CONFIDENTIAL TREATMENT
----------------------
(*)Confidential Material Redacted and
Filed Separately with the Commission
CONFIDENTIAL TREATMENT REQUESTED.
---------------------------------
CONFIDENTIAL PORTIONS OF THIS
-----------------------------
DOCUMENT HAVE BEEN REDACTED
---------------------------
AND HAVE BEEN SEPARATELY
------------------------
FILED WITH THE COMMISSION.
--------------------------
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Sears, Roebuck and Co.
Sears Wishbook, Inc.
3333 Beverly Road, A4-311B
Hoffman Estates, IL 60179
September 15, 2000
Mr. David E. Bowe
President and CEO
Ascendant Solutions
3737 Grader Street, Suite 110
Garland, TX 75041
Dear David:
We would like to return to your letter to me dated September 5,
2000, as a basis for Sears, Roebuck and Co. ("Sears Roebuck") and
Sears Wishbook, Inc. ("SWB") (collectively, "Sears") continuing their
relationship with Ascendant Solutions. You inquire in your
September 5 letter as to how the (*)[XXXXXXXXX] per month price
increase should be allocated. We accept an allocation of
(*)[XXXXXXXXX] per month allocated to the call center portion,
(*)[XXXXXXXXX] per month allocated to the fulfillment portion, and the
balance of (*)[XXXXXXXXX] allocated to systems services. If the call
center portion is assigned by Ascendant Solutions to a third party
(with Sears' consent), the monthly price increase due Ascendant
Solutions will be reduced by (*)[XXXXXXXXX] per month and paid to that
third party; if the fulfillment portion is assigned to a third party
(with Sears' consent), the monthly price increase due Ascendant
Solutions will be reduced by (*)[XXXXXXXXX] per month and paid to that
third party, both reductions commencing on the month following any
such assignment.
If Sears removes call center duties and/or fulfillment duties
from Ascendant Solutions or its assignee, the applicable monthly price
increase for that call center or fulfillment function will no longer
be paid.
The Agreements (as defined in Attachment B hereto) are herewith
deemed to be in full force and effect until July 1, 2001, provided,
however, that such Agreements are amended as set out in this letter
and Attachment A hereto. In the event of a conflict between this
letter or Attachment A and the Agreements, this letter or Attachment
A, as applicable, will control.
As you will note, we have made some changes and additions to the
Attachment A annexed
to your September 5 letter.
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
By my signature below Sears, Roebuck and SWB agree to the terms
and conditions of this letter agreement and the Attachments hereto.
Please evidence Ascendant Solutions' agreement to this letter
agreement and the Attachments hereto by executing this letter in the
space provided below and returning a fully executed original to me.
Very truly yours,
/s/ Kristine K. Crow
Kristine K. Crow
Authorized Representative for
Sears, Roebuck and Co.
Agreed To and Accepted By:
ASD Systems, Inc.
d/b/a ASCENDANT SOLUTIONS
/s/ David E. Bowe
------------------------------
David E. Bowe
President & CEO
Agreed To and Accepted By:
Sears Wishbook, Inc.
/s/ David H. Shepherd
-------------------------------
David H. Shepherd
President & CEO
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
ATTACHMENT A
Ascendant Solutions
Modification of Sears Wishbook & Craftsman Tool Contracts
Modified Terms and Conditions
Effective September 1, 2000
---------------------------
The Ascendant Solutions and Sears Wishbook & Craftsman Tool
Agreements ("Agreements") are hereby modified as follows:
[] The Wishbook contract is now co-terminus with Craftsman Tools
contract, with both contracts expiring on July 1, 2001.
[] An incremental service fee price increase of (*)[XXXXXXX] per
month over the existing charges will be effective September 1,
2000. The incremental service fee will be paid monthly, in
advance upon invoice (with dollar-for-dollar offset provided
in connection with any payment made in good faith prior to the
execution hereof). The balance of the incremental service fee
for September 2000 shall be paid within three (3) business
days of the execution hereof and receipt of an invoice from
Ascendant Solutions. The incremental service fee shall be
reduced by (*)[XXXXXXX] per month when Fulfillment Services
(as defined in the work orders) are no longer provided by
Ascendant Solutions or its assignee to Sears and shall also be
further reduced by (*)[XXXXXXX] per month when Call Center
Services (as defined in the work orders) are no longer
provided by Ascendant Solutions or its assignee to Sears.
