person conducting the tests.
PERFORMANCE TESTING
For individual award items 496-1a through 496-6, offeror must submit signed and
certified test reports or certifications that show proof that the unit offered
has been tested in accordance with and meets the acceptance levels specified
for the following:
<PAGE> 47
PAGE 15 of 123
496-1a - Perform all required tests (except No. 22 - Stability Test) on the
largest straight seating unit (3 or more seating positions) of each base or
beam type offered.
Perform test No. 22 (Stability Test) on the smallest, straight seating unit of
each base or beam type offered. If more than one seat type (e.g., wood,
plastic, metal) is offered, at least one of each seat type must be mounted to
the base or beam unit being tested. In addition, if arms are offered, one of
each arm type (e.g., wood, plastic, metal) must be tested.
496-1b - Perform all required tests, except No.18 (Unit drop Test), on a 3
seating position minimum, straight seating unit of each series offered.
Perform test No.18 (Unit Drop Test) on the largest, straight unit (3 or more
seating positions) of each series offered.
496-2 - Perform all required tests on the largest straight seating unit of each
series offered. Matching single chair/seat pieces will have to comply with the
performance test requirements prescribed for the Type I Single seating
classification and meet the same test numbers described above except for test
No. 16.
496-3 and 4964 - Rotary, adjustable chairs under SIN's 496-3 and 496-4 shall be
tested in accordance with the following applicable test sections for the Type
II or Type III chairs as defined in Table I of ANSI/BIFMA X5.1-1993.
496-5 - Test in accordance with the following applicable test sections for the
Type II or Type III chairs as defined in Table I of ANSI/BIFMA X5.1-1993.
<PAGE> 48
PAGE 16 OF 123
TABLE 1
TEST SCHEDULE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CHAIR
TYPE II. DESK CHAIR TYPE III. POSTURE CHAIR
- ------------------------------------------------------------------------------------------------------------------------------------
SECTION DESCRIPTION CLASS 3, CLASS 3, CLASS 5, CLASS 5, CLASS 1, CLASS 1, CLASS 2, CLASS 2,
STYLE A STYLE B STYLE A STYLE B STYLE A STYLE B STYLE A STYLE B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 Back Pull - Tilt Chairs X X X X
6 Back Pull - Back Tile Chairs X X
7 Back Pull - Nontilt Chairs X X
8 Base X X X X X X X X
9 Drop X X X X X X X X
10 Swivel Cycling X X X X X X X X
11 Tilt Mechanism X X X X
12 Seating Impact X X X X X X X X
13 Stability X X X
14 Arm Strength - Vertical X X X
15 Arm Strength - Horizontal X X X
16 Back Durability - Tilting Seating
17 Back Durability - Non Tilting Seat X X X X
18 Caster/Chair Base Durability X X X X X X X X
19 Leg Strength - Front Load
20 Leg Strength - Side Load
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TYPE II - DESK CHAIR, ROTARY
Class 3 - Nontilt seat, fixed back
Style A: with arms
Style B: without arms
Class 5 - Tilt seat, fixed back
Style A: with arms
Style B: without arms
TYPE III - POSTURE CHAIR, ROTARY
Class 1 - Tilt seat and back
(synchronized seat and back)
Style A: with arms
Style B: without arms
Class 2 - Nontilt seat, back tilt
Style A: with arms
Style B: without arms
<PAGE> 49
PAGE 17 OF 123
PAGE 1 OF 2
CAL 117 Section A, Part I - Resilient Cellular Materials
Laboratory testing Company submitting test
- ------------------ -----------------------
Name: Name:
--------------------------- -----------------------
Address: Address:
--------------------------- -----------------------
--------------------------- -----------------------
Phone #: Phone #:
--------------------------- -----------------------
- --------------------------------------------------------------------------------
Product Identification:
- --------------------------------------------------------------------------------
Date Samples Received: Test Report #:
-------------- ------------------
- --------------------------------------------------------------------------------
Before Aging Charlength Afterflame Afterglow
Specimen (inches) (seconds) (seconds)
1
---------- ---------- ---------
2
---------- ---------- ---------
3
---------- ---------- ---------
4
---------- ---------- ---------
5
---------- ---------- ---------
AVG.
---------- ---------- ---------
After Aging Charlength Afterflame Afterglow
Specimen (inches) (seconds) (seconds)
6
---------- ---------- ---------
7
---------- ---------- ---------
8
---------- ---------- ---------
9
---------- ---------- ---------
10
---------- ---------- ---------
AVG.
---------- ---------- ---------
- --------------------------------------------------------------------------------
Requirements: Average char length shall not exceed 6 inches.
Maximum char length of any one specimen shall not exceed 8 inches.
Average afterflame shall not exceed 5 seconds.
Maximum afterflame shall not exceed 10 seconds.
Average afterglow shall not exceed 15 seconds.
- --------------------------------------------------------------------------------
<PAGE> 50
PAGE 18 OF 123
PAGE 2 OF 2
ADDITIONAL TEST:* ( ) Necessary ( ) Not Necessary
Charlength Afterflame Afterglow
Specimen (inches) (seconds) (seconds)
1
---------- ---------- ---------
2
---------- ---------- ---------
3
---------- ---------- ---------
4
---------- ---------- ---------
5
---------- ---------- ---------
AVG.
---------- ---------- ---------
- --------------------------------------------------------------------------------
Conclusion: The above results indicate __________ with the stated requirements.
- --------------------------------------------------------------------------------
I certify that the above results were obtained after testing specimens in
accordance with the procedures and equipment specified by California Technical
Bulletin 117 Section A, Part I Resilient Cellular Materials dated January 1980.
Testing Completed:
-------------------- -------------------------------
Test Supervisor
* If two or more specimens fail one or more test criteria - material fails.
No additional testing is allowed.
If one test specimen fails one or more test criteria, five additional
specimens must be tested. Of these, if one or more test specimens fail one
or more test criteria - material fails.
<PAGE> 51
PAGE 19 OF 123
PAGE 1 OF 2
CAL 117 Section A, Part II - Shredded Resilient Cellular Materials
Laboratory testing Company submitting test
- ------------------ -----------------------
Name: Name:
--------------------------- -----------------------
Address: Address:
--------------------------- -----------------------
Phone #: Phone #:
--------------------------- -----------------------
- --------------------------------------------------------------------------------
Product Identification:
- --------------------------------------------------------------------------------
Date Samples Received: Test Report #:
-------------- ------------------
- --------------------------------------------------------------------------------
Part 1: Pillow
Before Aging After Aging
Specimen Weight Loss Weight Loss
1
------------ -----------
Part 2: Fabric/Ticking
Test Yarns Charlength Afterflame Afterglow
Specimen Flame Vertical (inches) (seconds) (seconds)
1 3 Sec Warp
---------- ---------- ---------
2 3 Sec Warp
---------- ---------- ---------
3 3 Sec Warp
---------- ---------- ---------
4 3 Sec Warp
---------- ---------- ---------
5 3 Sec Warp
---------- ---------- ---------
AVG.
---------- ---------- ---------
Specimen
6 3 Sec Fill
---------- ---------- ---------
7 3 Sec Fill
---------- ---------- ---------
8 3 Sec Fill
---------- ---------- ---------
9 3 Sec Fill
---------- ---------- ---------
10 3 Sec Fill
---------- ---------- ---------
AVG.
---------- ---------- ---------
<PAGE> 52
PAGE 20 OF 123
PAGE 2 OF 2
Test Yarns Charlength Afterflame Afterglow
Specimen Flame Vertical (inches) (seconds) (seconds)
11 12 Sec Warp
---------- ---------- ---------
12 12 Sec Warp
---------- ---------- ---------
13 12 Sec Warp
---------- ---------- ---------
14 12 Sec Warp
---------- ---------- ---------
15 12 Sec Warp
---------- ---------- ---------
AVG.
---------- ---------- ---------
Specimen
16 12 Sec Fill
---------- ---------- ---------
17 12 Sec Fill
---------- ---------- ---------
18 12 Sec Fill
---------- ---------- ---------
19 12 Sec Fill
---------- ---------- ---------
20 12 Sec Fill
---------- ---------- ---------
AVG.
---------- ---------- ---------
- --------------------------------------------------------------------------------
Requirements: Average char length shall not exceed 6 inches.
Maximum char length of any one specimen shall not exceed 8 inches.
Average afterflame shall not exceed 5 seconds.
Maximum afterflame shall not exceed 10 seconds.
Average afterglow shall not exceed 15 seconds.
- --------------------------------------------------------------------------------
Conclusion: The above results indicate __________ with the stated requirements.
- --------------------------------------------------------------------------------
I certify that the above results were obtained after testing specimens in
accordance with the procedures and equipment specified by California Technical
Bulletin 117 Section A, Part II Shredded Resilient Cellular Materials dated
January 1980.
Testing Completed:
-------------------- -------------------------------
Test Supervisor
<PAGE> 53
PAGE 21 OF 123
PAGE 1 OF 1
CAL 117 Section A, Part III - Expanded Polystyrene Beads
Laboratory testing Company submitting test
- ------------------ -----------------------
Name: Name:
--------------------------- -----------------------
Address: Address:
--------------------------- -----------------------
Phone #: Phone #:
--------------------------- -----------------------
- --------------------------------------------------------------------------------
Product Identification:
- --------------------------------------------------------------------------------
Date Samples Received: Test Report #:
-------------- ------------------
- --------------------------------------------------------------------------------
After Aging Pre-test Post-test Weight
Specimen Weight Weight Loss
1
---------- ---------- ---------
2
---------- ---------- ---------
3
---------- ---------- ---------
4
---------- ---------- ---------
5
---------- ---------- ---------
AVG.
---------- ---------- ---------
- --------------------------------------------------------------------------------
Requirements: Weight loss shall not exceed 5 percent in any of five consecutive
tests.
- --------------------------------------------------------------------------------
Conclusion: The above results indicate __________ with the stated requirements.
- --------------------------------------------------------------------------------
I certify that the above results were obtained after testing specimens in
accordance with the procedures and equipment specified by California Technical
Bulletin 117 Section A, Part III Expanded Polystyrene Beads dated January 1980.
Testing Completed:
-------------------- -------------------------------
Test Supervisor
<PAGE> 54
PAGE 22 OF 123
PAGE 1 OF 1
CAL 117 Section A, Part I - Non-Man-Made Filling Materials
Laboratory testing Company submitting test
- ------------------ -----------------------
Name: Name:
--------------------------- -----------------------
Address: Address:
--------------------------- -----------------------
Phone #: Phone #:
--------------------------- -----------------------
- --------------------------------------------------------------------------------
Product Identification:
- --------------------------------------------------------------------------------
Date Samples Received: Test Report #:
-------------- ------------------
- --------------------------------------------------------------------------------
Before Aging Charlength Afterflame Afterglow
Specimen (inches) (seconds) (seconds)
1
---------- ---------- ---------
2
---------- ---------- ---------
3
---------- ---------- ---------
4
---------- ---------- ---------
5
---------- ---------- ---------
AVG.
---------- ---------- ---------
- --------------------------------------------------------------------------------
Requirements: Average char length shall not exceed 6 inches.
Maximum char length of any one specimen shall not exceed 8 inches.
Average afterflame shall not exceed 5 seconds.
Maximum afterflame shall not exceed 10 seconds.
Average afterglow shall not exceed 15 seconds.
- --------------------------------------------------------------------------------
Conclusion: The above results indicate __________ with the stated requirements.
- --------------------------------------------------------------------------------
I certify that the above results were obtained after testing specimens in
accordance with the procedures and equipment specified by California Technical
Bulletin 117 Non-Man-Made Filling Materials dated January 1980.
Testing Completed:
-------------------- -------------------------------
Test Supervisor
<PAGE> 55
PAGE 23 OF 123
PAGE 1 OF 2
CAL 117 Section A, Part II - Shredded and Loose Fill Materials
Laboratory testing Company submitting test
- ------------------ -----------------------
Name: Name:
--------------------------- -----------------------
Address: Address:
--------------------------- -----------------------
Phone #: Phone #:
--------------------------- -----------------------
- --------------------------------------------------------------------------------
Product Identification:
- --------------------------------------------------------------------------------
Date Samples Received: Test Report #:
-------------- ------------------
- --------------------------------------------------------------------------------
Test Yarns Charlength Afterflame Afterglow
Specimen Flame Vertical (inches) (seconds) (seconds)
1 3 Sec Warp
---------- ---------- ---------
2 3 Sec Warp
---------- ---------- ---------
3 3 Sec Warp
---------- ---------- ---------
4 3 Sec Warp
---------- ---------- ---------
5 3 Sec Warp
---------- ---------- ---------
AVG.
---------- ---------- ---------
Specimen
6 3 Sec Fill
---------- ---------- ---------
7 3 Sec Fill
---------- ---------- ---------
8 3 Sec Fill
---------- ---------- ---------
9 3 Sec Fill
---------- ---------- ---------
10 3 Sec Fill
---------- ---------- ---------
AVG.
---------- ---------- ---------
<PAGE> 56
PAGE 24 OF 123
PAGE 2 OF 2
Test Yarn Charlength Afterflame Afterglow
Specimen Flame Vertical (inches) (seconds) (seconds)
11 12 Sec Warp
---------- ---------- ---------
12 12 Sec Warp
---------- ---------- ---------
13 12 Sec Warp
---------- ---------- ---------
14 12 Sec Warp
---------- ---------- ---------
15 12 Sec Warp
---------- ---------- ---------
AVG.
---------- ---------- ---------
Specimen
16 12 Sec Fill
---------- ---------- ---------
17 12 Sec Fill
---------- ---------- ---------
18 12 Sec Fill
---------- ---------- ---------
19 12 Sec Fill
---------- ---------- ---------
20 12 Sec Fill
---------- ---------- ---------
AVG.
---------- ---------- ---------
- --------------------------------------------------------------------------------
Requirements: Average char length shall not exceed 6 inches.
Maximum char length of any one specimen shall not exceed 8 inches.
Average afterflame shall not exceed 5 seconds.
Maximum afterflame shall not exceed 10 seconds.
Average afterglow shall not exceed 15 seconds.
- --------------------------------------------------------------------------------
Conclusion: The above results indicate __________ with the stated requirements.
- --------------------------------------------------------------------------------
I certify that the above results were obtained after testing specimens in
accordance with the procedures and equipment specified by California Technical
Bulletin 117 Shredded and Loose Fill Materials dated January 1980.
Testing Completed:
-------------------- -------------------------------
Test Supervisor
<PAGE> 57
PAGE 25 OF 123
PAGE 1 OF 1
CAL 117 Section C, - Man-Made Fiber Filling Materials
Laboratory testing Company submitting test
- ------------------ -----------------------
Name: Name:
--------------------------- -----------------------
Address: Address:
--------------------------- -----------------------
Phone #: Phone #:
--------------------------- -----------------------
- --------------------------------------------------------------------------------
Product Identification:
- --------------------------------------------------------------------------------
Date Samples Received: Test Report #:
-------------- ------------------
- --------------------------------------------------------------------------------
Flame Spread
Specimen (seconds)
1
---------
2
---------
3
---------
4
---------
5
---------
AVG.
---------
- --------------------------------------------------------------------------------
Requirements: Minimum flame spread of any individual specimens shall not be less
than 7 seconds.
Average flame spread of all specimens shall not be less than 10
seconds.
- --------------------------------------------------------------------------------
Conclusion: The above results indicate _________ with the stated requirements.
- --------------------------------------------------------------------------------
I certify that the above results were obtained after testing specimens in
accordance with the procedures and equipment specified by California Technical
Bulletin 117 Section C Man-Made Fiber Filling Materials dated January 1980.
Testing Completed:
-------------------- -------------------------------
Test Supervisor
<PAGE> 58
PAGE 26 of 123
Page 1 of 1
CAL 117 Section D, Part I - Resilient Filling Materials - Cigarette Resistance
Laboratory testing Company submitting test
Name: Name:
--------------------------- -----------------------
Address: Address:
--------------------------- -----------------------
Phone #: Phone #:
--------------------------- -----------------------
- --------------------------------------------------------------------------------
Product Identification:
- --------------------------------------------------------------------------------
Date Samples Received: Test Report #:
-------------- ------------------
- --------------------------------------------------------------------------------
Covered
Charlength
Specimen (inches)
1
---------
2
---------
3
---------
Uncovered
Charlength
Specimen (inches)
1
---------
2
---------
3
---------
- --------------------------------------------------------------------------------
Requirements: Maximum char length of any specimen shall not exceed 2 inches in
any direction from the cigarette.
- --------------------------------------------------------------------------------
Conclusion: The above results indicate _______ with the stated requirements.
- --------------------------------------------------------------------------------
I certify that the above results were obtained after testing specimens in
accordance with the procedures and equipment specified by California Technical
Bulletin 117 Section D, Part I Resilient Filling Materials - Cigarette
Resistance dated January 1980.
Testing Completed:
-------------------- -------------------------------
Test Supervisor
<PAGE> 59
PAGE 27 of 123
Page 2 of 2
CAL 117 Section D, Part II - Resilient Cellular Materials - Smoldering Screening
Test
Laboratory testing Company submitting test
Name: Name:
--------------------------- -----------------------
Address: Address:
--------------------------- -----------------------
Phone #: Phone #:
--------------------------- -----------------------
- --------------------------------------------------------------------------------
Product Identification:
- --------------------------------------------------------------------------------
Date Samples Received: Test Report #:
-------------- ------------------
- --------------------------------------------------------------------------------
Pre-test Post-test Weight
Weight Weight Loss
Specimen (grams) (grams) (%)
1
---------- ---------- ---------
2
---------- ---------- ---------
3
---------- ---------- ---------
- --------------------------------------------------------------------------------
Requirements: Weight loss shall not exceed 20%.
- --------------------------------------------------------------------------------
ADDITIONAL TEST:* ( ) Necessary ( ) Not Necessary
Pre-test Post-test Weight
Weight Weight Loss
Specimen (grams) (grams) (%)
1
---------- ---------- ---------
2
---------- ---------- ---------
3
---------- ---------- ---------
- --------------------------------------------------------------------------------
Conclusion: The above results indicate ______ with the stated requirements.
- --------------------------------------------------------------------------------
<PAGE> 60
PAGE 28 of 123
Page 2 of 2
I certify that the above results were obtained after testing specimens in
accordance with the procedures and equipment specified by California Technical
Bulletin 117 Section D, Part II Resilient Cellular Materials - Smoldering
Screening Test dated January 1980.
Testing Completed:
-------------------- -------------------------------
Test Supervisor
* If two or more specimens fail the test criteria - material fails.
No additional testing is allowed.
If one test specimen fails test criteria, three additional specimens
must be tested. Of these, if one test specimen fails test criteria -
material fails.
<PAGE> 61
PAGE 29 of 123
Page 1 of 2
CAL 117 Section E, Part I - Upholstery Fabrics
Laboratory testing Company submitting test
Name: Name:
--------------------------- -----------------------
Address: Address:
--------------------------- -----------------------
Phone #: Phone #:
--------------------------- -----------------------
- --------------------------------------------------------------------------------
Product Identification:
- --------------------------------------------------------------------------------
Date Samples Received: Test Report #:
-------------- ------------------
- --------------------------------------------------------------------------------
Flame Spread
Warp With Without
Specimen (seconds) Nap Nap
1
---------- ( ) ( )
2
---------- ( ) ( )
3
---------- ( ) ( )
4
---------- ( ) ( )
5
---------- ( ) ( )
Flame Spread
Fill
Specimen (seconds)
6
---------- ( ) ( )
7
---------- ( ) ( )
8
---------- ( ) ( )
9
---------- ( ) ( )
10
---------- ( ) ( )
- --------------------------------------------------------------------------------
Requirements: With nap - Minimum flame spread of any individual specimens shall
not be less than 7 seconds.
Without nap - Minimum flame spread of any individual specimens
shall not be less than 3.5 seconds.
- --------------------------------------------------------------------------------
<PAGE> 62
PAGE 30 of 123
Page 2 of 2
- -----------------------------------------------------------------------------
Conclusion: The above results indicate ______________ with the stated
requirements.
- -----------------------------------------------------------------------------
I certify that the above results were obtained after testing specimens in
accordance with the procedures and equipment specified by California Technical
Bulletin 117 Section E, Part I Upholstered Fabrics dated January 1980.
Testing Completed: _____________________ _________________________________
Test Supervisor
<PAGE> 63
SOLICITATION NO. FCNO-93-S303-3 PAGE 31 of 123
SECTION C
DESCRIPTION/SPECS./WORK STATEMENT
C-FSS-414 DESIGN (APR 1984)
In order to serve the needs of the Government in this instance, furniture of a
specific style and design is desired, as depicted by the selected pictures,
hereinafter referred to as illustrations, included in and made a part of this
solicitation. The illustrations referred to are not intended to show details of
construction, but are solely intended to delineate the style and design of the
furniture required. The style and design of any furniture offered under this
solicitation must of necessity be substantially the same and closely resemble
that depicted by the illustrations. The general lines and significant details
of style and design of each item must be adhered to with but slight deviation.
Offerors are notified that any deviation or variation in style and design that
alters or affects the appearance of the items as depicted by the illustrations
in any material way will not be acceptable.
C-FSS-425 WORKMANSHIP (OCT 1988)
Any item contracted for must be new, current model at the time of offer, unless
otherwise specified. Each article must perform the functions for its intended
use.
C-FSS-427 ANSI STANDARDS (JUL 1991)
ANSI Standards cited in this solicitation may be obtained from the American
National Standards Institute, Inc., 11 West 42nd Street, 13th Floor, New York,
NY 10036 (Tel: (212) 642-4900).
<PAGE> 64
SOLICITATION NO. FCNO-93-S303-3 PAGE 32 of 123
SECTION D
PACKAGING AND MARKING
D-FSS-456 PACKAGING AND PACKING (APR 1984)
(a) Packaging. Shall be in accordance with accepted commercial practice.
(b) Packing. Shall be packed to ensure carrier acceptance and safe
delivery to the destination in containers complying with rules and regulations
applicable to the mode of transportation.
D-FSS-465 EXPORT PACKING (APR 1984)
(a) Offerors are requested to quote, in the pricelist accompanying their
offer (or by separate attachment), additional charges or net prices covering
delivery of the items furnished with commercial and/or Government export
packing. Government export packing, if offered, shall be in accordance with
accepted commercial practice, unless requested otherwise by the customer. If
commercial export packing is offered, the offer or pricelist shall include
detailed specifications describing the packing to be furnished at the price
quoted.
(b) Ordering activities will not be obligated to utilize the Contractor's
services for export packing accepted under this solicitation, and they may
obtain such services elsewhere if desired. However, the Contractor shall
furnish items export packed when such packing is specified on the purchase
order.
<PAGE> 65
SOLICITATION NO. FCNO-93-S303-3 PAGE 33 of 123
SECTION E
INSPECTION AND ACCEPTANCE
52.246-2 INSPECTION OF SUPPLIES - FIXED-PRICE (JUL 1985)
(a) Definition. "Supplies," as used in this clause, includes but is not
limited to raw materials, components, intermediate assemblies, end products,
and lots of supplies.
(b) The Contractor shall provide and maintain an inspection system
acceptable to the Government covering supplies under this contract and shall
tender to the Government for acceptance only supplies that have been inspected
in accordance with the inspection system and have been found by the Contractor
to be in conformity with contract requirements. As part of the system, the
Contractor shall prepare records evidencing all inspections made under the
system and the outcome. These records shall be kept complete and made available
to the Government during contract performance and for as long afterwards as the
contract requires. The Government may perform reviews and evaluations as
reasonably necessary to ascertain compliance with this paragraph. These reviews
and evaluations shall be conducted in a manner that will not unduly delay the
contract work. The right of review, whether exercised or not, does not relieve
the Contractor of the obligations under the contract.
(c) The Government has the right to inspect and test all supplies called
for by the contract, to the extent practicable, at all places and times,
including the period of manufacture, and in any event before acceptance. The
Government shall perform inspections and tests in a manner that will not unduly
delay the work. The Government assumes no contractual obligation to perform any
inspection and test for the benefit of the Contractor unless specifically set
forth elsewhere in this contract.
(d) If the Government performs inspection or test on the premises of the
Contractor or a subcontractor, the Contractor shall furnish, and shall require
subcontractors to furnish, without additional charge, all reasonable facilities
and assistance for the safe and convenient performance of these duties. Except
as otherwise provided in the contract, the Government shall bear the expense of
Government inspections or tests made at other than the Contractor's or
subcontractor's premises; provided, that in case of rejection, the Government
shall not be liable for any reduction in the value of inspection or test
samples.
(e) (1) When supplies are not ready at the time specified by the
Contractor for inspection or test, the Contracting Officer may charge to the
Contractor the additional cost of inspection or test.
(2) The Contracting Officer may also charge the Contractor for any
additional cost of inspection or test when prior rejection makes reinspection
or retest necessary.
(f) The Government has the right either to reject or to require correction
of nonconforming supplies. Supplies are nonconforming when they are defective
in material or workmanship or are otherwise not in conformity with contract
requirements. The Government may reject nonconforming supplies with or without
disposition instructions.
(g) The Contractor shall remove supplies rejected or required to be
corrected. However, the Contracting Officer may require or permit correction in
place, promptly after notice, by and at the expense of the Contractor. The
Contractor shall not tender for acceptance corrected or rejected supplies
without disclosing the former rejection or requirement for correction, and,
when required, shall disclose the corrective action taken.
(h) If the Contractor fails to promptly remove, replace. or correct
rejected supplies that are required to be removed or to be replaced or
corrected, the Government may either (1) by contract or otherwise, remove,
replace, or correct the supplies and charge the cost to the Contractor or (2)
terminate the contract for default. Unless the Contractor corrects or replaces
the supplies within the delivery schedule, the Contracting Officer may require
their delivery and make an equitable price reduction. Failure to agree to a
price reduction shall be a dispute.
<PAGE> 66
SOLICITATION NO. FCNO-93-S303-3 PAGE 34 of 123
(i) (1) If this contract provides for the performance of Government
quality assurance at source, and if requested by the Government, the Contractor
shall furnish advance notification of the time (i) when Contractor inspection
or tests will be performed in accordance with the terms and conditions of the
contract and (ii) when the supplies will be ready for Government inspection.
(2) The Government's request shall specify the period and method
of the advance notification and the Government representative to whom it shall
be furnished. Requests shall not require more than 2 workdays of advance
notification if the Government representative is in residence in the
Contractor's plant, nor more than 7 workdays in other instances.
(j) The Government shall accept or reject supplies as promptly as
practicable after delivery, unless otherwise provided in the contract.
Government failure to inspect and accept or reject the supplies shall not
relieve the Contractor from responsibility, nor impose liability on the
Government, for nonconforming supplies.
(k) Inspections and tests by the Government do not relieve the Contractor
of responsibility for defects or other failures to meet contract requirements
discovered before acceptance. Acceptance shall be conclusive, except for latent
defects, fraud, gross mistakes amounting to fraud, or as otherwise provided in
the contract.
(l) If acceptance is not conclusive for any of the reasons in paragraph
(k) hereof, the Government, in addition to any other rights and remedies
provided by law, or under other provisions of this contract, shall have the
right to require the Contractor (1) at no increase in contract price, to
correct or replace the defective or nonconforming supplies at the original
point of delivery or at the Contractor's plant at the Contracting Officer's
election, and in accordance with a reasonable delivery schedule as may be
agreed upon between the Contractor and the Contracting Officer; provided, that
the Contracting Officer may require a reduction in contract price if the
Contractor fails to meet such delivery schedule, or (2) within a reasonable
time after receipt by the Contractor of notice of defects or nonconformance, to
repay such portion of the contract as is equitable under the circumstances if
the Contracting Officer elects not to require correction or replacement. When
supplies are returned to the Contractor, the Contractor shall bear the
transportation cost from the original point of delivery to the Contractor's
plant and return to the original point when that point is not the Contractor's
plant. If the Contractor fails to perform or act as required in (1) or (2)
above and does not cure such failure within a period of 10 days (or such longer
period as the Contracting Officer may authorize in writing) after receipt of
notice from the Contracting Officer specifying such failure, the Government
shall have the right by contract or otherwise to replace or correct such
supplies and charge to the Contractor the cost occasioned the Government
thereby.
52.246-16 RESPONSIBILITY FOR SUPPLIES (APR 1984)
(a) Title to supplies furnished under this contract shall pass to the
Government upon formal acceptance, regardless of when or where the Government
takes physical possession, unless the contract specifically provides for
earlier passage of title.
(b) Unless the contract specifically provides otherwise, risk of loss of
or damage to supplies shall remain with the Contractor until, and shall pass to
the Government upon -
(1) Delivery of the supplies to a carrier, if transportation is
f.o.b. origin; or
(2) Acceptance by the Government or delivery of the supplies to
the Government at the destination specified in the contract, whichever is later,
if transportation is f.o.b. destination.
(c) Paragraph (b) above shall not apply to supplies that so fail to
conform to contract requirements as to give a right of rejection. The risk of
loss of or damage to such nonconforming supplies remains with the Contractor
until cure or acceptance. After cure or acceptance, paragraph (b) above shall
apply.
(d) Under paragraph (b) above, the Contractor shall not be liable for loss
of or damage to supplies caused by the negligence of officers, agents, or
employees of the Government acting within the scope of their employment.
E-FSS-521-D INSPECTION (OCT 1985
<PAGE> 67
SOLICITATION NO. FCNO-93-S303-3 PAGE 35 of 123
Inspection of all products purchased under this contract will be made at
destination by an authorized Government representative.
<PAGE> 68
SOLICITATION NO. FCNO-93-S303-3 PAGE 36 of 123
SECTION F
DELIVERIES OR PERFORMANCE
52.212-9 VARIATION IN QUANTITY (APR 1984)
(a) A variation in the quantity of any item called for by this contract
will not be accepted unless the variation has been caused by conditions of
loading, shipping, or packing, or allowances in manufacturing processes, and
then only to the extent, if any, specified in paragraph (b) below.
(b) The permissible variation shall be limited to:
o percent increase
o percent decrease
THIS INCREASE OR DECREASE SHALL APPLY TO ALL ITEMS
52.233-3 PROTEST AFTER AWARD (AUG 1989)
(a) Upon receipt of a notice of protest (as defined in 33.101 of the FAR)
the Contracting Officer may, by written order to the Contractor, direct the
Contractor to stop performance of work called for by this contract. The order
shall be specifically identified as a stop-work order issued under this clause.
Upon receipt of the order, the Contractor shall immediately comply with its
terms and take all reasonable steps to minimize the incurrence of costs
allocable to the work covered by the order during the period of work stoppage.
Upon receipt of the final decision in the protest, the Contracting Officer
shall either --
(1) Cancel the stop-work order; or
(2) Terminate the work covered by the order as provided in the
Default, or the Termination for Convenience of the Government, clause of this
contract.
(b) If a stop-work order issued under this clause is canceled either
before or after a final decision in the protest, the Contractor shall resume
work. The Contracting Officer shall make an equitable adjustment in the
delivery schedule or contract price, or both, and the contract shall be
modified, in writing, accordingly, if -
(1) The stop-work order results in an increase in the time
required for, or in the Contractor's cost properly allocable to, the
performance of any part of this contract; and
(2) The Contractor asserts its right to an adjustment within 30
days after the end of the period of work stoppage; provided, that if the
Contracting Officer decides the facts justify the action, the Contracting
Officer may receive and act upon the request at any time before final payment
under this contract.
(c) If a stop-work order is not canceled and the work covered by the order
is terminated for the convenience of the Government, the Contracting Officer
shall allow reasonable costs resulting from the stop-work order in arriving at
the termination settlement.
(d) If a stop-work order is not canceled and the work covered by the order
is terminated for default, the Contracting Officer shall allow, by equitable
adjustment or otherwise, reasonable costs resulting from the stop-work order.
<PAGE> 69
SOLICITATION NO. FCNO-93-S303-3 PAGE 37 of 123
(e) The Government's rights to terminate this contract at anytime are not
affected by action taken under this clause.
52.247-29 F.O.B. ORIGIN (JUN 1988)
(a) The term "f.o.b. origin," as used in this clause, means free of
expense to the Government delivered --
(1) On board the indicated type of conveyance of the carrier (or
of the Government, if specified) at a designated point in the city, county, and
State from which the shipment will be made and from which line-haul
transportation service (as distinguished from switching, local drayage, or
other terminal service) will begin;
(2) To, and placed on, the carrier's wharf (at shipside, within
reach of the ship's loading tackle, when the shipping point is within a port
area having water transportation service) or the carrier's freight station:
(3) To a U.S. Postal Service facility; or
(4) If stated in the solicitation, to any Government designated
point located within the same city or commercial zone as the f.o.b. origin
point specified in the contract (commercial zones are prescribed by the
Interstate Commerce Commission at 49 CFR 1048).
(b) The Contractor shall --
(1) (i) Pack and mark the shipment to comply with contract
specifications; or
(ii) In the absence of specifications, prepare the
shipment in conformance with carrier requirements to protect the goods and to
ensure assessment of the lowest applicable transportation charge;
(2) (i) Order specified carrier equipment when requested by
the Government; or
(ii) If not specified, order appropriate carrier equipment
not in excess of capacity to accommodate shipment;
(3) Deliver the shipment in good order and condition to the
carrier, and load, stow, trim, block, and/or brace carload or truckload
shipment (when loaded by the Contractor) on or in the carrier's conveyance as
required by carrier rules and regulations;
(4) Be responsible for any loss of and/or damage to the goods -
(i) Occurring before delivery to the carrier;
(ii) Resulting from improper packing and marking; or
(iii) Resulting from improper loading, stowing, trimming,
blocking, and/or bracing of the shipment, if loaded by the Contractor on or in
the carrier's conveyance;
(5) Complete the Government bill of lading supplied by the
ordering agency or, when a Government bill of lading is not supplied, prepare a
commercial bill of lading or other transportation receipt. The bill of lading
shall show --
(i) A description of the shipment in terms of the
governing freight classification or tariff (or Government rate tender) under
which lowest freight rates are applicable;
(ii) The seals affixed to the conveyance with their serial
numbers or other identification;
(iii) Lengths and capacities of cars or trucks ordered and
furnished;
<PAGE> 70
SOLICITATION NO. FCNO-93-S303-3 PAGE 38 of 123
(iv) Other pertinent information required to effect prompt
delivery to the consignee, including name, delivery address, postal address and
ZIP code of consignee, routing, etc.;
(v) Special instructions or annotations requested by the
ordering agency for commercial bills of lading; e.g., (A) "to be converted to a
Government bill of lading," or (B) "this shipment is the property of, and the
freight charges paid to the carrier(s) will be reimbursed by, the Government";
and
(vi) The signature of the carrier's agent and the date the
shipment is received by the carrier; and
(6) Distribute the copies of the bill of lading, or other
transportation receipts, as directed by the ordering agency.
(c) These Contractor responsibilities are specified for performance at the
plant or plants at which the supplies are to be finally inspected and accepted,
unless the facilities for shipment by carrier's equipment are not available at
the Contractor's plant, in which case the responsibilities shall be performed
f.o.b. the point or points in the same or nearest city where the specified
carrier's facilities are available; subject, however, to the following
qualifications:
(1) If the Contractor's shipping plant is located in the State of
Alaska or Hawaii, the Contractor shall deliver the supplies listed for shipment
outside Alaska or Hawaii to the port of loading in Alaska or Hawaii,
respectively, as specified in the contract, at Contractor's expense, and to
that extent the contract shall be "f.o.b. destination."
(2) Notwithstanding subparagraph (c)(1) of this clause, if the
Contractor's shipping plant is located in the State of Hawaii, and the contract
requires delivery to be made by container service, the Contractor shall deliver
the supplies, at the Contractor's expense, to the container yard in the same or
nearest city where seavan container service is available.
552.212-1(a) TIME OF DELIVERY (MAY 1989)
(a) The time of delivery for each item means the time required after
receipt of an order (1) to make delivery to a destination in the case of
delivered prices, or (2) to place shipment in transit in the case of f.o.b.
origin prices.
(b) Delivery is required to be made at the point(s) specified on the order
within 60 days after receipt of order.
F-FSS-202-G DELIVERY PRICES (JAN 1994)
(a) Prices offered must cover delivery as provided below to destinations
located within the 48 contiguous States and the District of Columbia.
(1) Delivery to the door of the specified Government activity by
freight or express common carriers on articles for which store-door delivery is
provided, free or subject to a charge, pursuant to regularly published tariffs
duly filed with the Federal and/or State regulatory bodies governing such
carrier; or, at the option of the Contractor, by parcel post on mailable
articles, or by the Contractor's vehicle. Where store-door delivery is subject
to a charge, the Contractor shall (a) place the notation "Delivery Service
Requested" on bills of lading covering such shipments, and (b) pay such charge
and add the actual cost thereof as a separate item to his invoice.
(2) Delivery to siding at destinations when specified by the
ordering office, if delivery is not covered under paragraph (a)(1), above.
(3) Delivery to the freight station nearest destination when
delivery is not covered under paragraph (a)(1) or (a)(2), above.
<PAGE> 71
SOLICITATION NO. FCNO-93-S303-3 PAGE 39 of 123
(b) The offeror is requested to indicate below whether or not prices
submitted cover delivery f.o.b. destination in Alaska, Hawaii. and the
Commonwealth of Puerto Rico.
<TABLE>
<CAPTION>
(YES) (NO)
<S> <C>
Alaska X
----- -----
Hawaii X
----- -----
Puerto Rico X
----- -----
</TABLE>
(c) When deliveries are made to destinations outside the contiguous 48
States; i.e., Alaska, Hawaii, and the Commonwealth of Puerto Rico, and are not
covered by paragraph (b), above, the following conditions will apply:
(1) Delivery will be f.o.b. inland carrier, point of exportation
(FAR 52.247-38), with the transportation charges to be paid by the Government
from point of exportation to destination in Alaska, Hawaii, or the Commonwealth
of Puerto Rico, as designated by the ordering office. The Contractor shall add
the actual cost of transportation to destination from the point of exportation
in the 48 contiguous States nearest to the designated destination. Such costs
will, in all cases be based upon the lowest regularly established rates on file
with the interstate Commerce Commission, the U.S. Maritime Commission (if
shipped by water), or any State regulatory body, or those published by the U.S.
Postal Service; and must be supported by paid freight or express receipt or by a
statement of parcel post charges including weight of shipment.
(2) The right is reserved to ordering agencies to furnish
Government bills of lading.
(d) Ordering offices will be required to pay differential between freight
charges and express charges where express deliveries are desired by the
Government.
F-FSS-244-B ADDITIONAL SERVICE CHARGE FOR DELIVERY WITHIN CONSIGNEE'S
PREMISES (APR 1984)
(a) Offerors are requested to insert, in the spaces provided below or by
attachment hereto, a separate charge for "Delivery Within Consignee's Premises"
applicable to each shipping container to be shipped. (Articles which are
comparable in size and weight, and for which the same charge is applicable,
should be grouped under an appropriate item description.) These additional
charges will be accepted as part of the award, if considered reasonable, and
shall be included in the Contractor's published catalog and/or price list.
(b) Ordering activities are not obligated to issue orders on the basis of
"Delivery Within Consignee's Premises," and Contractors may refuse delivery on
that basis provided such refusal is communicated in writing to the ordering
activity issuing such orders within 5 days of the receipt of such order by the
Contractor and provided further, that delivery is made in accordance with the
other delivery requirements of the contract. Failure of the Contractor to
submit this notification within the time specified shall constitute acceptance
to furnish "Delivery
Within Consignee's Premises" at the additional charge awarded. When an
ordering activity issues an order on the basis of "Delivery Within Consignee's
Premises" at the accepted additional charge awarded and the Contractor accepts
such orders on that basis, the Contractor will be obligated to provide delivery
"F.o.b. Destination Within Consignee's Premises' in accordance with FAR
52.247-35 with the exception that an additional charge as provided herein is
allowed for such services. Unless otherwise stipulated by the offeror, the
additional charges awarded hereunder may be applied to any delivery within the
48 contiguous States and the District of Columbia.
(c) When exercising their option to issue orders on the basis of delivery
service as provided herein, ordering activities will specify "Delivery Within
Consignee's Premises" on the purchase order, and will indicate the exact
location to which delivery is to be made. The Contractor's delivery price and
the additional charge(s) for "Delivery Within Consignee's Premises" will be
shown as separate entries on the purchase order.
<PAGE> 72
SOLICITATION NO. FCNO-93-S303-3 PAGE 40 of 123
<TABLE>
<CAPTION>
ITEMS ADDITIONAL CHARGE (PER SHIPPING
(NSN'S OR SPECIAL ITEM NUMBERS CONTAINER) FOR "DELIVERY WITHIN
OR DESCRIPTIVE NAME OF ARTICLES) CONSIGNEE'S PREMISES"
<S> <C>
ALL OFFERED Actual Price charged by Carrier
- -------------------------------- -------------------------------
- -------------------------------- -------------------------------
- -------------------------------- -------------------------------
</TABLE>
<PAGE> 73
SOLICITATION NO. FCNO-93-S303-3 PAGE 41 of 123
SECTION G
CONTRACT ADMINISTRATION DATA
52.216-18 ORDERING (APR 1984) (VARIATION - AUG 1995)
(a) Any supplies and services to be furnished under this contract shall be
ordered by issuance of delivery orders by the individuals or
activities designated. Such orders may be issued during the contract
term.
(b) All delivery orders are subject to the terms and conditions of this
contract. In the event of conflict between a delivery order and this
contract, the contract shall control.
(c) If mailed, a delivery order is considered "issued" when the Government
deposits the order in the mail. Orders may be issued orally or by
facsimile, or by electronic commerce methods only if authorized in the
contract.
52.242-13 BANKRUPTCY (APR 1991)
In the event the Contractor enters into proceedings relating to bankruptcy,
whether voluntary or involuntary, the Contractor agrees to furnish, by
certified mail, written notification of the bankruptcy to the Contracting
Officer responsible for administering the contract. This notification shall be
furnished within five days of the initiation of the proceedings relating to
bankruptcy filing. This notification shall include the date on which the
bankruptcy petition was filed, the identity of the court in which the
bankruptcy petition was filed, and a listing of Government contract numbers and
contracting offices for all Government contracts against which final payment
has not been made. This obligation remains in effect until final payment under
this contract.
552.216-73 PLACEMENT OF ORDERS (JUN 1994) (ALTERNATE II - JUN 1994)
(a) Delivery orders under this contract may be placed by either the using
Federal agencies or the General Services Administration's Federal
Supply Service (FSS).
(b) Orders may be placed through Electronic Data Interchange (EDI) or
mailed in paper form. EDI orders shall be placed using the American
National Standards Institute (ANSI) X12 Standard for Electronic Data
Interchange (EDI) format.
(c) If the Contractor agrees, GSA's Federal Supply Service (FSS) will
place all orders by EDI using computer-to-computer EDI. If
computer-to-computer EDI is not possible, FSS will use an alternative
EDI method allowing the Contractor to receive orders by facsimile
transmission. Subject to the Contractor's agreement, other agencies
may place orders by EDI.
(d) When computer-to-computer EDI procedures will be used to place orders,
the Contractor shall enter into one or more Trading Partner Agreements
(TPA) with each Federal agency placing orders electronically in order
to ensure mutual understanding by the parties of certain electronic
transaction conventions and to recognize the rights and
responsibilities of the parties as they apply to this method of
placing orders. The TPA must identify, among other things, the third
party provider(s) through which electronic orders are placed, the
transaction sets used, security procedures, and guidelines for
implementation. Federal agencies may obtain a sample format to
customize as needed from the office specified in (g) below.
(e) The Contractor shall be responsible for providing its own hardware and
software necessary to transmit and receive data electronically.
Additionally, each party to the TPA shall be responsible for the costs
associated with its use of third party provider services.
(f) Nothing in the TPA will invalidate any part of this contract between
the Contractor and the General Services Administration. All terms and
conditions of this contract that otherwise would be applicable to a
mailed order shall apply to the electronic order.