[] The existing transaction based pricing between the parties (as
contained in the Agreements) (the "Service Fee") shall survive
this amendment.
[] The parties agree that they will complete the following
activities no later than the corresponding dates:
Date Activity
---- --------
12/31/00 Sears, Roebuck to have completed transition of
its Fulfillment Services needs to a third-party
provider. Ascendant Solutions or its assignee
shall no longer have any obligation to provide
Fulfillment Services to Sears, Roebuck after
December 31, 2000.
02/28/01 Sears, Roebuck to have completed transition of
its Call Center Services needs to a third-party
provider. Ascendant Solutions or its assignee
shall no longer have any obligation to provide
Call Center Services to Sears, Roebuck after
February 28, 2001.
-1-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
[] Sears may terminate the Agreements for cause if:
(i) Ascendant Solutions fails to satisfy any one or more of the
service levels for any four (4) consecutive measurement
periods and Ascendant Solutions has not provided Sears a
reasonable plan to correct same (except, however, the period
to cure is reduced to two (2) consecutive measurement
periods in November, December, and January);
(ii) any insolvency, receivership, assignment for benefit of
creditors, trusteeship or bankruptcy proceedings are
commenced by or against Ascendant Solutions and such
proceedings remain undischarged for sixty (60) days;
(iii) Ascendant Solutions admits, in writing, its inability
to pay its debts as they become due; or
(iv) Ascendant Solutions completely abandons provision of the
Services.
[] Ascendant Solutions may terminate the Agreements for cause if:
(i) Sears shall fail to pay any amount due to Ascendant
Solutions after five (5) days written notice of default and
opportunity to cure has been provided to Sears via fax to
Kris Crow, Dave Shephard, Lincoln Rodman or their
successors; provided, however, an amount shall not be due if
it has been properly offset; or
(ii) Sears ceases to perform one of its other obligations under
the Agreements after thirty (30) days written notice of
default and opportunity to cure has been provided to Sears
via fax to Kris Crow, Dave Shephard, Lincoln Rodman or their
successors.
[] Ascendant Solutions' maximum aggregate liability (and any
liability of third-party suppliers) to Sears, or any party
claiming through Sears, related to, arising out of or
otherwise involving the Agreements or the business
relationship evidenced thereby (a "Disputed Matter"), whether
in tort, contract or any other theory of liability, shall be
limited to the average monthly amount actually paid by Sears
to Ascendant Solutions for the last 12-calendar month period
immediately preceding the first event giving rise to the
liability, multiplied by two (2) (the "Liability Cap"). In no
event will Ascendant Solutions be liable for any indirect,
punitive, special, incidental, exemplary or consequential
damages. The parties acknowledge that the Liability Cap and
elimination of consequential and similar damages have been
negotiated between the parties, and that Ascendant Solutions
would not have entered into this amendment but for the
inclusion of this protection.
All charge back and offset provisions under the terms of the Sears
Wishbook and Craftsman Tools Agreements are replaced with the
following:
[] Ascendant Solutions shall provide Sears with weekly invoices
for Service Fees due for the Services rendered by Ascendant
Solutions. Invoices are due and payable, within five (5)
calendar
-2-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
days of receipt by Sears, by ACH in the case of Craftsman Tool
Catalog and thirty (30) calendar days by check in the case of
SWB, except to the extent a bona fide dispute exists between
the parties with respect thereto and such dispute has been
formally submitted under the dispute resolution provisions
herein. Any amount due either party but not received within
thirty (30) days of the date it is deemed due, shall be
subject to an interest charge at the rate of 1.5% per month,
or the maximum rate allowable by law (to the extent lower).