<PAGE> 74
SOLICITATION NO. FCNO-93-S303-3 PAGE 42 of 123
(g) The basic content and format of the TPA will be provided by:
General Services Administration
Systems Inventory and Operations Management Center (FCS)
Washington, DC 20406
Telephone: (703) 305-7741
FAX: (703) 305-7720
552.216-74 ORDERING INFORMATION (JUN 1994) (ALTERNATE II-JUNE 1994)
(a) In accordance with the Placement of Orders clause of this solicitation,
the offeror elects to receive orders placed by GSA's Federal Supply Service
(FFS) by either (X) facsimile transmission or (X) computer-to-computer
Electronic Data Interchange (EDI).
(b) An offeror electing to receive computer-to-computer EDI is requested to
indicate below the name, address, and telephone number of the representative to
be contacted regarding establishment of an EDI interface.
Martin Gear - manager Federal Gov't Contracts
6445 Cardinal Lane
Columbia, MD 21044 410/715-1266
(c) An offeror electing to receive orders by facsimile transmission is
requested to indicate below the telephone number(s) for facsimile transmission
equipment where orders should be forwarded.
Neutral Posture Federal Government Sales Office
6445 Cardinal Lane
Columbia, MD 21044 FAX: 410/992-7051
(d) For mailed orders, the offeror is requested to include the postal
mailing address(es) where paper form orders should be mailed.
Neutral Posture Federal Government Sales Office
6445 Cardinal Lane
Columbia, MD 21044
Neutral Posture Ergonomics will accept orders by any of the above
methods at the Gov't option.
(e) Offerors marketing through dealers are requested to indicate below
whether those dealers will be participating in the proposed contract.
YES ( ) NO (X)
If "yes" is checked, ordering information to be inserted above shall
reflect that in addition to offeror's name, address, and facsimile transmission
telephone number, orders can be addressed to the offeror's name, c/o nearest
local dealer. In this event, two copies of a list of participating dealers
shall accompany this offer, and shall also be included in Contractor's Federal
Supply Schedule pricelist.
552.238-72 CONTRACTOR'S REPORT OF SALES (APR 1995)
(a) Contractors shall furnish quarterly the dollar value (rounded to the
nearest whole dollar) of all sales under the contract during the preceding
3-month period to include any partial month. A separate report for each
National Stock Number (NSN), Special Item Number (SIN), or subitem shall be
prepared and submitted, unless otherwise specified, on GSA Form 72A.
<PAGE> 75
SOLICITATION NO. FCNO-93-S303-3 PAGE 43 of 123
(b) The report is due in the office specified below or specified at the
time of award 30 days following the completion of the reporting period. A
report is required even when no sales occur during the reporting period. Sales
for orders that extend beyond the contract period will be reported within 60
days of final delivery.
(c) The Government reserves the right to inspect without further notice,
such records of the Contractor as pertain to sales under any contract resulting
from this solicitation. Willful failure or refusal to furnish the required
reports, or falsification thereof, shall constitute sufficient cause for
terminating the contract for default under FAR 52.249-8, Default (Fixed-priced
Supply and Service).
(d) The report shall be forwarded to the following address:
General Services Administration
Accounts Receivable Branch (6BCR)
P.O. Box 70500
Chicago, IL 60673-0500
(NOTE: Contractors will be furnished copies of GSA Form 72A, along with
reporting requirements and instructions, approximately 6 weeks after date of
award.)
G-FSS-900-A CONTACT FOR CONTRACT ADMINISTRATION (JAN 1994)
Offerors are required to designate a person to be contacted for prompt contract
administration.
NAME Martin Gear
TITLE Manager for Federal Government Contracts
ADDRESS 6445 Cardinal Lane
Columbia, MD ZIP CODE 21044
TELEPHONE NO. (410) 715-1266 FAX NO. (410) 992-7051
G-FSS-907 ORDER ACKNOWLEDGEMENT (APR 1984)
Contractors shall acknowledge only those orders which state "Order
Acknowledgement Required." These orders shall be acknowledged within 10 days
after receipt. Such acknowledgement shall be sent to the activity placing the
order and contain information pertinent to the order, including the anticipated
delivery date.
G-FSS-913 CONTRACTOR'S BILLING RESPONSIBILITIES (APR 1984)
The Contractor is required to perform all billings made pursuant to this
contract. However, if the Contractor has dealers which participate on the
contract, and the billing/payment process by the Contractor for sales made by
the dealer is a significant administrative burden, the following alternative
procedures may be used:
Where dealers are allowed by the Contractor to bill Government agencies and
accept payment in the Contractor's name, the Contractor agrees to obtain from
all dealers participating in the performance of the contract a written
agreement which will require dealers to:
(1) Comply with the same terms and conditions regarding prices as the
Contractor, for sales made under the contract;
(2) Maintain a system of reporting sales under the contract to the
manufacturer which includes:
<PAGE> 76
SOLICITATION NO. FCNO-93-S303-3 PAGE 44 of 123
(a) the date of sale,
(b) the agency to which the sale was made,
(c) the product/model sold,
(d) the quantity of each product/model sold,
(e) the price at which it was sold, including discounts, and
(f) all other significant sales data;
(3) Be subject to audit by the Government, with respect to sales made
under the contract; and
(4) Place orders and accept payment in the name of the Contractor, in
care of the dealer.
An agreement between a Contractor and its dealers pursuant to this procedure
will not establish privity of contract between dealers and the Government.
Price reductions made by a participating dealer on sales to the Government
under the contract will result in an overall price reduction being assessed
against the Contractor as provided for in the Price Reduction Clause.
NOT APPLICABLE - Dealers are not participating in the above meaning of the term
CERTIFICATION
I certify that all dealers participating in the performance of this contract
have agreed that their performance will be in accordance with all terms and
conditions regarding prices of the contract including the provisions listed
above.
-------------------------- ----------------
Name Date
G-FSS-914-A CONTRACTOR'S REMITTANCE (PAYMENT) ADDRESS (OCT 1988)
The offeror shall indicate below, the payment address to which Government
checks should be mailed for payment of proper invoices submitted under a
resultant contract.
PAYMENT ADDRESS:
Neutral Posture Ergonomics
2301 Fountain Avenue
Bryan, TX 77801
Offeror shall furnish by attachment to this solicitation, the remittance
(payment) addresses of all authorized participating dealers placing orders and
accepting payment in the name of the Contractor in care of the dealer, if
different from their ordering addresses
<PAGE> 77
SOLICITATION NO. FCNO-93-S303-3 PAGE 45 of 123
specified elsewhere in this solicitation. If a dealer's ordering and remittance
address differ, both must be furnished and identified as such.
All offerors are cautioned that if the remittance (payment) address shown on an
actual invoice differs from that shown above or on the attachment, the
remittance address(es) above or attached will govern. Payment to any other
address will require an administrative change to the contract.
PLEASE NOTE: All delivery orders placed against a Federal Supply Schedule
Contract are to be paid by the individual agency placing the order. Each
delivery order will cite the appropriate agency payment address, and proper
invoices should be sent to that address. Proper invoices should be sent to GSA
only for orders placed by GSA. Any other agency's invoices sent to GSA will
only delay your payment.
<PAGE> 78
SOLICITATION NO. FCNO-93-S303-3 PAGE 46 of 123
SECTION H
SPECIAL CONTRACT REQUIREMENTS
GENERAL PROVISIONS GOVERNING THE REQUOTE PROCEDURE FOR REQUIREMENTS EXCEEDING
THE MAXIMUM ORDER LIMITATION (MOL)
The MO of any contract resulting from this solicitation will by $200,000. any
requirement in excess of the MO will be procured through the issuance of a
SF-18, "Request for Quotation" (RFQ), where Schedule contractors will requote
their discounts to agencies on a project-by-project basis. The requote process
will not trigger the Price Reduction Clause of this solicitation. This will
allow contractors to tailor the volume of business to their capacity and
provide a more flexible discount structure for orders in excess of the
Schedule's MO.
Contractors are prohibited from accepting orders in excess of the MO, unless
the order is issued as a result of a requote project. Violation of this
prohibition may result in termination of the contract pursuant to the Default
Clause of this solicitation.
For the information of offerors, ordering activities will, in accordance with
FPMR 101-26.106, consolidate their requirements whenever feasible, so as to
take advantage of price savings available through the requote procedure, for
requirements which exceed the MO.
In responding to an RFQ (requote), contractors may either quote lower prices or
quote the lowest price already available under their Federal Supply Schedule
contract. Prices offered in response to an RFQ which are higher than the lowest
price already available under the current Schedule contract will not be
considered.
This requote procedure will not apply to requirements in excess of
$5,000,000.00.
OPEN SEASON FOR CONTRACT MODIFICATIONS
The provisions of Clause I-FSS-630, "Modifications" are supplemented by the
addition of the following paragraphs:
(h) All requests to modify the contract will be accepted ONLY during the
established "open season" periods identified below. These intervals will occur
every six (6) months throughout the contract period.
August 1-15, 1996 August 1-15, 1999
February 1-15, 1997 February 1-15, 2000
August 1-15, 1997 August 1-15, 2000
February 1-15, 1998
August 1-15, 1998
February 1-15, 1999
(I) Offerors are cautioned to carefully review the requirements of Clause
I-FSS-630A concerning the documentations which must accompany each request.
Contractors who have not submitted the proper documentation within the
established "open season" period will receive written notification of any
deficiencies in their submittal and will be allowed an additional 15 working
days in which to submit the proper documentation. Failure to do so will result
in a denial of the request to modify the contract and the contractor must wait
until the next modification period in which to resubmit the request.
<PAGE> 79
SOLICITATION NO. FCNO-93-S303-3 PAGE 47 of 123
(j) The above provisions do not apply to requests for price increases.
Refer to the provisions of Clause I-552.216-71, "Economic Price Adjustment"
for the regulations governing price increases.
(k) Notwithstanding the above, modifications requests resulting from
improved commercial prices, terms and conditions must be reported to the
Contracting Officer within 10 day of the date that they become effective for
commercial customers. The Government reserves the right to accept improved
prices, terms and conditions without regard to the established modifications
time frames noted in paragraph h, above. The offer of new or modified products
does not represent and improved offer the Government as defined herein. New or
modified products may only be offered during the "open season" time frames in
paragraph h, above. Contractors are urged to review the provisions of Clause
I-FSS-390, "Price Reduction" to ensure compliance with the requirement to report
changes to commercial prices and terms.
(I) These provisions are not to be confused with the provisions of Clause
I-FSS-694, "Open Season for Consideration of New Offers". The above supplements
to Clause I-FSS-630A apply only to existing contracts and not the submittal of
new offers. Contract modification requests will not be accepted during the
"Open Season" for considerations of new offers.
SPECIAL REQUIREMENTS APPLICABLE TO CONTRACTORS SELLING TO THE GOVERNMENT WITH
PARTICIPATING DEALERS:
All offerors using participating dealers must submit as part of their offer, a
written program of dealer orientation that will 1) ensure participating dealers
understanding of and compliance with the requote process; 2) make participating
dealers aware that they may not influence a government activity that is
preparing a requote in such a way as to promote the contractor's product as
superior to the product of other contractors; 3) provide a means of assuring
participating dealer compliance with the stated dealer functions within the
requote framework.
Along with the participating dealer orientation program all offerors using
participating dealer must provide a complete list of all proposed participating
dealers showing full company names, addresses, and phone numbers. Additions and
deletions of dealers' from any resulting contract will be permitted only during
the schedule's open season for modifications unless circumstances are such that
the contractor must add or delete a participating dealer due to circumstances
beyond the control of the contractor. Such cases will be reviewed on a case by
case basis by the contracting officer in order to determine whether a
participating dealer may be added or deleted during a non-open season period.
Additionally, contractors offering to the Government with participating dealers
must submit with their offer, a proposed dealer agreement which at a minimum,
addresses the following:
1. Participating dealers not authorized to accept purchase orders or
payments in their own names. All purchase orders and payments under any
resulting contract must be in the name of the GSA Federal Supply Schedule
Contractor (unless payments are assigned in accordance with assignment of
claims clause).
2. Participating dealers may provide oral estimates, however binding
price quotations must be from the prime contractor. Additionally participating
dealers may not respond to requote procurements in their own names.
3. The GSA General Supply Schedule contractor retains legal
responsibility for performance under this contract, including the delivery of
the product as well as the performance of design and/or installation services
whether or not a participating dealer is involved.
<PAGE> 80
SOLICITATION NO. FCNO-93-S303-3 PAGE 48 of 123
4. Contractors who authorize participating dealers to accept payments in
the contractors name must require those participating dealers to maintain sales
records in accordance with Clause G-FSS-93 of this solicitation. Those records
may be subject to audit.
5. Contractors shall inform participating dealers of the contract terms
and conditions and make participating dealers aware that violation of any of
the contract terms and conditions by the participating dealer will result in
cancellation of the agreement between the contractor and the participating
dealer, thereby precluding the participating dealer from acting as a
participating dealer for the contractor under any resulting contract.
6. Any agreement between a contractor and its participating dealers does
not establish privity of contract between said dealer and the Government. The
Government will review and approve all proposed participating dealer agreements
drawn up in accordance with the above provision. After receipt of the
Contracting Officers approval, each offeror must submit signed agreements from
all participating dealers prior to award of the contract.
<PAGE> 81
SOLICITATION NO. FCNO-93-S303-3 PAGE 49 of 123
SECTION I
CONTRACT CLAUSES
52.203-9 REQUIREMENT FOR CERTIFICATE OF PROCUREMENT INTEGRITY --
MODIFICATION (NOV 1990)
(a) Definitions. The definitions set forth in FAR 3.104-4 are hereby
incorporated in this clause.
(b) The Contractor agrees that it will execute the certification set forth
in paragraph (c) of this clause when requested by the Contracting Officer in
connection with the execution of any modification of this contract.
(c) Certification. As required in paragraph (b) of this clause, the
officer or employee responsible for the modification proposal shall execute the
following certification:
CERTIFICATE OF PROCUREMENT INTEGRITY -- MODIFICATION (NOV 1990)
(1) I, (Name of certifier) am the
officer or employee responsible for the preparation of this modification
proposal and hereby certify that, to the best of my knowledge and belief, with
the exception of any information described in this certification, I have no
information concerning a violation or possible violation of subsection 27(a),
(b), (d), or (f) of the Office of Federal Procurement Policy Act, as amended*
(41 U.S.C. 423), (hereinafter referred to as "the Act"), as implemented in the
FAR, occurring during the conduct of this procurement (contract
and modification number).
(2) As required by subsection 27(e)(1)(B) of the Act, I further
certify that to the best of my knowledge and belief, each officer, employee,
agent, representative, and consultant of (Name of
Offeror) who has participated personally and substantially in the preparation or
submission of this proposal has certified that he or she is familiar with, and
will comply with, the requirements of subsection 27(a) of the Act, as
implemented in the FAR, and will report immediately to me any information
concerning a violation or possible violation of subsections 27(a), (b), (d), or
(f) of the Act, as implemented in the FAR, pertaining to this procurement.
(3) Violations or possible violations: (Continue on plain bond
paper if necessary and label Certificate of Procurement Integrity --
Modification (Continuation Sheet), ENTER NONE IF NONE EXISTS)
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
- ------------------------------------- ----------------------------------------
(Signature of the Officer or Employee (Typed Name of the Officer or Employee
Responsible for the Modification Responsible for the Modification
Proposal and Date) Proposal)
<PAGE> 82
SOLICITATION NO. FCNO-93-S303-3 PAGE 49 of 123
SECTION I
CONTRACT CLAUSES
52.203-9 REQUIREMENTS FOR CERTIFICATE OF PROCUREMENT INTEGRITY -
MODIFICATION (NOV 1990)
(a) Definitions. The definitions set forth in FAR 3.104-4 are hereby
incorporated in this clause.
(b) The Contractor agrees that it will execute the certification set forth
in paragraph (c) of this clause when requested by the Contracting Officer in
connection with the execution of any modification of this contract.
(c) Certification. As required in paragraph (b) of this clause, the officer
or employee responsible for the modification proposal shall execute the
following certification:
CERTIFICATE OF PROCUREMENT INTEGRITY -- MODIFICATION (NOV 1990)
(1) I, Martin Gear (Name of certifier) am the officer or employee
responsible for the preparation of this modification proposal and hereby
certify that, to the best of my knowledge and belief, with the exception of any
information described in this certification, I have no information concerning a
violation or possible violation of subsection 27(a), (b), (d), or (f) of the
Office of Federal Procurement Policy Act, as amended* (41 U.S.C. 423),
(hereinafter referred to as "the Act"), as implemented in the FAR, occurring
during the conduct of this procurement GS-29F-0140C Mod 10 (contract and
modification number).
(2) As required by subsection 27(e)(1)(B) of the Act, I further
certify that to the best of my knowledge and belief, each officer, employee,
agent, representative, and consultant of Neutral Posture (Name of Offeror) who
has participated personally and substantially in the preparation or submission
of this proposal has certified that he or she is familiar with, and will comply
with, the requirements of subsection 27(a) of the Act, as implemented in the
FAR, and will report immediately to me any information concerning a violation
or possible violation of subsections 27(a),(b),(d), or (f) of the Act, as
implemented in the FAR, pertaining to this procurement.
(3) Violations or possible violations: (Continue on plain bond paper
if necessary and label Certificate of Procurement Integrity -- Modification
(Continuation Sheet), ENTER NONE IF NONE EXISTS)
NONE
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
MARTIN GEAR Martin Gear
- -------------------------------------- ---------------------------------
(Signature of the Officer or Employee (Typed Name of the Officer or
Responsible for the Modification Employee Responsible for the
Proposal and Date) Modification Proposal)
<PAGE> 83
SOLICITATION NO. FCNO-93-S303-3 PAGE 50 of 123
* Subsections 27(a), (b), and (d) are effective on December 1,
1990. Subsection 27(f) is effective on June 1, 1991.
THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION
OF AN AGENCY OF THE UNITED STATES AND THE MAKING OF A FALSE, FICTITIOUS, OR
FRAUDULENT CERTIFICATION MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER
TITLE 18, UNITED STATES CODE, SECTION 1001.
(End of certification)
(d) In making the certification in paragraph (2) of the certificate, the
officer or employee of the competing Contractor responsible for the offer or
bid, may rely upon a one-time certification from each individual required to
submit a certification to the competing Contractor, supplemented by periodic
training. These certifications shall be obtained at the earliest possible date
after an individual required to certify begins employment or association with
the contractor. If a contractor decides to rely on a certification executed
prior to the suspension of section 27 (i.e., prior to December 1, 1989), the
Contractor shall ensure that an individual who has so certified is notified
that section 27 has been reinstated. These certifications shall be maintained
by the Contractor for a period of 6 years from the date a certifying employee's
employment with the company ends or, for an agency, representative, or
consultant, 6 years from the date such individual ceases to act on behalf of
the contractor.
(e) The certification required by paragraph (c) of this clause is a
material representation of fact upon which reliance will be placed in executing
this modification.
52.215-2 AUDIT - NEGOTIATION (FEB 1993)
(a) Examination of costs. If this is a cost-reimbursement, incentive,
time-and-materials, labor-hour, or price redeterminable contract, or any
combination of these, the Contractor shall maintain -- and the Contracting
Officer or representatives of the Contracting Officer shall have the right to
examine and audit -- books, records, documents, and other evidence and
accounting procedures and practices, regardless of form (e.g., machine readable
media such as disk, tape, etc.) or type (e.g., data bases, applications
software, data base management software, utilities, etc.) sufficient to reflect
properly all costs claimed to have been incurred or anticipated to be incurred
in performing this contract. This right of examination shall include inspection
at all reasonable times of the Contractor's plants, or parts of them, engaged
in performing the contract.
(b) Cost or pricing data. If, pursuant to law, the Contractor has been
required to submit cost or pricing data in connection with pricing this
contract or any modification to this contract, the Contracting Officer or
representatives of the Contracting Officer who are employees of the Government
shall have the right to examine and audit all of the Contractor's books,
records, documents, and other data, regardless of form (e.g., machine readable
media such as disk, tape, etc.) or type (e.g., data bases, applications
software, data base management software, utilities, etc.), including
computations or projections, related to proposing, negotiating, pricing, or
performing the contract or modification, in order to evaluate the accuracy,
completeness, and currency of the cost or pricing data. The right of
examination shall extend to all documents necessary to permit adequate
evaluation of the cost or pricing data submitted, along with the computations
and projections used.
(c) Reports. If the Contractor is required to furnish cost, funding, or
performance reports, the Contracting Officer or representatives of the
Contracting Officer who are employees of the Government shall have the right to
examine and
<PAGE> 84
SOLICITATION NO. FCNO-93-S303-3 PAGE 51 of 123
audit books, records, other documents, and supporting materials, for the
purpose of evaluating (1) the effectiveness of the Contractor's policies and
procedures to produce data compatible with the objectives of these reports and
(2) data reported.
(d) Availability. The Contractor shall make available at its office at all
reasonable times the materials described in paragraphs (a) and (b) above, for
examination, audit, or reproduction, until 3 years after final payment under
this contract, or for any shorter period specified in Subpart 4.7, Contractor
Records Retention, of the Federal Acquisition Regulation (FAR), or for any
longer period required by statute or by other clauses of this contract.
In addition --
(1) If this contract is completely or partially terminated, the
records relating to the work terminated shall be made available for 3 years
after any resulting final termination settlement; and
(2) Records relating to appeals under the Disputes clause or to
litigation or the settlement of claims arising under or relating to this
contract shall be made available until such appeals, litigation, or claims are
disposed of.
(e) Except as otherwise provided in FAR Subpart 4.7, Contractor Records
Retention, the Contractor may transfer computer data in machine readable form
from one reliable computer medium to another. The Contractor's computer data
retention and transfer procedures shall maintain the integrity, reliability,
and security of the original data. The Contractor's choice of form or type of
materials described in paragraphs (a), (b), and (c) of this clause affects
neither the Contractor's obligations nor the Government's rights under this
clause.
(f) The Contractor shall insert a clause containing all the terms of this
clause, including this paragraph (f), in all subcontracts under this contract
that are over the small purchase limitation in FAR Part 13, altering the clause
only as necessary to identify properly the contracting parties and the
Contracting Officer under the Government prime contract.
52.215-22 PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA (JAN 1991)
(a) If any price, including profit or fee, negotiated in connection with
this contract, or any cost reimbursable under this contract, was increased by
any significant amount because (1) the Contractor or a subcontractor furnished
cost or pricing data that were not complete, accurate, and current as certified
in its Certificate of Current Cost or Pricing Data, (2) a subcontractor or
prospective subcontractor furnished the Contractor cost or pricing data that
were not complete, accurate, and current as certified in the Contractor's
Certificate of Current Cost or Pricing Data, or (3) any of these parties
furnished data of any description that were not accurate, the price or cost
shall be reduced accordingly and the contract shall be modified to reflect the
reduction.
(b) Any reduction in the contract price under paragraph (a) above due to
defective data from a prospective subcontractor that was not subsequently
awarded the subcontract shall be limited to the amount, plus applicable
overhead and profit markup, by which (1) the actual subcontract or (2) the
actual cost to the Contractor, if there was no
<PAGE> 85
SOLICITATION NO. FCNO-93-S303-3 PAGE 52 of 123
subcontract, was less than the prospective subcontract cost estimate submitted
by the Contractor; provided, that the actual subcontract price was not itself
affected by defective cost or pricing data.
(c) (1) If the Contracting Officer determines under paragraph (a) of this
clause that a price or cost reduction should be made, the Contractor agrees not
to raise the following matters as a defense:
(i) The Contractor or subcontractor was a sole source
supplier or otherwise was in a superior bargaining position and thus the price
of the contract would not have been modified even if accurate, complete, and
current cost or pricing data had been submitted.
(ii) The Contracting Officer should have known that the
cost or pricing data in issue were defective even though the Contractor or
subcontractor took no affirmative action to bring the character of the data to
the attention of the Contracting Officer.
(iii) The contract was based on an agreement about the
total cost of the contract and there was no agreement about the cost of each
item procured under the contract.
(iv) The Contractor or subcontractor did not submit a
Certificate of Current Cost or Pricing Data.
(2) (i) Except as prohibited by subdivision (c)(2)(ii) of
this clause, an offset in an amount determined appropriate by the Contracting
Officer based upon the facts shall be allowed against the amount of a contract
price reduction if --
(A) The Contractor certifies to the Contracting
Officer that, to the best of the Contractor's knowledge and belief, the
Contractor is entitled to the offset in the amount requested; and
(B) The Contractor proves that the cost or
pricing data were available before the date of agreement on the price of the
contract (or price of the modification) and that the data were not submitted
before such date.
(ii) An offset shall not be allowed if --
(A) The understated data was known by the
Contractor to be understated when the Certificate of Current Cost or Pricing
Data was signed; or
(B) The Government proves that the facts
demonstrate that the contract price would not have increased in the amount to
be offset even if the available data had been submitted before the date of
agreement on price.
(d) If any reduction in the contract price under this clause reduces the
price of items for which payment was made prior to the date of the modification
reflecting the price reduction, the Contractor shall be liable to and shall pay
the United States at the time such overpayment is repaid --
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SOLICITATION NO. FCNO-93-S303-3 PAGE 53 of 123
(1) Simple interest on the amount of such overpayment to be
computed from the date(s) of overpayment to the Contractor to the date the
Government is repaid by the Contractor at the applicable underpayment rate
effective for each quarter prescribed by the Secretary of the Treasury under 26
U.S.C. 6621(a)(2); and
(2) For Department of Defense contracts only, a penalty equal to the
amount of the overpayment, if the Contractor or subcontractor knowingly
submitted cost or pricing data which were incomplete, inaccurate, or
noncurrent.
52.215-23 PRICE REDUCTION FOR DEFECTIVE COST OR PRICING
DATA--MODIFICATIONS (NOV 1994)
(a) This clause shall become operative only for any modification to this
contract involving a pricing adjustment expected to exceed the threshold for
submission of cost or pricing data at FAR 5.804-(a)(1), except that this clause
does not apply to any modification for which the price is--
(1) Based on adequate price competition;
(2) Based on established catalog or market prices of commercial
items sold in substantial quantities to the general public; or
(3) Set by law or regulation.
(b) If any price, including profit or fee, negotiated in connection with
any modification under this clause, or any cost reimbursable under this
contract, was increased by any significant amount because (1) the Contractor or
a subcontractor furnished cost or pricing data that were not complete,
accurate, and current as certified in the
Contractor's Certificate of Current Cost or Pricing Data, (2) a
subcontractor or prospective subcontractor furnished the Contractor cost or
pricing data that were not complete, accurate, and current as certified in the
Contractor's Certificate of Current Cost or Pricing Data, or (3) any of these
parties furnished data of any description that were not accurate, the price or
cost shall be reduced accordingly and the contract shall be modified to reflect
the reduction. This right to a price reduction is limited to that resulting
from defects in data relating to modifications for which this clause becomes
operative under paragraph (a) above.
(c) Any reduction in the contract price under paragraph (b) above due to
defective data from a prospective subcontractor that was not subsequently
awarded the subcontract shall be limited to the amount, plus applicable
overhead and profit markup, by which (1) the actual subcontract or (2) the
actual cost to the Contractor, if there was no subcontract, was less than the
prospective subcontract cost estimate submitted by the Contractor; provided,
that the actual subcontract price was not itself affected by defective cost or
pricing data.
(d) (1) If the Contracting Officer determines under paragraph (b) of
this clause that a price or cost reduction should be made, the Contractor
agrees not to raise the following matters as a defense:
(i) The Contractor or subcontractor was a sole source
supplier or otherwise was in a superior bargaining position and thus the price
of the contract would not have been modified even if accurate, complete, and
current cost or pricing data had been submitted.
(ii) The Contracting Officer should have known that the
cost or pricing data in issue were defective even though the Contractor or
subcontractor took no affirmative action to bring the character of the data to
the attention of the Contracting Officer.
<PAGE> 87
SOLICITATION NO. FCNO-93-S303-3 PAGE 54 of 123
(iii) The contract was based on an agreement about the
total cost of the contract and there was no agreement about the cost of each
item procured under the contract.
(iv) The Contractor or subcontractor did not submit a
Certificate of Current Cost or Pricing Data.
(2) (i) Except as prohibited by subdivision (d)(2)(ii) of
this clause, an offset in an amount determined appropriate by the Contracting
Officer based upon the facts shall be allowed against the amount of a contract
price reduction if--
(A) The Contractor certified to the Contracting
Officer that, to the best of the Contractor's knowledge and belief, the
Contractor is entitled to the offset in the amount requested; and
(B) The Contractor proves that the cost or
pricing data were available before the date of agreement on the price of the
contract (or price of the modification) and that the data were not submitted
before such date.
(ii) An offset shall not be allowed if--
(A) The understated data was known by the
Contractor to be understated when the Certificate of Current Cost or Pricing
Data was signed; or
(B) The Government proves that the facts
demonstrate that the contract price would not have increased in the amount to
be offset even if the available data had been submitted before the date of
agreement on price.
(e) If any reduction in the contract price under this clause reduces the
price of items for which payment was made prior to the date of the modification
reflecting the price reduction, the Contractor shall be liable to and shall pay
the United States at the time such overpayment is repaid--
(1) Simple interest on the amount of such overpayment to be
computed from the date(s) of overpayment to the Contractor to the date the
Government is repaid by the Contractor at the applicable underpayment rate
effective for each quarter prescribed by the Secretary of the Treasury under 26
U.S.C. 6621(a)(2); and
(2) For Department of Defense contracts only, a penalty equal to
the amount of the overpayment, if the Contractor or subcontractor knowingly
submitted cost or pricing data which were incomplete, inaccurate, or
noncurrent.
52.215-24 SUBCONTRACTOR COST OR PRICING DATA (NOV 1994)
(a) Before awarding any subcontract expected to exceed the threshold for
submission of cost or pricing data at FAR 15.804-2(a)(1), when entered into, or
before pricing any subcontract modification involving a pricing adjustment
expected to exceed the threshold for submission of cost or pricing data at FAR
15.804-2(a)(1), the Contractor shall require the subcontractor to submit cost
or pricing data (actually or by specific identification in writing), unless the
price is --
(1) Based on adequate price competition;
(2) Based on established catalog or market prices of commercial
items sold in substantial quantities to the general public; or
(3) Set by law or regulation.
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SOLICITATION NO. FCNO-93-S303-3 PAGE 55 of 123
(b) The Contractor shall require the subcontractor to certify in
substantially the form prescribed in Subsection 15.804-4 of the Federal
Acquisition Regulation (FAR) that, to the best of its knowledge and belief, the
data submitted under paragraph (a) above were accurate, complete, and current
as of the date of agreement on the negotiated price of the subcontract or
subcontract modification.
(c) In each subcontract that exceeds the threshold for submission of cost
or pricing data at FAR 15.804-2(a)(1), when entered into, the Contractor shall
insert either --
(1) The substance of this clause, including this paragraph (c), if
paragraph (a) above requires submission of cost or pricing data for the
subcontract; or
(2) The substance of the clause at FAR 52.215-25, Subcontractor
Cost or Pricing Data-Modifications.
52.215-25 SUBCONTRACTOR COST OR PRICING DATA-MODIFICATIONS (NOV 1994)
(a) The requirements of paragraphs (b) and (c) of this clause shall (1)
become operative only for any modification to this contract involving a pricing
adjustment expected to exceed the threshold for submission of cost or pricing
data at (FAR) 48 CFR 15.804-2(a)(1); and (2) be limited to such modifications.
(b) Before awarding any subcontract expected to exceed the threshold for
submission of cost or pricing data at (FAR) 48 CFR 15.804-2(a)(1) when entered
into, or pricing any subcontract modification involving a pricing adjustment
expected to exceed the threshold for submission of cost or pricing data at
(FAR) 48 CFR 15.804-2(a)(1), the Contractor shall require the subcontractor to
submit cost or pricing data (actually or by specific identification in
writing), unless the price is --
(1) Based on adequate price competition;
(2) Based on established catalog or market prices of commercial
items sold in substantial quantities to the general public; or
(3) Set by law or regulation.
(c) The Contractor shall require the subcontractor to certify in
substantially the form prescribed in Subsection 15.804-4 of the Federal
Acquisition Regulation (FAR) that, to the best of its knowledge and belief, the
data submitted under paragraph (b) above were accurate, complete, and current
as of the date of agreement on the negotiated price of the subcontract or
subcontract modification.
(d) The Contractor shall insert the substance of this clause, including
this paragraph (d), in each subcontract that exceeds the threshold for
submission of cost or pricing data at (FAR) 48 CFR 15.804-2(a)(1), when entered
into.
52.216-19 DELIVERY ORDER LIMITATIONS (APR 1984) (VARIATION II - AUG 1995)
(a) Minimum order. When the Government requires supplies or services
covered by this contract in an amount of less than $100, the
Government is not obligated to purchase, nor is the Contractor
obligated to furnish, those supplies or services under the contract.
However, offerors may, if willing to accept smaller orders, specify a
smaller amount in their offers. If a smaller amount is offered, it is
mutually agreed that the Contractor will accept such orders and
specify the smaller minimum order limitation in the applicable
catalog/pricelist. If the offeror fails to specify a
<PAGE> 89
SOLICITATION NO. FCNO-93-S303-3 PAGE 56 of 123
smaller amount the Government may place orders for a smaller amount.
Such orders shall be deemed to be accepted by the Contractor, unless
returned to the ordering office within 5 workdays after receipt by the
Contractor.
(b) Maximum order. The maximum order will be negotiated individually for
each contract. The limits will be established based on the concessions
granted by the Contractor. The contractor is not obligated to honor
any order when the dollar value of any single item ordered, whether
ordered separately or in combination with other items, exceed the
dollar amounts set forth below for the items indicated.
The maximum order will be negotiated to one of the levels shown for
each Special Item Number, depending on the concessions offered.
<TABLE>
<CAPTION>
ITEM NUMBER/SIN MAXIMUM ORDER
<S> <C>
ALL SIN'S $200,000
</TABLE>
(c) Notwithstanding paragraph (b) above, the Contractor shall honor any
order exceeding the maximum orders in paragraph (b), unless that order
(or orders) is returned to the ordering office within 5 days after
issuance, with written notice stating the Contractor's intent not to
ship the item (or items) called for and the reasons. Upon receiving
this notice, the Government may acquire the supplies or services from
another source.
52.216-22 INDEFINITE QUANTITY (APR 1984) (VARIATION - AUG 1995)
(a) This is an indefinite-quantity contract for the supplies or services
specified, and effective for the period stated. The quantities of
supplies and services specified in the contract are estimates only and
are not purchased by this contract.
(b) Delivery or performance shall be made only as authorized by orders
issued in accordance with the Ordering clause. The contractor shall
furnish to the Government, when and if ordered, the supplies or
services specified in the contract. The Government shall order at
least the quantity of supplies or services designated in the contract
as the "minimum."
(c) Except for any limitations on quantities in the Guaranteed Minimum
clause, Delivery Order Limitations clause, there is no limit on the
number of orders that may be issued. The Government may issue orders
requiring delivery to multiple destinations or performance at multiple
locations.
(d) Any order issued during the effective period of this contract and not
completed within that period shall be completed by the Contractor
within the time specified in the order. The contract shall govern the
Contractor's and Government's rights and obligations with respect to
that order to the same extent as if the order were completed during
the contract's effective period.
52.219-8 UTILIZATION OF SMALL BUSINESS CONCERNS AND SMALL DISADVANTAGED
BUSINESS CONCERNS (FEB 1990)
(a) It is the policy of the United States that small business concerns and
small business concerns owned and controlled by socially and
economically disadvantaged individuals shall have the maximum
practicable opportunity to participate in performing contracts let by
any Federal agency, including contracts and subcontracts for
subsystems, assemblies, components, and related services for major
systems. It is further the policy of the United States that its
<PAGE> 90
SOLICITATION NO. FCNO-93-S303-3 PAGE 57 of 123
prime contractors establish procedures to ensure the timely payment of amounts
due pursuant to the terms of their subcontracts with small business concerns
and small business concerns owned and controlled by socially and economically
disadvantaged individuals.
(b) The Contractor hereby agrees to carry out this policy in the awarding
of subcontracts to the fullest extent consistent with efficient contract
performance. The Contractor further agrees to cooperate in any studies or
surveys as may be conducted by the United States Small Business Administration
or the awarding agency of the United States as may be necessary to determine
the extent of the Contractor's compliance with this clause.
(c) As used in this contract, the term "small business concern" shall mean
a small business as defined pursuant to section 3 of the Small Business Act and
relevant regulations promulgated pursuant thereto. The term "small business
concern owned and controlled by socially and economically disadvantaged
individuals" shall mean a small business concern --
(1) which is at least 51 percent unconditionally owned by one or
more socially and economically disadvantaged individuals; or, in the case of
any publicly owned business, at least 51 per centum of the stock of which is
unconditionally owned by one or more socially and economically disadvantaged
individuals; and
(2) whose management and daily business operations are controlled
by one or more of such individuals.
This term also means a small business concern that is at least
51 percent unconditionally owned by an economically disadvantaged Indian tribe
or Native Hawaiian Organization, or a publicly owned business having at least
51 percent of its stock unconditionally owned by one of these entities which
has its management and daily business controlled by members of an economically
disadvantaged Indian tribe or Native Hawaiian Organization, and which meets the
requirements of 13 CFR 124. The Contractor shall presume that socially and
economically disadvantaged individuals include Black Americans, Hispanic
Americans, Native Americans, Subcontinent Asian Americans, Asian-Pacific and
other minorities, or any other individual found to be disadvantaged by the
Administration pursuant to section 8(a) of the Small Business Act. The
Contractor shall presume that socially and economically disadvantaged entities
also include Indian Tribes and Native Hawaiian Organizations.
(d) Contractors acting in good faith may rely on written representations
by their subcontractors regarding their status as either a small business
concern or a small business concern owned and controlled by socially and
economically disadvantaged individuals.
52.225-21 BUY AMERICAN ACT - NORTH AMERICAN FREE TRADE AGREEMENT
IMPLEMENTATION ACT - BALANCE OF PAYMENTS PROGRAM (JAN 1994)
(a) Definitions. As used in this clause --
Components means those articles, materials, and supplies incorporated
directly into the end products.
Domestic end product means (1) an unmanufactured end product mined or
produced in the United States, or (2) an end product manufactured in the United
States, if the cost of its components mined, produced, or manufactured in the
United States exceeds 50 percent of the cost of all its components. A component
shall also be considered to have been mined, produced, or manufactured in the
United States (regardless of its source in fact) if the end product in which it
is incorporated is manufactured in the United States and the component is of a
class or kind (i) determined by the
<PAGE> 91
SOLICITATION NO. FCNO-93-S303-3 PAGE 58 of 123
Government to be not mined, produced, or manufactured in the United States in
sufficient and reasonably available commercial quantities of a satisfactory
quality, or (ii) to which the agency head concerned has determined that it
would be inconsistent with the public interest to apply the restrictions of the
Buy American Act.
End products means those articles, materials, and supplies to be
acquired under this contract for public use.
Foreign end product means an end product other than a domestic end
product.
North American Free Trade Agreement (NAFTA) country means Canada or
Mexico.
NAFTA country end product means an article that (a) is wholly the
growth, product, or manufacture of a NAFTA country, or (b) in the case of an
article which consists in whole or in part of materials from another country or
instrumentality, has been substantially transformed in a NAFTA country into a
new and different article of commerce with a name, character, or use distinct
from that of the article or articles from which it was transformed. The term
includes services (except transportation services) incidental to its supply;
provided, that the value of those incidental services does not exceed that of
the product itself. It does not include service contracts as such.
(b) This clause implements the Buy American Act (41 U.S.C. 10), the North
American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat.
2057), and the Balance of Payments Program by providing preference for domestic
end products over foreign end products, except for certain foreign end products
which meet the requirements for classification as NAFTA country end products.
(c) The Contracting Officer has determined that the NAFTA applies to this
acquisition. Unless otherwise specified, the Act applies to all items in the
schedule. The Contractor agrees to deliver under this contract only domestic
end products unless, in its offer, it specifies delivery of foreign end
products in the provision entitled "Buy American Act -- North American Free
Trade Agreement Implementation Act -- Balance of Payments Program Certificate."
An offer certifying that a NAFTA country end product will be supplied requires
the Contractor to supply a NAFTA country end product or, at the Contractor's
option, a domestic end product.
(d) If this contract contains the clause at 52.225-17, Buy American Act --
Supplies Under European Community Agreement, the Contractor may deliver EC
country end products notwithstanding the provisions of paragraph (c).
(e) Offers will be evaluated in accordance with the policies and
procedures of Subpart 25.4 of the Federal Acquisition Regulation.
52.229-1 STATE AND LOCAL TAXES (APR 1984)
Notwithstanding the terms of the Federal, State, and Local Taxes clause, the
contract price excludes all State and local taxes levied on or measured by the
contract or sales price of the services or completed supplies furnished under
this contract. The Contractor shall state separately on its invoices taxes
excluded from the contract price, and the Government agrees either to pay the
amount of the taxes to the Contractor or provide evidence necessary to sustain
an exemption.
52.232-25 PROMPT PAYMENT (MAR 1994)
Notwithstanding any other payment clause in this contract, the government will
make invoice payments and contract financing payments under the terms and
conditions specified in this clause. Payment shall be considered as being made
<PAGE> 92
SOLICITATION NO. FCNO-93-S303-3 PAGE 59 of 123
on the day a check is dated or an electronic funds transfer is made.
Definitions of pertinent terms are set forth in 32.902. All days referred to in
this clause are calendar days, unless otherwise specified.
(a) Invoice Payments.
(1) For purposes of this clause, "invoice payment" means a
Government disbursement of monies to a Contractor under a contract or other
authorization for supplies or services accepted by the Government. This
includes payments for partial deliveries that have been accepted by the
Government and final cost or fee payments where amounts owed have been settled
between the Government and the Contractor.
(2) Except as indicated in subparagraph (a)(3) and paragraph (c)
of this clause, the due date for making invoice payments by the designated
payment office shall be the later of the following two events:
(i) The 30th day after the designated billing office has
received a proper invoice from the Contractor.
(ii) The 30th day after Government acceptance of supplies
delivered or services performed by the Contractor. On a final invoice where the
payment amount is subject to contract settlement actions, acceptance shall be
deemed to have occurred on the effective date of the contract settlement.
However, if the designated billing office fails to annotate the invoice with
the actual date of receipt, the invoice payment due date shall be deemed to be
the 30th day after the date the Contractor's invoice is dated, provided a
proper invoice is received and there is no disagreement over quantity, quality,
or Contractor compliance with contract requirements.
(3) The due date on contracts for meat, meat food products, or
fish; contracts for perishable agricultural commodities, contracts for dairy
products, edible fats or oils, and food products prepared from edible fats or
oils, and contracts not requiring the submission of an invoice shall be as
follows:
(i) The due date for meat and meat food products, as
defined in section 2(a)(3) of the Packers and Stockyard Act of 1921 (7
U.S.C.182(3)) and further defined in Pub. L. 98-181 to include any edible fresh
or frozen poultry meat, any perishable poultry meat food product, fresh eggs,
and any perishable egg product, will be as close as possible to, but not later
than, the 7th day after product delivery.
(ii) The due date for fresh or frozen fish, as defined in
section 204(3) of the Fish and Seafood Promotion Act of 1986 (16 U.S.C.
4003(3)), will be as close as possible to, but not later than, the seventh day
after product delivery.
(iii) The due date for perishable agricultural commodities,
as defined in Section 1(4) of the Perishable Agricultural Commodities Act of
1930 (7 U.S.C. 499a(44)), will be as close as possible to, but not later than,
the 10th day after product delivery, unless another date is specified in the
contract.
(iv) The due date for dairy products, as defined in
section 111(e) of the Dairy Production Stabilization Act of 1983 (7 U.S.C.
4502(e)), edible fats or oils, and food products prepared from edible fats or
oils, will be as close as possible to, but not later than, the 10th day after
the date on which a proper invoice has been received.
(v) If the contract does not require submission of an
invoice for payment (e.g., periodic lease payments), the due date will be as
specified in the contract.