[] Sears will notify Ascendant Solutions in writing of any item
and amount disputed within fifteen (15) days of Sears' receipt
of the invoice bearing the discrepancy, whereupon such
discrepancy shall become a Disputed Matter hereunder.
Ascendant Solutions and Sears will work in good faith to
resolve the dispute as quickly as is commercially reasonable,
but in no event shall the resolution period last more than
fifteen (15) days. If the parties cannot mutually resolve the
Disputed Matter within said fifteen (15) days then, unless
agreed to the contrary in writing by Ascendant Solutions and
Sears, the matter will be resolved in accordance with the
dispute resolution provisions hereof. Any amount in dispute
ultimately found to be owed by one party to the other will be
paid by the owing party along with interest calculated
according to the interest rate above from the date the amount
originally came due prior to the dispute.
[] All Disputed Matters still remaining unsettled at that point
shall be submitted to the following dispute resolution
process:
A. The Disputed Matter shall be referred jointly to senior
executives (which shall be deemed to include Kristine Crow and
David Bowe and their successors) of each of the parties. If such
executives do not agree upon a resolution within ten (10) business
days after referral of the matter to them, the complaining party
shall proceed to the next stage of this dispute resolution
procedure.
B. The complaining party shall, upon written notice and within
ten (10) business days after the conclusion of the internal
escalation procedure, elect to have the Disputed Matter referred to
non-binding mediation before a single impartial mediator to be
jointly agreed upon by the parties. The mediation hearing shall be
attended by executives of both Parties possessing authority to
resolve the Dispute Matter, and shall be conducted no more than
twenty (20) business days after a party serves a written notice of
its intent to mediate. The costs of such mediation shall be shared
equally by the parties. If the Disputed Matter cannot be resolved
at mediation, the complaining party shall proceed to the next stage
of this dispute resolution procedure.
C. In the event a Disputed Matter has not been resolved through
mediation, the complaining party shall submit the Disputed Matter
to binding arbitration pursuant to the Commercial Arbitration Rules
of the American Arbitration Association (the "AAA"). The
arbitration panel shall have the authority to render only those
awards or remedies allowed by this Amendment. The arbitration
panel shall consist of three neutral arbitrators selected from the
AAA's Panel of Arbitrators, and the arbitration hearing shall be
conducted in Dallas County, Texas. The parties shall diligently
attempt to schedule the arbitration hearing for a time within one
hundred and twenty (120) days after the demand for arbitration
-3-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
hereunder has been issued. Following the hearing, the
arbitrators shall issue a written decision specifying the
basis of their decision, and the award made, if any. The
cost of the arbitration proceeding shall be shared equally
by the parties, but the prevailing party in any arbitration
proceeding shall be entitled to recover its reasonable and
necessary attorneys' fees, expert witness fees, expenses and
costs of arbitration incurred in connection with the
arbitration. Provided that Sears continues to timely pay
Ascendant Solutions for services rendered under the
Agreements (including as modified by this amendment),
Ascendant Solutions shall continue to provide such services
during the pendency of any Disputed Matter before
arbitration.
[] Pursuant to a commercially reasonable License and Escrow
Agreement to be executed by the parties hereto, Ascendant
Solutions shall deposit with a third-party Escrow Agent weekly
downloads to a Sears designated hard drive, all software
systems and data files for both Tools and Wishbook. To the
extent the license becomes operable under the escrow, Sears
shall have license rights to use the Lynx software until
July 1, 2001 or 180 days, whichever is shorter. The license
shall be come operable upon the occurrence of any of the
following events (except where the Agreements have terminated
by Ascendant Solutions for cause):
1. Ascendant Solutions shall be dissolved or liquidated or shall
otherwise completely cease to provide the Services pursuant to the
Work Orders attached hereto or subsequently entered into by the
parties;
2. Ascendant Solutions shall become insolvent or shall be unable
to pay its debts when and as such debts are due;
3. Ascendant Solutions shall cease to provide maintenance and/or
support for all or any portion of the software systems and/or data
files for both Tools and Wishbook;
4. Ascendant Solutions shall be in material breach of its
covenants, warranties and duties under the Agreements such that
Sears declares the Agreements, or any one of them, as terminated
for cause.