(4) An invoice is the Contractor's bill or written request for
payment under the contract for supplies delivered or services performed. An
invoice shall be prepared and submitted to the designated billing office
specified in the contract.
<PAGE> 93
SOLICITATION NO. FCNO-93-S303-3 PAGE 60 of 123
A proper invoice must include the items listed in subdivisions (a)(4)(i)
through (a)(4)(viii) of this clause. If the invoice does not comply with these
requirements, then the Contractor will be notified of the defect within 7 days
after receipt of the invoice at the designated billing office (3 days for meat,
meat food products, or fish, and 5 days for perishable agricultural
commodities, edible fats or oils, and food products prepared from edible fats
or oils). Untimely notification will be taken into account in the computation
of any interest penalty owed the Contractor in the manner described in
subparagraph (a)(6) of this clause.
(i) Name and address of the Contractor.
(ii) Invoice date.
(iii) Contract number or other authorization for supplies
delivered or services performed (including order number and contract line item
number).
(iv) Description, quantity, unit of measure, unit price,
and extended price of supplies delivered or services performed.
(v) Shipping and payment terms (e.g., shipment number and
date of shipment, prompt payment discount terms). Bill of lading number and
weight of shipment will be shown for shipments on Government bills of lading.
(vi) Name and address of Contractor official to whom
payment is to be sent (must be the same as that in the contract or in a proper
notice of assignment).
(vii) Name (where practicable), title, phone number and
mailing address of person to be notified in event of defective invoice.
(viii) Any other information or documentation required by
other requirements of the contract (such as evidence of shipment).
(5) An interest penalty shall be paid automatically by the
Government, without request from the Contractor, if payment is not made by the
due date and the conditions listed in subdivisions (a)(5)(i) through
(a)(5)(iii) of this clause are met, if applicable.
(i) A proper invoice was received by the designated
billing office.
(ii) A receiving report or other Government documentation
authorizing payment was processed and there was no disagreement over quantity,
quality, or contractor compliance with any contract term or condition.
(iii) In the case of a final invoice for any balance of
funds due the Contractor for supplies delivered or services performed, the
amount was not subject to further contract settlement actions between the
Government and the Contractor.
(6) The interest penalty shall be at the rate established by the
Secretary of the Treasury under section 12 of the Contract Disputes Act of 1978
(41 U.S.C. 611) that is in effect on the day after the due date, except where
the interest penalty is prescribed by other government authority. This rate is
referred to as the "Renegotiation Board Interest Rate," and it is published in
the Federal Register semiannually on or about January 1 and July 1. The
interest penalty shall accrue daily on the invoice payment amount approved by
the Government and be compounded in 30-day increments inclusive from the first
day after the due date through the payment date. That is, interest accrued at
the end of any 30-
<PAGE> 94
SOLICITATION NO. FCNO-93-S303-3 PAGE 61 of 123
day period will be added to the approved invoice payment amount and be subject
to interest penalties if not paid in the succeeding 30-day period. If the
designated billing office failed to notify the Contractor of a defective
invoice within the periods prescribed in subparagraph (a)(4) of this clause,
then the due date on the corrected invoice will be adjusted by subtracting the
number of days taken beyond the prescribed notification of defects period. Any
interest penalty owed the Contractor will be based on this adjusted due date.
Adjustments will be made by the designated payment office for errors in
calculating interest penalties, if requested by the Contractor.
(i) For the sole purpose of computing an interest penalty
that might be due the Contractor, government acceptance shall be deemed to have
occurred constructively on the 7th day (unless otherwise specified in this
contract) after the Contractor delivered the supplies or performed the services
in accordance with the terms and conditions of the contract, unless there is a
disagreement over quantity, quality, or Contractor compliance with a contract
provision. In the event that actual acceptance occurs within the constructive
acceptance period, the determination of an interest penalty shall be based on
the actual date of acceptance. The constructive acceptance requirement does
not, however, compel Government officials to accept supplies or services,
perform contract administration functions, or make payment prior to fulfilling
their responsibilities.
(ii) The following periods of time will not be included in
the determination of an interest penalty:
(A) The period taken to notify the Contractor of
defects in invoices submitted to the Government, but this may not exceed 7 days
(3 days for meat, meat food products, or fish, and 5 days for perishable
agricultural commodities, dairy products, edible fats or oils, and food
products prepared from edible fats or oils).
(B) The period between the defects notice and
resubmission of the corrected invoice by the Contractor.
(iii) Interest penalties will not continue to accrue after
the filing of a claim for such penalties under the clause at 52.233-1,
Disputes, or for more than 1 year. Interest penalties of less than $1.00 need
not be paid.
(iv) Interest penalties are not required on payment delays
due to disagreement between the Government and Contractor over the payment
amount or other issues involving contract compliance or on amounts temporarily
withheld or retained in accordance with the terms of the contract. Claims
involving disputes, and any interest that may be payable, will be resolved in
accordance with the clause at 52.233-1, Disputes.
(7) An interest penalty shall also be paid automatically by the
designated payment office, without request from the Contractor, if a discount
for prompt payment is taken improperly. The interest penalty will be calculated
as described in subparagraph (a)(6) of this clause on the amount of discount
taken for the period beginning with the first day after the end of the discount
period through the date when the Contractor is paid.
(8) If this contract was awarded on or after October 1, 1989, a
penalty amount, calculated in accordance with regulations issued by the Office
of Management and Budget, shall be paid in addition to the interest penalty
amount if the Contractor --
(i) Is owed an interest penalty;
(ii) Is not paid the interest penalty within 10 days after
the date the invoice amount is paid; and
(iii) Makes a written demand, not later than 40 days after
the date the invoice amount is paid, that the agency pay such a penalty.
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SOLICITATION NO. FCNO-93-S303-3 PAGE 62 of 123
(b) Contract Financing Payments.
(1) For purposes of this clause, "contract financing payment" means
a Government disbursement of monies to a Contractor under a contract clause or
other authorization prior to acceptance of supplies or services by the
Government. Contract financing payments include advance payments, progress
payments based on cost under the clause at 52.232-16, Progress Payments,
progress payments based on a percentage or stage of completion (32.102(e)(1))
other than those made under the clause at 52.232-5, Payments Under Fixed-Price
Construction Contracts, or the clause at 52.232-10, Payments Under Fixed-Price
Architect-Engineer Contracts, and interim payments on cost type contracts.
(2) For contracts that provide for contract financing, requests for
payment shall be submitted to the designated billing office as specified in
this contract or as directed by the Contracting Officer. Contract financing
payments shall be made on the N/A day after receipt of a proper contract
financing request by the designated billing office. In the event that an audit
or other review of a specific financing request is required to ensure
compliance with the terms and conditions of the contract, the designated
payment office is not compelled to make payment by the due date specified.
(3) For advance payments, loans, or other arrangements that do not
involve recurrent submissions of contract financing requests, payment shall be
made in accordance with the corresponding contract terms or as directed by the
Contracting Officer.
(4) Contract financing payments shall not be assessed an interest
penalty for payment delays.
(c) If this contract contains the clause at 52.213-1, Fast Payment
Procedures, payments will be made within 15 days after the date of receipt of
the invoice.
52.232-28 ELECTRONIC FUNDS TRANSFER PAYMENT METHODS (APR 1989)
Payments under this contract will be made by the Government either by check or
electronic funds transfer (through the Treasury Fedline Payment System
(FEDLINE) or the Automated Clearing House (ACH), at the option of the
Government. After award, but no later than 14 days before an invoice or
contract financing request is submitted, the Contractor shall designate a
financial institution for receipt of electronic funds transfer payments, and
shall submit this designation to the Contracting Officer or other Government
official, as directed.
(a) For payment through FEDLINE, the Contractor shall provide the
following information:
(1) Name, address, and telegraphic abbreviation of the financial
institution receiving payment.
(2) The American Bankers Association 9-digit identifying number for
wire transfers of the financing institution receiving payment if the institution
has access to the Federal Reserve Communications System.
(3) Payee's account number at the financial institution where funds
are to be transferred.
(4) If the financial institution does not have access to the
Federal Reserve Communications System, name, address, and telegraphic
abbreviation of the correspondent financial institution through which the
financial institution receiving payment obtains wire transfer activity. Provide
the telegraphic abbreviation and American Bankers Association identifying
number for the correspondent institution.
(b) For payment through ACH, the Contractor shall provide the following
information:
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SOLICITATION NO. FCNO-93-S303-3 PAGE 63 of 123
(1) The transit number of the financial institution receiving
payment (same as American Bankers Association identifying number used for
FEDLINE).
(2) Number of account to which funds are to be deposited.
(3) For depositor account ("C" for checking, "S" for savings).
(4) The Contractor is a new enrollee to the ACH system, a "Payment
Information Form," SF 3881, must be completed before payment can be processed.
(c) In the event the Contractor, during the performance of this contract,
elects to designate a different financial institution prior to receipt of any
payment made using electronic funds transfer procedures, notification of such
change and the new information specified above must be received by the
appropriate Government official 30 days prior to the date change is to become
effective.
(d) Documents furnishing the information required in this clause must be
dated and contain the signature, title, and telephone number of the Contractor
official authorized to provide it, as well as the Contractor's name and
contract number.
(e) The failure to properly designate a financial institution or to provide
appropriate payee bank account information may delay payments of amounts
otherwise properly due.
52.249-?? TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE)
(SHORT-TERM) (APR 1984)
The Contracting Officer, by written notice, may terminate this contract, in
whole or in part, when it is in the Government's interest. If this contract is
terminated, the rights, duties, and obligations of the parties, including ?????
Contractor, shall be in accordance with Part 49 of the Federal Acquisition
Regulation in effect on the date of contract.
52.252-?? CLAUSES INCORPORATED BY REFERENCE (JUN 1988)
This ???? incorporates one or more clauses by reference, with the same force
and effect as if they were given in full text. Upon request, the Contracting
Officer will make their full text available.
552.216-?? ECONOMIC PRICE ADJUSTMENT (OCT 1985) (ALTERNATE I - JAN 1989)
Price ????? include price increases and price decreases. Adjustments will be
considered as follows:
(a) ????? shall submit price decreases anytime during the contract period
in which they occur. Price decreases are handled in accordance with the
provisions of the Price Reduction Clause.
(b) ????? may request price increases to be effective on or after the first
12 months of the contract period providing the following conditions are met:
(1) ????? result from a reissue or other modification of the
Contractor's commercial catalog pricelist that was used as ????? the contract
award.
<PAGE> 97
SOLICITATION NO. FCNO-93-S303-3 PAGE 64 of 123
(2) No more than three increases will be considered during each
succeeding 12-month period of the contract. (For succeeding contract periods of
less than 12 months, up to three increases will be considered subject to the
other conditions of this subparagraph (b)).
(3) Increases are requested before the last 60 days of the contract
period.
(4) At least 30 days elapse between requested increases.
(c) In any contract period during which price increases will be considered,
the aggregate of the increases during any 12-month period shall not exceed 10%
of the contract unit price in effect at the end of the preceding 12-month
period. The Government reserves the right to raise the ceiling when market
conditions during the contract period support such a change.
(d) The following material shall be submitted with the request for a price
increase:
(1) A copy of the commercial catalog/pricelist showing the price
increase and the effective duty for commercial customers.
(2) Discount Schedule and Marketing Data regarding the Contractors'
commercial pricing practice relating to the reissued or modified
catalog/pricelist, or a certification that no change has occurred in the data
since completion of the initial negotiation or a subsequent submission.
(3) Documentation supporting the reasonableness of the price
increase.
(e) The Government reserves the right to exercise one of the following
options:
(1) Accept the Contractors' price increases as requested when all
conditions of (b), (c), and (d), above, are satisfied;
(2) Negotiate more favorable discounts from the new commercial
prices when the total increase requested is not supported; or,
(3) Remove the product(s) from contract involved pursuant to the
Cancellation Clause of this contract, when the increase requested is not
supported.
(f) The contract modification reflecting the price adjustment shall be
signed by the Government and made effective upon receipt of notification from
the Contractor that the new catalogs/pricelist have been mailed to the
addresses previously furnished by the Contracting Officer, provided that in no
event shall such price adjustment be effective prior to the effective date of
the commercial price increases. The increased contract prices shall apply to
delivery orders issued to the Contractor on or after the effective date of the
contract modification.
552.217-71 NOTICE REGARDING OPTION(S) (NOV 1992)
The General Services Administration (GSA) has included an option to extend the
term of the contract in order to demonstrate the value it places on quality
performance by providing a mechanism for continuing a contractual relationship
with a successful officer that performs at a level which meets or exceeds GSA's
quality performance expectations as communicated to the Contractor, in writing,
by the Contracting Officer or designated representative.
<PAGE> 98
SOLICITATION NO. FCNO-93-S303-3 PAGE 65 of 123
When deciding whether to exercise the option, the Contracting Officer will
consider the quality of the Contractor's past performance under this contract
in accordance with 48 CFR 517.207.
552.219-9 SMALL BUSINESS SUBCONTRACTING PLAN (DEVIATION FAR 52.219-9) (JUN 1994)
(a) This clause does not apply to small business concerns.
(b) "Commercial product," as used in this clause, means a product in
regular production that is sold in substantial quantities to the general public
and/or industry at established catalog or market prices. It also means a
product which, in the opinion of the Contracting Officer, differs only
insignificantly from the Contractor's commercial product.
"Subcontract," as used in this clause, means any agreement (other than
one involving an employer-employee relationship) entered into by a Federal
Government prime Contractor or subcontractor calling for supplies or services
required for performance of the contract or subcontract.
(c) The offeror, upon request by the Contracting Officer, shall submit and
negotiate a subcontracting plan, where applicable, which separately addresses
subcontracting with small business concerns, with small disadvantaged business
concerns, and with women-owned small business concerns. If the offeror is
submitting an individual contract plan, the plan must separately address
subcontracting with small business concerns, with small disadvantaged business
concerns, and with women-owned small business concerns with a separate part for
the basic contract and separate parts for each option (if any). The plan shall
be included in and made a part of the resultant contract. The subcontracting
plan shall be negotiated within the time specified by the Contracting Officer.
Failure to submit and negotiate the subcontracting plan shall make the offeror
ineligible for award of a contract.
(d) The offeror's subcontracting plan shall include the following:
(1) Goals, expressed in terms of percentages of total planned
subcontracting dollars, for the use of small business concerns, small
disadvantaged business concerns and, if an individual contract plan is
involved, women-owned small business concerns as subcontractors. The offeror
shall include all subcontracts that contribute to contract performance, and may
include a proportionate share of products and services that are normally
allocated as indirect costs.
(2) A statement of --
(i) Total dollars planned to be subcontracted;
(ii) Total dollars planned to be subcontracted to small
business concerns;
(iii) Total dollars planned to be subcontracted to small
disadvantaged business concerns; and
(iv) Total dollars planned to be subcontracted to
women-owned small business concerns, if an individual contract plan is
involved.
(3) A description of the principal types of supplies and services
to be subcontracted, and an identification of the types planned for
subcontracting to (i) small business concerns, (ii) small disadvantaged
business concerns, and (iii) women-owned small business concerns.
(4) A description of the method used to develop the subcontracting
goals in (1) above.
<PAGE> 99
SOLICITATION NO. FCNO-93-S303-3 PAGE 66 of 123
(5) A description of the method used to identify potential sources for
solicitation purposes (e.g., existing company source lists, the Procurement
Automated Source System (PASS) of the Small Business Administration, the
National Minority Purchasing Council Vendor Information Service, the Research
and Information Division of the Minority Business Development Agency in the
Department of Commerce, or small, small disadvantaged, and women-owned small
business concerns trade associations).
(6) A statement as to whether or not the offeror included indirect
costs in establishing subcontracting goals, and a description of the method
used to determine the proportionate share of indirect costs to be incurred with
(i) small business concerns, (ii) small disadvantaged business concerns, and if
an individual contract plan is involved, (iii) women-owned small business
concerns.
(7) The name of the individual employed by the offeror who will
administer the offeror's subcontracting program, and a description of the
duties of the individual.
(8) A description of the efforts the offeror will make to assure that
small business concerns, small disadvantaged business concerns, and women-owned
small business concerns have an equitable opportunity to compete for
subcontracts.
(9) Assurances that the offeror will include the clause in this
contract entitled Utilization of Small Business Concerns and Small
Disadvantaged Business Concerns in all subcontracts that offer further
subcontracting opportunities, and that the offeror will require all
subcontractors (except small business concerns) who receive subcontracts in
excess of $500,000 ($1,000,000 for construction of any public facility), to
adopt a plan similar to the plan agreed to by the offeror.
(10) Assurances that the offeror will (i) cooperate in any studies or
surveys as may be required, (ii) submit periodic reports in order to allow the
Government to determine the extent of compliance by the offeror with the
subcontracting plan, (iii) submit Standard Form (SF) 294, Subcontracting Report
for Individual Contracts, and/or SF 295, Summary Subcontract Report, in
accordance with the instructions on the forms, and (iv) ensure that its
subcontractors agree to submit Standard Forms 294 and 295.
(11) A recitation of the types of records the offeror will maintain to
demonstrate procedures that have been adopted to comply with the requirements
and goals in the plan, including establishing source lists; and a description
of its efforts to locate small, small disadvantaged, and women-owned small
business concerns and award subcontracts to them. The records shall include at
least the following (on a plant-wide or company-wide basis, unless otherwise
indicated):
(i) Source lists, guides, and other data that identify small,
small disadvantaged, or women-owned small business concerns.
(ii) Organizations contacted in an attempt to locate sources
that are small, small disadvantaged, or women-owned small business concerns.
(iii) Records on each subcontract solicitation resulting in an
award of more than $100,000, indicating (A) whether small business concerns were
solicited and if not, why not, (B) whether small disadvantaged business
concerns were solicited and if not, why not, (C) whether women-owned small
business concerns were solicited and if not, why not, and (D) if applicable,
the reason award was not made to a small business concern.
<PAGE> 100
SOLICITATION NO. FCNO-93-S303-3 PAGE 67 of 123
(iv) Records of any outreach efforts to contact (A) trade
associations, (B) business development organizations, and (C) conferences and
trade fairs to locate small, small disadvantaged, and women-owned small
business sources.
(v) Records of internal guidance and encouragement
provided to buyers through (A) workshops, seminars, training, etc., and (B)
monitoring performance to evaluate compliance with the program's requirements.
(vi) On a contract-by-contract basis, records to support
award data submitted by the offeror to the Government, including the name,
address, and business size of each subcontractor. Contractors having company or
division-wide annual plans need not comply with this requirement.
(e) In order to effectively implement this plan to the extent consistent
with efficient contract performance, the Contractor shall perform the following
functions:
(1) Assist small, small disadvantaged, and women-owned small
business concerns by arranging solicitations, time for the preparation of bids,
quantities, specifications, and delivery schedules so as to facilitate the
participation by such concerns. Where the Contractor's lists of potential
small, small disadvantaged, and women-owned small business subcontractors are
excessively long, reasonable efforts shall be made to give all such small
business concerns an opportunity to compete over a period of time.
(2) Provide adequate and timely consideration of the
potentialities of small, small disadvantaged business, and women-owned small
business concerns in all "make-or-buy" decisions.
(3) Counsel and discuss subcontracting opportunities with
representatives of small, small disadvantaged, and women-owned small business
firms.
(4) Provide notice to subcontractors concerning penalties and
remedies for misrepresentations of business status as small business or small
disadvantaged business for the purpose of obtaining a subcontract that is to be
included as part or all of a goal contained in the Contractor's subcontracting
plan.
(f) A master subcontracting plan on a plant or division-wide basis which
contains all the elements required by (d) above, except goals, may be
incorporated by reference as a part of the subcontracting plan required of the
offeror by this clause; provided, (1) the master plan has been approved, (2)
the offeror provides copies of the approved master plan and evidence of its
approval to the Contracting Officer, and (3) goals and any deviations from the
master plan deemed necessary by the Contracting Officer to satisfy the
requirements of this contract are set forth in the individual subcontracting
plan.
(g) (1) If a commercial product is offered, the subcontracting plan
required by this clause may relate to the offeror's production generally, for
both commercial and noncommercial products, rather than solely to the
Government contract. In these cases, the offeror shall, with the concurrence of
the Contracting Officer, submit one company-wide or division-wide annual plan.
(2) The annual plan shall be reviewed for approval by the agency
awarding the offeror its first prime contract requiring a subcontracting plan
during the fiscal year, or by an agency satisfactory to the Contracting
Officer.
(3) The approved plan shall remain in effect during the offeror's
fiscal year for all of the offeror's commercial products.
<PAGE> 101
SOLICITATION NO. FCNO-93-S303-3 PAGE 68 of 123
(h) Prior compliance of the offeror with other such subcontracting plans
under previous contracts will be considered by the Contracting Officer in
determining the responsibility of the offeror for award of the contract.
(i) The failure of the Contractor or subcontractor to comply in good faith
with (1) the clause of this contract entitled Utilization of Small Business
Concerns and Small Disadvantaged Business Concerns, or (2) an approved plan
required by this clause, shall be a material breach of the contract.
552.219-16 LIQUIDATED DAMAGES -- SMALL BUSINESS SUBCONTRACTING PLAN
(DEVIATION FAR 52.219-16) (JUN 1994)
(a) "Failure to make a good faith effort to comply with the subcontracting
plan, "as used in this clause, means a willful or intentional failure to perform
in accordance with the requirements of the subcontracting plan approved under
the clause in this contract entitled Small Business Subcontracting Plan, or
willful or intentional action to frustrate the plan.
(b) If, at contract completion, or in the case of a commercial products
plan, at the close of the fiscal year for which the plan is applicable, the
Contractor has failed to meet its subcontracting goals and the Contracting
Officer decides in accordance with paragraph (c) of this clause that the
Contractor failed to make a good faith effort to comply with its subcontracting
plan, established in accordance with the clause in this contract entitled Small
Business Subcontracting Plan, the Contractor shall pay the Government liquidated
damages in an amount stated. The amount of probable damages attributable to the
Contractor's failure to comply, shall be an amount equal to the actual dollar
amount by which the Contractor failed to achieve each subcontracting goal for
small business and/or small disadvantaged business or, in the case of a
commercial products plan, that portion of the dollar amount allocable to
Government contracts by which the Contractor failed to achieve each subcontract
goal.
(c) Before the Contracting Officer makes a final decision that the
Contractor has failed to make such good faith effort, the Contracting Officer
shall give the Contractor written notice specifying the failure and permitting
the Contractor to demonstrate what good faith efforts have been made. Failure to
respond to the notice may be taken as an admission that no valid explanation
exists. If, after consideration of all the pertinent data, the Contracting
Officer finds that the Contractor failed to make a good faith effort to comply
with the subcontracting plan, the Contracting Officer shall issue a final
decision to that effect and require that the Contractor pay the Government
liquidated damages as provided in paragraph (b) of this clause.
(d) With respect to commercial products plans; i.e., company-wide or
division-wide subcontracting plans approved under paragraph (g) of the clause in
this contract entitled Small Business Subcontracting Plan, the Contracting
Officer of the agency that originally approved the plan will exercise the
functions of the Contracting Officer under this clause on behalf of all agencies
that awarded contracts covered by that commercial products plan.
(e) The Contractor shall have the right of appeal, under the clause in this
contract entitled Disputes, from any final decision of the Contracting Officer.
(f) Liquidated damages shall be in addition to any other remedies that the
Government may have.
552.225-9 TRADE AGREEMENTS ACT (DEC 1994) (DEVIATION FAR 52.225-9)
(a) This clause implements the Trade Agreements Act of 1979 (19 U.S.C.
2501-2582) by providing a preference for U.S. made end products, designated
country end products, Caribbean Basin country end products, Canadian end
products or Mexican end products over other products.
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SOLICITATION NO. FCNO-93-S303-3 PAGE 69 of 123
"Caribbean Basin country end products," as used in this clause, means
an article that: (1) is wholly the growth, product, or manufacture of a
Caribbean Basin country (as defined in section 25.401 of the Federal
Acquisition Regulation (FAR)), or (2) in the case of an article which consists
in whole or in part of materials from another country or instrumentality, has
been substantially transformed into a new and different article of commerce
with a name, character, or use distinct from that of the article or articles
from which it was so transformed. The term includes services (except
transportation services) incidental to its supply; provided that the value of
those incidental services does not exceed that of the product itself. It does
not include service contracts as such. The term excludes products that are
excluded from duty free treatment from Caribbean countries under the Caribbean
Basin Economic Recovery Act (19 U.S.C. 2703(b)). These exclusions presently
consist of (i) textiles and apparel articles that are subject to textile
agreements; (ii) footwear, handbags, luggage, flat goods, work gloves, and
leather wearing apparel not designated as eligible articles for the purpose of
the Generalized System of Preference under title V of the Trade Act of 1974;
(iii) tuna, prepared or preserved in any manner in airtight containers, (iv)
petroleum, or any product derived from petroleum; and (v) watches and watch
parts (including cases, bracelets and straps) of whatever type including, but
not limited to, mechanical, quartz digital or quartz analog, if such watches or
watch parts contain any material that is the product of any country to which
the Tariff Schedule of the United States (TSUS) column 2 rates of duty apply.
"Designated country end product," as used in this clause, means an
article that (1) is wholly the growth, product, or manufacture of the
designated country (as defined in section 25.401 of the Federal Acquisition
Regulation (FAR)), or (2) in the case of an article which consists in whole or
in part of materials from another country or instrumentality, has been
substantially transformed into a new and different article of commerce with a
name, character, or use distinct from that of the article or articles from
which it was so transformed. The term includes services (except transportation
services) incidental to its supply, provided that the value of those incidental
services does not exceed that of the product itself. It does not include
service contracts as such.
"Canadian end product," as used in this clause, means an article that
(1) is wholly the growth, product, or manufacture of Canada, or (2) in the case
of an article which consists in whole or in part of materials from another
country or instrumentality, has been substantially transformed in Canada into a
new and different article of commerce with a name, character, or use distinct
from that of the article or articles from which it was transformed. The term
includes services (except transportation services) incidental to its supply;
provided, that the value of those incidental services does not exceed that of
the product itself. It does not include service contracts as such.
"Mexican end product," as used in this clause, means an article that
(1) is wholly the growth, product, or manufacture of Mexico, or (2) in the case
of an article which consists in whole or in part of materials from another
country or instrumentality, has been substantially transformed in Mexico into a
new and different article of commerce with a name, character, or use distinct
from that of the article or articles from which it was so transformed. The term
includes services (except transportation services) incidental to its supply,
provided that the value of those incidental services does not exceed that of
the product itself. It does not include service contracts as such.
"End products," as used in this clause, means those articles,
materials, and supplies to be acquired under this contract for public use.
"U.S. made end product," as used in this clause, means an article
which (1) is wholly the growth, product, or manufacture of the United States,
or (2) in the case of an article which consists in whole or in part of
materials from another country or instrumentality, has been substantially
transformed in the United States into a new and different article of commerce
with a name, character, or use distinct from that of the article or articles
from which it was so transformed.
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SOLICITATION NO. FCNO-93-S303-3 PAGE 70 of 123
"Nondesignated country end products," as used in this clause, means any
end product which is not a U.S. made end product, designated country end
product, Caribbean Basin Country end product, Canadian end product or Mexican
end product.
"United States," as used in this clause, means the United States, its
possessions, Puerto Rico, and any other place which is subject to its
jurisdiction, but does not include leased bases or trust territories.
(b) The Contractor agrees to deliver under this contract only U.S. made end
products, designated country end products, Caribbean Basin country end products.
Canadian end products or Mexican end products or, if a national interest waiver
is granted under section 302 of the Trade Agreements Act of 1979, nondesignated
country end products. Only if such waiver is granted may a nondesignated country
end product be delivered under this contract(s).
(c) Offers will be evaluated in accordance with the policies and procedures
of Part 25 of the FAR except that offers of U.S. made end products, designated
country end products, Caribbean Basin end products, Canadian end products or
Mexican end products shall be evaluated without the restriction of the Buy
American Act or the Balance of Payments Program.
552.229-72 FEDERAL EXCISE TAX - DC GOVERNMENT (FEB 1990)
If the District of Columbia cites an Internal Revenue Tax Exempt Certificate
Number on orders placed under this contact, the Contractor shall bill shipments
to the District of Columbia at prices exclusive of Federal excise tax and show
the amount of such tax on the invoice.
552.232-70 PAYMENTS BY ELECTRONIC FUNDS TRANSFER (APR 1989)
The submission of a designation of financial institution for receipt of
electronic funds transfer payments in the "Electronic Funds Transfer Payment
Methods" clause (FAR 52.232-28) shall be as follows: The Contractor shall submit
its designation of a financial institution for receipt of electronic funds
transfer payments with each invoice requesting payment of $25,000 or more
(exclusive of any discount for prompt payment). The information for electronic
funds transfer is not required by the Department of Defense, the United States
Postal Service, or the Tennessee Valley Authority. Information required for
electronic funds transfer payments shall be furnished to the Veterans
Administration in accordance with instructions provided by that agency. Other
agencies and departments thereof may waive the requirement for designation of a
financial institution or receipt of electronic funds transfer payments and for
submission of information required to make such payments by including a notice
on delivery orders or otherwise notifying the Contractor.
552.232.72 INVOICE REQUIREMENTS (VARIATION IV - DEC. 1990)
(a) Invoices shall be submitted in an original only, unless additional
copies are required by the ordering agency on the delivery order, to the
designated billing office specified on the delivery order.
(b) In addition to the requirements for a proper invoice as specified in
paragraph (a)(4)(i) through (a)(4)(vii) of the Prompt Payment clause (52.232-25)
of this contract, the Contractor shall submit with the invoice any information
or documentation necessary for the processing of payment as may be specified by
the ordering agency on the delivery order, provided that such requirements are
consistent with the terms and conditions of this contract.
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SOLICITATION NO. FCNO-93-S303-3 PAGE 71 of 123
(c) (Applicable to invoices for $25,000 or more). Information necessary to
enable the Government to make payment by wire transfer shall be furnished in
accordance with 552.232-70, Payments by Electronic Funds Transfer.
552.232-80 PAYMENT BY CREDIT CARD (DEC 1989)
(a) Definitions. "Government commercial credit card" means the uniquely
numbered credit card issued by the Contractor under single award schedule,
Federal Supply Schedule IG 615, Governmentwide Commercial Credit Card Service,
to named individual Government employees to pay for official Government
purchases.
"Oral delivery order" means an order placed orally either in person or
by telephone, which is paid for by Government commercial credit card.
(b) At the option of the Government and if agreeable to the Contractor,
payments of $25,000 or less for oral or written delivery orders may be made
using the Government commercial credit card.
(c) The Contractor shall not process a transaction for payment through the
credit card clearinghouse until the purchased supplies have been shipped or
services performed. Unless the cardholder requests correction or replacement of
a defective or faulty item in accordance with other contract requirements, the
Contractor shall immediately credit a cardholder's account for items returned
as defective or faulty.
552.238-75 IDENTIFICATION OF ENERGY-EFFICIENT OFFICE EQUIPMENT AND SUPPLIES
CONTAINING RECOVERED MATERIALS OR OTHER ENVIRONMENTAL ATTRIBUTES (SEP 1994)
(a) Definitions. "Energy-efficient office equipment," as used in this
clause, means office equipment that, in representative use, provides equivalent
or better performance and value to users, but uses significantly less energy
than most functionally equivalent models.
"Recovered materials," as used in this clause, means waste material
and by-products which have been recovered or diverted from solid waste, but
such term does not include those materials and by-products generated from, and
commonly reused, within an original manufacturing process (42 U.S.C. 6903(19)).
For paper, it also includes postconsumer materials, and manufacturing and
certain other wastes. (42 U.S.C. 6962(h)).
"Remanufactured products," as used in this clause, means equipment or
parts that have been factory remanufactured or rebuilt to meet new equipment or
part performance specifications and have had no use subsequent to their
remanufacture.
(b) The offeror shall identify in its offer and include in any commercial
catalogs and pricelists and any resultant Government catalogs or pricelists
submitted to the Contracting Officer, energy-efficient office equipment and
supplies that contain recovered material, remanufactured products, or other
environmental attributes. Examples of energy- efficient office equipment are
microcomputers and associated equipment that meet the requirements of the
Environmental Protection Agency's (EPA's) Energy Star Computers Program.
Supplies that contain recovered materials and other environmental attributes
include, but are not limited to, products identified in EPA procurement
guidelines (40 CFR Subchapter 1) and products that are either degradable, ozone
safe, recyclable, contain low volatile organic content compounds, contribute to
source reduction, or otherwise are designed or manufactured to achieve
environmental improvement. For example, an offeror can identify products that
are safe or safer alternatives for more toxic or hazardous products and
products that can be substituted for ones manufactured with toxic or hazardous
materials. Such
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SOLICITATION NO. FCNO-93-S303-3 Page 72 of 123
supplies shall satisfy the guidance contained in 16 CFR Part 260, Guides for the
Use of Environmental Marketing Claims.
(c) An offeror, in identifying an item with an environmental attribute, shall
possess evidence or rely upon a reasonable basis to substantiate the claim
(see 16 CFR 260.5). The Government will accept an offeror's claim of an item's
environmental attribute on the basis of -
(1) Participation in a Federal agency sponsored program, e.g.,
EPA's Energy Star Computer program;
(2) Verification by an independent organization that specializes in
certifying such claims; or
(3) Possession of competent and reliable evidence. For any test,
analysis, research, study or other evidence to be "competent and reliable,"
it must have been conducted and evaluated in an objective manner by persons
qualified to do so, using procedures generally accepted in the profession to
yield accurate and reliable results.
552.238-76 PRICE REDUCTIONS (OCT 1994)
(a) Before award of a contract, the Contracting Officer and the Offeror will
agree upon (1) the customer (or category of customers) which will be the basis
of award, and (2) the Government's price or discount relationship to the
identified customer (or category of customers). This relationship shall be
maintained throughout the contract period. Any change in the Contractor's
commercial pricing or discount arrangement applicable to the identified customer
(or category of customers) which disturbs this relationship shall constitute a
price reduction.
(b) During the contract period, the Contractor shall report to the Contracting
Officer all price reductions to the customer (or category of customers) that was
the basis of award. The Contractor's report shall include an explanation of the
conditions under which the reductions were made.
(c) (1) A price reduction shall apply to purchases under this contract if,
after the date negotiations conclude, the Contractor -
(i) Revises the commercial catalog, pricelist, schedule or other
document upon which contract award was predicated to reduce prices;
(ii) Grants more favorable discounts or terms and conditions than those
contained in the commercial catalog, pricelist, schedule or other documents upon
which contract award was predicated; or
(iii) Grants special discounts to the customer (or category of
customers) that was the basis of award, and the change disturbs the
price/discount relationship of the Government to the customer (or category of
customers) that was the basis of award.
(2) The Contractor shall offer the price reduction to the Government
with the same effective date, and for the same time period, as extended to the
commercial customer (or category of customers).
(d) There shall be no price reduction for sales -
(1) To commercial customers under firm, fixed-price definite quantity
contracts with specified delivery in excess of the maximum order limitations
specified in this contract;
<PAGE> 106
SOLICITATION NO. FCNO-93-S303-3 PAGE 73 of 123
(2) To Federal agencies; or
(3) Caused by an error in quotation or billing, provided adequate
documentation is furnished by the Contractor to the Contracting Officer.
(e) The Contractor may offer the Contracting Officer a voluntary
Governmentwide price reduction at any time during the contract period.
(f) The Contractor shall notify the Contracting Officer of any price
reduction subject to this clause as soon as possible, but not later than 15
calendar days after its effective date.
(g) The contract will be modified to reflect any price reduction which
becomes applicable in accordance with this clause.
552.238-72 CONTRACTOR'S REPORT OF SALES (APR 1995)
(a) Contractors shall furnish quarterly the dollar value (rounded to the
nearest whole dollar) of all sales under the contract during the preceding
3-month period to include any partial month. A separate report for each
National Stock Number (NSN), Special Item Number (SIN), or subitem shall be
prepared and submitted, unless otherwise specified, on GSA Form 72A.
(b) The report is due in the office specified below or specified at the
time of award 30 days following the completion of the reporting period. A
report is required even when no sales occur during the reporting period. Sales
for orders that extend beyond the contract period will be reported within 60
days of final delivery.
(c) The Government reserves the right to inspect without further notice,
such records of the Contractor as pertain to sales under any contract resulting
from this solicitation. Willful failure or refusal to furnish the required
reports, or falsification thereof, shall constitute sufficient cause for
terminating the contract for default under FAR 52.249-8, Default (Fixed-Priced
Supply and Service).
(d) The report shall be forwarded to the following address:
General Services Administration
Accounts Receivable Branch (6BCR)
P.O. Box 70500
Chicago, IL 60673-0500
(NOTE: Contractors will be furnished copies of GSA Form 72A, along with
reporting requirements and instructions, approximately 6 weeks after date of
award.)
552.238-77 INDUSTRIAL FUNDING FEE (APR 1995)
(a) Contractors shall pay the Federal Supply Service, GSA, an industrial
funding fee (IFF) at the end of each contract quarter. The IFF shall be
remitted at the same time the GSA Form 72A, Contractor's Report of Sales, is
submitted under clause 552.238-72, Contractor's Report of Sales. The IFF equals
1% (one percent) of total sales reported on GSA Form 72A. The IFF reimburses
the GSA Federal Supply Service for the costs of operating the Federal Supply
Schedules Program and recoups its operating costs from ordering activities.
Offerors should include the IFF in
<PAGE> 107
SOLICITATION NO. FCNO-93-S303-3 PAGE 74 of 123
the prices submitted with their offer. The fee will be included in award
price(s) and reflected in the total amount charged to ordering activities.
(b) The IFF amount due shall be paid by check or electronic funds transfer
to the "General Services Administration." Where multiple special item numbers
and/or contracts are involved, the IFF's may be consolidated into one check. To
ensure that the payment is credited properly, the Contractor should identify the
check or electronic transmission as an "Industrial Funding Fee" and include
the following information: contract number(s); report amounts(s); and report
period(s).
(1) If the IFF payment is made by check, it shall be forwarded to
the following address:
General Services Administration
Accounts Receivable Branch (6BCR)
P.O. Box 70500
Chicago, IL 60673-0500
(2) If the IFF payment is made by electronic funds transfer through
the Automated Clearing House (ACH), the Contractor should provide their
financial institution with the following information for use in making
payments: (i) the ACH Transmission Routing Number of the First National Bank of
Chicago: 071000013; and (ii) the GSA Account Number: 1165151. Contractors may
call the GSA Accounts Receivable Branch (816) 926-7351 with questions regarding
payments through the ACH.
(c) If the full amount of the IFF is not paid within 30 calendar days after
the end of the applicable reporting period, it shall constitute a contract debt
to the United States Government under the terms of FAR 32.6. The Government may
exercise all rights under the Debt Collection Act of 1982, including
withholding or setting off payments and interest on the debt (see FAR
52.232-17, interest).
(d) Failure to submit sales reports, falsification of sales reports, and/or
failure to pay the IFF in a timely manner may result in termination or
cancellation of this contract. Willful failure or refusal to furnish the
required reports, falsification of sales reports, or failure to make timely
payment of the IFF constitutes a cause for terminating the Contractor for
default under FAR 52.249-8, Default (Fixed Priced Supply and Service).
552.246-17 WARRANTY OF SUPPLIES OF A NONCOMPLEX NATURE (DEC 1990)
(ALTERNATE I - DEC 1990) (DEVIATION FAR 52.246-17)
(a) Definitions. "Acceptance," as used in this clause, means the act of an
authorized representative of the Government by which the Government assumes for
itself, or as an agent of another, ownership of existing supplies, or approves
specific services as partial or complete performance of the contract.
"Correction," as used in this clause, means the elimination of a defect.
"Supplies," as used in this clause, means the end item furnished by the
Contractor and related services required under the contract. The word does not
include "data."
(b) Contractor's obligations.
<PAGE> 108
SOLICITATION NO. FCNO-93-S303-3 PAGE 75 of 123
(1) Notwithstanding inspection and acceptance by the Government of
supplies furnished under this contract, or any condition of this contract
concerning the conclusiveness thereof, the Contractor warrants that for 24
months after acceptance by the government, all supplies furnished --
(i) Are of a quality to pass without objection in the
trade under the contract description;
(ii) Are fit for the ordinary purposes for which the
supplies are used;
(iii) Are within the variations permitted by the contract,
and are of an even kind, quality, and quantity within each unit and among all
units;
(iv) Are adequately contained, packaged, and marked as the
contract may require; and
(v) Conform to the promises or affirmations of fact made
on the container.
(2) When return, correction, or replacement is required, the
Contractor shall be responsible for all costs attendant to the return,
correction or replacement of the nonconforming supplies. Any removal in
connection with the above shall be done by the Contractor at its expense.
However, the Contractor's liability for the transportation charges shall not
exceed an amount equal to the cost of transportation by the usual commercial
method of shipment between the place of delivery specified in the contract and
the Contractor's plant, and return.
(3) Any supplies or parts thereof, corrected or famished in
replacement under this clause, shall also be subject to the terms of this
clause to the same extent as supplies initially delivered. The warranty, with
respect to supplies or parts thereof, shall be equal in duration to that in
paragraph (b)(1) of this clause and shall run from the date of delivery of the
corrected or replaced supplies.
(c) Remedies available to the Government.
(1) The Contracting Officer shall give written notice to the
Contractor of any breach of warranties in paragraph (b)(1) of this clause
within 30 days. This notice shall contain information concerning the
deficiencies found, the location of the nonconforming supplies, and the
quantity involved.
(2) Within a reasonable time after the notice, the Contracting
Officer may either --
(i) Require, by written notice, the prompt correction or
replacement of any supplies or parts thereof (including preservation,
packaging, packing, and marking) that do not conform with the requirements of
this contract within the meaning of paragraph (b)(1) of this clause; or
(ii) Retain such supplies and reduce the contract price by
an amount equitable under the circumstances. When the nature of the defect in
the nonconforming item is such that the defect affects an entire batch or lot
of material, then the equitable price adjustment shall apply to the entire
batch or lot of material from which the nonconforming item was taken.
(3) (i) If the contract provides for inspection of supplies by
sampling procedures, conformance of supplies or components subject to warranty
action shall be determined by the applicable sampling procedures in the
contract. The Contracting Officer --
(A) May, for sampling purposes, group any
supplies delivered under this contract;
<PAGE> 109
SOLICITATION NO. FCNO-93-S303-3 PAGE 76 of 123
(B) Shall require the size of the sample to be that
required by sampling procedures specified in the contract for the quantity of
supplies on which warranty action is proposed;
(C) May project warranty sampling results over supplies in
the same shipment or other supplies contained in other shipments even though all
such supplies are not present at the point of reinspection; provided, that the
supplies remaining are reasonably representative of the quantity on which
warranty action is proposed; and
(D) Need not use the same lot size as on original
inspection or reconstitute the original inspection lots.
(ii) Within a reasonable time after notice of any breach of the
warranties specified in paragraph (b)(1) of this clause, the Contracting
Officer may exercise one or more of the following options:
(A) Require an equitable adjustment in the contract price
for any group of supplies.
(B) Screen the supplies grouped for warranty action
under this clause at the Contractor's expense and return all nonconforming
supplies to the Contractor for correction or replacement.
(C) Require the Contractor to screen the supplies at
locations designated by the Government within the continental United States and
to correct or replace all nonconforming supplies.
(D) Return the supplies grouped for warranty action under
this clause to the Contractor (irrespective of the f.o.b. point or the point of
acceptance), for screening and correction or replacement. All costs incurred by
the Government in returning the nonconforming supplies, including costs to the
freight carrier resulting from the Contractor's refusal to accept their return,
shall be for the Contractor's account.
(4) (i) The Contracting Officer may, by contract or otherwise, correct
or replace the nonconforming supplies with similar supplies from another source
and charge to the Contractor the cost occasioned to the Government thereby if
the Contractor --
(A) Fails to make redelivery of the corrected or replaced
supplies within the time established for their return; or
(B) Fails either to accept return of the nonconforming
supplies or fails to make progress after their return to correct or replace
them so as to endanger performance of the delivery schedule, and in either of
these circumstances does not cure such failure within a period of 10 days (or
such longer period as the Contracting Office may authorize in writing) after
receipt of notice from the Contracting Officer specifying such failure.