[] Texas Law will govern both the Sears Wishbook and Craftsman
Tools contracts with the following addition: Waiver of
Consumer Rights. The Parties agree that the provisions of the
Deceptive Trade Practice-Consumer Protection Act ("DTPA")
Section 17.41 et seq., Business & Commerce Code shall not
apply to this transaction. Without limiting the foregoing, in
the event that for any reason it is determined that the DTPA
does apply to this transaction, Ascendant Solutions waives its
rights under the DTPA, a law that gives consumers special
rights and protections. After consultation with its attorneys,
Ascendant Solutions voluntarily consents to this waiver.
Exclusive venue for all Disputed Matters shall only be in
Dallas County, Texas.
[] The existing service levels under the Sears Wishbook and
Craftsman Tools contracts are hereby replaced with the Service
Level Agreements attached to this document as Work Orders for
the Call Center functions, Fulfillment Center functions, and
the operating system functions for
-4-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Craftsman Tools system, the Wishbook, and Wishbook.com
systems. Ascendant Solutions warrants performance of the
Work Orders attached hereto and any subsequently executed by
the parties pursuant to the service level agreements attached
hereto.
[] Ascendant Solutions shall be excused from performance, and
shall have no liability, for any period and to the extent that
Ascendant Solutions is prevented, hindered or delayed from
performing the service levels as a result of acts, omissions
or events beyond the reasonable control of Ascendant Solutions
(including, without limitation, acts or omissions of Sears,
changes to the services required by Sears that make
performance impossible, third-party nonperformance, failure or
malfunction of computer or telecommunications hardware,
equipment or software that is outside the responsibility of
Ascendant Solutions, strikes or labor disputes, riots, war,
fire, acts of God or government regulations). Further, Sears
assumes all risks associated with material departures from its
internal forecasts to the extent such forecasts are not
accurate or timely. If Sears' internal forecasts are not
timely or ultimately prove to be materially inaccurate for any
given measurement period, then Ascendant Solutions shall be
relieved of compliance with the service levels for such
measurement period.
[] Any services other than those enumerated in the Work Orders
attached to this document to be performed by Ascendant
Solutions will be considered "Special Services". Sears agrees
to pay Ascendant Solutions its then-current time and materials
rate for Special Services. The time and materials rate
applicable to Special Services as of the Effective Date have
been attached as Schedule 1 hereto and shall be effective for
the term of this Agreement. No Services or Special Services
shall be performed unless a Work Order is signed by both
parties and includes a written estimate of the cost of such
services detailing the requirements and the measurement
standards.
[] Any transition, migration, conversion or related services
provided by Ascendant Solutions to Sears Wishbook or Craftsman
Tools will be provided on a time and material basis, at
Ascendant Solutions' standard rates.
[] Ascendant Solutions may assign the Call Center Services or
Fulfillment Center Services to be performed (or sell its Call
Center and/or Fulfillment Center) to a third-party Call Center
provider and/or third-party Fulfillment Center provider with
the prior written consent of Sears which shall not be
unreasonably withheld so long as the third-party Call Center
or Fulfillment Center provider performs the Call Center and/or
Fulfillment Center Services at the current location, with the
current (to the extent commercially reasonable) key employees
(including but not limited to team leaders), and using the
current systems to process the call orders and fulfillment
services.
[]CONFIDENTIALITY OF BUSINESS
A. "Confidential Business Information" means any information,
whether disclosed in oral, written, visual, electronic or
other form, which either party discloses or observes in
connection with Ascendant Solutions' performance of the
Services. Confidential Business Information includes, but
is not limited to, Work Product; either party's business
plans, strategies, forecasts and analyses; either party's
-5-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
financial information; either party's employee and vendor
information; either party's software (including all
documentation and code); hardware and system designs,
architectures and protocols; either party's product and
service specifications; SWB purchasing, logistics, sales,
marketing and other business processes.