(ii) Instead of correction or replacement by the Government, the
Contracting Officer may require an equitable adjustment of the contract price
for all nonconforming supplies, including batch or lot materials which either
have been consumed or other disposition has been made. In addition, if the
Contractor fails to furnish timely disposition instructions, the Contracting
Officer may return the supplies for screening and correction or replacement
under subparagraph (c)(3)(ii)(D) above; store the nonconforming supplies for
the Contractor's account; sell the nonconforming supplies to the highest bidder
on the open market and apply the proceeds against the accumulated storage and
other costs, including the cost of the sale; or otherwise dispose of the
nonconforming supplies for the Contractor's account in a reasonable manner. The
Government is entitled to reimbursement from the Contractor, or from the
proceeds of such disposal, for the reasonable expenses of the care and
disposition of the nonconforming supplies, as well as for excess costs incurred
or to be incurred.
<PAGE> 110
SOLICITATION NO. FCNO-93-S303-3 PAGE 77 of 123
(5) The rights and remedies of the Government provided in this
clause are in addition to and do not limit any rights afforded to the
Government by any other clause of this contract.
(6) Unless otherwise provided, this warranty is applicable both
within and outside the continental limits of the United States.
(7) In addition to other marking requirements of this contract,
the Contractor shall stamp or mark the supplies delivered or otherwise furnish
notice with the supplies of the existence of the warranty. The marking should
briefly include (i) a statement that the warranty exists, (ii) the substance of
the warranty, (iii) its duration, and (iv) whom to notify if the supplies are
found to be defective.
552.246-73 WARRANTY - MULTIPLE AWARD SCHEDULE (MAY 1989)
The Contractor's standard commercial warranty as stated in the Contractor's
commercial price list will apply to this contract if its warranty is equal to
or better than the warranty required by 552.246-17 (Alternate I).
I-FSS-50 PERFORMANCE REPORTING REQUIREMENTS (FEB 1995)
(a) This clause applies to all contracts estimated to exceed $100,000.
(b) Unless notified otherwise in writing by the Contracting Officer, the
Contractor may assume contract performance is satisfactory.
(c) If negative performance information is submitted by customer agencies,
the Contracting Officer will notify the Contractor in writing and provide
copies of any complaints received. The Contractor will have 30 calendar days
from receipt of this notification to submit a rebuttal and/or a report of
corrective actions taken.
I-FSS-102-D SCOPE OF CONTRACT (AUG 1995)
This solicitation is issued to establish contracts which may be used on a
nonmandatory basis by the agencies and activities named below, as a source of
supply for the supplies or services described herein, for delivery within the
48 contiguous states and Washington, D.C.
(1) All Federal agencies and activities in the executive,
legislative, and judicial branches,
(2) Government contractors authorized in writing by a Federal
Agency pursuant to 48 CFR 51.1,
(3) Mixed ownership Government corporations (as defined in the
Government Corporation Control Act),
(4) The Government of the District of Columbia.
(5) Other activities and organizations authorized by statute or
regulation to use GSA as a source of supply. (Questions
regarding activities authorized to use this schedule should
be directed to the Contracting Officer.)
Articles or services may be ordered from time to time in such quantities as may
be needed to fill any requirement, subject to the Minimum Order, Delivery Order
Limitation thresholds which will be specified in resultant contracts. Overseas
activities may place orders directly with schedule contractors for delivery to
CONUS port or consolidation point.
<PAGE> 111
SOLICITATION NO. FCNO-93-S303-3 PAGE 78 of 123
For orders received from activities within the Executive Branch of the
Government, each Contractor is obligated to deliver all articles or services
contracted for that may be ordered during the contract term.
The Contractor is not obligated to accept orders received from activities
outside the Executive Branch; however, the Contractor is encouraged to accept
such orders. If the Contractor is unwilling to accept such an order, the
Contractor shall return it by mailing it or delivering it to the ordering
office within 5 workdays from receipt. Failure to return an order shall
constitute acceptance whereupon all provisions of the contract shall apply.
The Government is obligated to purchase under each resultant contract a
guaranteed minimum of one hundred dollars during the contract term.
I-FSS-106 GUARANTEED MINIMUM (APR 1995)
The minimum quantity of supplies that the Government agrees to order during the
period of this contract is $100. If, at the conclusion of the contract period
the Contractor has received orders for less than $100, the Government will pay
(upon request) the difference between the amount ordered and the $100.
(a) Request for payment of any amount due under this clause shall be
submitted in writing to the Contracting Officer within 30 days after the end of
the contract period.
(b) Payment of any amount due under this clause shall be contingent upon
the Contractor's timely submission of GSA Form 72 reports (see Section I, ref.
GSAR 552.238-72, "Contractor's Report of Sales") during the period of the
contract.
(c) The guaranteed minimum does not apply if the contract is terminated for
default.
I-FSS-125 REQUIREMENTS EXCEEDING THE MAXIMUM ORDER (AUG 1995)
(a) In accordance with FAR 8.404 there may be circumstances where an
ordering activity finds it advantageous to request a price reduction
such as where a quantity of an individual order clearly indicates the
potential for obtaining a reduced price.
To assist the customer agencies to determine when they should seek a
price decrease a level called a maximum order has been identified under
the contract. When an ordering activity's order exceeds this amount it
is recommended that the ordering activity contract the vendor for a
reduced price.
(b) Vendors may:
(1) offer a new lower price for this requirement (the Price Reduction
clause is not applicable to orders placed over the Maximum Order
in FAR 52.216-19.)
(2) offer the lowest price available under the contract; or
(3) decline the order, orders must be returned in accordance with FAR
52.216-19.
(c) A delivery order that exceed the maximum order may be placed with the
Contractor selected in accordance with FAR 8.404. The order will be
placed under the contract.
<PAGE> 112
SOLICITATION NO. FCNO-93-S303-3 PAGE 79 of 123
(d) Sales for orders that exceed the Maximum Order shall be reported in
accordance with GSAR 552.238-72.
I-FSS-140-B URGENT REQUIREMENTS (JAN 1994)
When the Federal Supply Schedule contract delivery period does not meet the
bona fide urgent delivery requirements of an ordering agency, agencies are
encouraged, if time permits, to contact the Contractor for the purpose of
obtaining accelerated delivery. The Contractor shall reply to the inquiry
within 3 workdays after receipt. (Telephonic replies shall be confirmed by the
Contractor in writing.) If the Contractor offers an accelerated delivery time
acceptable to the ordering agency, any order(s) placed pursuant to the agreed
upon accelerated delivery time frame shall be delivered within this shorter
delivery time and in accordance with all other terms and conditions of the
contract.
I-FSS-164-B OPTION TO EXTEND THE TERM OF THE CONTRACT (AUG 1995)
The Government may require continued performance of this contract for an
additional 5 year period. The option clause may not be exercised more than one
time. When the option to extend the term of this contract is exercised, the
following conditions apply:
(a) The Contracting Officer may exercise the option by providing a written
notice to the Contractor 10 months before expiration of the contract.
(b) When the Government exercises its option to extend the term of this
contract, prices in effect at the time the option is exercised will
remain in effect during the option period, unless an adjustment is
made in accordance with another contract clause (e.g., Economic Price
Adjustment Clause or Price Reduction Clause).
(c) When the Government exercises the option to extend the term of this
contract, the following clauses, if included in the original contract,
are deleted from the contract for the 5 year option period.
<TABLE>
<S> <C>
B-FSS-98 Estimated Requirements (OCT 1988)
F-FSS-202-E Delivery Prices (MAY 1991)
I-FSS-102 A/B/C Scope of Contract
I-FSS-104 Scope of Contract
I-FSS-140-A Urgent Requirements (APR 1984)
I-FSS-249-A Default (AUG 1993)
I-FSS-150 A/B Non-Mandatory Schedule Users (APR 1984)
I-FSS-648 Procurement of Similar Articles or Services (JUN 1986)
I-FSS-690-A Cancellation (APR 1984)
I-FSS-695 Open Season for Consideration of New Offers (18-month Open Season)
I-FSS-696 Open Season for Consideration of New Offers (24-month Open Season)
I-FSS-684 End-of-Contract Additional Discounts Applicable to Aggregate Sales
M-FSS-305-A/B/C Multiple Awards
52.216-19 Delivery Order Limitation (Variation I)
552.238-72 Contractor's Report of Orders Received
</TABLE>
(d) When the Government exercises the option to extend the term of this
contract, the following new clauses apply to the contract for the 5
year option period.
<TABLE>
<S> <C>
CP-FSS-3 Impact of Nonmandatory Users
B-FSS-96 Estimated Sales
</TABLE>
<PAGE> 113
SOLICITATION NO. FCNO-93-S303-3 PAGE 80 of 123
I-FSS-106 Guaranteed Minimum
I-FSS-102-D Scope of Contract
I-FSS-104 Scope of Contract (IFSS)
F-FSS-202-G Delivery Prices
S2-216-19 Delivery Order Limitations (Variation II)
I-FSS-140-B Urgent Requirements
I-FSS-249-B Default
I-FSS-690-B Cancellation
52.216-22 Indefinite Quantity
M-FSS-305 Multiple Awards
CP-FSS-20 New Industrial Funding Fee/Revised Contract Sales
Reporting
552.238-77 Industrial Funding Fee
552.238-72 Contractor's Report of Sales
I-FSS-685-A Aggregate Sales Discounts
I-FSS-694 Open Season for Consideration of New Offers (Annual
Open Season)
I-FSS-249-B DEFAULT (JAN 1994)
In addition to FAR clause 52.249-8, which is incorporated by reference herein,
the following is applicable to orders placed under Federal Supply Schedule
contracts.
Any ordering office may, in respect to any one or more purchase orders
placed by it under the contract, exercise the same right of termination,
acceptance of inferior articles or services, and assessment of excess costs as
might the Contracting Officer, except that when failure to deliver articles or
services is alleged by the Contractor to be excusable, the determination of
whether the failure is excusable shall be made only by the Contracting Officer
of the General Services Administration, to whom such allegation shall be
referred by the ordering office and from whose determination appeal may be
taken as provided in the clause of this contract entitled "Disputes."
552.238-74 SUBMISSION AND DISTRIBUTION OF AUTHORIZED GSA SCHEDULE
PRICELISTS (SEP 1993)
(a) Definition. For the purposes of this clause, the Mailing List is the
list of Federal addresses provided to the Contractor by the Contracting Officer.
(b) The Contracting Officer will return one copy of the Authorized GSA
Schedule Pricelist to the Contractor with the notification of contract award.
The Contractor shall not print or distribute the pricelist without written
approval from the Contracting Officer. NOTE: Approval by the Contracting
Officer shall not absolve the Contractor from responsibility for the accuracy
of the pricelist.
(c) (1) The Contractor shall provide to the GSA Contracting Officer:
(i) Two paper copies of Authorized GSA Schedule Pricelist;
and
(ii) The Authorized GSA Schedule Pricelist on a common-use
electronic medium. The Contracting Officer will provide
detailed instructions for the electronic submission with
the award notification. Some structured data entry in a
prescribed format may be required.
(2) The Contractor shall provide to each addressee on the mailing
list either:
<PAGE> 114
SOLICITATION NO. FCNO-93-S303-3 PAGE 81 of 123
(i) One paper copy of the Authorized GSA Schedule Price
List; or
(ii) A self-addressed, postage-paid envelope or postcard
to be returned by addressees that want to receive a
paper copy of the pricelist. The Contractor shall
distribute price lists within 20 calendar days after
receipt of returned requests.
(3) The Contractor shall advise each addressee of the availability
of pricelist information through the on-line Multiple Award
Schedule electronic data base.
(d) The Contractor shall make all of the distributions required in
paragraph (c) at least 15 calendar days before the beginning of the
contract period, or within 30 calendar days after receipt of the
Contracting Officer's approval for printing, whichever is later.
(e) During the period of the contract, the Contractor shall provide one
copy of its Authorized GSA Schedule Pricelist to any authorized
schedule user, upon request. Use of the mailing list for any other
purpose is not authorized.
I-FSS-599 ELECTRONIC COMMERCE--FACNET (SEP 1995)
(a) General Background.
The Federal Acquisition Streamlining Act (FASA) of 1994 establishes
the Federal Acquisition Network (FACNET) requiring the Government to
evolve its acquisition process from one driven by paperwork into an
expedited process based on electronic commerce/electronic data
interchange (EC/EDI). FASA increased the Simplified Acquisition
Threshold (SAT--formerly is known as "small purchases") to $ 100,000
if an ordering activity is FACNET compliant. The interim rules on
FACNET were published in the Federal Register on July 3, 1995.
EC/EDI means more than merely automating manual processes and
eliminating paper transactions. It can and will help to move business
processes (e.g., procurement, finance, logistics, etc.) into a fully
electronic environment and fundamentally change the way organizations
operate.
(b) Trading Partners and Value-Added Networks (VAN's).
Within the FACNET architecture, electronic documents (e.g., orders,
invoices, etc.) are carried between the Federal Government's procuring
office and contractors (now known as "trading partners"). These
transactions are carried by commercial telecommunications companies
called Value-Added Networks (VAN's). Federal Government transactions
are provided only to those VAN's that have been certified by DOD and
connected to FACNET.
EDI can be done using standard office automation hardware and
telecommunications. The selection of a VAN is a business decision
contractors must make. There are many different VAN's which provide a
variety of electronic services and different pricing strategies. If
your VAN only provides communications services, you may also need a
software translation package.
(c) Registration Instructions.
To do EDI with the Government, contractors must register as a trading
partner with a VAN. Contractors will register using an American
National Standards Institute (ANSI) ANSI X12 838 transaction set,
called a "Trading Partner Profile." A transaction set is a standard
method of moving electronic data. VAN's will be able to assist
<PAGE> 115
SOLICITATION NO. FCNO-93-S303-3 PAGE 82 of 123
contractors with registration. Contractors will provide regular business
information, banking information, and EDI capabilities to all agencies in this
single registration. A central repository of all trading partners has been
developed. All Government procuring offices and other interested parties will
have access to this central repository. The database is structured to identify
the types of data elements which are public information and those which are
confidential and not releasable.
A list of certified VAN's and software providers will be available from the
Department of Defense (DOD) by calling 1(800)EDI-3414, or from world wide web
at www.itsi.disa.mil/ctf.
To register, contractors must provide their Dunn and Bradstreet (DUNS) number.
The DUNS number is available by calling 1(800)335-0505. It is provided and
maintained free of charge and only takes a few minutes to obtain. Contractors
will need to provide their Tax Identification Number (TIN). The TIN is assigned
by the Internal Revenue Service by calling 1(800)829-1040. Contractors will also
be required to provide information about company bank or financial institution
for electronic funds transfer (EFT).
(d) Implementation Conventions.
All EDI transactions must comply with the Federal Implementation Convention
(IC's). Many VAN's and software providers have already built the IC
requirements into their products. If you need to see the IC's, they are
available on a registry maintained by the National Institute of Standards and
Technology (NIST). It is accessible via the Internet at
http://saad.ncsl.nist.gov/dartg/edi/fededi.html. IC's are available for common
business documents such as Purchase Order, Price Sales Catalog, Invoice,
Request for Quotes, etc.
(e) Additional Information.
For additional information on FACNET, contact the following Government
Agency:
Federal Electronic Commerce Acquisition
Program Management Office (ECA-PMO)
5113 Leasburg Pike, Suite 400
Falls Church, VA 22041
703/681-0364 or 0369
FAX 703/681-0362 or 0363
Electronic Mail: [email protected]
Internet World Wide Web Home Page: http://www.gsa.gov
(f) GSA Advantage!
(1) GSA Advantage! will use this FACNET system to receive price lists and
send purchase orders, GSA Advantage! enables customers to:
(i) Perform database searches across all contracts by
Manufacturer, Manufacturer's Model/Part Number, and
generic Product Categories.
(ii) Generate their own EDI delivery orders to contractors,
generate EDI delivery orders from the Federal Supply
Service to contractors, or download files to create
their own delivery orders.
(2) GSA Advantage! may be accessed via the INTERNET. The INTERNET
address is: http://www.gsa.gov.
<PAGE> 116
SOLICITATION NO. FCNO-93-S303-3 PAGE 83 of 123
I-FSS-600 CONTRACT PRICE LISTS (SEP 1995)
(a) Electronic Contract Data.
(1) The Contracting Officer will provide instructions for
submitting electronic contract data in a prescribed electronic
format as required by clause 552.238-74, Submission and
Distribution of Authorized GSA Schedule Pricelists. Formats
will follow the Federal Implementation Convention (IC) for
ANSI ASC X12 Transaction Set 832, Price Sales Catalog. The
instructions provided will include the following sections:
(i) The files needed for submission;
(ii) The File Verification Program, where applicable;
(iii) Instructions for file submissions and transmission
procedures; and
(iv) "P-Code" or product category code listing.
(2) The Contractor is encouraged to transmit its file submissions
electronically through the EDI Government FACNET system using
a Value Added Network (VAN). The necessary format and
information will be provided on a diskette to a Contractor
that is not EDI capable. The Contractor's electronic files
shall be complete; correct; readable; virus-free; and contain
only those products, prices, and terms and conditions that
were accepted by the Government. They will be added to GSA's
electronic ordering system known as GSA Advantage!, a
menu-driven database system that provides on-line access to
contract ordering information, terms and conditions,
up-to-date pricing, and the option to create an electronic
delivery order. The Contractor's electronic files must be
received no later than 30 days after receipt of award.
(3) Further details on FACNET, VAN'S, IC's, and GSA Advantage! can
be found in I-FSS-599, Electronic Commerce-FACNET.
(b) Paper Federal Supply Schedule Price Lists.
(1) The Contractor shall also prepare, print, and distribute a
paper Federal Supply Schedule Price List as required by clause
552.238-74, Submission and Distribution of Authorized GSA
Schedule Price Lists. This shall be done as set forth in this
paragraph (b).
(2) The Contractor shall prepare a Federal Supply Schedule Price
List by either:
(i) Using the commercial catalog and/or price list as
accepted by the Government, showing accepted
discounts, and obliterating all items, terms, and
conditions not accepted by the Government by lining
out those items or by a stamp across the face of the
item stating "NOT UNDER CONTRACT" or "EXCLUDED"; or
(ii) Composing a price list in which only those items,
terms, and conditions accepted by the Government are
included, and which contain only net prices, based
upon the commercial price list less discounts
accepted by the Government. In this instance, the
Contractor must show on the cover page the notation
"Prices Shown Herein are Net (discount deducted)".
<PAGE> 117
SOLICITATION NO. FCNO-93-S303-3 PAGE 84 of 123
(3) The cover page of the Federal Supply Schedule Price List shall
include the following information set forth in this subparagraph
(b)(3):
(i) GENERAL SERVICES ADMINISTRATION
Federal Supply Service
Authorized Federal Supply Schedule Price List
On-line access to contract ordering information, terms
and conditions, up-to-date pricing, and the option to
create an electronic delivery order is available through
GSA Advantage!, a menu-driven database system. The
INTERNET address for GSA Advantage! is:
http://www.gsa.gov.
Schedule title and FSC group, part, and section
FSC class(es).
Contract number.
Contract period.
Contractor's name, address, and phone number (include
toll-free WATS number and FAX number, if applicable).
Contract administration source (if different from
preceding entry).
Business size.
(ii) CUSTOMER INFORMATION: The following information should be
placed under this heading in consecutively numbered
paragraphs in the sequence set forth below. If this
information is placed in another part of the Federal
Supply Schedule Price List, a table of contents shall be
shown on the cover page that refers to the exact
location of the information.
1a. Table of awarded special item number(s) with
appropriate cross-reference to page number(s).
1b. Identification of the lowest priced model number
and lowest unit price for that model for each
special item number awarded in the contract.
This price is the government price based on a
unit of one, exclusive of any quantity/dollar
volume, prompt payment, or any other concession
affecting price. Those contracts that have unit
prices based on the geographic location of the
customer, should show the range of the lowest
price, and cite the areas to which the prices
apply.
2. Maximum order.
3. Minimum order.
4. Geographic coverage (delivery area).
5. Point(s) of production (city, country, and State
or foreign country).
6. Discount from list prices or statement of net
price.
7. Quantity discounts.
8. Prompt payment terms.
<PAGE> 118
SOLICITATION NO. FCNO-93-S303-3 PAGE 85 of 123
9a. Annotate if Government commercial credit card is accepted.
9b. Discount for payment by Government commercial credit card.
10. Foreign items (list items by country of origin).
11a. Time of delivery. (Contractor insert number of days.)
11b. Expedited Delivery. The Contractor will insert the sentence
"Items available for expedited delivery are noted in this
price list." under this heading. The Contractor may use a
symbol of its choosing to highlight items in its price lists
that have expedited delivery.
11c. Overnight and 2-day delivery. The Contractor will indicate
whether overnight and 2-day delivery are available. Also, the
Contractor will indicate that the schedule customer may
contact the Contractor for rates for overnight and 2-day
delivery.
11d. Urgent Requirements. The Contractor will note in its price
list the "Urgent Requirements" clause, I-FSS-140-A or
I-FSS-140-B, of its contract and advise agencies that they can
also contact the Contractor's representative to effect a
faster delivery.
12. F.o.b. point(s).
13. Ordering address(es).
14. Payment address(es).
15. Warranty provision.
16. Export packing charges.
17. Terms and conditions of Government commercial credit card
acceptance (if applicable).
18. Terms and conditions of rental, maintenance, and repair (if
applicable).
19. Terms and conditions of installation (if applicable).
20. Terms and conditions of repair parts indicating date of parts
price lists and any discounts from list prices (if
applicable).
21. List of service and distribution points (if applicable).
22. List of participating dealers (if applicable).
23. Preventive maintenance (if applicable).
(4) Amendments to Federal Supply Schedule Price Lists shall include on the
cover page the same information as the basic document plus the title
"Supplement No. (sequentially numbered)" and the effective date(s) of
such supplements.
<PAGE> 119
SOLICITATION NO. FCNO-93-S303-3 PAGE 86 of 123
(5) Prior to printing and distributing Federal Supply Schedule
Price Lists, two proof copies (including covering letters),
must be submitted to the Contracting Officer for review.
Accuracy of information and computation of prices is the
responsibility of the Contractor. NOTE: The obliteration
discussed in subdivision (b)(2)(i) of this clause must be
accomplished prior to submission. Proofs shall be submitted
within 15 calendar days after receipt of award notification.
(6) After the price list proof has been reviewed by the
Contracting Officer, one proof copy will be furnished to the
Contractor for formal printing and distribution. The
Contractor will also be furnished a list of customer addresses
who are interested in receiving the Federal Supply Schedule
Price List. The Contractor may receive, free of charge, the
list of customer addresses in one of the following formats (as
specified by the Contractor):
___ Cheshire Label
___ Gummed Label
___ Diskette-Mailing lists on diskette are available in ASCII
and in the following record format only:
<TABLE>
<CAPTION>
Field Name Field Size
<S> <C> <C>
1. Customer ID No. 12
2. Agency Name 35
3. Address Line 1 35
4. Address Line 2 35
5. City 20
6. State 2
7. Zip Code 9
</TABLE>
(7) The Contractor may formally print and distribute a Federal Supply
Schedule Price List upon receipt of the reviewed price list proof.
Inclusion of incorrect information will cause the Contractor to
reprint and redistribute the Federal Supply Schedule Price List, and
may constitute sufficient cause for Cancellation, applying the
provisions of clause 52.249-8, Default (Fixed Price and Supply), and
application of any other remedies as provided by law-including
monetary recovery.
(8) Distribution to the customer mailing list supplied by GSA shall be
made as set forth in paragraphs (c), (d), and (e) of clause
552.238-74, Submission and Distribution of Authorized GSA Schedule
Price Lists. In addition, one copy of the Federal Supply Schedule
Price List shall be submitted to the FSS Schedule Information Center.
The Contractor may also send Federal Supply Schedule Price Lists to
agencies not on the GSA listing when there is reasonable expectation
that sales to these agencies will be made.
<PAGE> 120
SOLICITATION NO. FCNO-93-S303-3 PAGE 87 of 123
(9) The customer mailing list (identified by code) applicable to commodities
that are included in this solicitation and the approximate number of price
lists needed for distribution to addresses that are listed below for the
offeror's information.
MAILING LIST CODE COMMODITY GROUP APPROX. NO. OF COPIES
OOCC 7110 3700
(10) The Federal Supply Schedule Price Lists furnished to the Contracting
Officer shall be accompanied by a certification signed by the Contractor
as follows:
"I HEREBY CERTIFY THAT THE ITEMS, DISCOUNTS, PRICES, AND TERMS AND
CONDITIONS IN THE FEDERAL SUPPLY SCHEDULE PRICE LISTS FURNISHED TO THE
CONTRACTING OFFICER AND DISTRIBUTED TO ORDERING OFFICES ARE IDENTICAL TO
THOSE ACCEPTED BY THE GOVERNMENT, AND THAT ANY ITEMS, DISCOUNTS, PRICES,
AND TERMS AND CONDITIONS NOT ACCEPTED BY THE GOVERNMENT HAVE BEEN REMOVED
OR OBLITERATED."
(11) Failure to furnish the certification statement, or the willful furnishing
of an erroneous certification may constitute sufficient cause for applying
the provisions of clause 52.249-8, Default (Fixed Price and Supply).
I-FSS-630-A MODIFICATIONS (SEP 1995)
The Contractor may request contract modifications after award. The Contractor
shall submit two copies of the modification request to the Contracting Officer
for processing, except as noted in subparagraph (f)(1) of this clause. A
separate request should be submitted for each type of proposed modification. At
a minimum, every modification request must describe the proposed change(s) and
provide the rationale for the proposed change(s). Supplementary information may
be required by the Contracting Officer as deemed necessary. For example:
(a) Additional items. Additional items may be added only when the items offered
fall under an awarded Special Item Number. "Discount Schedule and Marketing
Data" information as required with original offer; product literature and
all applicable published price lists; and production point and delivery
time on the new item(s) shall be furnished. Price lists shall include
effective date. Details of all discounts and pricing plans offered to any
customer and sales data substantiating commerciality of the products
offered must be submitted. If all discounts, terms and conditions are the
same as the initial award, a statement to that effect is required. A
certification that no discounts in excess of those disclosed in the
modification request have been offered to any customer is also required.
When the estimated value of the modification is $500,000 or less, the
Contractor, at the Contracting Officer's discretion, may submit a
certification statement on commerciality in lieu of actual figures
requested in the Discount Schedule and Marketing Data. The Contractor will
submit discount data or, if all discounts, terms and conditions remain the
same as the initial award, a statement to that effect is required. A
certification that no discounts in excess of those disclosed in the
modification request have been offered to any customer is also required.
Items, at a minimum, must be available for commercial usage in the United
States. The items must meet market acceptability as provided for in FAR
Part II. Nominal quantities, such as models, samples, prototypes, or
experimental units are unacceptable. The Contractor shall not split
modifications to avoid the $500,000 threshold.
If the information required by this subparagraph (a) is not submitted, the
modification request will be returned.
<PAGE> 121
SOLICITATION NO. FCNO-93-S303-3 PAGE 88 of 123
(b) Deletion. State reason for requesting deletion. The Government reserves
the right to reject any subsequent offer of a substantially equal or the
same item at a higher price during the same contract period if, in the
opinion of the Contracting Officer, the higher price is unreasonable
when compared with that of the deleted item.
(c) Price Reduction. State whether in conformity with the criteria in (i),
(ii), or (iii) of subparagraph (c)(1) of clause 552.238-76, Price
Reductions. If type (i) or (ii) reduction applies, submit copy of dated
commercial price list. If type (iii) reduction applies, submit copies of
the applicable price lists. Contractor bulletins or letters and customer
agreements which detail data regarding the effective date, duration,
terms and conditions of the price reduction.
(d) Revision of Commercial Price List. If, after award and no later than
30 calendar days prior to the start of the schedule contract period, the
Contractor changes the established commercial catalog or market price
list on which the contract was awarded, and furnishes the new price list
to the Contracting Officer, the new price list, if deemed valid and
reasonable by the Contracting Officer, may be substituted for the
original price list, provided the Contractor certifies in writing that
(1) the new commercial price list is or will be in effect prior to the
start of the contract period, and (2) the discount(s) offered to the
Government, as awarded, remain in the same ratio to those available to
commercial customers.
(e) Effective Dates. The effective date of any modification is the date
specified in the modification, except as otherwise provided in clause
552.238-76, Price Reductions.
(f) Electronic File Updates.
(1) The Contractor shall keep its electronic file submissions
current and update them to reflect all changes. All effective
price reductions shall be transmitted immediately. Price changes
that do not exceed the negotiated price (as adjusted) may be
transmitted without prior approval. After transmitting, the
Contracting Officer shall be notified as set forth in clause
552.238-76, Price Reductions.
(2) With the exception of price reductions and corrections
(misprints), THE CONTRACTOR IS REQUIRED TO OBTAIN PRIOR APPROVAL
FROM THE CONTRACTING OFFICER BEFORE TRANSMITTING CHANGES TO ITS
ELECTRONIC FILE SUBMISSIONS, CONTRACT MODIFICATIONS WILL NOT BE
MADE EFFECTIVE UNTIL THE ELECTRONIC FILES ARE UPDATED.
(g) Amendments to paper Federal Supply Schedule Price Lists: The Contractor
agrees to print and distribute a supplemental paper Federal Supply
Schedule Price List reflecting accepted changes within 15 calendar days
after the effective date of the modification. Printing shall be as set
forth in clause I-FSS-600, Contract Price Lists. At a minimum,
distribution shall be made to those customers who previously received
the basic document. In addition, two copies of the supplemental price
list shall be submitted to the Contracting Officer, and one copy shall
be submitted to the FSS Schedule Information Center.
I-FSS-639 CONTRACT AWARD SALES CRITERIA (SEP 1990)
Normally a contract will not be awarded unless anticipated sales are expected
to exceed $25,000 for a 1-year period. For example, consideration will be given
to awarding contracts when anticipated sales under the proposed contract will
be less than $25,000 for a 1-year period to offerors who certify affirmatively
to FAR 52.219-3, Women-Owned Small Business Representation, or FAR 52.219-2,
Small Disadvantaged Business Concern Representation.
<PAGE> 122
SOLICITATION NO. FCNO-93-S303-3 PAGE 89 of 123
It is the general policy of the Government not to contract for a product when
the anticipated purchases of the item will be less than $2,000 for a 1-year
period. Contractors generally should not offer products which do not meet this
criteria except in accordance with the exceptions listed in FAR 38.202
(c)(l)-(5).
I-FSS-642 CERTIFICATION OF DATA BY DEALER (OCT 1988)
(a) Dealers offering direct are hereby advised that any data, including
manufacturers' commercial pricelists, sales data and/or cost information,
relied on in connection with this offer must be made available for review, if
requested, to the Contracting Officer or his/her authorized representative.
(b) Consistent with clause M-FSS-330, records of manufacturer/supplier
must be made available, upon request, to the Government in order to verify any
data furnished by the manufacturer/supplier and used by the offeror to support
his proposal. It is the responsibility of the offeror (dealer in this instance)
to assure access to the supplier's records if this data is relied on by the
offeror. If a manufacturer/supplier refuses access to his records, the
offeror/dealer will be determined to be in noncompliance with the provisions of
FAR 15.804, and the offer rejected. Dealers offering direct must submit a
letter from the manufacturer acknowledging his/her understanding of the
requirements of the above referenced clause.
I-FSS-644 DEALERS AND SUPPLIERS (OCT 1988)
When requested by the Contracting Officer, if other than the manufacturer, the
offeror must submit prior to award of a contract, either (1) a letter of
commitment from the manufacturer which will assure the offeror of a source of
supply sufficient to satisfy the Government's requirements for the contract
period, OR (2) evidence that the offeror will have an uninterrupted source of
supply from which to satisfy the Governments requirements for the contract
period.
I-FSS-646-A BLANKET PURCHASE AGREEMENTS (NOV 1992)
Blanket Purchase Agreements (BPA's) can reduce costs and save time because
individual purchase orders and invoices are not required for each procurement
but can instead be documented on a consolidated basis. The Contractor agrees to
enter into BPA's with ordering activities provided that:
(a) The period of time covered by such agreements shall not exceed: (1)
the period of the contract, or, (2) in the case of multi-year contracts, the
fiscal year, unless the ordering activity has authority to obligate funds in
excess of the fiscal year;
(b) Orders placed under such agreements shall be issued in accordance with
all applicable regulations and the terms and conditions of the contract (NOTE:
The maximum order limitation of the contract applies solely to individual
orders placed against the blanket purchase agreement and has no bearing on the
cumulative or total value of these orders); and
(c) BPA's may be established to obtain the maximum discount (lowest net
price) available in those schedule contracts containing volume or quantity
discount arrangements. (NOTE: In the event the cumulative total of orders
placed against the BPA does not reach the projected estimated total purchase
upon which the BPA was established, the Contractor may invoice at the price
applicable for the actual quantity level achieved by the agency.)
<PAGE> 123
SOLICITATION NO. FCNO-93-S303-3 PAGE 90 OF 123
I-FSS-680 DISSEMINATION OF INFORMATION BY CONTRACTOR (APR 1984)
The Government will provide the Contractor with a single copy of the resulting
Federal Supply Schedule. However, it is the responsibility of the Contractor to
furnish all sales outlets authorized to participate in the performance of the
contract with the terms, conditions, pricing schedule, and other appropriate
information.
I-FSS-685-A AGGREGATE SALES DISCOUNTS (AUG 1995)
(a) The Discount Schedule and Marketing Data Sheets (DSMD), contained in this
solicitation/contract request additional discounts based on the aggregate
purchases by the Government. These discounts shall be applied as follows:
(1) FOR A CURRENT CONTRACTOR: The additional discounts will be applied to
those sales under this contract which exceed 100 percent of the
Contractor's aggregate sales to the Government for all Special Item
Numbers for the most recent 12 month period under a similar Federal
Supply Schedule contract(s). This figure is to be referred to
hereinafter as the base figure. (DSMD Part A, Section VI, Item 1.)
(2) FOR A NEW OFFEROR: The additional discounts will be applied to those
sales under this contract which exceed 100 percent of the offeror's
projected aggregate sales for all Special Item Numbers under this
contract. This figure is to be referred to hereinafter as the base
figure. (DSMD Part A, Section VI, Item 2.)
(3) FOR EXTENDED CONTRACTS: If the Government exercises the 5 year option
period, a new base figure will be calculated for the option period. The
new base figure will be applied to those sales under the option period
which exceed 100 percent of the Contractor's aggregate sales to the
Government for all Special Item Numbers for the past 12 month period
under the basic contract period.
(b) The applicable additional discount percentage shall be applied at the end
of the basic contract period and at the end of the option period to the
Government-wide aggregate sales realized under this contract which are in
excess of the applicable base figure.
(c) Within 20 calendar days after the end of the basic contract period, the
Contractor shall furnish a statement to the Contracting Officer certifying
the aggregate dollar value of sales made under the contract. Within 20
calendar days after the end of the option period, the Contractor shall
furnish a statement to the Contracting Officer certifying the aggregate
dollar value of sales made under the contract.
(d) Payment of discounts shall not be made until after receipt of a written
notification from the Contracting Officer stating the amount due. Within 30
calendar days after the date of such notification, the amount due shall be
paid by check made payable to the "General Services Administration." The
check shall include the statement "Discount on aggregate sales under
Contract No. ," and the claim number. The claim number will be provided
with the written notification from the Contracting Officer. The remittance
shall be mailed to:
General Services Administration, Region 6
Accounts Receivable Branch (6BCR)
P.O. Box 73221
Chicago, IL 60673-7221
<PAGE> 124
SOLICITATION NO. FCNO-93-S303-3 PAGE 91 of 123
(e) Any amount not paid within 30 calendar days from the date of written
notification from the Contracting Officer described in (d), above,
shall bear interest in accordance with clause 52.232-17, Interest. Any
controversies concerning the amount due to the Government shall be
subject to the Disputes clause.
I-FSS-690-B CANCELLATION (JAN 1994)
Resultant contracts may be canceled in whole or in part by either party upon 30
calendar days written notice. If the contract is canceled by the contractor the
one hundred dollar minimum guarantee will not be reimbursed by the Government.
I-FSS-694 OPEN SEASON FOR CONSIDERATION OF NEW OFFERS (ANNUAL OPEN
SEASON) (JAN 1989)
(a) This standing solicitation will result in contracts that will remain
in effect for periods in excess of one (1) year. The specific schedule
contract period can be found on the solicitation cover page, and in
the Section A clauses of the solicitation. Offers will be solicited
annually, generally during the last six months of each twelve month
period, at which time the original solicitation will be reopened. No
open season will be held during the last year of the schedule period.
(b) Contracts awarded in response to the basic solicitation will be in
effect from the date of award or the schedule beginning date
(whichever is later) through the end of the schedule completion date
(unless otherwise canceled or terminated). The effective date for
contracts made as a result of open season soliciting will be the first
day of the succeeding year of the schedule period, or date of award
(whichever is later) through the schedule completion date.
(c) Open seasons will remain in effect for 30 days to consider new offers.
All open seasons will be publicized in the Commerce Business Daily.
New offers will be considered only during the specified open seasons.
(d) No contract will be awarded for products identical to those already
under contract. Offers submitted after the end of the 30-day period
will be processed in accordance with the late proposals provision
contained in the solicitation.
I-FSS-935 ACCEPTANCE OF GOVERNMENT COMMERCIAL CREDIT CARD (DEC 1989)
GSAR Clause 552.232-80, Payment by Credit Card, establishes use of a government
commercial credit card as another means for payment of supplies ordered against
federal supply schedules. Offerors are requested to indicate (by placing a
check mark at the beginning of one of the following paragraphs) whether they
will accept the credit card as a method of payment when used by the ordering
agencies.
(a) ______ I will accept the government commercial credit card, and offer
the following discount for all orders placed using the credit card:
________%.
(b) ______ I will accept the government commercial credit card, but elect
not to offer any discount for orders placed using the credit card.
(c) ______ I elect not to accept the government commercial credit card for
payment for supplies issued against the schedule contract.
<PAGE> 125
SOLICITATION NO. FCNO-93-S303-3 PAGE 92 of 123
(NOTE: Discounts offered in connection with the credit card will not be
used in the evaluation of the offer.)
I-FSS-965 INTERPRETATION OF CONTRACT REQUIREMENTS (APR 1984)
No interpretation of any provision of this contract, including applicable
specifications, shall be binding on the Government unless furnished or agreed
to in writing by the Contracting Officer or his designated representative.
I-FSS-966 MULTIPLE AWARD SCHEDULE PRICE REDUCTION AND ECONOMIC PRICE
ADJUSTMENT CLAUSE (DEC 1987)
Negotiations on multiple award schedule contracts are normally conducted on the
basis of discounts from an established commercial pricelist from which
substantial sales are made to the general public at the published prices.
Accordingly, paragraph (b) of the Price Reduction clause requires certain
actions based on changes in the discounts and commercial pricelists. Similarly,
price increases allowed under the Economic Price Adjustment clause are
triggered by the commercial pricelist used in negotiation of the Government
contract. When evaluation, negotiation, and award are based on factors other
than discounts from an established commercial price list, paragraph (b) of the
Price Reduction clause and the entire Economic Price Adjustment clause are
inapplicable and therefore are deleted from the contract.
<PAGE> 126
SOLICITATION NO. FCNO-93-S303-3 PAGE 93 of 123
SECTION K
REPRESENTATIONS, CERTIFICATIONS
AND OTHER STATEMENTS OF OFFERORS
<PAGE> 127
PAGE 94 of 123
- --------------------------------------------------------------------------------
REPRESENTATIONS AND CERTIFICATIONS Reference
- --------------------------------------------------------------------------------
Name and Address of Offeror Date of Offer
(Name, Street, City, State and Zip Code)
Neutral Posture Ergonomics, Inc. 11/01/95
Federal Government Sales Office
6445 Cardinal Lane
Columbia, MD 21044
- --------------------------------------------------------------------------------
"SOLICITATION" MEANS "INVITATION FOR BIDS" IN SEALED BIDDING AND
"REQUEST FOR PROPOSAL" OR "REQUEST FOR QUOTATION" IN NEGOTIATION.
"OFFER" MEANS "BID" IN SEALED BIDDING AND "PROPOSAL" IN NEGOTIATION.
"OFFEROR" MEANS THE PERSON OR FIRM SUBMITTING THE OFFER.
THE OFFEROR MAKES THE FOLLOWING REPRESENTATIONS AND CERTIFICATIONS AS A PART OF
THE OFFER IDENTIFIED ABOVE. (CHECK APPROPRIATE BOXES AND FILL IN BLANKS.)
1. 552.219-1 SMALL BUSINESS CONCERN REPRESENTATION (MAY 1991) (DEVIATION
FAR 52.219-1)
(a) Representation. The offeror represents and certifies as part of
its offer that it [ ] is or [ ] is not a small business concern.
(b) Definition. Small business concern, as used in this provision,
means a concern, including its affiliates that is independently owned and
operated, not dominant in the field of operation in which it is bidding on
Government contracts, and qualified as a small business under the criteria and
size standards in this solicitation.
(c) Notice. Under 15 U.S.C. 645(d), any person who misrepresents a
firm's status as a small business concern in order to obtain a contract to be
awarded under the preference programs established pursuant to sections 8(a),
8(d), 9, or 15 of the Small Business Act or, any other provision of Federal law
that specifically references section 8(d) for a definition of program
eligibility, shall (1) be punished by imposition of a fine, imprisonment, or
both; (2) be subject to administrative remedies including suspension and
debarment; and (3) be ineligible for participation in programs conducted under
the authority of the Act.
2. 52.204-3 TAXPAYER IDENTIFICATION (SEPT 1989)
(a) Definitions.
"Common parent," as used in this solicitation provision, means
that corporate entity that owns or controls an affiliated group of corporations
that files its Federal income tax returns on a consolidated basis, and of which
the offeror is a member.
"Corporate status," as used in this solicitation provision, means
a designation as to whether the offeror is a corporate entity, an
unincorporated entity (e.g. sole proprietorship or partnership), or a
corporation providing medical and health care services.
"Taxpayer Identification Number (TIN)," as used in this
solicitation provision, means the number required by the IRS to be used by the
offeror in reporting income tax and other returns.
(b) The offeror is required to submit the information required in
paragraphs (c) through (e) of this solicitation provision in order to comply
with reporting requirements of 26 U.S.C. 6041, 6041A, and 6050M and
implementing regulations issued by the Internal Revenue Service (IRS). If the
resulting contract is subject to the reporting requirements described in
4.902(a), the failure or refusal by the offeror to furnish the information may
result in a 20 percent reduction of payments otherwise due under the contract.
(c) Taxpayer Identification number (TIN).
(X) TIN: 74-2563656.
( ) TIN has been applied for.
( ) TIN is not required because:
( ) Offeror is a nonresident alien, foreign corporation,
or foreign partnership that does not have income
effectively connected with the conduct of a trade or
business in the U.S. and does not have an office or
place of business or a fiscal paying agent in the U.S.;
( ) Offeror is an agency or instrumentality of a foreign
government;
( ) Offeror is an agency or instrumentality of a Federal,
state, or local government;
( ) Other. State basis. __________________________________
(d) Corporate Status.
( ) Corporation providing medical and health care services, or
engaged in the billing and collecting of payments for such
services;
(X) Other corporate entity;
( ) Not a corporate entity;
( ) Sole proprietorship;
( ) Partnership;
( ) Hospital or extended care facility described in 26 CFR
501(c)(3) that is exempt from taxation under 26 CFR 501(a).
GENERAL SERVICES ADMINISTRATION
<PAGE> 128
PAGE 95 of 123
(e) Common Parent.
(X) Offeror is not owned or controlled by a common parent as
defined in paragraph (a) of this clause.
( ) Name and TIN of common parent:
NAME __________________________________________.
TIN ___________________________________________.
ITEMS 3, 4, 5 AND 6 NEED TO BE CHECKED ONLY IF OFFER EXCEEDS $10,000 IN AMOUNT.
3. 52.222-19 WALSH-HEALEY PUBLIC CONTRACTS ACT REPRESENTATION (APR 1984)
(Applicable to supply contracts unless exempted by the Secretary of
Labor.)
The offeror represents as a part of this offer that the offeror is / / or is
not /X/ a regular dealer in, or is /X/ or is not / / a manufacturer of, the
supplies offered.
4. 52.222-22 PREVIOUS CONTRACTS AND COMPLIANCE REPORTS (APR 1984)
The offeror represents that --
(a) It /X/ has, / / has not participated in a previous contract or
subcontract subject either to the Equal Opportunity clause of this
solicitation; or the clause contained in Section 201 of Executive Order No.
11114;
(b) It /X/ has, / / has not, filed all required compliance reports; and
(c) Representations indicating submission of required compliance
reports, signed by proposed subcontractors, will be obtained before subcontract
awards.
5. 52.222-25 AFFIRMATIVE ACTION COMPLIANCE (APR 1984)
(Applicable to contracts which include the clause at FAR 52.222-26,
Equal Opportunity, except for construction contracts.)
The offeror represents that --
(a) It /X/ has developed and has on file, / / has not developed and
does not have on file, at each establishment, affirmative action programs
required by the rules and regulations of the Secretary of Labor (41 CRF 60-1
and 60-2); or
(b) It / / has not previously had contracts subject to the written
affirmative action programs requirement of the rules and regulations of the
Secretary of Labor.
6. 52.222-21 CERTIFICATION OF NONSEGREGATED FACILITIES (APR 1984)
(a) "Segregated facilities," as used in this provision, means any
waiting rooms, work areas, rest rooms and wash rooms, restaurants and other
eating areas, time clocks, locker rooms and other storage or dressing areas,
parking lots, drinking fountains, recreation or entertainment areas,
transportation, and housing facilities provided for employees, that are
segregated by explicit directive or are in fact segregated on the basis of
race, color, religion, or national origin because of habit, local custom, or
otherwise.
(b) By the submission of this offer, the offeror certifies that it does
not and will not maintain or provide for its employees any segregated
facilities at any of its establishments, and that it does not and will not
permit its employees to perform their services at any location under its
control where segregated facilities are maintained. The offeror agrees that a
breach of this certification is a violation of the Equal Opportunity clause in
the contract.
(c) The offeror further agrees that (except where it has obtained
identical certifications from proposed subcontractors for specific time
periods) it will --
(1) Obtain identical certifications from proposed subcontractors
before the award of subcontracts under which the subcontractor will be subject
to the Equal Opportunity clause;
(2) Retain the certifications in the files; and
(3) Forward the following notice to the proposed subcontractors
(except if the proposed subcontractors have submitted identical certifications
for specific time periods.)
NOTICE TO PROSPECTIVE SUBCONTRACTORS OF REQUIREMENT FOR CERTIFICATIONS OF
NONSEGREGATED FACILITIES.
A Certification of Nonsegregated Facilities must be submitted before the award
of a subcontract under which the subcontractor will be subject to the Equal
Opportunity clause. The certification may be submitted either for each
subcontract or for all subcontracts during a period (i.e., quarterly,
semiannually, or annually). NOTE: The penalty for making false statements in
offers is prescribed in 18 U.S.C. 1001.
GSA FORM 3503 PAGE 2 (REV 2-92)
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PAGE 96 of 123
ITEMS 7-19 DO NOT APPLY TO PROCUREMENTS OF $25,000 OR LESS MADE THROUGH SMALL
PURCHASE PROCEDURES.
7. 52.219-3 WOMEN-OWNED SMALL BUSINESS REPRESENTATION (APR 1984)
(a) Representation. The offeror represents that it [x] is, [ ] is
not a women-owned small business concern.
(b) Definitions. "Small business concern," as used in this
provision, means a concern, including its affiliates, that is independently
owned and operated, not dominant in the field of operation in which it is
bidding on government contracts, and qualified as a small business under the
criteria and size standards in 13 CFR 121.
"Women-owned," as used in this provision, means a small business that
is at least 51 percent owned by a woman or women who are U.S. citizens and who
also control and operate the business.
8. 52.219-2 SMALL DISADVANTAGED BUSINESS CONCERN REPRESENTATION
(FEB 1990)
(a) Representation. The offeror represents that it [ ] is, [x] is
not a small disadvantaged business concern.
(b) Definitions.
Asian-Pacific Americans, as used in this provision, means United States
citizens whose origins are in Japan, China, the Philippines, Vietnam, Korea,
Samoa, Guam, the U.S. Trust Territory of the Pacific Islands (Republic of
Palau), the Northern Mariana Islands, Laos, Kampuchea (Cambodia), Taiwan,
Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Republic of the
Marshall Islands, or the Federated States of Micronesia.
Indian tribe, as used in this provision, means any Indian tribe, band,
nation, or other organized group or community of Indians, including any Alaska
Native Corporation as defined in 13 CFR 124.100 which is recognized as eligible
for the special programs and services provided by the U.S. to Indians because
of their status as Indians, or which is recognized as such by the State in
which such tribe, band, nation, group, or community resides.
Native Americans, as used in this provision, means American Indians,
Eskimos, Aleuts, and native Hawaiians.
Native Hawaiian Organization, as used in this provision, means any
community service organization serving Native Hawaiians in, and chartered as a
not-for-profit organization by, the State of Hawaii, which is controlled by
Native Hawaiians, and whose business activities will principally benefit such
Native Hawaiians.
Small business concern, as used in this provision, means a concern,
including its affiliates, that is independently owned and operated, not
dominant in the field of operation in which it is bidding on Government
contracts, and qualified as a small business under the criteria and size
standards in 13 CFR part 121.
Small disadvantaged business concern, as used in this provision, means
a small business concern that (a) is at least 51 percent unconditionally owned
by one or more individuals who are both socially and economically
disadvantaged, or a publicly owned business having at least 51 percent of its
stock unconditionally owned by one or more socially and economically
disadvantaged individuals and (b) has its management and daily business
controlled by one or more such individuals. This term also means a small
business concern that is at least 51 percent unconditionally owned by an
economically disadvantaged Indian tribe or Native Hawaiian Organization, or a
publicly owned business having at least 51 percent of its stock unconditionally
owned by one of these entities which has its management and daily business
controlled by members of an economically disadvantaged Indian tribe or Native
Hawaiian Organization, and which meets the requirements of 13 CFR part 124.
Subcontinent Asian Americans, as used in this provision, means United
States citizens whose origins are in India, Pakistan, Bangladesh, Sri Lanka,
Bhutan, or Nepal.
(c) Qualified groups. The offeror shall presume that socially and
economically disadvantaged individuals include Black Americans, Hispanic
Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian
Americans, and other individuals found to be qualified by SBA under 13 CFR 124.
The offeror shall presume that socially and economically disadvantaged entities
also include Indian tribes and Native Hawaiian Organizations.
<PAGE> 130
PAGE 97 of 123
9. 52.214-2/52.215-6 TYPE OF BUSINESS ORGANIZATION (JUL 1987)
The bidder/offeror or quoter, by checking the applicable box, represents that --
(a) It operates as /X/ a corporation incorporated under the laws of
the State of TEXAS.
/ / an individual, / / a partnership, / / a non profit organization,
/ / or a joint venture;
(b) If the bidder/offeror or quoter is a foreign entity, it operates
as / / an individual, / / partnership, / / a nonprofit organization,
/ / a joint venture, or / / a corporation, registered for business in
_______________ [Insert Country].
10. 52.204-4 CONTRACTOR ESTABLISHMENT CODE (AUG 1989)
In the block with its name and address, the offeror should supply the
Contractor Establishment Code applicable to that name and address, if known, to
the offeror. The number should be preceded by "CEC." Offerors should take care
to report the correct CEC and not a similar number assigned to the offeror in a
different system.
CEC: 61134982
The CEC is a 9-digit code assigned to a contractor establishment that contracts
with a Federal executive agency. The CEC system is a contractor identification
coding system which is currently the Dun and Bradstreet Data Universal
Numbering System (DUNS). The CEC system is distinct from the Federal Taxpayer
Identification Number (TIN) system.
The Government will obtain a Contractor Establishment Code for any awardee that
does not have or does not know its CEC.
11. 52.209.5 CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED
DEBARMENT, AND OTHER RESPONSIBILITY MATTERS (MAY 1989)
(a)(1) The offeror certifies, to the best of its knowledge and
belief, that --
(i) The offeror and/or any of its Principals --
(A) Are / / are not /X/ presently debarred,
suspended, proposed for debarment, or declared ineligible for the award of
contracts by any Federal agency;
(B) Have / / have not /X/ within a 3-year period
preceding this offer, been convicted of or had a civil judgment rendered
against them for: commission of fraud or a criminal offense in connection with
obtaining, attempting to obtain, or performing a public (Federal, state, or
local) contract or subcontract; violation of Federal or state antitrust
statutes relating to the submission of offers; or commission of embezzlement,
theft, forgery, bribery, falsification or destruction of records, making false
statements, or receiving stolen property; and
(C) Are / / are not /X/ presently indicted for, or
otherwise criminally or civilly charged by a governmental entity with,
commission of any of the offenses enumerated in subdivision (a)(1)(i)(B) of
this provision.
(ii) The offeror has / / has not /X/ within a 3-year
period preceding this offer, had one or more contracts terminated for default
by any Federal agency.
(2) "Principals," for the purposes of this certification, means
officers; directors; owners; partners; and, persons having primary management
or supervisory responsibilities within a business entity (e.g., general
manager; plant manager; head of a subsidiary, division, or business segment,
and similar positions).
THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF AN AGENCY OF
THE UNITED STATES AND THE MAKING OF A FALSE, FICTITIOUS, OR FRAUDULENT
CERTIFICATION MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER SECTION 1001,
TITLE 18, UNITED STATES CODE.
(b) The offeror shall provide immediate written notice to the
Contracting Officer if, at any time prior to contract award, the offeror learns
that its certification was erroneous when submitted or has become erroneous by
reason of changed circumstances.
(c) A certification that any of the items in paragraph (a) of this
provision exists will not necessarily result in withholding of an award under
this solicitation. However, the certification will be considered in connection
with a determination of the offeror's responsibility. Failure of the offeror to
furnish a certificate or provide such additional information as requested by
the Contracting Officer may render the offeror nonresponsible.
(d) Nothing contained in the foregoing shall be construed to require
establishment of a system of records in order to render, in good faith, the
certification required by paragraph (a) of this provision. The knowledge and
information of an offeror is not required to exceed that which is normally
possessed by a prudent person in the ordinary course of business dealings.
(e) The certification in paragraph (a) of this provision is a
material representation of fact upon which reliance was placed when making
award. If it is later determined that the offeror knowingly rendered an
erroneous certification, in addition to other remedies available to the
Government, the Contracting Officer may terminate the contract resulting from
this solicitation for default.
<PAGE> 131
PAGE 98 of 123
12. 52.203-2 CERTIFICATE OF INDEPENDENT PRICE DETERMINATION (APR 1985)
(a) The offeror certifies that --
(1) The prices in this offer have been arrived at independently,
without, for the purpose of restricting competition, any consultation,
communication, or agreement with any other offeror or competitor relating to
(i) those prices, (ii) the intention to submit an offer, or (iii) the methods
or factors used to calculate the prices offered;
(2) The prices in this offer have not been and will not be
knowingly disclosed by the offeror, directly or indirectly, to any other
offeror or competitor before bid opening (in the case of a sealed bid
solicitation) or contract award (in the case of a negotiated solicitation)
unless otherwise required by law; and
(3) No attempt has been made or will be made by the offeror to
induce any other concern to submit or not to submit an offer for the purpose of
restricting competition.
(b) Each signature on the offer is considered to be a certification by
the signatory that the signatory --
(1) Is the person in the offeror's organization responsible for
determining the prices being offered in this bid or proposal, and that the
signatory has not participated and will not participate in any action contrary
to subparagraphs (a)(1) through (a)(3) above; or
(2) (i) Has been authorized, in writing, to act as agent for the
following principals in certifying that those principals have not participated,
and will not participate in any action contrary to subparagraphs (a)(1) through
(a)(3) above Rebecca Boenigk - President - NP5 [insert full name of person(s)
in the offeror's organization responsible for determining the prices offered in
this bid or proposal, and the title of his or her position in the offeror's
organization];
(ii) As an authorized agent, does certify that the principals
named in subdivision (b)(2)(i) above have not participated, and will not
participate, in any action contrary to subparagraphs (a)(1) through (a)(3)
above; and
(iii) As an agent, has not personally participated, and will
not participate, in any action contrary to subparagraphs (a)(1) through (a)(3)
above.
(c) If the offeror deletes or modifies subparagraph (a)(2) above, the
offeror must furnish with its offer a signed statement setting forth in detail
the circumstances of the disclosure.
13. 52.203-4 CONTINGENT FEE REPRESENTATION AND AGREEMENT (APR 1984)
(a) Representation. The offeror represents that, except for full-time
bona fide employees working solely for the offeror, the offeror --
[NOTE: For interpretation of the representation, including the term
"bona fide employee," see Subpart 3.4 of the Federal Acquisition Regulation.]
(1) [X] has, [ ] has not employed or retained any person or company
to solicit or obtain this contract; and
(2) [ ] has, [X] has not paid or agreed to pay to any person or
company employed or retained to solicit or obtain this contract any commission,
percentage, brokerage, or other fee contingent upon or resulting from the award
of this contract.
(b) Agreement. The offeror agrees to provide information relating to
the above Representation as requested by the Contracting Officer and, when
subparagraph (a)(1) or (a)(2) is answered affirmatively, to promptly submit to
the Contracting Officer --
(1) A completed Standard Form 119, Statement of Contingent or Other
Fees, (SF 119); or
(2) A signed statement indicating that the SF 119 was previously
submitted to the same contracting office, including the date and applicable
solicitation or contract number, and representing that the prior SF 119 applies
to this offer or quotation.
14. 52.223-5 CERTIFICATION REGARDING A DRUG-FREE WORKPLACE (JUL 1990)
(a) Definitions. As used in this provision,
"Controlled substance" means a controlled substance in schedules I
through V of section 202 of the Controlled Substances Act (21 U.S.C. 812) and
as further defined in regulation at 21 CFR 1308.11 - 1308.15.
"Conviction" means a finding of guilt (including a plea of nolo
contendere) or imposition of sentence, or both, by any judicial body charged
with the responsibility to determine violations of the Federal or State
criminal drug statutes.
"Criminal drug statute" means a Federal or non-Federal criminal
statute involving the manufacture, distribution, dispensing, possession or use
of any controlled substance.
"Drug-free workplace" means the site(s) for the performance of work
done by the contractor in connection with a specific contract at which
employees of the Contractor are prohibited from engaging in the unlawful
manufacture, distribution, dispensing, possession, or use of a controlled
substance.
GSA FORM 3503 PAGE 5 (REV 2-92)
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PAGE 99 of 123
"Employee" means an employee of a Contractor directly engaged in
the performance of work under a Government contract. "Directly engaged" is
defined to include all direct cost employees and any other Contractor employee
who has other than a minimal impact or involvement in contract performance.
"Individual" means an offeror/contractor that has no more than
one employee including the offeror/contractor.
(b) By submission of its offer, the offeror, if other than an
individual, who is making an offer that equals or exceeds $25,000, certifies
and agrees that, with respect to all employees of the offeror to be employed
under a contract resulting from this solicitation, it will -- no later than 30
calendar days after contract award (unless a longer period is agreed to in
writing), for contracts of 30 calendar days or more performance duration, or as
soon as possible for contracts of less than 30 calendar days performance
duration; but in any case, by a date prior to when performance is expected to
be completed --
(1) Publish a statement notifying such employees that the
unlawful manufacture, distribution, dispensing, possession or use of a
controlled substance is prohibited in the Contractor's workplace and specifying
the actions that will be taken against employees for violations of such
prohibition;
(2) Establish an ongoing drug-free awareness program to
inform such employees about --
(i) The dangers of drug abuse in the workplace;
(ii) The Contractor's policy of maintaining a
drug-free workplace;
(iii) Any available drug counseling, rehabilitation,
and employee assistance programs; and
(iv) The penalties that may be imposed upon employees
for drug abuse violations occurring in the workplace;
(3) Provide all employees engaged in performance of the
contract with a copy of the statement required by subparagraph (b)(1) of this
provision;
(4) Notify such employees in writing in the statement
required by subparagraph (b)(1) of this provision that, as a condition of
continued employment on the contract resulting from this solicitation, the
employee will --
(i) Abide by the terms of the statement; and
(ii) Notify the employer in writing of the employee's
conviction under a criminal drug statute for a violation occurring in the
workplace no later than 5 calendar days after such conviction;
(5) Notify the Contracting Officer in writing within 10
calendar days after receiving notice under subdivision (b)(4)(ii) of this
provision, from an employee or otherwise receiving actual notice of such
conviction. The notice shall include the position title of the employee; and
(6) Within 30 calendar days after receiving notice under
subparagraph (a)(4)(ii) of this provision of a conviction, take one of the
following actions with respect to any employee who is convicted of a drug abuse
violation occurring in the workplace:
(i) Take appropriate personnel action against such
employee, up to and including termination; or
(ii) Require such employee to satisfactorily
participate in a drug abuse assistance or rehabilitation program approved for
such purposes by a Federal, State, or local health, law enforcement, or other
appropriate agency.
(7) Make a good faith effort to maintain a drug-free
workplace through implementation of subparagraphs (b)(1) through (b)(6) of
this provision.
(c) By submission of its offer, the offeror, if an individual who
is making an offer of any dollar value, certifies and agrees that the offeror
will not engage in the unlawful manufacture, distribution, dispensing,
possession, or use of a controlled substance in the performance of the contract
resulting from this solicitation.
(d) Failure of the offeror to provide the certification required by
paragraphs (b) or (c) of this provision, renders the offeror unqualified and
ineligible for award. (See FAR 9.104-1(g) and 19.602-1(a)(2)(i).)
(e) In addition to other remedies available to the Government, the
certification in paragraphs (b) or (c) of this provision concerns a matter
within the jurisdiction of an agency of the United States and the making of a
false, fictitious, or fraudulent certification may render the maker subject to
prosecution under Title 18, United States Code, Section 1001.
<PAGE> 133
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15. 52.223-1 CLEAN AIR AND WATER CERTIFICATION (APR 1984)
(Applicable if the offer exceeds $100,000 or the contracting officer has
determined that orders under an indefinite quantity contract in any year will
exceed $100,000, or a facility to be used has been the subject of a conviction
under the Clean Air Act (42 U.S.C. 7413(c)(1)) or the Federal Water Pollution
Control Act (33 U.S.C. 1319(c)) and is listed by EPA, or is not otherwise
exempt.)
The offeror certifies that -
(a) Any facility to be used in the performance of this proposed
contract is / /, is not /X/ listed on the Environmental Protection Agency List
of Violating Facilities;
(b) The offeror will immediately notify the Contracting Officer,
before award, of the receipt of any communication from the Administrator, or a
designee, of the Environmental Protection Agency, indicating that any facility
that the offeror proposes to use for the performance of the contract is under
consideration to be listed on the EPA List of Violating Facilities; and
(c) The offeror will include a certification substantially the same
as this certification, including this paragraph (c), in every nonexempt
subcontract.
16. 52.203-11 CERTIFICATION AND DISCLOSURE REGARDING PAYMENTS TO
INFLUENCE CERTAIN FEDERAL TRANSACTIONS (APR 1991)
(Deviation)
(Applicable if the offer exceeds $100,000)
(a) The definitions and prohibitions contained in the clause, at FAR
52.203-12, Limitation on Payments to Influence Certain Federal Transactions,
included in this solicitation are hereby incorporated by reference in paragraph
(b) of this certification.
(b) The offeror, by signing its offer, hereby certifies to the best
of his or her knowledge and belief that on or after December 23, 1989 -
(1) No Federal appropriated funds have been paid or will be paid
to any person for influencing or attempting to influence an officer or employee
of any agency, a Member of Congress, an officer or employee of Congress, or an
employee of a Member of Congress on his or her behalf in connection with the
awarding of a contract resulting from this solicitation.
(2) If any funds other than Federal appropriated funds (including
profit or fee received under a covered Federal transaction) have been paid, or
will be paid, to any person for influencing or attempting to influence an
officer or employee of any agency, a Member of Congress, an officer or employee
of Congress, or an employee of a Member of Congress on his or her behalf in
connection with this solicitation, the offeror shall complete and submit, with
its offer, OMB standard form LLL, Disclosure of Lobbying Activities, to the
Contracting Officer; and
(3) He or she will include the language of this certification in
all subcontract awards at any tier and require that all recipients of
subcontract awards in excess of $100,000 shall certify and disclose accordingly.
(c) Submission of this certification and disclosure is a prerequisite
for making or entering into this contract imposed by section 1352, title 31,
United States Code. Any person who makes an expenditure prohibited under this
provision or who fails to file or amend the disclosure form to be filed or
amended by this provision, shall be subject to a civil penalty of not less than
$10,000, and not more than $100,000, of each such failure.
17. 52.203-8 REQUIREMENT FOR CERTIFICATE OF PROCUREMENT INTEGRITY
(NOV 1990)
(Applicable if the offer exceeds $100,000)
(a) Definitions. The definitions at FAR 3.104-4 are hereby
incorporated in this provision.
(b) Certifications. As required in paragraph (c) of this provision,
the officer or employee responsible for this offer shall execute the following
certification:
CERTIFICATE OF PROCUREMENT INTEGRITY
(1) I, Martin Gear [Name of certifier], am the officer or employee
responsible for the preparation of this offer and hereby certify that, to the
best of my knowledge and belief, with the exception of any information described
in this certificate, I have no information concerning a violation or possible
violation of subsection 27(a), (b), (d), or (f) of the Office of Federal
Procurement Policy Act, as amended* (41 U.S.C. 423), hereinafter referred to as
"the Act"), as implemented in the FAR, occurring during the conduct of this
procurement FCNO-93-S303-3Mod9 [solicitation number].
(2) As required by subsection 27(e)(1)(B) of the Act, I further
certify that, to the best of my knowledge and belief, each officer, employee,
agent, representative, and consultant of Neutral Posture Ergonomics [Name of
Offeror] who has participated personally and substantially in the preparation or
submission of this offer has certified that he or she is familiar with, and
will comply with, the requirements of subsection 27(a) of the Act, as
implemented in the FAR, and will report immediately to me any information
concerning a violation or possible violation of subsections 27(a), (b), (d), or
(f) of the Act, as implemented in the FAR, pertaining to this procurement.
<PAGE> 134
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(3) Violations or possible violations: (Continue on plain
bond paper if necessary and label Certificate of Procurement Integrity
(Continuation Sheet), ENTER NONE IF NON EXIST)
NONE
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
(4) I agree that, if awarded a contract under this
solicitation, the certifications required by subsection 27(e)(1)(B) of the Act
shall be maintained in accordance with paragraph (f) of this provision.
/s/ MARTIN GEAR 11/01/95
- -------------------------------------- ------------
[Signature of the Officer or Employee Date
Responsible for the Offer]
Martin Gear
- --------------------------------------
[Typed Name of the Officer or Employee
Responsible for the Offer]
* Subsections 27(a), (b), and (d) are effective on December 1, 1990.
Subsection 27(f) is effective on June 1, 1991.
THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF AN AGENCY OF
THE UNITED STATES AND THE MAKING OF A FALSE, FICTITIOUS, OR FRAUDULENT
CERTIFICATION MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER TITLE 18,
UNITED STATES CODE, SECTION 1001.
(End of certification)
(c) (Applicable to sealed bid solicitations)
(1) FOR PROCUREMENTS USING SEALED BIDDING PROCEDURES, THE
SIGNED CERTIFICATIONS SHALL BE SUBMITTED BY EACH BIDDER WITH THE BID SUBMISSION
EXCEPT FOR PROCUREMENTS USING TWO-STEP SEALED BIDDING PROCEDURE (SEE SUBPART
14.5). For those procurements, the certifications shall be submitted with
submission of the step two sealed bids. A certificate is not required for
indefinite delivery contracts (see Subpart 16.5) unless the total estimated
value of all orders eventually to be placed under the contract is expected to
exceed $100,000.
(2) For contracts and contract modifications which include
options, a certificate is required when the aggregate value of the contract
or contract modification and all options (see 3.104-4(e)) exceeds $100,000.
(3) FAILURE OF A BIDDER TO SUBMIT THE SIGNED CERTIFICATE
WITH ITS BID SHALL RENDER THE BID NONRESPONSIVE.
(c) (Applicable to negotiated solicitations) For procurements,
including contract modifications, in excess of $100,000 made using procedures
other than sealed bidding, the signed certifications shall be submitted by the
successful Offeror to the Contracting Officer within the time period specified
by the Contracting Officer when requesting the certificates except as provided
in subparagraphs (c)(1) through (c)(5) of this clause. In no event shall the
certificate be submitted subsequent to award of a contract or execution of a
contract modification:
(1) For letter contracts, other unpriced contracts, or
unpriced contract modifications, whether or not the unpriced contract or
modification contains a maximum or not to exceed price, the signed
certifications shall be submitted prior to the award of the letter contract,
unpriced contract, or unpriced contract modification, and prior to the
definitization of the letter contract or the establishment of the price of the
unpriced contract or unpriced contract modification. The second certification
shall apply only to the period between award of the letter contract and
execution of the document definitizing the letter contract, or award of the
unpriced contract or unpriced contract modification and execution of the
document establishing the definitive price of such unpriced contract or
unpriced contract modification.
(2) For basic ordering agreements, prior to the execution
of a priced order; prior to the execution of an unpriced order, whether or not
the unpriced order contains a maximum or not to exceed price; and, prior to
establishing the price of an unpriced order. The second certificate to be
submitted for unpriced orders shall apply only to the period between award of
the unpriced order and execution of the document establishing the definitive
price for such order.
(3) A certificate is not required for indefinite delivery
contracts (see Subpart 16.5) unless the total estimated value of all orders
eventually to be placed under the contract is expected to exceed $100,000.
(4) For contracts and contract modifications which include
options, a certificate is required when the aggregate value of the contact or
contract modification and all options (see 3.104-4(e)) exceeds $100,000.
(5) For purposes of contracts entered into under section
8(a) of the SBA, the business entity with whom the SBA contracts, and not the
SBA, shall be required to comply with the certification requirements of
subsection 27(e). The SBA shall obtain the signed certificate from the business
entity and forward the certificate to the Contracting Officer prior to the
award of a contract to the SBA.
GSA FORM 3503 PAGE 8 (REV. 2-92)
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(6) Failure of an Offeror to submit the signed certificate
within the time prescribed by the Contracting Officer shall cause the offer to
be rejected.
(d) Pursuant to FAR 3.104-9(d), the Offeror may be requested to
execute additional certifications at the request of the Government. Failure of
an Offeror to submit the additional certifications shall cause its offer to be
rejected.
(e) A certification containing a disclosure of a violation or
possible violation will not necessarily result in the withholding of award
under this solicitation. However, the Government, after evaluation of the
disclosure, may cancel this procurement or take any other appropriate actions
in the interests of the Government, such as disqualification of the Offeror.
(f) In making the certification in paragraph (2) of the
certificate, the officer or employee of the competing contractor responsible
for the offer may rely upon a one-time certification from each individual
required to submit a certification to the competing contractor, supplemented by
periodic training. These certifications shall be obtained at the earliest
possible date after an individual required to certify begins employment or
association with the contractor. If a contractor decides to rely on a
certification executed prior to the suspension of section 27 (i.e., prior to
December 1, 1989), the Contractor shall ensure that an individual who has so
certified is notified that section 27 has been reinstated. These certifications
shall be maintained by the Contractor for 6 years from the date a certifying
employee's employment with the company ends or, for an agent, representative,
or consultant, 6 years from the date such individual ceases to act on behalf of
the Contractor.
(g) Certifications under paragraphs (b) and (d) of this provision
are material representations of fact upon which reliance will be placed in
awarding a contract.
18. 52.209-7 ORGANIZATIONAL CONFLICTS OF INTEREST CERTIFICATE --
MARKETING CONSULTANTS (NOV 1991) (Applicable to negotiated acquisitions if the
offer exceeds $200,000.)
(a) Definitions.
(1) Marketing consultant means any independent contractor
who furnishes advice, information, direction, or assistance to an offeror or
any other contractor in support of the preparation or submission of an offer
for a government contract by that offeror. An independent Contractor is not a
marketing consultant when rendering --
(i) Services excluded in Subpart 37.204;
(ii) Routine engineering and technical services
(such as installation, operation, or maintenance of systems, equipment,
software, components, or facilities);
(iii) Routine legal, actuarial, auditing, and
accounting services; or
(iv) Training services.
(2) Organizational conflict of interest means that because
of other activities or relationships with other persons, a person is unable or
potentially unable to render impartial assistance or advice to the Government,
or the person's objectivity in performing the contract work is or might be
otherwise impaired, or a person has an unfair competitive advantage.
(b) An individual or firm that employs, retains or engages
contractually one or more marketing consultants in connection with a contract,
shall submit to the contracting officer, with respect to each marketing
consultant, the certificates described below, if the individual or firm is
notified that it is the apparent successful offeror.
(c) The certificate must contain the following:
(1) The name of the agency and the number of the
solicitation in question.
(2) The name, address, telephone number, and federal
taxpayer identification number of the marketing consultant.
(3) The name, address, and telephone number of a
responsible officer or employee of the marketing consultant who has personal
knowledge of the marketing consultants involvement in the contract.
(4) A description of the nature of the services rendered by
or to be rendered by the marketing consultant.
(5) The name, address, and telephone number of the client
or clients, and the name of a responsible officer or employee of the marketing
consultant who is knowledgeable about the services provided to such client(s),
and a description of the nature of the services rendered to such client(s), if,
based on information provided to the Contractor by the marketing consultant,
any marketing consultant is rendering or, in the 12 months preceding the date
of the certificate, has rendered services respecting the same subject matter of
the instant solicitation, or directly relating to such subject matter, to the
Government or any other client (including any foreign government or person).
(6) A statement that the person who signs the certificate
for the prime Contractor has informed the marketing consultant of the existence
of Subpart 9.5 and Office of Federal Procurement Policy Letter 89-1.
(7) The signature, name, title, employer's name, address,
and telephone number of the persons who signed the certificates for both the
apparent successful offeror and the marketing consultant.
GSA FORM 3503 PAGE 9 (REV 2-92)
<PAGE> 136
PAGE 103 of 123
(d) In addition, the apparent successful offeror shall forward to
the Contracting Officer a certificate signed by the marketing consultant that
the marketing consultant has been told of the existence of Subpart 9.5 and
Office of Federal Procurement Policy Letter 89-1, and the marketing consultant
has made inquiry, and to the best of the consultant's knowledge and belief, the
consultant has provided no unfair competitive advantage to the prime Contractor
with respect to the services rendered or to be rendered in connection with the
solicitation, or that any unfair competitive advantage that, to the best of the
consultant's knowledge and belief, does or may exist, has been disclosed to the
offeror.
(e) Failure of the offeror to provide the required certifications
may result in the offeror being determined ineligible for award.
Misrepresentation of any fact may result in the assessment of penalties
associated with false certifications or such other provisions provided for by
law or regulation.
19. 52.209-15 NOTICE OF PARTICIPATION BY ORGANIZATIONS FOR THE
HANDICAPPED (APR 1991) (Applies if solicitation is total or partial small
business set-aside)
(a) Definitions.
"Handicapped individual" means a person who has a physical,
mental, or emotional impairment, defect, ailment, disease, or disability of a
permanent nature which in any way limits the selection of any type of
employment for which the person would otherwise be qualified or qualifiable.
"Public or private organization for the handicapped" means one (1) which is
organized under the laws of the United States or of any State, operating in the
interest of handicapped individuals, the net income of which does not inure in
whole or in part to the benefit of any shareholder or other individual; (2)
which complies with any applicable occupational health and safety standard
prescribed by the Secretary of Labor; and (3) employs in the production of
commodities and in the provision of services, handicapped individuals for not
less than 75 percent of the direct labor required for the production or
provision of the commodities or services.
(b) Certification. The offeror certifies that it is [ ] is not [x]
a public or private organization for the handicapped. An offeror certifying in
the affirmative is eligible to participate in any resultant contract as if it
were a small business concern.
(c) Agreement. An offeror certifying as a public or private
organization for the handicapped agrees that at least 75 percent of the direct
labor required in the performance of the contract will be performed by
handicapped individuals.
20. 52.215-11 AUTHORIZED NEGOTIATORS (APR 1984)
(Applicable to negotiated acquisitions)
The offeror or quoter represents that the following persons are authorized to
negotiate on its behalf with the Government in connection with this request for
proposals or quotations: [list names, titles, and telephone numbers of the
authorized negotiators].
Martin Gear - Manager for Federal Government Contracts - (410) 715-1266
-----------------------------------------------------------------------
Rebecca Boenigk - President - (409) 822-5080
-----------------------------------------------------------------------
-----------------------------------------------------------------------
GSA FORM 3503 PAGE 10 (REV. 2-92)
<PAGE> 137
SOLICITATION NO. FCNO-93-S303-3 PAGE 104 of 123
52.215-20 PLACE OF PERFORMANCE (APR 1984)
(a) The offeror or quoter, in the performance of any contract resulting
from this solicitation ( ) intends, ( ) does not intend (check applicable box)
to use one or more plants or facilities located at a different address from the
address of the offeror or quoter as indicated in this proposal or quotation.
(b) If the offeror or quoter checks "intends" in paragraph (a) above, it
shall insert in the spaces provided below the required information:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF OWNER AND
PLACE OF PERFORMANCE (STREET OPERATOR OF THE PLANT OR
ADDRESS, CITY, COUNTY, FACILITY IF OTHER THAN
STATE, AND ZIP CODE) OFFEROR OR QUOTER
<S> <C>
2301 Fountain Ave. Neutral Posture Ergonomics, Inc.
- ---------------------------- --------------------------------
Bryan, Brazos Cty, Texas
- ---------------------------- --------------------------------
77801
- ---------------------------- --------------------------------
</TABLE>
52.225-20 BUY AMERICAN ACT -- NORTH AMERICAN FREE TRADE AGREEMENT
IMPLEMENTATION ACT -- BALANCE OF PAYMENTS PROGRAM CERTIFICATE (JAN 1994)
(a) The offeror hereby certifies that each end product, except those
listed in paragraph (b) of this provision, is a domestic end product (as
defined in the clause entitled "Buy American Act -- North American Free Trade
Agreement (NAFTA) Implementation Act -- Balance of Payments Program") and that
components of unknown origin have been considered to have been mined, produced,
or manufactured outside the United States.
(b) Excluded End Products:
<TABLE>
<CAPTION>
LINE ITEM NO. COUNTRY OF ORIGIN
<S> <C>
NONE
- ---------------------------- --------------------------------
- ---------------------------- --------------------------------
- ---------------------------- --------------------------------
</TABLE>
(List as necessary)
(c) Offers will be evaluated by giving certain preferences to domestic end
products or NAFTA country end products over other end products. In order to
obtain these preferences in the evaluation of each excluded end product listed
in paragraph (b) of this provision, offerors must identify and certify below
those excluded end products that are NAFTA country end products. Products that
are not identified and certified below will not be deemed NAFTA country end
products. Offerors must certify by inserting the applicable line item numbers
in the following:
(1) The offeror certifies that the following supplies qualify as
"NAFTA country end products" as that term is defined in the clause entitled
"Buy American Act -- North American Free Trade Agreement Implementation Act --
Balance of Payments Program:"
NONE
------------------------------------------------------------
(Insert line item numbers)
(d) Offers will be evaluated in accordance with FAR Part 25.
<PAGE> 138
SOLICITATION NO. FCNO-93-S303-3 PAGE 105 of 123
552.225-8 TRADE AGREEMENTS ACT CERTIFICATE (DEC 1994) (DEVIATION
FAR 52.225-8)
(a) The Offeror, by signing this offer, certifies that each end product to
be delivered under this contract is a U.S. made end product, a designated
country end product, a Caribbean Basin country end product, a Canadian end
product or a Mexican end product as defined in the clause entitled "Trade
Agreements Act" at 48 CFR 552.225-9.
(b) Offers will be evaluated in accordance with Subpart 25.4 of the
Federal Acquisition Regulation except that offers of U.S. made end products,
designated country end products, Caribbean Basin end products, Canadian end
products, or Mexican end products shall be evaluated without the restrictions
of the Buy American Act or the Balance of Payments Program.
K-FSS-30 CLAUSES APPLICABLE TO COST ACCOUNTING STANDARDS (JAN 1995)
Reference is made to the provision in this Section K that is numbered and
entitled 52.230-1, DISCLOSURE STATEMENT-COST ACCOUNTING PRACTICES AND
CERTIFICATION. On the basis of the information furnished by the offeror in
conjunction with that provision, any one or more of the following clauses may
be applicable to a contract awarded to the offeror. These clauses have not been
included in this solicitation, but will be negotiated into contracts prior to
award if it is determined that the contract is subject to the cost accounting
standards (CAS) requirements. In this connection, all determinations of
applicability are contingent upon the value of the proposed award (not the
amount of the offer), and whether cost or pricing data is considered in the
evaluation of the offeror's proposal. These clauses are prescribed in the
Federal Acquisition Regulation (FAR), but also appear in 48 CFR Chapter 99, the
pertinent portions of which are reprinted in FAR Appendix B, Cost Accounting
Preambles and Regulations.
(a) 52.230-2, COST ACCOUNTING STANDARDS. Applicable if the contract is
subject to full CAS coverage. (Indicated by checking 52.230-1), Part 1, (c)(1)
or (c)(2), or if offeror does not qualify for exemptions under Part 1, (c)(3)
or (c)(4), or Part II.)
(b) 52.230-3, DISCLOSURE AND CONSISTENCY OF COST ACCOUNTING PRACTICES.
Applicable if the contract is subject to modified CAS coverage. (Indicated when
offeror requests a monetary exemption under 52.230-1, Part I, (c)(3) or (c)(4),
or modified coverage under Part II.)
(c) 52.230-4, CONSISTENCY IN COST ACCOUNTING PRACTICES. Applicable if the
proposed contract is exempt from CAS requirements solely on the basis of the
fact that the contract is to be awarded to a United Kingdom contractor and is
to be performed substantially in the United Kingdom.
(d) 52.230-5, ADMINISTRATION OF COST ACCOUNTING STANDARDS. Applicable if
either 52.230-2 or 52.230-3 apply to the resultant contract.
K-FSS-35-B GSA FORM 3503, REPRESENTATIONS AND CERTIFICATIONS (JUN 1995)
GSA Form 3503, Representations and Certifications, February 1992 edition, is
included in this Section K as a part of this solicitation.
This form is amended as set forth below.
(a) Article 2, 52.204-3, Taxpayer Identification, is amended in the
provision heading by removing the date "(SEP 1989)" and inserting in its place
"(MAR 1994)". In addition, paragraph (b) of the provision is revised to read as
follows:
"All offerors are required to submit the information required in
paragraphs (c) through (e) of this solicitation provision in order to comply
with reporting requirements of 26 U.S.C. 6041, 6041A, and 6050M and
implementing regulations issued by the Internal Revenue Service (IRS). If the
resulting contract is subject to the reporting requirements described in FAR
4.903, the failure or refusal by the offeror to furnish the information may
result in a 31 percent reduction of payments otherwise due under the contract."
(b) Article 10, 52.2044, Contractor Establishment Code, is deleted.
<PAGE> 139
SOLICITATION NO. FCNO-93-S303-3 PAGE 106 of 123
(c) Article 17, 52.203-8, Requirement for Certificate of Procurement
Integrity (NOV 1990), is amended in the provision heading by showing two
provision numbers before the title, as follows: "52.203-8/52.203-8 ALT I."
Explanation: Article 17 is actually a combination of two provisions, FAR
52.203-8, which is applicable to sealed bid solicitations, and FAR 52.203-8
Alternate 1, which is applicable to negotiated solicitations. With the
exception of paragraph (c), these two provisions are identical. Consequently,
for the sake of brevity, they are shown in GSA Form 3503 as a single article.
but with two versions of paragraph (c), each of which is identified as to its
applicability. Any reference to "52.203-8 ALT I" which may appear elsewhere in
this solicitation (or in a cover page notice) shall be regarded as meaning this
Article 17 and the paragraph (c) of this article that is identified as being
"(Applicable to negotiated solicitations)".
(d) Article 19, 52.219-15, Notice of Participation by Organizations for
the Handicapped, is deleted.
(e) ARTICLE 1, 552.219-1, SMALL BUSINESS CONCERN REPRESENTATION, IS
DELETED. THE FAR PROVISION 52.219-1, SMALL BUSINESS CONCERN REPRESENTATION, IS
INCLUDED IN SECTION K OF THIS SOLICITATION.
<PAGE> 140
SOLICITATION NO. FCNO-93-S303-3 PAGE 107 of 123
SECTION L
INSTRS., CONDS., AND NOTICES TO OFFERORS
52.233-2 SERVICE OF PROTEST (NOV 1988)
(a) Protests, as defined in section 33.101 of the Federal Acquisition
Regulation, that are filed directly with an agency, and copies of any protests
that are filed with the General Accounting Office (GAO) or the General Services
Administration Board of Contract Appeals (GSBCA), shall be served on the
Contracting Officer (addressed as follows) by obtaining written and dated
acknowledgment of receipt from:
GENERAL SERVICES ADMINISTRATION
FEDERAL SUPPLY SERVICE
NATIONAL FURNITURE CENTER (3FNS)
CRYSTAL MAIL BUILDING 4, SUITE 403
WASHINGTON, DC 20406
(b) The copy of any protest shall be received in the office designated
above on the same day a protest is filed with the GSBCA or within one day of
filing a protest with the GAO.
52.252-1 SOLICITATION PROVISIONS INCORPORATED BY REFERENCE (JUN 1988)
This solicitation incorporates one or more solicitation provisions by
reference, with the same force and effect as if they were given in full text.
Upon request, the Contracting Officer will make their full text available.
552.219-73 PREPARATION, SUBMISSION, AND NEGOTIATION OF SUBCONTRACTING
PLANS (JUNE 1994)
(a) An offeror, other than a small business concern, submitting an offer
that exceeds $500,000 ($1,000,000 for construction) shall submit a
subcontracting plan with its initial offer. The subcontracting plan will be
negotiated concurrently with price and any required technical and management
proposals, unless the offeror submits a previously-approved commercial
products plan. Maximum practicable utilization of small, small disadvantaged,
and women-owned small business concerns as subcontractors is a matter of
national interest with both social and economic benefits. It is the General
Services Administration's (GSA's) expectation that an offeror's subcontracting
plan will reflect a commitment to assuring that small, small disadvantaged, and
women-owned small business concerns are provided the maximum practicable
opportunity, consistent with efficient contract performance, to participate as
subcontractors in the performance of the resulting contract. An offeror
submitting a commercial products plan can reflect this commitment through
subcontracting opportunities it provides that relate to the offeror's
production generally; i.e., for both its commercial and Government business.
(b) GSA believes that this potential contract provides significant
opportunities for the use of small, small disadvantaged, and women-owned small
business concerns as subcontractors. Consequently, in addressing the eleven
elements described at 552.219-9(d) of the clause in this contract entitled Small
Business Subcontracting Plan, the offeror shall demonstrate that its
subcontracting plan represents a creative and innovative program for involving
small, small disadvantaged, and women-owned small business concerns in
performing the contract. The subcontracting plan shall include a description of
the offeror's subcontracting strategies used in any previous contracts,
significant achievements, and how this plan will build upon those earlier
achievements. Additionally, the offeror shall demonstrate through its plan that
it understands the small business subcontracting program's objectives, GSA's
expectations, and is committed to taking those actions necessary to meet these
goals or objectives.
(c) In determining the acceptability of any subcontracting plan, the
Contracting Officer will --
<PAGE> 141
SOLICITATION NO. FCNO-93-S303-3 PAGE 108 of 123
(1) Review the plan to verify that the offeror has demonstrated an
understanding of the small business subcontracting program's objectives and
GSA's expectations with respect to the program and has included all the
information, goals, and assurances required by 552.219-9;
(2) Consider previous goals and achievements of contractors in the
same industry;
(3) Consider information and potential sources obtained from
agencies administering national and local preference programs and other
advocacy groups in evaluating whether the goals stated in the plan adequately
reflect the anticipated potential for subcontracting to small, small
disadvantaged, and women-owned small business concerns; and
(4) Review the offeror's description of its strategies, historical
performance and significant achievements in placing subcontracts for the same
or similar products or services with small, small disadvantaged, and
women-owned small business concerns. The offeror's description can apply to
commercial as well as previous Government contracts.
(d) Failure to submit an acceptable subcontracting plan and/or correct
deficiencies in a plan within the time specified by the Contracting Officer
shall make the offeror ineligible for award.
L-FSS-57 LATE PROPOSALS (FEB 1991)
(a) Offerors are cautioned that Paragraph (a)(4) of FAR clause 52.215-10.
Late Submissions, Modifications, and Withdrawals of Proposals, is inapplicable
to this solicitation. Accordingly, the date appearing in Block 9 of Standard
Form 33 is the firm cut-off date established for receipt of proposals. Any
proposal received at the office designated in the solicitation after the exact
time specified for receipt will not be considered unless it qualifies under
Paragraph (a)(1), (a)(2), (a)(3), or (b) of FAR clause 52.215-10.
(b) No additional Special Item Numbers may be added to the proposal after
the firm cut-off date established for receipt of proposals. However, additional
products and/or models may be added when the item offered falls under a Special
Item Number originally submitted in a timely manner.
L-FSS-59 AWARD (APR 1984)
Until a formal notice of award is issued, no communication by the Government,
whether written or oral, shall be interpreted as a promise that an award will
be made.
L-FSS-101 BEST AND FINAL OFFERS (MAR 1990)
(a) Upon the conclusion of discussions the Contracting Officer will
request a "best and final" offer. Oral requests will be confirmed in writing.
(b) The request will include -
(1) Notice that discussions are concluded-,
(2) Notice that this is the opportunity to submit a best and final
offer;
(3) The specified cutoff date and time;
(4) A statement that any modification proposed as a result of the
best and final offer must be received by the date and time specified and will
be subject to the Late Submissions, Modifications, and Withdrawals of Proposals
provision of this solicitation.
(c) The Contracting Officer will not reopen discussions after receipt of
best and final offers unless it is clearly in the interests of the Government
to do so. If discussions are reopened, the Contracting Officer will issue an
additional request for best and final offer.
<PAGE> 142
SOLICITATION NO. FCNO-93-S303-3 PAGE 109 of 123
(d) It is the Contracting Officer's desire to conclude negotiations by
March 1, 1996.
L-FSS-490 UNSOLICITED SAMPLES, DESCRIPTIVE LITERATURE, OR BRAND NAME
REFERENCES (APR 1984)
When procurement is effected under specifications or purchase descriptions
(other than "brand name or equal") and the Government does not specifically
request bid samples, descriptive literature, or references to brand names.
models, or part numbers as an integral part of the bid, and the bid is
accompanied by any of those materials, the materials will be disregarded,
unless it is clear from the bid or accompanying papers that it was the bidders'
intention to qualify the bid.
<PAGE> 143
SOLICITATION NO. FCNO-93-S303-3 PAGE 110 of 123
SECTION M
EVALUATION FACTORS FOR AWARD
M-FSS-305 MULTIPLE AWARDS (AUG 1995)
(a) Basic Method of Award. The Government may make multiple awards for the
articles or services listed herein to those responsible offerors whose offers,
conforming to the request for proposals, will be most advantageous to the
Government, taking into consideration the multiplicity and complexity of
equipment of various manufacturers and the differences in performance required
to accomplish or produce required end results, production and distribution
facilities, price, compliance with delivery requirements, and other pertinent
factors. By providing a selection of comparable supplies or services, ordering
activities will be afforded the opportunity of fulfilling their requirements
with the lowest cost item having the features which specifically meet their
needs.
(b) Offers on Identical Products - Basic Contract Period. The Government
will award only one contract for each specific product. When two or more
suppliers (e.g., regular dealers) offer the identical product, award will be
made competitively to only one offeror on the basis of the lowest net price
offered. (Discounts for early payment will not be considered as an evaluation
factor in determining the low offeror.)
(c) Offers on Identical Products during a Contract Period Extension. During
the first open season for the contract extension period, any offers that are
equal to or lower than the current contract price, received for identical items
will be considered. Current contractors will be allowed to submit offers for
identical items during this open season. The current contractor which has the
identical item on contract will be included in this evaluation process. The
Government will evaluate all offers and award only one contract for each
specific product. Award will be made competitively to only one offeror on the
basis of the lowest net price offered. (Discounts for early payment will not be
considered as an evaluation factor in determining the low offeror.)
M-FSS-329 COMMERCIAL PRICE LISTS (SEP 1995)
(a) Two copies of the offeror's current published (dated or otherwise
identified) commercial descriptive catalogs and/or price lists must accompany
the offer. Commercial catalogs and/or price lists shall be those that contain
"established catalog or market prices" as set forth in clause M-FSS-330, Basis
for Price Negotiation. Special catalogs or price lists printed for the purpose
of this offer, showing only net prices to the Government or reference to
previous submissions, are not acceptable.
(b) Beside each offered item in the commercial catalog and/or price list,
the offeror shall write the special item number under which the item is being
offered. All other items shall be marked "excluded," lined out, and initialed
by the offeror.
(c) If the terms of sale appearing in the commercial catalogs or price list
on which an offer is based are in conflict with the terms of this solicitation,
the latter shall govern.
(d) Items containing jewel bearings. If compliance with clause 52.208-1,
Required Source for Jewel Bearings, is required and results in increases over
commercial list prices, the offeror shall submit a separate list showing for
each item (1) item identification, (2) number, size, and type of jewel
bearings, and (3) the additional price, if any, resulting from the required
purchase of Langer-made jewel bearings; such price to be added to the
Contractor's list price. This additional price will be accepted by the
Government if determined to be reasonable by the Contracting Officer, and this
information shall be included in the cover page of the Federal Supply
Schedule Price List.
<PAGE> 144
SOLICITATION NO. FCNO-93-S303-3 PAGE 111 of 123
M-FSS-330 BASIS FOR PRICE NEGOTIATION (APR 1984)
(a) General. Prices for items to be awarded under this solicitation normally
will be negotiated on the basis of discounts from offeror's established
catalog or market prices. Pricing data for the purpose of such negotiation
shall be submitted and certified as hereafter provided.
(b) Established Catalog or Market Prices. If the prices offered under this
solicitation are based on established catalog or market prices, a certification
is required that such prices are established catalog or market prices for
commercial items as defined in FAR 15.804-3(c).
(c) Certificate of Established Catalog or Market Price. Offeror certifies
that to the best of his knowledge and belief:
(1) The price(s) quoted in this proposal is based on established catalog
or market prices of commercial items, as defined in FAR 15.804-3(c), in effect
on the date of the offer or on the dates of any revisions submitted during the
course of negotiations.
(2) Substantial quantities of the items have been sold to the general
public at such prices.
(3) All of the data (including sales data) submitted with this offer are
accurate, complete, and current representations of actual transactions to the
date when price negotiations are concluded.
<PAGE> 145
SOLICITATION NO. FCNO-93-S303-3 PAGE 112 of 123
NAME AND TITLE OF PERSON AUTHORIZED TO SIGN OFFER
(Type or Print)
Martin Gear - manager for Federal Government Sales
- ---------------------------------------------------------------------------
SIGNATURE: /s/ MARTIN GEAR
----------------------------------------------------------------
FIRM: Neutral Posture Ergonomics, Inc.
---------------------------------------------------------------------
DATE OF EXECUTION: 11/01/95
--------------------------------------------------------
CAUTION: False statements may subject the offeror to penalties provided
by statute and regulations.
(d) Price Reduction for Defective Pricing Data. If subsequent to the award of
any contract resulting from this solicitation it is found that any price
negotiated in connection with this contract was increased by any
significant amount because the prices, data, and facts were not as stated
in the offeror's "Certificate of Established Catalog or Market Price,"
then the contract price(s) shall be reduced by such amount and the
contract shall be modified in writing to reflect such adjustment. Failure
to agree on such a reduction, subsequent to a "final decision" by the
Contracting Officer in this matter, shall be a dispute concerning a
question of fact within the meaning of the "Disputes" clause of the
contract.
(e) Access to Records. By submission of this proposal, the offeror grants to
the Contracting Officer, or his authorized representative, the right to
examine, for the purpose of verifying the (1) statements made in the above
"Certificate of Established Catalog or Market Price" or (2) cost or
pricing data (including computations and projections) submitted in
connection with the "Certificate of Current Cost or Pricing Data" (see f,
below), those books, records, documents, papers, and other supporting data
which involve transactions related to this proposal which will permit
adequate evaluation and verification thereof.
(f) Cost or Pricing Data.
(1) If it is determined by the Government that the price(s) quoted under
this solicitation is NOT based on established catalog or market prices of
commercial items sold in substantial quantities to the general public, or prices
set by law or regulations, the offeror shall submit in writing cost or pricing
data in support of the proposed price. (For definition of "cost or pricing
data," see FAR 15.804-3).
(2) The offeror shall certify, by the use of the certificate in FAR
15.804-4, that to the best of his knowledge and belief that cost or pricing data
submitted in accordance with the above in accurate, complete, and current. The
applicable clauses in FAR 15.804-8 are incorporated by reference in this
contract.
M-FSS-331 PROJECTED SALES (APR 1994)
(a) The Discount Schedule and Marketing Data section of the solicitation
requires full disclosure on commercial pricing and discounting arrangements.
This solicitation, however, is testing a reduced discount data disclosure
provision for those offerors who qualify. The reduced data requirements are
contained in Provision M-FSS-333. Offerors who anticipate sales of $5 million or
less under any contract awarded pursuant to this solicitation are eligible to
participate in this test. If you believe you are eligible, please insert your
best estimate of your projected sales under a proposed contract.
$4 Million over 5 years ($800K per year)
----------------------------------------
<PAGE> 146
SOLICITATION NO. FCNO-93-S303-3 PAGE 113 of 123
(b) For previous contractors, your anticipated sales should be commensurate
with the sales reported on GSA Form 72A (Contractor's Report of Orders Received)
for your previous contract under this schedule.
(c) New offerors should take into consideration the following when
estimating their sales.
(1) The number of contractors under the schedule.
(2) The schedule sales reported by previous vendors.
(3) The current commercial sales for items contained in offer.
(4) The share of the market now maintained by the vendor.
(5) The estimated sales to government agencies on the open market.
(d) The total estimated sales for each special item number (SIN) included
in this solicitation are shown in Section B, Schedule of Items. (See Clause
B-FSS-96, Estimated Sales, or B-FSS-98, Estimated Requirements). Your
eligibility to submit reduced data will be based on the projected TOTAL sales,
inclusive of all SIN's for the entire term of your contract.
(e) The Government reserves the right to require full disclosure if it is
determined that the sales estimates provided by the offeror exceed $5 million.
M-FSS-333 REDUCED DATA DISCLOSURE (APR 1994)
(a) Data Requirements. The data requirements contained in the insert or
attachment to this solicitation entitled "Discount Schedule & Marketing Data"
(DSMD) have been relaxed under certain circumstances. Offerors whose projected
sales do not exceed $5 million, determined in accordance with the preceding
provision (i.e., M-FSS-331), are authorized to report discount/pricing/sales
disclosures in accordance with the following subparagraphs (a)(1) through
(a)(5).
(1) DSMD Part A, Sections III.b and IV.b. Vendors are not required
to complete these sections unless requested to do so by the Contracting Officer.
(2) DSMD Part B, Section III.a. Vendors are not required to
disclose the best pricing arrangement for each customer or category of customer
as requested, but rather, may provide information as follows:
(i) Disclose the discounts, terms and conditions granted to
their three largest sales volumes commercial customers for the products
offered, including dealers, OEM's, distributors, etc. (based on sales volume)
(may be a specific customer, or a category of customers who all receive the
same discounts). As part of the disclosure, offerors are asked to provide the
annual sales of each customer identified.
(ii) In addition to the above disclosures, all offerors must
disclose discount/pricing arrangements offered to state or local governments
for the offered items.
(iii) Offerors MUST disclose three additional customers IF
the top customers are educational institutions. As is its current practice, the
Government will not establish its negotiation goals using educational
discounts, HOWEVER, the Government expects the same price/discount advantages
offered to educational institutions to be extended to the government's
educational facilities, if those prices/discounts are more favorable than the
discounts awarded in any contract pursuant to this solicitation.
<PAGE> 147
SOLICITATION NO. FCNO-93-S303-3 PAGE 114 of 123
(3) DSMD Part B, Section III.c. and Section V. Information
furnished in these sections need only be provided for those customers disclosed
in Part B, Section III.a.
(4) DSMD Part B, Section VI. Vendors are not required to complete
this section unless requested to do so by the Contracting Officer.
(5) DSMD Part B, Section VII. Vendors need only provide sales
information on the top two Government best-selling model/product/catalog numbers
for each SIN.
(b) Negotiation Objective. Notwithstanding the foregoing relaxation of
data requirements, the Government's negotiation objective has not been revised.
The Government will continue to pursue discount/pricing arrangements that give
the Government most favored customer pricing status. Therefore, the
Government's negotiations will not necessarily be restricted to the information
provided in the offer, but will include all other information available to the
Contracting Officer.
(1) Offerors are requested to indicate below whether the discounts
offered to the Government are equal to or better than those discounts/prices
granted to commercial customers who buy in quantities/volumes comparable to
the Government's anticipated sales volume?
YES X . NO . If the offeror's response is in the negative,
the offeror is requested to provide the specifies on the discounts/prices
offered, terms and conditions, and any other information to support why the
Government is not being offered similar pricing arrangements.
(2) The Contracting Officer reserves the right to request
additional information as deemed necessary in order to evaluate and make a
decision on the offer.
(3) Unless otherwise noted, all other provisions of this
solicitation remain in force, including all certification requirements.
<PAGE> 148
PAGE 115 of 123
REPORT OF CONTRACT SALES
(To be completed currently contractors)
In the spaces provided below, please provide contract sales data under Federal
Supply Schedule 71, Part III, Section H per Special Item Number. The sales must
reflect orders received from date of award September 1, 1994 through August 31,
1995.
<TABLE>
<CAPTION>
A B C D E
Contract Sin Total Contract Requote Sales Below
No. Sales Sales BOL
<S> <C> <C> <C> <C>
496-1a NOT APPLICABLE
496-1b NOT APPLICABLE
496-1c NOT APPLICABLE
496-2 NOT APPLICABLE
496-3 NOT APPLICABLE
496-4 NOT APPLICABLE
496-5 NOT APPLICABLE
496-6 NOT APPLICABLE
496-7 NOT APPLICABLE
GS-29F-014OC 496-8 $889,047.00 -0- $889,047.00
GS-29F-014OC 496-9 No Sales
496-10 NOT APPLICABLE
496-11 NOT APPLICABLE
</TABLE>
Column C must equal the total of columns D and E. Column D must reflect all
orders received as a result of requote awards. This includes individual requote
orders valued at less than 100,000 net. Column E must reflect all orders
received at dollar values at or below the BOL, excluding requote orders valued
at less than 100,000 net.
For SIN's not contained on your contracts, please annotate "Not applicable".
For SIN's for which you have no sales to report, please annotate "No Sales".
<PAGE> 149
PAGE 116 of 123
DISCOUNT SCHEDULE & MARKETING DATA
INSTRUCTIONS TO OFFERORS:
PART A: General information, applies to each Special Item Number (SIN) for
which an offer is submitted. (If all information is the same, SIN's may be
combined.)
PART B: Separate discount and sales information, must be completed for each
Special Item Number for which an offer is submitted. (If discount information
is the same for all products under each SIN, SINs may be combined. However,
separate sales information required under Part B VII must be provided for each
SIN.)
Information required by each space must be furnished. If not applicable,
indicate by "N/A". Information furnished in Part B relating to discounts,
allowances and sales information will be treated as "CONFIDENTIAL" by the
Government except for final prices and discounts awarded by the government.
Failure to provide current, accurate, and complete information under Parts A
and B may subject the offeror to liability for refunds pursuant to the price
reductions or Defective Pricing Clauses.
Part A - General Information
(applicable to all special item numbers)
I. OFFEROR'S MARKETING CATEGORY (check applicable item)
(a) Manufacturer selling direct - has no dealers
-----
(b) x Manufacturer selling direct to the Government even though he
----- has dealers.
(c) Manufacturer selling to the Government through dealers.
-----
(d) Dealer selling direct to the Government.
-----
(Dealer must submit manufacturer's price list)
(e) Other (specify)
----- -----------------------------------------------
II. IDENTIFICATION OF A PRICE LIST AS THE BASIS FOR THIS OFFER
(check and attach 2 copies of the Price List)
(a) xx Manufacturer's catalog/price list Suggested Retail Price List
----- November 1995
(b) Dealer's-catalog/price list
-----
(c) Retailer's catalog/price list
-----
(d) Other (specify)
----- ----------------------------------------------
<PAGE> 150
PAGE 117 of 123
III. WARRANTY: (Question (b) applies only to FSS solicitations.)
(a) Submit your standard commercial warranty or specify where it may be
found in your catalog or price list included with this offer. See
page 49 of Price List
(b) The warranty offered to GSA is more favorable __ less favorable __ or
equal to XX the commercial warranty? (check one) Describe and
provide the value (expressed as a percentage of the catalog price) if
more favorable or less favorable ____%.
IV. INSTALLATION AND INSTRUCTIONS (This section applies only to FSS.)
(a) Are installation and instructions included in this offer?
Yes X No ___ (check one) (Instruction only)
If Yes, give details or indicate where the information may be found
in your catalog or price list. All chairs come equipped with an
"owners manual" instructing the user in how to make the adjustments
available.
(b) Are installation and instruction provisions offered herein to the
Government more favorable than those in commercial customers? Yes ___
No X (check one). If Yes, describe and provide the value (expressed
as a percentage) ___% SAME
V. OTHER DATA (In FSS solicitations, answer "Yes" or "No" for each question)
(a) YES Do you maintain stock on hand of the items offered?
(b) YES Do you display the Special Item Number(s) offered in showroom?
(c) NO Do you provide any design and layout assistance related to this
Special Item Number free of charge?
(d) N/A If you are a dealer, will you arrange to have other dealers
participate in the schedule contract should you receive a
contract?
(e) YES Will you administer all incoming orders, including requests for
expediting and follow-up?
VI. END OF CONTRACT ADDITIONAL DISCOUNTS
An additional discount of zero percent is offered to the Government, which will
be applied to the actual aggregate sales for all Special Item Numbers under
this contract that exceed the following base figure:
(a) For current MAS contractors, aggregate sales to the Government, for
the most recent *__________* month period under a similar Federal
Supply Schedule(s) contract(s) are $857,369.00, based on sales during
the period 10/01/94 to 9/30/95.
(b) For new offerors or current MAS contractors without sales history for
the number of months specified in (a) above, projected aggregate
sales for the *___* month period of this contract are $__________.
Offerors should be prepared to provide the contracting office with
information documenting the basis for their projection.
<PAGE> 151
PAGE 118 of 123
A
PART B - DISCOUNT AND SALES INFORMATION
_______________________________________________________________________________
Name of Offeror GSA Special Item Number
NEUTRAL POSTURE ERGONOMICS, INC. 496-5
________________________________________________________________________________
I. IDENTIFICATION OF ITEMS OFFERED How many Model/type of catalog items do you
offer under this GSA Special Item Number 40 (enter number).
--
II. DISCOUNTS The following concessions are offered to the Government for
delivery FOB destination.
(a) Discount offered on the above GSA Special Item Number is 57.58% from
------
Price List dated 11/01/95, plus prompt payment discount, as stated on
--------
the first page of this solicitation (additional details may be
entered below or attached). If discounts vary, show discounts on
price list.
(b) Quantity Discounts List below any quantity discounts included in this
offer. Question (2) below applies only to FSS.
200+ units on single order List - 60.1%
(1) Can models/products be combined within Special Item Number?
Yes XX No . If Yes, provide details.
------ -----
All models offered within this S.I.N. may be combined regardless of
color or fabric in order to reach the required quantity necessary for the
200+ unit discount.
(2) Can Special Item Numbers be combined?
Yes No XX . If Yes, provide details.
------ ------
(c) Other beneficial terms, discounts, or concessions included in this offer
such as prompt renewal discounts, purchase option credits, etc. (List below and
provide detailed explanations) (This section applies only to FSS solicitations)
NONE
<PAGE> 152
PAGE 118 of 123
B
PART B - DISCOUNT AND SALES INFORMATION
_______________________________________________________________________________
NAME OF OFFEROR GSA SPECIAL ITEM NUMBER
NEUTRAL POSTURE ERGONOMICS, INC. 496-6
________________________________________________________________________________
I. IDENTIFICATION OF ITEMS OFFERED How many Model/type of catalog items do
you offer under this GSA Special Item Number 1 (enter number).
----
II. DISCOUNTS The following concessions are offered to the Government for
delivery FOB destination.
(a) Discount offered on the above GSA Special Item Number is 57.58% from
Price List dated 11/01/95, plus prompt payment discount, as stated on
the first page of this solicitation (additional details may be
entered below or attached). If discounts vary, show discounts on
price list.
(b) Quantity Discounts List below any quantity discounts included in this
offer. Question (2) below applies only to FSS.
200+ units on single order List - 60.1%
(1) Can models/products be combined within Special Item Number?
Yes X No . If Yes, provide details.
------ -----
(2) Can Special Item Numbers be combined?
Yes No X . If Yes, provide details.
------ ------
(c) Other beneficial terms, discounts, or concessions included in this offer
such as prompt renewal discounts, purchase option credits, etc. (List below and
provide detailed explanations) (This section applies only to FSS solicitations)
NONE
<PAGE> 153
PAGE 118 of 123
C
PART B - DISCOUNT AND SALES INFORMATION
_______________________________________________________________________________
NAME OF OFFEROR GSA SPECIAL ITEM NUMBER
NEUTRAL POSTURE ERGONOMICS, INC. 496-3
________________________________________________________________________________
I. IDENTIFICATION OF ITEMS OFFERED How many Model/type of catalog items do
you offer under this GSA Special Item Number 1 (enter number).
----
II. DISCOUNTS The following concessions are offered to the Government for
delivery FOB destination.
(a) Discount offered on the above GSA Special Item Number is 57.58% from
Price List dated 11/01/95, plus prompt payment discount, as stated on
the first page of this solicitation (additional details may be
entered below or attached). If discounts vary, show discounts on
price list.
(b) Quantity Discounts List below any quantity discounts included in this
offer. Question (2) below applies only to FSS.
200+ units on single order List - 60.1%
(1) Can models/products be combined within Special Item Number?
Yes X No . If Yes, provide details.
----- ----
(2) Can Special Item Numbers be combined?
Yes No X . If Yes, provide details.
----- -----
(c) Other beneficial terms, discounts, or concessions included in this offer
such as prompt renewal discounts, purchase option credits, etc. (List below and
provide detailed explanations) (This section applies only to FSS solicitations)
NONE
<PAGE> 154
III. DISCOUNTS/CONCESSIONS TO COMMERCIAL CUSTOMERS PAGE 119 of 123
A. LIST BELOW THE BEST DISCOUNT AND/OR CONCESSIONS RESULTING IN THE
LOWEST NET PRICE (REGARDLESS OF QUANTITY AND TERMS AND CONDITIONS) TO OTHER
THAN AUTHORIZED GSA CONTRACT USERS FROM PRICE LIST FOR THE SAME OR SIMILAR
PRODUCTS OR SERVICES OFFERED TO THE GOVERNMENT UNDER THIS SOLICITATION. (SHOW
ACTUAL PERCENTAGE AND DELIVER TERMS.)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMMISSIONS
REGULAR QUANTITY TO OTHER THAN
DISCOUNTS DISCOUNTS AGGREGATE EMPLOYEES PROMPT FOB
(%) (%) DISCOUNTS (%) PAYMENT POINT OTHER
<S> <C> <C> <C> <C> <C> <C> <C>
(1) TO dealers/ -50% &
retailers -50,-10% NONE NONE Net 30 Origin None
----------- ---------- ---------- ---------- -------- --------- -------
(2) to distributors/
wholesalers Neutral Posture does not sell to this class of customer---------------------------------------------------
----------- ---------- ---------- --------- --------- ---------- -------
(3) to educational
institutions GSA Pricing, Terms, and Conditions -------------------------------------------------------------------------
----------- ---------- ---------- -------- --------- ------------ -------
(4) to state, county,
city, and local
governments GSA Pricing, Terms, and Conditions -------------------------------------------------------------------------
----------- ---------- ---------- -------- --------- ------------ -------
(5) to original
equipment
manufacturers
(OEM) Neutral Posture does not sell to this class of customer---------------------------------------------------
----------- ---------- ---------- ------- --------- ------------ -------
(6) to others
(specify); e.g.,
nat'l accts.,
sales NONE See Attach NONE NONE Net 30 Origin None
agreements,
etc. ----------- ---------- ---------- ------ --------- ------------ -------
(7) If a dealer,
indicate
discount from
mfg's price NOT APPLICABLE - Offeror is manufacturer of the Products Offered ---------------------------------------
list ----------- ---------- ---------- ------ --------- ------------ -------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 155
PAGE 120 of 123
III(b). Do you have in effect, for any customer of any class within the MOL or
outside of the MOL, other discounts and/or concessions including but not
limited to the following, regardless of price list, which result in
lower net prices than those offered the Government in this offer?
Yes No X rebates of any kind including year-end or end of contract
--- ---
discounts?
Yes X No multiple quantity unit pricing plan?
--- ---
Yes No X cumulative discounts of any type which cover items being
--- ---
offered?
Yes X No products (models)/services that may be combined for
--- ---
maximum discounts?
Yes No X other (specify)
--- ---
If answer to any of the above is "Yes", provide detailed explanation
including the value expressed as a percentage of the list price.
See attached Discussion of NPE's Discount Policies
IV. IDENTICAL ITEMS
(a) Are any of the models/products offered herein sold by the offeror
under a different trade-name(s)? Yes No X . If Yes, explain and
provide applicable price lists --- ---
(b) To your knowledge, are there identical products offered herein
contained in any other GSA Federal Supply Schedule contract?
Yes No X If Yes, identify the product, schedule and contract.
--- ---
(c) Summarize any significant changes in concessions offered herein as
compared with those set forth in any current GSA contract.
Discounts offered have been reduced by 1% to cover Industrial
Funding Fees
V. ALLOWANCES:
Do you offer any of the following allowances to any customer which are
not available to a GSA contract user under this contract? (Enter "Yes"
or "No" for each. If Yes, explain)
(a) NO Trade-in allowances?
----
(b) NO Return/Exchange goods policy?
----
(c) NO Reduced prices on samples, demonstrator models, reconditioned
---- items or floor models?
(d) NO Do you give any allowances not mentioned above?
----
VI. SALES INFORMATION: (This section applies only to FSS solicitations.)
Estimate the percentage of your sales made to the U.S. Government under Federal
Supply Schedule Blanket Purchase Agreements (Check one of the following).
None X 25% or less 25 to 49% 50 to 74% 75% or more
--- --- --- --- ---
List agencies below: 1. ______________________ 3. _______________________
2. ______________________ 4. _______________________
etc.
<PAGE> 156
PAGE 121 of 123
VII. SALES DATA
A. This section requires (1) that sales information be provided to enable
the contracting officer to determine that the items meet the test of
commerciality in FAR 15.804-3 and ASPM Vol. 1, Chapter 9; and (2) that
pricing data is furnished in sufficient detail to enable the contracting
officer to perform a price analysis in accordance with FAR 15 304-3(h).
B. The offeror certifies that, except for the individual models/types or
catalog numbers cited in paragraph C below, all other models/types or
catalog numbers offered in response to this solicitation meet the tests
of commerciality in FAR 15.804-3 and ASPM Vol. 1, Chapter 9. Of the
individual models/types of catalog numbers so certified, sales
information shall be provided in the table below for each of the five
models/types or catalog numbers with the largest dollar sales volume.
The sales information provided is _____ for the prior 12 months, from
OCT 1, 1994 to SEPT 20, 1995 for this special item number.
1. Total annual sales to the Government under this special item
number $857,369.00.
2. Total annual sales (to all entities) under this special item
number $4,058,700.00.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
1 2 3 4 5
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Model/Type Total Annual Total annual sales Total annual sales Total annual sales
or catalog no. Sales to Fed Govt. to nongovernment to nongovernment columns 2, 3,
------------------ customers at customers at other and 4.
$ and % of catalog price than catalog price
column 5 (less published ------------------
------------------ discounts) $ and % of
column 3
if more
than 25%
------------------
1. 8500 158,022 14% 1,050,743. 0 1,208,765.
----------- ------------------ ------------------ ------------------ ------------------
2. 5500 309,384 27% 837,187. 0 1,146,571.
----------- ------------------ ------------------ ------------------ ------------------
3. 4500 24,786 6% 392,238. 0 417,024.
----------- ------------------ ------------------ ------------------ ------------------
4. 8800 26,277 7% 373,280. 0 399,557.
----------- ------------------ ------------------ ------------------ ------------------
5. 5505 4,592 5% 107,143 0 111,735.
----------- ------------------ ------------------ ------------------ ------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
6 7 8
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Provide List the largest discount Is the discount in Block 6 greater
information below at which the item was than your current offer under this
for largest sold for comparable solicitation? Yes ----------------
discount granted sales/quantities shown in No -----. If yes, provide complete
to any column 2 to any documentation and rationale of the
nongovernment nongovernment customer difference. Merely submitting
customer during the past year. copies of documents such as terms
- ----------------- ------------------------- and conditions of commercial
Qty. & Discount Qty. & Discount contracts, commercial warranties,
- ----------------- ------------------------- etc., will not be adequate to justify
the difference.
1. -------------- ------------------------- -------------------------------------
See attachment for Discussion of Discounts
2. -------------- ------------------------- -------------------------------------
3. -------------- ------------------------- -------------------------------------
4. -------------- ------------------------- -------------------------------------
5. -------------- ------------------------- -------------------------------------
</TABLE>
<PAGE> 157
PAGE 122 of 123
VII. Continued.
C. Sales information in the Table below shall be provided for each
individual model/type or catalog number in the above special item number
that is not certified commercial when experienced annual government
sales are $100,000 or more.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
1 2 3 4 5
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Model/Type Total Annual Total annual sales Total annual sales Total annual sales
or catalog no. Sales to Fed Govt. to nongovernment to nongovernment columns 2, 3,
------------------ customers at customers at other and 4.
$ and % of catalog price than catalog price
column 5 (less published ------------------
------------------ discounts) $ and % of
column 3
if more
than 25%
------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
6 7 8
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Provide List the largest discount Is the discount in Block 6 greater
information below at which the item was than your current offer under this
for largest sold for comparable solicitation? Yes ________________
discount granted sales/quantities shown in No _____. If yes, provide complete
to any column 2 to any documentation and rationale of the
nongovernment nongovernment customer difference. Merely submitting
customer during the past year. copies of documents such as terms
- ----------------- ------------------------- and conditions of commercial
Qty. & Discount Qty. & Discount contracts, commercial warranties,
- ----------------- ------------------------- etc., will not be adequate to justify
the difference.
</TABLE>
Note: 1. Federal government sales include all sales to U.S. Government
and its instrumentalities and for U.S. Government use, sales
directly to U.S. Government prime contractors and to their
subcontractors or suppliers at any time, for use as an end item
or as part of an end item, by the U.S. Government.
2. Nongovernment customer is defined as other than Government or
affiliates (include sales to distributors, dealers, OEM,
national accounts, educational institutions, state, etc.
3. Discounts are reductions to catalog or market prices (published
or unpublished) to any customer, including OEM's, dealers,
distributors, national accounts, states, etc.; and any other
form of price reduction such as concessions, rebates, quantity
discounts, allowances, services, warranties, installation, free
parts, etc., which are granted to any customer.
<PAGE> 158
SOLICITATION NO. FCNO-93-S303-3 PAGE 123 OF 123
CAUTION! CAUTION! CAUTION! CAUTION! CAUTION! CAUTION! CAUTION!
ALL OFFERS SUBMITTED IN RESPONSE TO THIS PACKAGE ARE DUE BY NOVEMBER 8, 1995 AT
NO LATER THAN 3:30 PM AT THE FOLLOWING ADDRESS:
GENERAL SERVICES ADMINISTRATION
IFB/RFP: FCNO-93-S303-3
FSS BID ROOM (C-39)
1941 JEFFERSON DAVIS HWY.
ARLINGTON, VA 22202
<PAGE> 159
ATTACHMENT B
Solicitation FCNO-93-S303-3-11-08-95
Discussion of NPE's Discount Policies
Dealer Program
Neutral Posture Ergonomics has two classes of dealer for its products: Dealers
who do not stock Neutral Posture Products, and Dealers who maintain a stock on
hand of Neutral Posture products.
Stocking Dealers receive a discount of 55% from list (actually list -50% -10%)
for a quantity of 1 or more chairs or stools ordered for stock. Additionally,
Stocking Dealers are required to purchase floor samples; one each of the four
models, 3440, 5500, 4700, and 8800 to have in their show rooms as a part of
their contractual commitment to NPE. (By interchanging parts from these four
models, all current models of NPE chairs can be demonstrated.) The fob point
is origin. Based upon our records for the period 1991 through 1994, the
average value of freight on these products is 2.1% of the list price of the
product.
In addition to their floor samples these dealers are required to stock
specified quantities of the most popular models of NPE chairs. Stocking dealers
are further required to purchase additional floor samples when NPE introduces
new models of chair, and to "turn" their floor samples at least every six
months.
Non-stocking Dealers purchase chairs as they need them. They may or may not
purchase floor samples. Their discount is list less 50% on everything that they
buy. Their fob point is origin.
National Accounts Program
NPE currently has in effect two National Accounts programs, one with Intel and
one with UPS. As there are significant differences between the two programs,
they will be discussed separately.
INTEL:
Intel has committed to purchase all its ergonomic chairs from NPE. It has
further committed to purchase a minimum of One Million Dollars worth of chairs
per year and actual purchases have exceeded $3 million during the past two
years. The contract establishes a price of $339.77 per chair for the models
5400, 5500, and 5700 in Berry or Royal only, and in minimum shipments of 50
chairs. This price represents discounts of 65% on the 5400 and 66% on the 5500
and 5700 chairs. Any other models and fabrics will be discounted 62% from the
current list price, and are subject to the 50+ chair minimum order. The above
price is fob origin, and the chairs are shipped "freight collect". Payment
terms are 1% 10 days, Net 30.
<PAGE> 160
UNITED PARCEL SERVICE:
UPS has committed to purchase a minimum of 15,000 chairs over the next two
years. Sales to date have exceeded $3.5 million. UPS issues purchase orders
against the master agreement for standing deliveries. The current purchase
order is for 1,731 model 5500F chairs and 2,934 model 8800AF chairs to be
shipped at the rate of 350 per week. The discount is 68% from list. The chairs
covered by this agreement are models 5500F, 5540F, 8400F, 8500F and 8800F. Fob
point is origin, required carrier is UPS. Payment terms are net 30 days.
Both of these National Accounts Programs are for guaranteed quantities
significantly in excess of the Maximum Order Limitation of the GSA contracts.
These agreements also call for fob origin, and place other restrictions on the
purchases (limit on models and/or colors, minimum quantities per order etc.)
which are really outside the scope of the solicitation.
State and Local Governments Degree Granting Institutions:
NPE offers the above classes of customer the same prices, terms, and conditions
as it does agencies of the U.S. Federal Government. The Authorized GSA FFS
Price List is given to these customers and they are obligated to comply with
its terms and conditions for all purchases within the MOL.
Our offer to the Federal Government on our current contracts (GS29F-0140C for
chairs and GS-28F-1125C for stools) is List less 58% for 1 to 199 units; and
List less 60.5% on single orders for 200 or more units. The quantity pricing is
on a "mix or match" basis i.e. the 200 units can be any combination of models,
colors, and fabrics. Under "Industrial Funding" the offer to GSA will be:
1-199 units = (List - 58%)/99%
200+ units = (List - 60.5%)/99%
All prices will be rounded to the nearest whole dollar. Attached is a
spreadsheet showing the prices for all models offered in a under the above
schema. The List prices shown are from NPE's November 1995 End User Price List.
This price list will be the basis for our Best and Final Offer.
The above will result in the same return per item to NPE after the Industrial
Funding fee has been paid as do the current offers.
<PAGE> 161
<TABLE>
<CAPTION>
S.I.N. MODEL GRADE LIST $ GSA $ <200 GSA $ 200+
<S> <C> <C> <C> <C> <C>
496-5 3400 ONE $ 895 $380 $357
TWO $ 945 $401 $377
THREE $ 995 $422 $397
496-5 3405 ONE $ 685 $291 $273
TWO $ 735 $312 $293
THREE $ 785 $333 $313
496-5 3500 ONE $ 915 $388 $365
TWO $ 965 $409 $385
THREE $1,015 $431 $405
496-5 3505 ONE $ 705 $299 $281
TWO $ 755 $320 $301
THREE $ 805 $342 $321
496-5 3700 ONE $ 915 $388 $365
TWO $ 965 $409 $385
THREE $1,015 $431 $405
496-5 3705 ONE $ 705 $299 $281
TWO $ 755 $320 $301
THREE $ 805 $342 $321
496-5 3800 ONE $ 955 $405 $381
TWO $1,005 $426 $401
THREE $1,055 $448 $421
496-5 3805 ONE $ 745 $316 $297
TWO $ 795 $337 $317
THREE $ 845 $348 $337
496-5 4400 ONE $ 925 $392 $369
TWO $ 975 $414 $389
THREE $1,025 $435 $409
496-5 4405 ONE $ 715 $303 $285
TWO $ 765 $325 $305
THREE $ 815 $346 $325
496-5 4500 ONE $ 945 $401 $377
TWO $ 995 $422 $397
THREE $1,045 $443 $417
496-5 4505 ONE $ 735 $312 $293
TWO $ 785 $333 $313
THREE $ 835 $354 $333
496-5 4700 ONE $ 945 $401 $377
TWO $ 995 $422 $397
THREE $1,045 $443 $417
496-5 4705 ONE $ 735 $312 $293
TWO $ 785 $333 $313
THREE $ 835 $354 $333
496-5 4800 ONE $ 985 $418 $393
TWO $1,035 $439 $413
THREE $1,085 $460 $433
496-5 4805 ONE $ 775 $329 $309
TWO $ 825 $350 $329
THREE $ 875 $371 $349
496-5 5400 ONE $ 965 $409 $385
TWO $1,015 $431 $405
THREE $1,065 $452 $425
496-5 5405 ONE $ 755 $320 $301
TWO $ 805 $342 $321
THREE $ 855 $363 $341
496-5 5500 ONE $ 985 $418 $393
TWO $1,035 $439 $413
THREE $1,085 $460 $433
</TABLE>
<PAGE> 162
Neutral Posture Ergonomics Pricing Sol. FCNS 3-S303-3-11-08-95 Page
S.I.N. MODEL GRADE LIST $ GSA $<200 GSA $200+
496-5 5505 ONE $ 775 $329 $309
TWO $ 825 $350 $329
THREE $ 875 $371 $349
496-5 5700 ONE $ 985 $418 $393
TWO $1,035 $439 $413
THREE $1,085 $460 $433
496-5 5705 ONE $ 775 $329 $309
TWO $ 825 $350 $329
THREE $ 875 $371 $349
496-5 5800 ONE $1,025 $435 $409
TWO $1,075 $456 $429
THREE $1,125 $477 $449
496-5 5805 ONE $ 815 $346 $325
TWO $ 865 $367 $345
THREE $ 915 $388 $365
496-5 8400 ONE $1,065 $452 $425
TWO $1,115 $473 $445
THREE $1,165 $494 $465
496-5 8405 ONE $ 855 $363 $341
TWO $ 905 $384 $361
THREE $ 955 $405 $381
496-5 9400 ONE $1,365 $579 $545
TWO $1,415 $600 $565
THREE $1,465 $622 $585
496-5 9405 ONE $1,155 $490 $461
TWO $1,205 $511 $481
THREE $1,255 $532 $501
496-5 8500 ONE $1,085 $460 $433
TWO $1,135 $482 $453
THREE $1,185 $503 $473
496-5 8505 ONE $ 875 $371 $349
TWO $ 925 $392 $369
THREE $ 972 $412 $388
496-5 9500 ONE $1,385 $588 $553
TWO $1,435 $609 $573
THREE $1,485 $630 $593
496-5 9505 ONE $1,175 $498 $469
TWO $1,225 $520 $489
THREE $1,275 $541 $509
496-5 8700 ONE $1,085 $460 $433
TWO $1,135 $482 $453
THREE $1,185 $503 $473
496-5 8705 ONE $ 875 $371 $349
TWO $ 925 $392 $369
THREE $ 975 $414 $389
496-5 9700 ONE $1,385 $588 $553
TWO $1,435 $609 $573
THREE $1,485 $630 $593
496-5 9705 ONE $1,175 $498 $469
TWO $1,225 $520 $489
THREE $1,275 $541 $509
496-5 8800 ONE $1,125 $477 $449
TWO $1,175 $498 $469
THREE $1,225 $520 $489
496-6 8805 ONE $ 915 $388 $365
TWO $ 965 $409 $385
THREE $1,015 $431 $405
<PAGE> 163
Neutral Posture Ergonomics Pricing Sol. FCNS 3-S303-3-11-08-95 Page
S.I.N. MODEL GRADE LIST $ GSA $<200 GSA $200+
496-5 9800 ONE $1,425 $605 $569
TWO $1,475 $626 $589
THREE $1,525 $647 $608
496-5 9805 ONE $1,215 $515 $485
TWO $1,265 $537 $505
THREE $1,315 $558 $525
496-3 600 ONE $ 650 $276 $259
TWO $ 700 $297 $279
THREE $ 750 $318 $299
496-6 4500 IU ONE $1,140 $484 $455
<PAGE> 1
EXHIBIT 6.10
PROMISSORY NOTE
$106,225.00 April 30, 1997
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to
the order of Neutral Posture Ergonomics, Inc., a Texas corporation (the
"Payee"), at its address of 3904 North Texas Avenue, Bryan, Texas 77803 the
principal sum of ONE HUNDRED SIX THOUSAND TWO HUNDRED AND TWENTY-FIVE AND
NO/100s ($106,225.00), together with interest on said principal equal to 7.50%
per annum, compounded annually.
Interest on this Note shall be payable annually, with the first
payment due and payable December 31, 1997 and each subsequent interest payment
due and payable on each succeeding December 31 prior to maturity. The
principal of this Note together with all accrued and unpaid interest shall be
finally due and payable December 31, 2001.
It is the intention of Maker and Payee to conform strictly to all
applicable usury laws. It is therefore agreed that (i) in the event that the
maturity hereof is accelerated by reason of an election by Payee, all unearned
interest shall be canceled automatically or, if theretofore paid, shall either
be refunded to Maker or credited on the unpaid principal amount of this Note,
whichever remedy is chosen by Payee, (ii) the aggregate of all interest and
other charges constituting interest under applicable law and contracted for,
chargeable or receivable under this Note or otherwise in connection with the
transaction for which this Note is given shall never exceed the maximum amount
of interest, nor produce a rate in excess of the maximum rate of interest that
Payee may charge Maker under applicable law and in regard to which Maker may
not successfully assert the claim or defense of usury, and (iii) if any excess
interest is provided for, it shall be deemed a mistake and the same shall
either be refunded to Maker or credited on the unpaid principal amount hereof
and this Note shall be automatically deemed reformed so as to permit only the
collection of the maximum legal non-usurious rate and amount of interest. All
sums paid or agreed to be paid to the holder of this Note for the use,
forbearance or detention of the indebtedness evidenced hereby to the full
extent allowed by applicable law, shall be amortized, prorated, allocated and
spread through the full term of this Note.
In the event of default in the payment of any installment of
principal or interest when due hereunder, Payee may declare the entirety of
this Note, principal and interest, immediately due and payable without any
notice to Maker or any other party, and failure to exercise said option shall
not constitute a waiver on the part of Payee of the right to exercise the same
at any other time.
This Note may be prepaid, in whole or in part, at any time
without penalty.
The terms and provisions hereof shall be binding upon and inure
to the benefit of Maker and Payee and their respective successors, heirs,
personal representatives, executors, estates and assigns.
This Note shall be governed by and construed in accordance with
the laws of the State of Texas and the United States of America.
EXECUTED EFFECTIVE the day and year first written above.
"Maker":
/s/ DAVID CAMPBELL
- ------------------------
David Campbell
PROMISSORY NOTE - SOLO PAGE
<PAGE> 1
EXHIBIT 6.11
PROMISSORY NOTE
$32,225.00 June 30, 1996
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to
the order of Neutral Posture Ergonomics, Inc., a Texas corporation (the
"Payee"), at its address of 3904 North Texas Avenue, Bryan, Texas 77803 the
principal sum of THIRTY-TWO THOUSAND TWO HUNDRED AND TWENTY-FIVE AND NO/100s
($32,225.00), together with interest on said principal equal to 7.50% per
annum, compounded annually.
Interest on this Note shall be payable annually, with the first
payment due and payable December 31, 1997 and each subsequent interest payment
due and payable on each succeeding December 31 prior to maturity. The
principal of this Note together with all accrued and unpaid interest shall be
finally due and payable December 31, 2000.
It is the intention of Maker and Payee to conform strictly to all
applicable usury laws. It is therefore agreed that (i) in the event that the
maturity hereof is accelerated by reason of an election by Payee, all unearned
interest shall be canceled automatically or, if theretofore paid, shall either
be refunded to Maker or credited on the unpaid principal amount of this Note,
whichever remedy is chosen by Payee, (ii) the aggregate of all interest and
other charges constituting interest under applicable law and contracted for,
chargeable or receivable under this Note or otherwise in connection with the
transaction for which this Note is given shall never exceed the maximum amount
of interest, nor produce a rate in excess of the maximum rate of interest that
Payee may charge Maker under applicable law and in regard to which Maker may
not successfully assert the claim or defense of usury, and (iii) if any excess
interest is provided for, it shall be deemed a mistake and the same shall
either be refunded to Maker or credited on the unpaid principal amount hereof
and this Note shall be automatically deemed reformed so as to permit only the
collection of the maximum legal non-usurious rate and amount of interest. All
sums paid or agreed to be paid to the holder of this Note for the use,
forbearance or detention of the indebtedness evidenced hereby to the full
extent allowed by applicable law, shall be amortized, prorated, allocated and
spread through the full term of this Note.
In the event of default in the payment of any installment of
principal or interest when due hereunder, Payee may declare the entirety of
this Note, principal and interest, immediately due and payable without any
notice to Maker or any other party, and failure to exercise said option shall
not constitute a waiver on the part of Payee of the right to exercise the same
at any other time.
This Note may be prepaid, in whole or in part, at any time without
penalty.
The terms and provisions hereof shall be binding upon and inure to
the benefit of Maker and Payee and their respective successors, heirs, personal
representatives, executors, estates and assigns.
This Note shall be governed by and construed in accordance with the
laws of the State of Texas and the United States of America.
EXECUTED EFFECTIVE the day and year first written above.
"Maker":
/s/ DAVID CAMPBELL
- -----------------------
David Campbell
PROMISSORY NOTE - SOLO PAGE
<PAGE> 1
EXHIBIT 6.12
PROMISSORY NOTE
$32,225.00 June 30, 1996
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to
the order of Neutral Posture Ergonomics, Inc., a Texas corporation (the
"Payee"), at its address of 3904 North Texas Avenue, Bryan, Texas 77803 the
principal sum of THIRTY-TWO THOUSAND TWO HUNDRED TWENTY-FIVE AND NO/100s
($32,225.00), together with interest on said principal equal to 7.50% per
annum, compounded annually.
Interest on this Note shall be payable annually, with the first
payment due and payable December 31, 1997 and each subsequent interest payment
due and payable on each succeeding December 31 prior to maturity. The
principal of this Note together with all accrued and unpaid interest shall be
finally due and payable December 31, 2000.
It is the intention of Maker and Payee to conform strictly to all
applicable usury laws. It is therefore agreed that (i) in the event that the
maturity hereof is accelerated by reason of an election by Payee, all unearned
interest shall be canceled automatically or, if theretofore paid, shall either
be refunded to Maker or credited on the unpaid principal amount of this Note,
whichever remedy is chosen by Payee, (ii) the aggregate of all interest and
other charges constituting interest under applicable law and contracted for,
chargeable or receivable under this Note or otherwise in connection with the
transaction for which this Note is given shall never exceed the maximum amount
of interest, nor produce a rate in excess of the maximum rate of interest that
Payee may charge Maker under applicable law and in regard to which Maker may
not successfully assert the claim or defense of usury, and (iii) if any excess
interest is provided for, it shall be deemed a mistake and the same shall
either be refunded to Maker or credited on the unpaid principal amount hereof
and this Note shall be automatically deemed reformed so as to permit only the
collection of the maximum legal non-usurious rate and amount of interest. All
sums paid or agreed to be paid to the holder of this Note for the use,
forbearance or detention of the indebtedness evidenced hereby to the full
extent allowed by applicable law, shall be amortized, prorated, allocated and
spread through the full term of this Note.
In the event of default in the payment of any installment of
principal or interest when due hereunder, Payee may declare the entirety of
this Note, principal and interest, immediately due and payable without any
notice to Maker or any other party, and failure to exercise said option shall
not constitute a waiver on the part of Payee of the right to exercise the same
at any other time.
This Note may be prepaid, in whole or in part, at any time
without penalty.
The terms and provisions hereof shall be binding upon and inure
to the benefit of Maker and Payee and their respective successors, heirs,
personal representatives, executors, estates and assigns.
This Note shall be governed by and construed in accordance with
the laws of the State of Texas and the United States of America.
EXECUTED EFFECTIVE the day and year first written above.
"Maker":
/s/ DAVID W. EBNER
- ----------------------
David W. Ebner
PROMISSORY NOTE - SOLO PAGE
<PAGE> 1
EXHIBIT 6.14
LOAN AGREEMENT
BETWEEN
COMERICA BANK-TEXAS
AND
NEUTRAL POSTURE ERGONOMICS, INC.
DATED
AS OF
DECEMBER 30, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1. DEFINITIONS . . . . . . . . . . . 1
Section 1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Accounting Terms . . . . . . . . . . . . . . . . . . 6
Section 1.3. Singular and Plural . . . . . . . . . . . . . . . . . 6
ARTICLE 2. COMMITMENT, INTEREST AND FEES. . . . . . . 6
Section 2.1. Commitment . . . . . . . . . . . . . . . . . . . . . 6
Section 2.2. Borrowing Procedures . . . . . . . . . . . . . . . . 7
Section 2.3. Revolving Credit Note . . . . . . . . . . . . . . . . 7
Section 2.4. Interest . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.5. Renewals and Extensions . . . . . . . . . . . . . . . 8
Section 2.6. Maximum Rate. . . . . . . . . . . . . . . . . . . . . 8
Section 2.7. Fees . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.8. Basis of Computation . . . . . . . . . . . . . . . . 10
Section 2.9. Prepayments . . . . . . . . . . . . . . . . . . . . . 10
Section 2.10. Term Loan . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.11. Basis of Payments . . . . . . . . . . . . . . . . . . 11
ARTICLE 3. SECURITY . . . . . . . . . . . . 11
ARTICLE 4. CONDITIONS PRECEDENT TO OBLIGATIONS OF BANK . . . 11
Section 4.1. Conditions to First Disbursement . . . . . . . . . . 11
Section 4.2. Conditions to All Disbursements . . . . . . . . . . . 13
ARTICLE 5. WARRANTIES AND REPRESENTATIONS . . . . . . 14
Section 5.1. Corporate Existence and Power . . . . . . . . . . . . 14
Section 5.2. Authorization and Approvals . . . . . . . . . . . . . 14
Section 5.3. Valid and Binding Agreement . . . . . . . . . . . . . 15
Section 5.4. Actions, Suits or Proceedings . . . . . . . . . . . . 15
Section 5.5. Subsidiaries . . . . . . . . . . . . . . . . . . . . 15
Section 5.6. No Liens, Pledges, Mortgages or Security Interests . 15
Section 5.7. Accounting Principles . . . . . . . . . . . . . . . . 15
Section 5.8. No Adverse Changes . . . . . . . . . . . . . . . . . 16
Section 5.9. Conditions Precedent . . . . . . . . . . . . . . . . 16
Section 5.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.11. Compliance with Laws . . . . . . . . . . . . . . . . 16
Section 5.12. Indebtedness . . . . . . . . . . . . . . . . . . . . 16
Section 5.13. Material Agreements . . . . . . . . . . . . . . . . . 16
Section 5.14. Margin Stock . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 5.15. Pension Funding . . . . . . . . . . . . . . . . . . . 17
Section 5.16. Misrepresentation . . . . . . . . . . . . . . . . . . 17
Section 5.17. Eligible Accounts . . . . . . . . . . . . . . . . . . 17
ARTICLE 6. AFFIRMATIVE COVENANTS . . . . . . . . . 19
Section 6.1. Financial and Other Information. . . . . . . . . . . 19
Section 6.2. Insurance . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.4. Maintain Corporation and Business . . . . . . . . . . 21
Section 6.5. Tangible Net Worth Step Up Requirement . . . . . . . 22
Section 6.6. Maintain Debt Ratio . . . . . . . . . . . . . . . . . 22
Section 6.7. Maintain Working Capital . . . . . . . . . . . . . . 22
Section 6.8. Maintain Fixed Charge Coverage . . . . . . . . . . . 22
Section 6.9. ERISA . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.10. Use of Loan Proceeds . . . . . . . . . . . . . . . . 22
ARTICLE 7. NEGATIVE COVENANTS . . . . . . . . . 23
Section 7.1. Dividends . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.2. Stock Issuance . . . . . . . . . . . . . . . . . . . 23
Section 7.3. Stock Acquisition . . . . . . . . . . . . . . . . . . 23
Section 7.4. Liens and Encumbrances . . . . . . . . . . . . . . . 23
Section 7.5. Indebtedness . . . . . . . . . . . . . . . . . . . . 23
Section 7.6. Extension of Credit . . . . . . . . . . . . . . . . . 24
Section 7.7. Guarantee Obligations . . . . . . . . . . . . . . . . 24
Section 7.8. Subordinate Indebtedness . . . . . . . . . . . . . . 24
Section 7.9. Property Transfer, Merger or Lease-Back . . . . . . . 24
Section 7.10. Acquire Securities . . . . . . . . . . . . . . . . . 24
Section 7.11. Pension Plans . . . . . . . . . . . . . . . . . . . . 24
Section 7.12. Misrepresentation . . . . . . . . . . . . . . . . . . 25
Section 7.13. Margin Stock . . . . . . . . . . . . . . . . . . . . 25
Section 7.14. Compliance with Environmental Laws . . . . . . . . . 25
Section 7.15. Capital Expenditures . . . . . . . . . . . . . . . . 25
Section 7.16. Bonus or Dividend for Taxes . . . . . . . . . . . . . 25
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 8. EVENTS OF DEFAULT - ENFORCEMENT -
APPLICATION OF PROCEEDS . . . . . . . . . . . 25
Section 8.1. Events of Default . . . . . . . . . . . . . . . . . . 25
Section 8.2. Acceleration of Indebtedness . . . . . . . . . . . . 27
Section 8.3. Application of Proceeds . . . . . . . . . . . . . . . 27
Section 8.4. Cumulative Remedies . . . . . . . . . . . . . . . . . 28
ARTICLE 9. MISCELLANEOUS. . . . . . . . . . . 28
Section 9.1. Independent Rights . . . . . . . . . . . . . . . . . 28
Section 9.2. Covenant Independence . . . . . . . . . . . . . . . . 28
Section 9.3. Waivers and Amendments . . . . . . . . . . . . . . . 28
Section 9.4. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 28
Section 9.5. Survival of Warranties, Etc . . . . . . . . . . . . . 29
Section 9.6. Attorneys' Fees . . . . . . . . . . . . . . . . . . . 29
Section 9.7. Payments on Saturdays, Etc . . . . . . . . . . . . . 29
Section 9.8. Binding Effect . . . . . . . . . . . . . . . . . . . 29
Section 9.9. Maintenance of Records . . . . . . . . . . . . . . . 29
Section 9.10. Notices . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.11. Counterparts . . . . . . . . . . . . . . . . . . . . 30
Section 9.12. Headings . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.13. Capital Adequacy . . . . . . . . . . . . . . . . . . 30
Section 9.14. Indemnification by the Borrower . . . . . . . . . . . 31
Section 9.15. NO ORAL AGREEMENTS . . . . . . . . . . . . . . . . . 31
Section 9.16. Gender . . . . . . . . . . . . . . . . . . . . . . . 31
Section 9.17. Joint Borrowers . . . . . . . . . . . . . . . . . . . 31
Section 9.18. Cross Default; Cross Collateral . . . . . . . . . . . 31
Section 9.19. Assignment . . . . . . . . . . . . . . . . . . . . . 32
SECTION 9.20. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . 32
</TABLE>
-iii-
<PAGE> 5
<PAGE> 6
<PAGE> 7
<PAGE> 8
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and delivered as of this 30th day of
December, 1996, by and between NEUTRAL POSTURE ERGONOMICS, INC., a Texas
corporation, and COMERICA BANK-TEXAS, a Texas banking association.
WITNESSETH:
WHEREAS, the Borrower desires to borrow up to TWO MILLION DOLLARS
($2,000,000.00) from the Bank in the form of a revolving credit facility to
repay its indebtedness to Fidelity Funding and for the working capital needs of
the Borrower; and
WHEREAS, the Borrower also desires to borrow up to FIVE HUNDRED THOUSAND
DOLLARS ($500,000.00) from the Bank in the form of term loans for the purpose
of acquiring additional machinery and equipment; and
WHEREAS, the Bank is willing to supply such financing subject to the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, the Borrower and the Bank agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.1. Defined Terms. As used herein, the following terms shall
have the following respective meanings:
"ACCOUNTS," "CHATTEL PAPER," "DOCUMENTS," "EQUIPMENT," "FIXTURES,"
"GENERAL INTANGIBLES," "GOODS," "INSTRUMENTS" and "INVENTORY" shall have the
meanings assigned to them in the UCC on the date of this Agreement.
"ADJUSTED NET INCOME" shall mean, for any period (as computed in
accordance with GAAP) net income, plus depreciation and amortization expense.
"AGREEMENT" shall mean this Loan Agreement.
"BANK" shall mean Comerica Bank-Texas, a Texas banking association.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code, as
amended, or any successor act or code.
"BASE RATE" shall mean that annual rate of interest designated by the
Bank as its prime rate and which is changed by the Bank from time to time. The
Base Rate may not necessarily be the lowest rate charged by the Bank.
<PAGE> 9
"BORROWER" shall mean Neutral Posture Ergonomics, Inc., a Texas
corporation.
"BORROWING BASE" shall mean EIGHTY percent (80%) of the aggregate
outstanding principal balance of the Borrower's Eligible Accounts but in no
event in excess of the Commitment Amount.
"BORROWING BASE CERTIFICATE" shall mean a certificate in the form of
Exhibit "B" to this Agreement, completed in all appropriate respects and
executed by the chief executive or chief financial officer of the Borrower and
setting forth Borrower's computation of the Borrowing Base as of the date of
such certificate.
"BUSINESS DAY" shall mean a day on which the Bank is open to carry on
its normal commercial lending business.
"COLLATERAL" shall mean any property of the Borrower in the possession
of the Bank, any amount in any deposit account of the Borrower with the Bank
and all of Borrower's, Chattel Paper, Documents, Equipment, Fixtures, General
Intangibles, Goods, Instruments and Inventory, wherever located and whether now
owned or hereafter acquired, together with all replacements thereof,
substitutions therefor and all proceeds and products thereof.
"COMMITMENT AMOUNT" shall mean $2,000,000.00.
"CONTRACT RATE" shall mean, as of any date of determination, the annual
rate of interest which, pursuant to Section 2.4 of this Agreement would be
applicable to the Notes if the annual rate of interest were determined without
the Maximum Legal Rate limitation.
"CURRENT ASSETS" shall mean, as of any applicable date of determination,
all cash, nonaffiliated customer receivables, United States government
securities, inventories and other assets of the Borrower that should be
classified as current in accordance with GAAP.
"CURRENT LIABILITIES" shall mean, as of any applicable date of
determination, all liabilities of the Borrower that should be classified as
current in accordance with GAAP, plus all amounts outstanding under the
Revolving Credit Note.
"DEBT" shall mean, as of any applicable date of determination, all items
of indebtedness, obligation or liability of the Borrower, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, that should be classified as liabilities in
accordance with GAAP.
"DEFAULT" shall mean a condition or event which, with the giving of
notice or the passage of time, or both, would become an Event of Default.
-2-
<PAGE> 10
"DISBURSEMENT DATE" shall mean each date upon which the Bank makes a
loan to the Borrower and/or Subsidiaries under Section 2.1 of this Agreement.
"ELIGIBLE ACCOUNTS" shall mean those Accounts of the Borrower for which
each of the warranties set forth in Section 5.17 of this Agreement shall be
true (as of any applicable date of determination) and which has been
represented by the Borrower to be an "ELIGIBLE ACCOUNT" on the Borrowing Base
Certificate.
"ENVIRONMENTAL LAWS" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq., the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq., the
Occupational Safety and Health Act, as amended, 29 U.S.C. 651 et seq., the
Clean Air Act, 42 U.S.C. 7401 et seq., the Clean Water Act as amended, 33
U.S.C. 1251 et seq., the Toxic Substances Control Act, as amended, 15 U.S.C.
2601 et seq., and all similar laws, regulations, and requirements of any
governmental authority or agency having jurisdiction over Borrower or any of
its properties or assets, as such laws, regulations, and requirements may be
amended or supplemented from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, or any successor act or code.
"EVENT OF DEFAULT" shall mean any of those conditions or events listed
in Section 8.1 of this Agreement.
"FINANCIAL STATEMENTS" shall mean all those balance sheets, earnings
statements and other financial data (whether of the Borrower, any Subsidiary,
any guarantor or otherwise) which have been furnished to the Bank for the
purpose of, or in connection with, this Agreement and the transactions
contemplated hereby.
"FINANCING STATEMENTS" shall mean UCC financing statements describing
the Bank as secured party and the Borrower as debtor covering the Collateral
and otherwise in such form, for filing in such jurisdictions and with such
filing offices as the Bank shall reasonably deem necessary or advisable.
"GAAP" shall mean, as of any applicable date of determination, generally
accepted accounting principles consistently applied.
"GUARANTOR" shall mean Rebecca C. Boenigk and Jaye E. Congleton.
"GUARANTY" shall mean a guaranty in the form of Exhibit "C" to this
Agreement pursuant to which the Guarantor unconditionally guarantees to the
Bank repayment of all of the Indebtedness.
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"HARD COST" shall mean the purchase price of any equipment or molds but
shall not include taxes, set-up or transportation charges, warranty costs or
similar charges.
"HAZARDOUS SUBSTANCE" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law, including,
without limitation, asbestos, petroleum, and polychlorinated biphenyls.
"INDEBTEDNESS" shall mean all loans, advances and indebtedness of the
Borrower to the Bank under this Agreement, together with all other
indebtedness, obligations and liabilities whatsoever of the Borrower and/or
Subsidiaries to the Bank, whether matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, joint or several, due
or to become due, now existing or hereafter arising.
"INVENTORY" means all of the Borrower's now owned and hereafter acquired
inventory, goods, merchandise, and other personal property, wherever located,
to be furnished under any contract of service or held for sale or lease, all
raw materials, work-in-process, finished goods, returned and repossessed goods,
and materials and supplies of any kind, nature or description which are or
might be used or consumed in the Borrower's business or used in connection with
the manufacture, packing, shipping, advertising, selling or finishing of such
inventory goods, merchandise and such other personal property, and all
documents of title or other documents representing them, and all proceeds
thereof (including, but not limited to, all proceeds of insurance with respect
thereto, including the proceeds of any casualty insurance); and any lists,
information and records prepared or kept in relation to the foregoing.
"LIEN AND FINANCING STATEMENT TRANSFERS" shall mean those certain UCC-3
assignments covering certain financing statements of record with the Secretary
of State of the State of Texas and/or the County Clerk of Brazos County, all to
be executed by Fidelity Funding to be in form and substance satisfactory to the
Bank.
"LOCK BOX AGREEMENT" shall mean that certain lock box agreement of even
date herewith by and between the Borrower and/or Subsidiaries and the Bank by
which the Borrower and/or Subsidiaries agree to direct their customers to make
payment on accounts to the post office box described in the lock box agreement.
Such lock box agreement shall further provide for the manner and method of
handling checks and items which are deposited therein.
"MAXIMUM LEGAL RATE" shall have the meaning set forth in Section 2 of
this Agreement.
"NET CURRENT ASSETS" shall mean Current Assets less Current Liabilities.
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"NOTES" shall mean collectively (i) the Revolving Credit Note conforming
to Section 2.3 of this Agreement and in the form of Exhibit "A-1" to this
Agreement; and (ii) the Term Note(s) (herein so called) conforming to Section
2.10 of this Agreement and in the form of Exhibit "A-2" for a loan to purchase
equipment or Exhibit "A-3" for a loan to purchase a mold.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any person
succeeding to the present powers and functions of the Pension Benefit Guaranty
Corporation.
"PERMITTED LIENS" shall mean:
(a) Liens and encumbrances in favor of the Bank;
(b) Liens for taxes, assessments or other governmental charges
incurred in the ordinary course of business and not yet past due or being
contested in good faith by appropriate proceedings and, in the event they are
being contested, and if requested by the Bank, bonded in a manner satisfactory
to the Bank;
(c) Liens not delinquent created by statute in connection with
worker's compensation, unemployment insurance, social security and similar
statutory obligations;
(d) Liens of mechanics, materialmen, carriers, warehousemen or other
like statutory or common law liens securing obligations incurred in good faith
in the ordinary course of business that are not yet due and payable;
(e) Encumbrances consisting of zoning restrictions, rights-of-way,
easements or other restrictions on the use of real property, none of which
materially impairs the use of such property by the Borrower or any Subsidiary
in the operation of the business for which it is used and none of which is
violated in any material respect by any existing or proposed structure or land
use; and
(f) Purchase money lien securing indebtedness authorized pursuant to
Section 7.5(g) hereof.
(g) Existing liens described in Schedule 5.6 attached hereto.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, association, trust, unincorporated association, joint stock company,
government, municipality, political subdivision or agency or other entity.
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"REVOLVING LOAN OR LOAN" shall mean an advance made by the Bank to the
Borrower under Section 2.1 of this Agreement on a Disbursement Date.
Collectively, all such advances are referred to as "REVOLVING LOANS" or
"LOANS".
"SECURITY AGREEMENTS" shall mean security agreements in the forms of
Exhibits "D-1" and "D-2" to this Agreement pursuant to which the Borrower
grants to the Bank a security interest in the Accounts, Chattel Paper,
Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments and
Inventory, wherever located and whether now owned or hereafter acquired,
together with all replacements thereof, substitutions therefor and all proceeds
and products thereof.
"SUBSIDIARIES" shall mean any corporation of which more than FIFTY
percent (50%) of the outstanding voting securities shall, as of any applicable
date of determination, be owned directly, or indirectly through one or more
intermediaries, by the Borrower.
"TANGIBLE NET WORTH" shall mean, as of any applicable date of
determination, the excess of (i) the book value of all assets of a person
(other than patents, patent rights, trademarks, trade names, franchises,
copyrights, licenses, goodwill, and similar intangible assets) after all
appropriate deductions (including, without limitation, reserves for doubtful
receivables, obsolescence, depreciation and amortization), all as determined in
accordance with GAAP, less (ii) all Debt of the Borrower.
"TERM LOAN" shall mean an advance made by the Bank to the Borrower under
Section 2.10 hereof.
"TERMINATION DATE" shall mean January ___, 1999.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of Texas and as amended from time to time.
Section 1.2. Accounting Terms. All accounting terms not specifically
defined in this Agreement shall be construed in accordance with GAAP.
Section 1.3. Singular and Plural. Where the context herein requires,
the singular number shall be deemed to include the plural, and vice versa.
ARTICLE 2. COMMITMENT, INTEREST AND FEES.
Section 2.1. Commitment. Subject to the terms and conditions of this
Agreement, the Bank agrees to make loans to the Borrower on a revolving basis
of such amount as the Borrower shall request pursuant to Section 2.2 of this
Agreement at any time from the date of this Agreement until the Termination
Date, up to an aggregate principal amount outstanding at any
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time not to exceed the lesser of (a) the Commitment Amount or (b) the Borrowing
Base, provided that each Disbursement Date under this Agreement must be a
Business Day.
Section 2.2. Borrowing Procedures.
2.2.1 Notice. The Borrower shall give the Bank notice of the
Borrower's desire for a Revolving Loan by 1:00 p.m. (Houston, Texas time) on
the day of the requested advance. Such notice shall be by telephone
communication from an officer of the Borrower who has been given access to the
Borrower to a security code given to the Borrower by the Bank. Such notice
shall specify the proposed Disbursement Date and the principal amount of the
proposed advance for such Revolving Loan. A written confirmation of each
request shall be given by the Borrower to the Bank within two (2) Business days
after any oral advance request; written confirmation shall be by confirmed
facsimile transmission or by U.S. mail.
2.2.2 Bank Obligations. The Bank agrees to make the Revolving Loan on
the Disbursement Date as set forth in a notice to the Bank from the Borrower
conforming to the requirements of Section 2.2.1 by crediting the Borrower's
general deposit account with the Bank in the amount of such Revolving Loan,
provided, however, that the Bank shall not be so obligated if:
(a) Any of the conditions precedent set forth in Section 4 of this
Agreement shall not have been satisfied or waived by the Bank in accordance
with Section 9.3 of this Agreement; or
(b) Such proposed Revolving Loan would cause the aggregate unpaid
principal amount of the Revolving Loans outstanding under this Agreement to
exceed the lesser of (i) the Commitment Amount or (ii) the Borrowing Base on
the Disbursement Date.
Section 2.3. Revolving Credit Note. The Revolving Loans shall be
evidenced by the Revolving Credit Note, executed by the Borrower, dated the
date of this Agreement, payable to the Bank on the Termination Date (unless
sooner accelerated pursuant to the term of this Agreement), and in the
principal amount of the original Commitment Amount. The date and amount of
each Revolving Loan made by the Bank and of each repayment of principal thereon
received by the Bank shall be recorded by the Bank in its records or, at the
option of the Bank, on a schedule attached to the Revolving Credit Note. The
aggregate unpaid principal amount so recorded by the Bank shall constitute the
best evidence of the principal amount owing and unpaid on the Revolving Credit
Note, provided, however, that the failure by the Bank so to record any such
amount or any error in so recording any such amount (whether on the schedule
attached to the Revolving Credit Note or otherwise) shall not limit or
otherwise affect the obligations of the Borrower under this Agreement or the
Revolving Credit Note to repay the principal amount of all the Revolving Loans
together with all interest accrued or accruing thereon.
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Section 2.4. Interest. Subject to the provisions of Section 2.6 below,
the Revolving Credit Note shall bear interest on the outstanding principal
balance from time to time outstanding under the Revolving Credit Note at a rate
equal to the lesser of (a) one-half of one percent (.50%) per annum plus the
Base Rate of the Bank until maturity, whether by acceleration or otherwise, (b)
the Maximum Legal Rate, as defined below. Interest shall be payable to the
extent then accrued on the first day of each calendar month, beginning March 1,
1997, until maturity (whether by acceleration or otherwise) and from and after
such maturity, on demand. The rate of interest applicable to the Revolving
Credit Note shall change as and when the Bank's Base Rate changes.
Section 2.5. Renewals and Extensions. Renewals and extensions, if any,
of any Loan shall be at the Bank's discretion and shall be evidenced by such
documents and instruments as the Bank may require in its sole discretion. The
Bank shall not be obligated to accommodate any renewals and extensions.
Section 2.6. Maximum Rate. The following provisions shall control this
Agreement and the Revolving Credit Note:
(a) No agreements, conditions, provision or stipulations contained in
this Agreement or in any other agreement between the Borrower and the Bank, or
the occurrence of an Event of Default, or the exercise by the Bank of any right
it may have to accelerate the payment of the maturity of principal and
interest, or to exercise any option whatsoever contained in this Agreement or
any other agreement between the Borrower and the Bank, or the arising of any
contingency whatsoever, shall entitle the Bank to collect, in any event,
interest exceeding the maximum rate of non-usurious interest allowed from time
to time by applicable state or federal laws as now or as may hereinafter be in
effect (the "Maximum Legal Rate") and in no event shall the Borrower be
obligated to pay interest exceeding such Maximum Legal Rate, and all
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel the Borrower to pay
a rate of interest exceeding the Maximum Legal Rate shall be without binding
force or effect, at law or in equity, to the extent only of the excess of
interest over such Maximum Legal Rate. In the event any interest is charged in
excess of the Maximum Legal Rate (the "Excess"), the Borrower acknowledges and
stipulates that any such charge shall be the result of an accidental and bona
fide error, and such Excess shall be, returned to the Borrower, it being the
intention of the parties hereto not to enter at any time into an usurious or
otherwise illegal relationship. The parties hereto recognize that with
fluctuations in the Base Rate from time to time announced by the Bank such an
unintentional result could inadvertently occur. By the execution of this
Agreement, the Borrower covenants that (a) the credit or return of any Excess
shall constitute the acceptance by the Borrower of such Excess, and (b) the
Borrower shall not seek or pursue any other remedy, legal or equitable, against
the Bank based, in whole or in part, upon the charging or receiving of any
interest in excess of the Maximum Legal Rate. For the purpose of determining
whether or not any Excess has been contracted for, charged or received by the
Bank, all interest at any time
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contracted for, charged or received by the Bank in connection with the
Borrower's obligations shall be amortized, prorated, allocated and spread in
equal parts during the entire term of this Agreement. If at any time the rate
of interest payable hereunder shall be computed on the basis of the Maximum
Legal Rate, any subsequent reduction in the Contract Rate shall not reduce such
interest thereafter payable hereunder below the amount computed on the basis of
the Maximum Legal Rate until the aggregate amount of such interest accrued and
payable under this Agreement equals the total amount of interest which would
have accrued if such interest had been at all times computed solely on the
basis of the Contract Rate, provided, however, in no event shall the Contract
Rate ever exceed the Maximum Legal Rate.
(b) Unless preempted by federal law, the rate of interest from time
to time in effect hereunder shall not exceed the greater of eighteen (18%)
percent per annum or the "INDICATED RATE CEILING" from time to time in effect
under Chapter 1 of the Texas Credit Code (Vernon's Texas Civil Statutes),
Section (a)(1), Article 5069-1.04, as amended.
(c) The provisions of this Section shall be deemed to be incorporated
into every document or communication relating to the Indebtedness which sets
forth or prescribes any account, right or claims or alleged account, right or
claim of the Bank with respect to the Borrower (or any other obligor in respect
of the Indebtedness), whether or not any provisions of this Section is referred
to therein. All such documents and communications and all figures set forth
therein shall, for the sole purpose of computing the extent of the obligations
asserted by the Bank thereunder, be automatically recomputed by the Borrower or
any other obligor, and by any court considering the same, to give effect to the
adjustments or credits required by this Section.
(d) If the applicable state or federal law is amended in the future
to allow a greater rate of interest to be charged under this Agreement than is
presently allowed by applicable state or federal law, then the limitation of
interest hereunder shall be increased to the maximum rate of interest allowed
by applicable state or federal law, as amended, which increase shall be
effective hereunder on the effective date of such amendment, and all interest
charges owing to the Bank by reason thereof shall be payable upon demand.
(e) The provisions of Chapter 15 of the Texas Credit Code (Vernon's
Texas Civil Statutes), Article 5069-15, as amended, are specifically declared
by the parties hereto not to be applicable to this Agreement or any of the
other agreements executed in connection herewith or therewith or to the
transactions contemplated hereby or thereby.
Section 2.7. Fees.
2.7.1 Commitment Fee. The Borrower agrees to pay to the Bank a
commitment fee for the period from and including the date of this Agreement to
the Termination Date equal to one quarter of one percent (.25%) per annum on
the average daily difference between the Commitment Amount and the aggregate
unpaid principal balance of the
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Revolving Loans. Such commitment fee shall be payable on the last Business Day
of March, June, September and December, beginning March, 1997, and on the
Termination Date, for the periods ending on such dates, or any portion thereof
this Agreement is in effect.
2.7.2 Preparation Fees. Simultaneously with the execution of this
Agreement, the Borrower shall pay to the Bank the amount of the Bank's expenses
(including attorney's fees and disbursements) incurred by the Bank in
connection with the preparation of this Agreement and related instruments.
Section 2.8. Basis of Computation. The amount of all interest and fees
hereunder shall be computed for the actual number of days elapsed on the basis
of a year consisting of 360 days.
Section 2.9. Prepayments.
2.9.1 Mandatory Prepayments. The Borrower shall pay to the Bank the
amount, if any, by which the aggregate unpaid principal amount of all Revolving
Loans from time to time exceeds the Borrowing Base, together with all interest
accrued and unpaid on the amount of such excess, but without other premium or
penalty. Such prepayment shall be immediately due and owing upon the
occurrence of any such excess and, at the option of the Bank, any mandatory
prepayment made under this Section 2.9.1 will reduce the Commitment Amount.
2.9.2 Optional Prepayment. The Borrower may prepay either the
Revolving Credit Note or the Term Note at any time and without the payment of
any penalty or premium; however, at the Bank's option, all voluntary prepayment
of the Term Note shall be applied to future installments due thereon in the
inverse order of their maturity.
Section 2.10. Term Loan. If all of the conditions set forth in Section
4, together with the following conditions, have been met, then the Bank agrees
to make advances of credit to the Borrower in the form of Term Loans of up to
an aggregate of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00), each
Term Loan representing the purchase of equipment shall be evidenced by a
separate promissory note fully amortizing the principal advanced over a five
(5) year period and each Term Loan evidencing the purchase of a mold shall be
evidenced by a separate promissory note fully amortizing the principal advanced
over a two (2) year period.
2.10.1 Conditions to Term Loan Advances. Advances under the Term Loan
Credit Facility shall be available for the purpose of acquiring new equipment
or molds and can be made in one or more advances so long as the aggregate
amount of advances made to the Borrower for the purchase of new equipment does
not exceed FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00). Each Term
Loan shall accrue interest at the same floating rate charged on the Revolving
Credit Note. Each advance shall be subject to the Bank's prior receipt from
the Borrower of the following:
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(a) A bill of sale covering the new equipment or molds
to be acquired;
(b) Proof of insurance coverage on the same showing the
Bank as loss payee and the mortgagee;
(c) Proof of receipt, installation and that the
equipment is operating pursuant to manufacturer's specifications;
(d) A signed financing statement to be in form and
substance satisfactory to the Bank and describing the equipment;
and
(e) A signed promissory note in the form of the note
attached hereto as Exhibit A-2, in the case of an advance to
purchase equipment, and to be in the amount not in excess of 90%
of the Hard Cost of the new equipment (which note shall be
repayable in not more than sixty (60) substantially equal monthly
installments of principal plus interest) or in the form of the
note attached hereto as Exhibit A-3, in the case of an advance to
purchase a mold, and to be in an amount not in excess of 70% of
the Hard Cost of the molds (which note shall be repayable in not
more than twenty-four (24) substantially equal monthly
installments of principal plus interest).
Section 2.11. Basis of Payments. All sums payable by the Borrower to
the Bank under this Agreement shall be paid directly to the Bank at its
principal office in immediately available funds, without setoff, deduction or
counterclaim.
ARTICLE 3. SECURITY.
To secure full and timely performance of the Borrower's covenants set
out in this Agreement and to secure the repayment of the Notes and all other
Indebtedness whatsoever of the Borrower to the Bank, the Borrower and/or
Subsidiaries agree to grant and assign liens upon and security interests in the
Collateral pursuant to the Security Agreements, the Financing Statements, and
other instruments and agreements satisfactory to the Bank.
ARTICLE 4. CONDITIONS PRECEDENT TO OBLIGATIONS OF BANK.
Section 4.1. Conditions to First Disbursement. The obligations of the
Bank under this Agreement are subject to the occurrence, prior to or on the
Disbursement Date first occurring, of each of the following conditions, any or
all of which may be waived in whole or in part by the Bank in writing:
4.1.1 Documents Executed and Filed. The Borrower shall have executed
(or caused to be executed) and delivered to the Bank and, as appropriate, there
shall have been filed with such filing offices as the Bank shall deem
appropriate, the following:
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(a) The Note or Notes;
(b) The Security Agreements;
(c) The Financing Statements;
(d) The Guaranty;
(e) The Lien and Financing Statement Transfers; and
(f) The Lockbox Agreement.
4.1.2 Certified Resolutions. The Borrower shall have furnished to the
Bank a copy of resolutions of the Board of Directors of the Borrower
authorizing the execution, delivery and performance of this Agreement, the
borrowing hereunder, the Notes and any other documents contemplated by this
Agreement, which shall have been certified by the Secretary or Assistant
Secretary of the Borrower as of the Disbursement Date first occurring.
4.1.3 Certified Articles. The Borrower shall have furnished to the
Bank a copy of the Articles of Incorporation, including all amendments thereto,
and all other charter documents of the Borrower, all of which shall have been
certified by the state agency issuing the same as of a date reasonably near the
Disbursement Date first occurring.
4.1.4 Certified Bylaws. The Borrower shall have furnished to the Bank
a copy of the Bylaws of the Borrower, which shall have been certified by the
Secretary or Assistant Secretary of the Borrower as of the Disbursement Date
first occurring.
4.1.5 Certificate of Good Standing. The Borrower shall have furnished
to the Bank a certificate of good standing with respect to the Borrower, which
shall have been certified by the state agency issuing the same as of a date
reasonably near the Disbursement Date first occurring.
4.1.6 Certificate of Incumbency. The Borrower shall have furnished to
the Bank a certificate of the Secretary or Assistant Secretary of the Borrower
certified as of the Disbursement Date first occurring, as to the incumbency and
signatures of the officers of the Borrower signing this Agreement, the Notes
and any documents contemplated or delivered under this Agreement.
4.1.7 Opinion of Borrower's Counsel. The Borrower shall have furnished
to the Bank the favorable written opinion of Miller & Lehman, counsel to the
Borrower, dated as of the Disbursement Date first occurring and in the form of
Exhibit "E" to this Agreement.
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4.1.8 UCC Lien Search. The Bank shall have received UCC record and
copy searches, evidencing the appropriate filing and recording of the Financing
Statements and disclosing no notice of any liens or encumbrances filed against
any of the Collateral in any relevant jurisdiction other than the Financing
Statements and other than as relate to Permitted Liens.
4.1.9 Hazard Insurance. The Borrower shall have furnished to the Bank,
in form and amounts and with companies satisfactory to the Bank, evidence of
hazard insurance policies naming the Bank as "mortgagee", and "loss payee" (to
the extent doing so is not prohibited under the terms of any lease which the
Debtor is a party to) and relating to the assets and properties (including, but
not limited to, the Collateral) of the Borrower and/or Subsidiaries.
4.1.10 Payment of Debt. The Bank shall have been furnished with
evidence satisfactory to it that all indebtedness of the Borrower to Fidelity
Funding has been paid in full and all corresponding liens terminated or
transferred to the Bank.
4.1.11 Approval of Bank Counsel. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall have
been satisfactory to and approved by legal counsel for the Bank, and said
counsel shall have been furnished with such certified copies of actions and
proceedings and such other instruments and documents as they shall have
reasonably requested.
4.1.12 Other Information and Documentation. The Bank shall have
received such other information, certificates and executed documents as they
shall have reasonably requested.
Section 4.2. Conditions to All Disbursements. The obligation of the
Bank to make any Revolving Loan or Term Loan on any Disbursement Date,
including, but not limited to, the Disbursement Date first occurring, are
subject to the occurrence, prior to or on the Disbursement Date related to such
Revolving Loan or Term Loan, of each of the following conditions, any or all of
which may be waived in whole or in part by the Bank in writing:
4.2.1 Certificate. The Bank shall have received a certificate,
executed by the chief executive or chief financial officer of the Borrower,
certified as of such Disbursement Date, and confirming that, as of such
Disbursement Date:
(a) No Default or Event of Default has occurred and is
continuing; and
(b) The warranties and representations set forth in Section 5
of this Agreement are true and correct on and as of such Disbursement
Date.
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4.2.2 Bank Satisfaction. The Bank shall not know or have any
reasonable reason to believe that, as of such Disbursement Date:
(a) Any Default or Event of Default has occurred and is
continuing;
(b) Any warranty or representation set forth in Section 5 of
this Agreement shall not be true and correct; or
(c) Any provision of law, any order of any court or other
agency of government or any regulation, rule or interpretation thereof
shall have had any material adverse effect on the validity or
enforceability of this Agreement, the Notes, the Security Agreement, the
Financing Statements, the Guaranty or the Subordination Agreement.
ARTICLE 5. WARRANTIES AND REPRESENTATIONS.
The Borrower represents and warrants to the Bank that:
Section 5.1. Corporate Existence and Power. (a) The Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas, (b) the Borrower has the corporate power and
authority to own their respective properties and assets and to carry out their
respective business as now being conducted and are qualified to do business and
in good standing in every jurisdiction wherein such qualification is necessary
and (c) the Borrower has the corporate power and authority to execute and
perform this Agreement, to borrow money in accordance with its terms, to
execute and deliver the Notes and other documents contemplated hereby, to grant
to the Bank liens and security interest in the Collateral as hereby
contemplated and to do any and all other things required of it hereunder.
Section 5.2. Authorization and Approvals. The execution, delivery and
performance of this Agreement, the borrowing hereunder and the execution and
delivery of the Notes, the Security Agreements, the Financing Statements, and
other documents contemplated hereby have been duly authorized by all requisite
corporate action, (a) do not require registration with or consent or approval
of, or other action by, any federal, state or other governmental authority or
regulatory body, or, if such registration, consent or approval is required, the
same has been obtained and disclosed in writing to the Bank, (b) will not
violate any provision of law, any order of any court or other agency of
government, the Articles of Incorporation or Bylaws of the Borrower, any
provision of any indenture, agreement or other instrument to which the Borrower
is a party, or by which it or any of its properties or assets are bound, (c)
will not be in conflict with, result in a breach of or constitute (with or
without notice or passage of time) a default under any such indenture,
agreement or other instrument, and (d) will not result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of the Borrower other than in favor of the Bank and
as contemplated hereby. The execution, delivery and performance of the
Guaranty, and other documents contemplated thereby (e) do not require
registration with or consent or approval of, or other action by, any
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<PAGE> 22
federal, state or other governmental authority or regulatory body, or, if such
registration, consent or approval is required, the same has been obtained and
disclosed in writing to the Bank, (f) will not violate any provision of law,
any order of any court or other agency of government, any provision of any
indenture, agreement or other instrument to which Guarantor is a party, or by
which either or any of their properties or assets are bound, (g) will not be in
conflict with, result in a breach of or constitute without notice or passage of
time) a default under any such indenture, agreement or other instrument, and
(h) will not result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties of the
Guarantor other than in favor of the Bank and as contemplated hereby.
Section 5.3. Valid and Binding Agreement. This Agreement is, and the
Notes, the Security Agreements, the Financing Statements, and all other
documents contemplated hereby will be, when delivered, valid and binding
obligations of the Borrower and/or Subsidiaries, and the Guaranty, and all
other documents contemplated thereby will be valid and binding obligations of
the Guarantor and/or owner of the life insurance policy, in each case
enforceable in accordance with their respective terms except as similar laws
and equitable principles affecting the enforcement of creditors' rights
generally.
Section 5.4. Actions, Suits or Proceedings. Except as disclosed on
Schedule 5.4, there are no actions, suits or proceedings, at law or in equity,
and no proceedings before any arbitrator or by or before any governmental
commission, board, bureau or other administrative agency, pending, or, to the
best knowledge of the Borrower, threatened against or affecting the Borrower,
any Subsidiary or Guarantor, or any properties or rights of the Borrower or any
of the Subsidiaries or Guarantor, which, if adversely determined, could
materially impair the right of the Borrower or any of the Subsidiaries to carry
on business substantially as now conducted or could have a material adverse
effect upon the financial condition of the Borrower, any Subsidiary or
Guarantor.
Section 5.5. Subsidiaries. Borrower has no subsidiaries.
Section 5.6. No Liens, Pledges, Mortgages or Security Interests. Except
for Permitted Liens, none of the Borrower's or the Subsidiaries' assets and
properties, including the Collateral, is subject to any mortgage, pledge, lien,
security interest or other encumbrance of any kind or character.
Section 5.7. Accounting Principles. The Financial Statements have been
prepared in accordance with GAAP and fully and fairly present the financial
condition of the Borrower and the Subsidiaries as of the dates, and the results
of their operations for the periods, for which the same are furnished to the
Bank. To the best of Borrower's knowledge and belief, the Borrower has no
material contingent obligations, liabilities for taxes, long-term leases or
unusual forward or long-term commitments not disclosed by, or reserved against
in, the Financial Statements.
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Section 5.8. No Adverse Changes. There has been no material adverse
change in the business, properties or condition (financial or otherwise) of the
Borrower or any of the Subsidiaries since the date of the latest of the
Financial Statements.
Section 5.9. Conditions Precedent. As of each Disbursement Date, all
appropriate conditions precedent referred to in Section 4 hereof shall have
been satisfied (or waived in writing by the Bank).
Section 5.10. Taxes. The Borrower and the Subsidiaries have filed by
the due date therefor all federal, state and local tax returns and other
reports they are required by law to file and which are material to the conduct
of their respective businesses, have paid or caused to be paid all taxes,
assessments and other governmental charges that are shown to be due and payable
under such returns, and have made adequate provision for the payment of such
taxes, assessments or other governmental charges which have accrued but are not
yet payable. The Borrower has no knowledge of any deficiency or assessment in
a material amount in connection with any taxes, assessments or other
governmental charges not adequately disclosed in the Financial Statements.
Section 5.11. Compliance with Laws. Except as disclosed on Schedule
5.11, the Borrower and the Subsidiaries have complied with all applicable laws,
to the extent that failure to comply would materially interfere with the
conduct of the business of the Borrower or any of the Subsidiaries.
Section 5.12. Indebtedness. Except as disclosed on Schedule 5.12, the
Borrower and the Subsidiaries have no indebtedness for money borrowed and no
direct or indirect obligations under any leases (whether or not required to be
capitalized under GAAP) or any agreements of guarantee or surety except for the
endorsement of negotiable instruments by the Borrower and the Subsidiaries in
the ordinary course of business for deposit or collection.
Section 5.13. Material Agreements. Except as disclosed on Schedule
5.13, the Borrower and the Subsidiaries have no material leases, contracts or
commitments of any kind (including, without limitation, employment agreements,
collective bargaining agreements, powers of attorney, distribution contracts,
patent or trademark licenses, contracts for future purchase or delivery of
goods or rendering of services, bonus, pension and retirement plans, or accrued
vacation pay, insurance and welfare agreements); to the best knowledge of
Borrower, all parties to such agreements (including the Borrower and the
Subsidiaries) have complied with the provisions of such leases, contracts or
commitments; and to the best knowledge of Borrower, no party to such agreements
(including the Borrower and the Subsidiaries) is in default thereunder, nor has
there occurred any event which with notice or the passage of time, or both,
would constitute such a default.
Section 5.14. Margin Stock. Neither the Borrower nor any of the
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System, and no part of the proceeds of any loan
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hereunder will be used, directly or indirectly, to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock or for any other purpose which might violate the provisions of
Regulation G, T, U or X of the said Board of Governors. The Borrower does not
own any margin stock.
Section 5.15. Pension Funding. The Borrower has not incurred any
material accumulated funding deficiency within the meaning of ERISA and has not
incurred any material liability to the PBGC in connection with any employee
benefit plan established or maintained by the Borrower or any of the
Subsidiaries and no reportable event or prohibited transaction, as defined in
ERISA, has occurred with respect to such plans.
Section 5.16. Misrepresentation. No warranty or representation by the
Borrower contained herein or in any certificate or other document furnished by
the Borrower pursuant hereto contains any untrue statement of material fact or
omits to state a material fact necessary to make such warranty or
representation not misleading in light of the circumstances under which it was
made.
Section 5.17. Eligible Accounts. As to each Account represented by the
Borrower to be an "Eligible Account" on a Borrowing Base Certificate, as of the
date of each such Borrowing Base Certificate:
(a) Such Account arose in the ordinary course of the business
of Borrower out of either (i) a bona fide sale of Inventory by the
Borrower, and in such case such Inventory has in fact been shipped to,
and accepted and retained by, the appropriate account debtor or the sale
has otherwise been consummated in accordance with such order, or (ii)
services performed by the Borrower, under an enforceable contract, and
in such case such services have in fact been performed for the
appropriate account debtor in accordance with such contract.
(b) Such Account represents a legally valid and enforceable
claim which is due and owing to the Borrower, by such account debtor and
for such amount as is represented by the Borrower, to the Bank on such
Borrowing Base Certificate, such Account is due and payable not more
than thirty (30) days from the delivery of the related Inventory, or the
performance of the related services, giving rise to such Account and
such Account has not been due for more than ninety (90) days (from the
date of invoice).
(c) The unpaid balance of such Account is as represented by
the Borrower, and not subject to any defense, counterclaim, setoff,
credit, allowance or adjustment by the account debtor because of
returned, inferior or damaged Inventory or services, or for any other
reason, except for customary discounts allowed by Borrower, in the
ordinary course of business for prompt payment, and there is no
agreement between Borrower, the related account debtor and any other
person for any rebate, discount, concession or release of liability, in
whole or in part.
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<PAGE> 25
(d) The transactions leading to the creation of such Account
comply with all applicable state and federal laws and regulations.
(e) The Borrower has granted to the Bank a perfected security
interest in such Account (as an item of the Collateral) prior in right
to all other persons (other than Permitted Liens), and such Account has
not been sold, transferred or otherwise assigned by the Borrower, to any
person, other than the Bank.
(f) Such Account is not represented by any note, trade
acceptance, draft or other negotiable instrument or by any chattel
paper, except any such as have been endorsed and delivered by the
Borrower, to the Bank on or prior to such Account's inclusion on such
Borrowing Base Certificate.
(g) The Borrower has not received, with respect to such
Account, any notice of the death of the related account debtor or any
partner thereof, nor of the dissolution, liquidation, termination of
existence, insolvency, business failure, appointment of a receiver for
any part of the property of, assignment for the benefit of creditors by,
or the filing of a petition in bankruptcy or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against, such
account debtor.
(h) The account debtor on such Account is not:
(i) an affiliate of the Borrower,
(ii) the United States of America or any department,
agency or instrumentality thereof,
(iii) a citizen or resident of any jurisdiction other
than one of the United States (unless such Foreign Account is
subject to a guaranty of payment in the form of a letter of
credit issued by a Bank which is acceptable to the Bank) or
(iv) an account debtor whom the Bank has, in the
exercise of such Bank's sole discretion, determined to be (based
on such factors as the Bank deems appropriate) an ineligible
account debtor and as to which the Bank has notified the
Borrower, provided, however, that any such notice shall not apply
as to any Account of such account debtor which has been included
on a Borrowing Base Certificate by the Borrower prior to the
giving of such notice by the Bank and which meets each and every
other requirement under this Agreement for the denomination of
such Account as an "Eligible Account."
NOTWITHSTANDING the foregoing, the Borrower may include in Eligible
Accounts, provided the Account is otherwise eligible hereunder, up to
$100,000.00 of Accounts where the account debtor is the United States of
America or any department, agency or instrumentality thereof.
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(i) Such Account is not payable by an account debtor for whom
Twenty-Five percent (25%) or more of the total amount then owed to the
Borrower and/or its Subsidiaries by that account debtor is ninety (90)
days or more from invoice date.
ARTICLE 6. AFFIRMATIVE COVENANTS.
From the date hereof until the principal of and interest on the Notes
and other Indebtedness is paid in full, the Borrower covenants and agrees that
it will:
Section 6.1. Financial and Other Information.
6.1.1 Annual Financial Reports. Furnish to the Bank in form
satisfactory to the Bank not later than one hundred and fifty (150) days
after the close of the 1996 fiscal year ending December 31, 1996 and not
later than one hundred and twenty (120) days after the close of each
fiscal year of the Borrower, beginning with the Borrower's fiscal year
ending December 31, 1997, on a consolidated and consolidating basis, a
balance sheet as at the close of each such fiscal year, statements of
income and statements of cash flows for each such fiscal year, and such
other comments and financial details as are usually included in similar
reports. Such reports shall be prepared in accordance with GAAP by
independent certified public accountants of recognized standing selected
by the Borrower and acceptable to the Bank and shall contain unqualified
opinions as to the fairness of the statements therein contained.
6.1.2 Monthly Financial Statements. Furnish to the Bank not
later than thirty (30) days after the close of each month of each fiscal
year of the Borrower, beginning with November 30, 1996, financial
statements containing the consolidated and consolidating balance sheet
of the Borrower and the Subsidiaries as of the end of each such period,
consolidated and consolidating statements of income and statements of
cash flows of the Borrower and the Subsidiaries up to the end of such
period. These statements shall be prepared on substantially the same
accounting basis as the statements required in Section 6.1.1 of this
Agreement and shall be in such detail as the Bank may require, and the
accuracy of the statements shall be certified by the chief executive or
financial officer of the Borrower.
6.1.3 No Default Certificate. Together with each delivery of
the financial statements required by Sections 6.1.1 and 6.1.2 of this
Agreement, furnish to the Bank a certificate of its chief executive or
financial officer stating that no Event of Default or Default has
occurred, or if any such Event of Default or Default exists, stating the
nature thereof, the period of existence thereof and what action the
Borrower proposes to take with respect thereto. Such certificate shall
also demonstrate, by showing the applicable ratio or other calculation,
with such supporting information as the Bank requires, that the Borrower
is in compliance with Section 6.5 through and including Section 6.8.
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<PAGE> 27
6.1.4 Aging and Backlog Reports. Furnish to the Bank monthly by
the twentieth (20th) of the succeeding month an aging as of the end of
the preceding month of Borrower's and Subsidiaries' (i) Accounts and
(ii) accounts payable together with Inventory listings and backlog
reports in forms satisfactory to the Bank.
6.1.5 Borrowing Base Certificate. Furnish to the Bank not later
than twenty (20) after the close of each month, a Borrowing Base
Certificate confirming that the aggregate unpaid principal amount of all
Revolving Loans does not exceed the lesser of the Commitment Amount or
the Borrowing Base as then in effect (or, if such is not the case,
accompanied by a prepayment of the Revolving Credit Note in accordance
with Section 2.8.2 of this Agreement). Such reports shall be delivered
to the Bank no later than twenty (20) days after the date thereof but
shall only be due if there are funds outstanding on the Revolving Credit
Note.
6.1.6 Adverse Events. Promptly inform the Bank of the
occurrence of any Event of Default or Default, or of any occurrence
which has or could reasonably be expected to have a materially adverse
effect upon the Borrower's business, properties, financial condition or
ability to comply with its obligations hereunder.
6.1.7 Shareholder Reports. Promptly furnish to the Bank upon
becoming available a copy of all financial statements, reports, notices,
proxy statements and other communications sent by the Borrower to its
stockholders, and all regular and periodic reports filed by the Borrower
with any securities exchange, the Securities and Exchange Commission or
any other state or federal agency.
6.1.8 Management Letters. Furnish to the Bank, promptly upon
receipt thereof, copies of all management letters and other reports of
substance submitted to the Borrower by independent certified public
accountants in connection with any annual or interim audit of the books
of the Borrower.
6.1.9 Accounts Receivable Audit. Allow the Bank to conduct, at
least once per year, and as of such dates as the Bank shall designate,
an audit and verification of the Borrower's and/or Subsidiaries'
Accounts, to be performed by the Bank or such other party as the Bank
shall designate, and to be performed in such form and detail as the Bank
shall reasonably require.
6.1.10 Financial Statements of Guarantors. To cause to be
furnished to the Bank annually, and no later than one hundred twenty
(120) days after the end of each calendar year, the annual financial
statement of each Guarantor, which statements shall be in such form and
detail as the Bank shall reasonably request, and to contain a listing of
assets and liabilities and a summary of cash uses and sources, together
with a copy, as soon as it is filed, of each Guarantor's annual federal
income tax return.
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6.1.11 Other Information as Requested. Promptly furnish to the
Bank such other information regarding the operations, business affairs
and financial condition of the Borrower and the Subsidiaries as the Bank
may reasonably request from time to time and permit the Bank, its
employees, attorneys and agents, to inspect all of the books, records
and properties of the Borrower and the Subsidiaries at any reasonable
time during normal business hours.
Section 6.2. Insurance. Keep its insurable properties (including, but
not limited to, the Collateral) and the insurable properties of the
Subsidiaries adequately insured and maintain (a) insurance against fire and
other risks customarily insured against by companies engaged in the same or a
similar business to that of the Borrower or the Subsidiaries, (b) necessary
worker's compensation insurance, (c) public liability and product liability
insurance, and (d) such other insurance as may be required by law or as may be
reasonably required in writing by the Bank, all of which insurance shall be in
such amounts, containing such terms, in such form, for such purposes and
written by such companies as may be satisfactory to the Bank. All such
policies shall contain a provision whereby they may not be canceled except upon
thirty days' prior written notice to the Bank. The Borrower will deliver to
the Bank, at the Bank's request, evidence satisfactory to the Bank that such
insurance has been so procured and, with respect to casualty insurance, names
the Bank as "mortgagee" and "loss payee" (to the extent doing so is not
prohibited under the terms of any lease which the Debtor is a party to) and
provides for payment to the Bank even if the Borrower would not be entitled to
receive payment of any proceeds. If the Borrower fails to maintain
satisfactory insurance as herein provided, the Bank shall have the option to do
so, and the Borrower agrees to repay the Bank, with interest at five percent
(5%) per annum plus the Base Rate, all amounts so expended by the Bank. The
Borrower hereby appoints the Bank as Borrower's attorney-in-fact, which
appointment is coupled with an interest and irrevocable, to endorse any check
or draft payable to the Borrower in connection with returned or unearned
premiums on said insurance or the proceeds of said insurance, and any amount so
collected may be applied toward satisfaction of the Indebtedness, provided,
however, that the Bank shall not be required hereunder so to act.
Section 6.3. Taxes. Pay promptly and within the time that they can be
paid without interest or penalty all taxes, assessments and similar imposts and
charges of every kind and nature lawfully levied, assessed or imposed upon the
Borrower, the Subsidiaries and their respective property, except to the extent
being contested in good faith and, if requested by the Bank, bonded in a manner
satisfactory to the Bank. If the Borrower shall fail to pay such taxes and
assessments by their due date, the Bank shall have the option to do so, and the
Borrower agrees to repay the Bank, with interest at five percent (5%) per annum
plus the Base Rate, all amounts so expended by the Bank.
Section 6.4. Maintain Corporation and Business. Do or cause to be done
all things necessary to preserve and keep in full force and effect the
Borrower's and the Subsidiaries' corporate existence, rights and franchises and
comply with all applicable laws; continue to conduct and operate their
respective businesses substantially as conducted and operated during the
present and preceding calendar year; at all times maintain, preserve and
protect all franchises
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<PAGE> 29
and trade names and preserve all the remainder of their respective property
used or useful in the conduct of their respective business and keep the same in
good repair, working order and condition; and from time to time make, or cause
to be made, all needed and proper repairs, renewals, replacements, betterments
and improvements thereto so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
Section 6.5. Tangible Net Worth Step Up Requirement. The Borrower
shall increase its Tangible Net Worth by not less than $150,000.00 per fiscal
year.
Section 6.6. Maintain Debt Ratio. The Borrower shall maintain the
ratio of Debt to Tangible Net Worth of not more than 2.75 to 1.0.
Section 6.7. Maintain Working Capital. The Borrower shall maintain
minimum Working Capital of $200,000.00. For purposes hereof, "Working Capital"
shall mean the sum of all cash, plus accounts receivable (less accounts
receivable more than ninety days old and less any accounts for which there is a
dispute concerning payment) plus inventory (less any obsolete inventory) less
all Current Liabilities.
Section 6.8. Maintain Fixed Charge Coverage. The Borrower shall
maintain a Fixed Charge Coverage ratio of not less than 1.10 to 1.0 to be
calculated quarterly on a rolling quarterly basis.
For purposes hereof, "Fixed Charge Coverage" shall mean the sum of net income
plus depreciation, plus amortization plus interest expense, divided by the sum
of current maturities of long-term debt (the Revolving Credit Note being
considered short-term debt for purposes hereof) plus current maturities of
capital leases, plus interest expense plus non-financed capital expenditures.
Section 6.9. ERISA. (a) At all times meet and cause each of the
Subsidiaries to meet the minimum funding requirements of ERISA with respect to
the Borrower's and the Subsidiaries' employee benefit plans subject to ERISA;
(b) promptly after the Borrower knows (i) of the occurrence of any event, which
would constitute a reportable event or prohibited transaction under ERISA, or
(ii) that the PBGC or the Borrower (or any Subsidiary) has instituted or will
institute proceedings to terminate an employee pension plan, deliver to the
Bank a certificate of the chief financial officer of the Borrower setting forth
details as to such event or proceedings and the action which the Borrower (or
such Subsidiary) proposes to take with respect thereto, together with a copy of
any notice of such event which may be required to be filed with the PBGC; and
(c) furnish to the Bank (or cause the plan administrator to furnish the Bank) a
copy of the annual return (including all schedules and attachments) for each
plan covered by ERISA, and filed with the Internal Revenue Service by the
Borrower (or any Subsidiary), not later than ten (10) days after such report
has been so filed.
Section 6.10. Use of Loan Proceeds. Use the proceeds of the loan
hereunder for the purpose set forth in the recitals to this Agreement.
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ARTICLE 7. NEGATIVE COVENANTS.
From the date hereof until the principal of and interest on the Notes
and other Indebtedness is paid in full, the Borrower covenants and agrees that
it will not, and will not permit any Subsidiary to:
Section 7.1. Dividends. Declare or pay any dividend (other than
dividends payable solely in shares of its capital stock) on, or make any other
distribution with respect to (whether by reduction of capital or otherwise),
any shares of its capital stock, except that dividends from any Subsidiary to
the Borrower are permitted.
Section 7.2. Stock Issuance. Issue any additional shares of its
capital stock, or any warrant, right or option relating thereto or any security
convertible into any of the foregoing.
NOTWITHSTANDING the foregoing, the Borrower may issue (i) currently
authorized but unissued shares and/or (ii) stock options, and allow those
options to be exercised, so long as, after taking into account the purchase of
any currently authorized but unissued shares and/or the exercise of any stock
options, at all times David R. Campbell, Rebecca C. Boenigk and Jaye E.
Congleton collectively own and control the voting rights to FIFTY-ONE percent
(51%) or more, both before and after the issuance of any currently authorized
but unissued shares and/or the exercise of any such options, of the voting
stock of the Borrower.
Section 7.3. Stock Acquisition. Purchase, redeem, retire or otherwise
acquire any of the shares of its capital stock, or make any commitment to do
so.
Section 7.4. Liens and Encumbrances. Create, incur, assume or suffer
to exist any mortgage, pledge, encumbrance, security interest, lien or charge
of any kind (including any charge upon property purchased or acquired under a
conditional sales or other title-retaining agreement or lease required to be
capitalized under GAAP) upon any of its property or assets, whether now owned
or hereafter acquired, other than Permitted Liens.
Section 7.5. Indebtedness. Incur, create, assume or permit to exist
any indebtedness or liability on account of deposits or advances or any
indebtedness or liability for borrowed money, or any other indebtedness or
liability evidenced by notes, bonds, debentures or similar obligations, or any
other indebtedness whatsoever, except for (a) the Indebtedness, (b)
indebtedness subordinated to the prior payment in full of the Indebtedness upon
terms and conditions approved in writing by the Bank, (c) existing indebtedness
to the extent set forth on Schedule 5.12, (d) trade indebtedness incurred and
paid in the ordinary course of business, (e) contingent indebtedness to the
extent permitted by Section 7.7 of this Agreement, (f) indebtedness secured by
Permitted Liens, (g) purchase money indebtedness, not to exceed ONE HUNDRED
FIFTY THOUSAND AND NO/100 Dollars ($150,000.00) each fiscal year, where used to
acquire equipment, and (h) obligations to the extent permitted by Section 7.11
of this Agreement.
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Section 7.6. Extension of Credit. Make loans, advances or extensions
of credit to any person, except for sales on open account and otherwise in the
ordinary course of business.
Section 7.7. Guarantee Obligations. Guarantee or otherwise, directly
or indirectly, in any way be or become responsible for obligations of any other
person, whether by agreement to purchase the indebtedness of any other person,
agreement for the furnishing of funds to any other person through the
furnishing of goods, supplies or services, by way of stock purchase, capital
contribution, advance or loan, for the purpose of paying or discharging (or
causing the payment or discharge of) the indebtedness of any other person, or
otherwise, except for the endorsement of negotiable instruments by the Borrower
or the Subsidiaries in the ordinary course of business for deposit or
collection.
Section 7.8. Subordinate Indebtedness. Subordinate any indebtedness
due to it from a person to indebtedness of other creditors of such person.
Section 7.9. Property Transfer, Merger or Lease-Back. (a) Sell, lease,
transfer or otherwise dispose of all or, except as to the sale of Inventory in
the ordinary course of business, any material part of its properties and assets
(whether in one transaction or in a series of transactions), (b) change its
name, consolidate with or merge into any other corporation, permit another
corporation to merge into it, acquire all or substantially all the properties
or assets of any other person, enter into any reorganization or
recapitalization or reclassify its capital stock (NOTWITHSTANDING the
foregoing, should the Borrower desire to acquire a business in substantially
the same line of business that the Borrower is currently in, and further
provided that such acquisition shall not otherwise result in an Event of
Default hereunder, nor impose upon the Borrower or its management, any undue
financial or managerial constraints or burdens, the Bank shall not unreasonably
withhold or delay its approval of any written request, containing such
information as the Bank shall reasonably require to make its decision, of the
acquisition by the Borrower of any such business), or (c) enter into any
sale-leaseback transaction; provided, however, that a Subsidiary wholly owned
by the Borrower may be merged into, or consolidated with, the Borrower or
another Subsidiary wholly owned by the Borrower, and such Subsidiary may sell,
lease or transfer all or a substantial part of its assets to the Borrower or
another Subsidiary wholly owned by the Borrower, and the Borrower or such
Subsidiary may acquire all or substantially all of the properties and assets of
the Subsidiary so to be merged into, or consolidated with, it or so to be sold,
leased or transferred to it.
Section 7.10. Acquire Securities. Purchase or hold beneficially any
stock or other securities of, or make any investment or acquire any interest
whatsoever in, any other person except for certificates of deposit with
maturities of one year or less of United States commercial banks with capital,
surplus and undivided profits in excess of $100,000,000 and direct obligations
of the United States Government maturing within one year from the date of
acquisition thereof.
Section 7.11. Pension Plans. (a) Allow any fact, condition or event to
occur or exist with respect to an employee pension or profit sharing plan which
might constitute grounds for termination of any such plan or for the
appointment by a United States District Court of a trustee
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<PAGE> 32
to administer any such plan, or (b) permit any such plan to be the subject of
termination proceedings (whether voluntary or involuntary) from which
termination proceedings there may result a liability of the Borrower or any of
the Subsidiaries to the PBGC which in the opinion of the Bank, will have a
materially adverse effect upon the operations, business, property, assets,
financial condition or credit of the Borrower.
Section 7.12. Misrepresentation. Furnish the Bank with any certificate
or other document that contains any untrue statement of a material fact or
omits to state a material fact necessary to make such certificate or document
not misleading in light of the circumstances under which it was furnished.
Section 7.13. Margin Stock. Apply any of the proceeds of the Notes to
the purchase of carrying of any "margin stock" within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System, or any regulations,
interpretations or rulings thereunder.
Section 7.14. Compliance with Environmental Laws. Borrower will not,
and will not allow any Subsidiary to, (i) use (or permit any tenant to use) any
of its respective properties or assets for the handling, processing, storage,
transportation, or disposal of any Hazardous Substance except in all respects
in compliance with Environmental Laws, (ii) generate any Hazardous Substance
except in all respects in compliance with Environmental Laws, (iii) conduct any
activity which is likely to cause a release of any Hazardous Substance, or (iv)
otherwise conduct any activity or use any of its respective properties or
assets in any manner that is likely to violate any Environmental Law.
Section 7.15. Capital Expenditures. Acquire or expend money for, or
commit itself to acquire or expend money for by lease, purchase or otherwise,
fixed assets in excess of $500,000.00 per fiscal year.
Section 7.16. Bonus or Dividend for Taxes. The Borrower is a Subchapter
S Corporation for federal income tax purposes. Annually, the Borrower may pay
a bonus or dividend to the Guarantors in cash sufficient to pay the federal
income taxes attributable to the net income of the Borrower attributed to the
Guarantors under the provisions of Subchapter S.
ARTICLE 8. EVENTS OF DEFAULT - ENFORCEMENT -
APPLICATION OF PROCEEDS.
Section 8.1. Events of Default. The occurrence of any of the following
events shall constitute an Event of Default hereunder:
8.1.1 Failure to Pay Monies Due. If any principal of or
interest on the Notes, any fees under Section 2.7 of this Agreement or
any other Indebtedness shall not be paid when due.
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8.1.2 Misrepresentation. If any warranty or representation of
the borrower in connection with or contained in this Agreement, or if
any financial data or other information now or hereafter furnished to
the Bank by or on behalf of the Borrower, shall prove to be false or
misleading in any material respect.
8.1.3 Noncompliance with Bank Agreement. If the Borrower or the
Guarantor shall fail to perform any of its obligations and covenants
under, or shall fail to comply with any of the provisions of, this
Agreement or any other agreement with the Bank to which it may be a
party, including, without limitation, any indebtedness owed by Guarantor
to the Bank.
8.1.4 Other Defaults. If the Borrower or any Subsidiary or
Guarantor shall default in the due payment of any of its indebtedness
(other than the Indebtedness) or in the observance or performance of any
term, covenant or condition in any agreement or instrument evidencing,
securing or relating to such indebtedness and such default shall be
continued for a period sufficient to permit acceleration of the
indebtedness, irrespective of whether any such default shall be forgiven
or waived by the holder thereof.
8.1.5 Judgments. If there shall be rendered against the
Borrower or any Subsidiary or the Guarantor, one or more judgments or
decrees involving an aggregate liability of $20,000.00 or more, which
has or have become nonappealable and shall remain undischarged,
unsatisfied by insurance and unstayed for more than 45 days, whether or
not consecutive; or of a writ of attachment or garnishment against the
property of the Borrower or any of the Subsidiaries or the Guarantor
shall be issued and levied in an action claiming $20,000.00 or more and
not released or appealed and bonded in a manner satisfactory to the
Bank.
8.1.6 Business Suspension, Bankruptcy, Etc. If the Borrower or
any Subsidiary shall voluntarily suspend transaction of its business; or
if the Guarantor shall die; or if the Borrower or any Subsidiary or the
Guarantor shall not pay its debts as they mature or shall make a general
assignment for the benefit of creditors; or proceedings in bankruptcy,
or for reorganization or liquidation of the Borrower or any Subsidiary
or the Guarantor, under the Bankruptcy Code or under any other state or
federal law for the relief of debtors shall be commenced by the Borrower
or any Subsidiary or the Guarantor or shall be commenced against the
Borrower or any Subsidiary or the Guarantor and shall not be discharged
within thirty (30) days of commencement; or a receiver, trustee or
custodian shall be appointed for the Borrower or any Subsidiary or the
Guarantor or for any substantial portion of its respective properties or
assets.
8.1.7 Change of Control or Management. If the Borrower or a
controlling portion of its voting stock or a substantial portion of its
assets comes under the practical, beneficial or effective control of one
or more persons other than Rebecca C. Boenigk, Jaye E. Congleton or
David R. Campbell whether by reason of death, merger, consolidation,
sale or purchase of assets or stock or otherwise; or if any TWO (2) of
the
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following are no longer active in the day-to-day management of the
Borrower: Rebecca C. Boenigk, Jaye E. Congleton or David R. Campbell,
and if any such change of control adversely impacts, in the sole
judgment of the Bank, upon the ability of the Borrower to carry on its
business as theretofore conducted.
8.1.8 Inadequate Funding or Termination of Employee/Benefit
Plan(s). If the Borrower (or any Subsidiary) shall fail to meet its
minimum funding requirements under ERISA with respect to any employee
benefit plan established or maintained by the Borrower (or any
Subsidiary), or if any such plan shall be, for a period of sixty (60)
days after they commence, the subject of termination proceedings
(whether voluntary or involuntary) or there shall result from such
termination proceedings a liability of Borrower (or any subsidiary) to
the PBGC which in the opinion of the Bank will have a materially adverse
effect upon the operations, business, property, assets, financial
condition or credit of the Borrower.
8.1.9 Occurrence of Certain Reportable Events. If there shall
occur, with respect to any pension plan maintained by the Borrower or
any Subsidiary, any reportable event (within the meaning of section
4043(b) of ERISA) which the Bank shall determine in good faith
constitutes a ground for the termination of any such plan, and if such
event continues for thirty (30) days after the Bank gives written notice
to the Borrower, provided that termination of such plan or appointment
of such trustee would, in the opinion of the Bank, have a materially
adverse effect upon the operations, business, property, assets,
financial condition or credit of the Borrower.
Section 8.2. Acceleration of Indebtedness. Upon the occurrence of any
of the Events of Default described in Section 8.1.3 hereunder which is not
cured by the Borrower or waived by the Bank within 30 days after the earlier of
the date of notice to the Borrower by the Bank of such Default or the date the
Bank is notified, or should have been notified, pursuant to Borrower's
obligation under Section 6.1.5 of this Agreement, of such Default, or upon the
occurrence of any of the Events of Default described in Section 8.1.1, Section
8.1.2 or Sections 8.1.4 through 8.1.9, all Indebtedness shall be due and
payable in full forthwith at the option of the Bank without presentation,
demand, protest, notice of dishonor or other notice of any kind, all of which
are hereby expressly waived. Unless all of the Indebtedness is then fully paid,
the Bank shall have and may exercise any one or more of the rights and remedies
for which provision is made for a secured party under UCC, under the Security
Agreements, or under any other document contemplated hereby, including, without
limitation, the right to take possession and sell, lease or otherwise dispose
of any or all of the Collateral and to setoff against the Indebtedness any
amount owing by the Bank to the Borrower. The Borrower agrees, upon request of
the Bank, to assemble the Collateral and make it available to the Bank at any
place designated by the Bank which is reasonably convenient to the Bank and the
Borrower.
Section 8.3. Application of Proceeds. The proceeds of any sale or
other disposition of the Collateral authorized by this Agreement shall be
applied by the Bank, first upon all expenses authorized by the Uniform
Commercial Code and all reasonable attorneys' fees and legal
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<PAGE> 35
expenses incurred by the Bank; the balance of the proceeds of such sale or
other disposition shall be applied in the payment of the Indebtedness, first to
interest, then to principal; and the surplus, if any, shall be paid over to the
Borrower or to such other person or persons as may be entitled thereto under
applicable law. The Borrower shall remain liable for any deficiency, which the
Borrower shall pay to the Bank immediately upon demand.
Section 8.4. Cumulative Remedies. The remedies provided for herein are
cumulative to the remedies for collection of the Indebtedness as provided by
law or by any mortgage, security agreement or other document contemplated
hereby. Nothing herein contained is intended, nor should it be construed, to
preclude the Bank from pursuing any other remedy for the recovery of any other
sum to which the Bank may be or become entitled for the breach of this
Agreement by the Borrower.
ARTICLE 9. MISCELLANEOUS.
Section 9.1. Independent Rights. No single or partial exercise of any
right, power or privilege hereunder, or any delay in the exercise thereof,
shall preclude other or further exercise of the rights of the parties to this
Agreement.
Section 9.2. Covenant Independence. Each covenant in this Agreement
shall be deemed to be independent of any other covenant, and an exception in
one covenant shall not create an exception in another covenant.
Section 9.3. Waivers and Amendments. No forbearance on the part of the
Bank in enforcing any of its rights under this Agreement, nor any renewal,
extension or rearrangement of any payment or covenant to be made or performed
by the Borrower hereunder, shall constitute a waiver of any of the terms of
this Agreement or of any such right. No Default or Event of Default shall be
waived by the Bank except in writing signed and delivered by an officer of the
Bank, and no waiver of any Default or Event of Default shall operate as a
waiver of any other Default or Event of Default or of the same Default or Event
of Default on a future occasion. No other amendment, modification or waiver
of, or consent with respect to, any provision of this Agreement or the Notes or
other documents contemplated hereby shall be effective unless the same shall be
in writing and signed and delivered by an officer of the Bank.
Section 9.4. GOVERNING LAW. THIS AGREEMENT, AND EACH AND EVERY TERM
AND PROVISION HEREOF, SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF
THE STATE OF TEXAS. IF ANY PROVISIONS OF THIS AGREEMENT SHALL FOR ANY REASON
BE HELD INVALID OR UNENFORCEABLE, SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT
AFFECT ANY OTHER PROVISION HEREOF, BUT THIS AGREEMENT SHALL BE CONSTRUED AS IF
SUCH INVALID OR UNENFORCEABLE PROVISION HAD NEVER BEEN CONTAINED HEREIN.
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<PAGE> 36
Section 9.5. Survival of Warranties, Etc. All of the Borrower's
covenants, agreements, representations and warranties made in connection with
this Agreement and any document contemplated hereby shall survive the borrowing
and the delivery of the Notes hereunder and shall be deemed to have been relied
upon by the Bank, notwithstanding any investigation heretofore or hereafter
made by the Bank. All statements contained in any certificate or other
document delivered to the Bank at any time by or on behalf of the Borrower
pursuant hereto or in connection with the transactions contemplated hereby
shall constitute representations and warranties by the Borrower in connection
with this Agreement.
Section 9.6. Attorneys' Fees. The Borrower agrees that it will pay all
reasonable costs and expenses of the Bank in connection with the enforcement of
the Bank's rights and remedies under this Agreement and in connection with the
preparation or making of any amendments, modifications, waivers or consents
with respect to this Agreement.
Section 9.7. Payments on Saturdays, Etc. Whenever any payment to be
made hereunder or under the Notes shall be stated to be due on a Saturday,
Sunday or any other day which is not a Business Day, such payment may be made
on the next succeeding Business Day, and such extension, if any, shall be
included in computing interest in connection with such payment.
Section 9.8. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the parties hereto and their respective successors
and assigns; provided, however, the Borrower may not assign or transfer its
rights or obligations hereunder without the prior written consent of the Bank.
Section 9.9. Maintenance of Records. The Borrower will keep all of its
records concerning the Collateral at its principal place of business. The
Borrower will give the Bank prompt written notice of any change in its
principal place of business, or in the location of said records.
Section 9.10. Notices. All notices and communications provided for
herein or in any document contemplated hereby or required by law to be given
shall be effective when received or, in the case of notices from the Bank to
the Borrower, if notice is given by mail three (3) days after the deposit
thereof, postage prepaid, and return receipt requested, by first United States
class mail, addressed as follows:
To Borrower: Neutral Posture Ergonomics, Inc.
3904 North Texas Avenue
Bryan, Texas 77803
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<PAGE> 37
To the Bank: Comerica Bank-Texas
P.O. Box 6502828
Mail Code 6627
Dallas, Texas 75265-0282
Attention: Gary W. Orr
Senior Vice President
With a copy to: Comerica Bank-Texas
P.O. Box 4167
Houston, Texas 77210-4167
Attention: Mark H. Metcalfe
Vice President
(or to such other address as a party shall have designated to the other in
writing.) The giving of at least five (5) days' notice before the Bank shall
take any action described in any notice shall conclusively be deemed reasonable
for all purposes.
Section 9.11. Counterparts. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures were upon the same
instrument.
Section 9.12. Headings. Article and section headings in this Agreement
are included for the convenience of reference only and shall not constitute a
part of this Agreement for any purpose.
Section 9.13. Capital Adequacy. If as a result of any regulatory change
directly or indirectly affecting the Bank or any of the Bank's affiliates there
shall be imposed, modified or deemed applicable any tax, reserve, special
deposit, minimum capital, capital ratio, or similar requirement against or with
respect to or measured by reference to loans made or to be made hereunder or
participations therein, and the result shall be to increase the cost to the
Bank or any of the Bank's affiliates of making or maintaining any loan
hereunder or to any other party maintaining any participation therein, or
reduce any amount receivable in respect of any such loan (which increase in
cost, or reduction in amount receivable, shall be the result of the Bank's or
the Bank's affiliated company's reasonable allocation among all affected
customers of the aggregate of such increases or reductions resulting from such
event), then, within ten (10) days after receipt by the Borrower of a
certificate from the Bank containing the information described in this Section
below which shall be delivered to the Borrower, the Borrower agrees from time
to time to pay the Bank such additional amounts as shall be sufficient to
compensate the Bank or any of the Bank's affiliates (for as long as such
increased costs or reductions in amount receivable exist) for such increased
costs or reductions in amount receivable which the Bank determines in the
Bank's sole discretion are material. The certificate requesting compensation
under this Section shall identify the regulatory change which has occurred, the
requirements which have been imposed, modified or deemed applicable, the amount
of such additional cost or reduction in amount receivable and the way in which
such amount has been calculated.
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<PAGE> 38
Section 9.14. Indemnification by the Borrower. The Borrower hereby
covenants and agrees to indemnify, defend and hold harmless the Bank and its
officers, directors, employees and agents from and against any and all claims,
damages, liabilities, costs and expenses (including without limitation, the
fees and out-of-pocket expenses of counsel) which may be incurred by or
asserted against the Bank or any such other individual or entity in connection
with:
(a) any investigation, action or proceeding arising out of or
in any way relating to this Agreement, the Notes, or any other documents
or agreements relating to the loans or any collateral, or any act or
omission relating to any of the foregoing other than an act or omission
constituting wilful misconduct by the Bank and/or its officers,
directors, employees or agents;
(b) any taxes (other than federal or state income taxes),
liabilities, claims or damages relating to the Collateral or the Bank's
liens thereon; or
(c) the correctness, validity or genuineness of any
instruments or documents that may be released or endorsed to Borrower by
the Bank (which shall automatically be deemed to be without recourse to
the Bank in any event), or the existence, character, quantity, quality,
condition, value or delivery of any goods purporting to be represented
by any such documents.
Section 9.15. NO ORAL AGREEMENTS. THIS AGREEMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS AS WRITTEN, REPRESENT THE FINAL AGREEMENTS BETWEEN THE
BANK AND THE BORROWER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE BANK AND THE BORROWER.
Section 9.16. Gender. Throughout this Agreement, the masculine shall
include the feminine and vice versa and the singular shall include the plural
and vice versa, unless the context of this Agreement indicates otherwise.
Section 9.17. Joint Borrowers. If more than one party executes this
Agreement as Borrower, then for the purpose of this Agreement the term Borrower
shall mean each such party and each such party shall be jointly and severally
liable as Borrower for the Obligations as defined herein without regard to
which party receives the proceeds of any of the Loans. Each such party hereby
acknowledges that it expects to derive economic advantage from each of the
Loans.
Section 9.18. Cross Default; Cross Collateral. The Borrower hereby
agrees that (a) all other agreements between Borrower and the Bank or any of
its affiliates is hereby amended so that a default under this Agreement is a
default under all other agreements and a default under any one of the other
agreements is a default under this Agreement, and (b) the collateral under
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<PAGE> 39
this Agreement secures the obligations now or hereafter outstanding under all
other agreements between Borrower and the Bank or any of its affiliates and the
collateral pledged under any other agreement with the Bank or any of its
affiliates secures the obligations under this Agreement.
Section 9.19. Assignment. The Bank shall have the absolute and
unrestricted right to sell, assign, transfer, or grant participation in, all or
any portion of the loans and any collateral, guaranties or other security
relating thereto without the consent of Borrower; provided, however, no such
action on the part of the Bank shall have the effect of changing any of the
Borrower's obligations hereunder without the written consent of the Borrower.
SECTION 9.20. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMISSIBLE
BY APPLICABLE LAW, THE BORROWER HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL
RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTER-CLAIM (WHETHER
BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF
THE LOAN DOCUMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE
BANK IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT HEREOF.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
written above.
THIS AGREEMENT HAS AN INDEMNITY PROVISION AT SECTION 9.14.
NEUTRAL POSTURE ERGONOMICS, INC.,
a Texas corporation
By: /s/ DAVID R. CAMPBELL
--------------------------------------
Name: David R. Campbell
Title: President
COMERICA BANK-TEXAS
By: /s/ MARK H. METCALFE
--------------------------------------
Name: Mark H. Metcalfe
Title: Vice President
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EXHIBIT 6.25
AGREEMENT
WHEREAS, I, JEROME J. CONGLETON, of College Station, Texas hereinafter
referred to as "assignor", am the sole owner of the entire, right, title, and
interest in and to U.S. Patent No. 4,552,404, titled "Neutral Body Posture
Chair", filed on October 12, 1983, and issued on November 12, 1985; and,
WHEREAS, NEUTRAL POSTURE ERGONOMICS, INC., a Texas corporation with
offices located at 3904 N. Texas Avenue, Bryan, Texas, 77803, hereinafter
referred to as "assignee", is desirous of acquiring the entire right, title and
interest in the same;
NOW, therefore, in consideration of:
(a) the sum of thirty thousand dollars ($30,000.00), payable
in two installments of fifteen thousand dollars
($15,000.00) each, receipt of the first installment of
which is hereby acknowledged, with the second installment
payable no later than twelve (12) months from the date of
execution of this Assignment; and
(b) twenty five percent (25%) of net royalties (1) collected by
assignee from third parties for products manufactured,
used, or sold under license or sublicense of said U.S.
Patent No. 4,552,404, and other good and valuable
consideration,
I, the assignor, by these presents do sell, assign, and transfer unto
said assignee the entire right, title, and interest in and to said
Patent aforesaid; the same to be held and enjoyed by the said assignee
for his own use and behoove, and for his legal representatives and
assigns, to the full end of the term for which said Patent is granted,
as fully and entirely as the same would have been held by me had this
assignment and sale not been made.
Signed: /s/ JEROME J. CONGLETON
------------------------------
Jerome J. Congleton
<PAGE> 2
Executed this 5th day of March, 1997, at Bryan, State of Texas, County of
Brazos.
Before me personally appeared said Jerome J. Congleton and acknowledged the
foregoing instrument to be his free act and deed this 5th day of March, 1997.
SEAL /s/ Konny Griffin
------------------------------------ --------------------------------------
KONNY GRIFFIN Notary Public
[NOTARY PUBLIC Notary Public,
STATE OF TEXAS State of Texas /s/ exp date: 5/24/2000
STAMP/SEAL] My Commission Expires
MAY 24, 2000
------------------------------------
<PAGE> 1
EXHIBIT 10.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Neutral Posture
Ergonomics, Inc. on Form SB-1 of our report dated August 11, 1997, appearing in
the Prospectus, which is part of this Registration Statement, and to the
reference to us under the heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
Dallas, Texas
August 14, 1997