B. Sears and Ascendant Solutions shall use Confidential
Business Information only as necessary to perform the
Services and their other obligations under the Agreements.
Sears and Ascendant Solutions shall restrict disclosure of
Confidential Business Information to their personnel who
have a need to know such information to perform the
Services. Ascendant Solutions shall require its authorized
agents and subcontractors who are assigned to a project to
execute a document stating agreement to the terms of this
section. Each party is liable for any unauthorized
disclosure or use of Confidential Business Information by
any of its respective personnel. Within ten (10) days after
receiving Sears' written request, Ascendant Solutions shall
destroy in such a manner that it cannot be retrieved or
return (as instructed by Sears) any materials containing
Confidential Business Information. Ascendant Solutions
shall certify to Sears that it has satisfied its obligations
under this section.
C. The obligations under this section do not apply to any
Confidential Business Information that either Sears or
Ascendant Solutions can demonstrate:
* is or becomes publicly available without breach of this
Agreement by each party respectively;
* is independently developed by the disclosing party
without use of any Confidential Business Information; or
* is received by either party from a third party that does
not have an obligation of confidentiality to the non-
disclosing party.
D. Either party may disclose Confidential Business Information
to the extent that, in the reasonable opinion of its legal
counsel, it is legally required to be disclosed. The
disclosing party shall notify the other party within a
reasonable time prior to disclosure and allow the non-
disclosing party a reasonable opportunity to seek
appropriate protective measures.
[]CONFIDENTIALITY OF PERSONAL INFORMATION
A. Ascendant Solutions agrees that all information about Sears'
individual customers provided by Sears or its customers to
Ascendant Solutions, including but not limited to names, addresses,
telephone numbers, account numbers, customer lists, and
demographic, financial and transaction information ("Confidential
Personal Information"), shall be deemed confidential.
-6-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
B. Ascendant Solutions shall use Confidential Personal
Information only as necessary to perform the Services and
its other obligations under the Agreements. Ascendant
Solutions shall not duplicate or incorporate the
Confidential Personal Information into its own records or
databases, except as necessary to provide Services.
Ascendant Solutions shall restrict disclosure of
Confidential Personal Information to its personnel who have
a need to know such information to perform the Services.
Ascendant Solutions shall require its authorized agents and
subcontractors who are assigned to a project to execute a
document stating they will abide by this section. Ascendant
Solutions is liable for any unauthorized disclosure or use
of Confidential Personal Information by any of its
personnel.
C. Ascendant Solutions shall not disclose the Confidential
Personal Information to any third party, including an
affiliate of Ascendant Solutions or a permitted
subcontractor, without prior written consent of Sears and
the written agreement of such third party to be bound by the
terms of this section. Unless otherwise prohibited by law,
Ascendant Solutions shall (i) immediately notify Sears of
any legal process served on Ascendant Solutions for the
purpose of obtaining Confidential Personal Information and
(ii) permit Sears adequate time to exercise its legal
options to prohibit or limit such disclosure.
D. Ascendant Solutions shall establish and maintain written
policies and procedures designed to ensure the
confidentiality of the Confidential Personal Information.
Copies of such policies and procedures shall be provided to
Sears upon our written request.
E. Within ten (10) days following termination of this Agreement
or ten (10) days following the completion of a project for
which the Confidential Personal Information has been
provided, whichever first occurs, Ascendant Solutions shall,
at Sears' discretion, (i) return the Confidential Personal
Information to Sears or (ii) certify in writing to Sears
that such Confidential Personal Information has been
destroyed in such a manner that it cannot be retrieved.
F. Ascendant Solutions shall notify Sears promptly upon the
discovery of the loss, unauthorized disclosure or
unauthorized use of the Confidential Personal Information
and shall indemnify Sears and hold Sears harmless for such
loss, unauthorized disclosure or unauthorized use, including
attorneys' fees.
G. Ascendant Solutions shall permit Sears to audit Ascendant
Solutions' compliance with the provisions of this section at
any time during Ascendant Solutions' regular business hours.
H. A material breach of this section shall be grounds for
immediate termination of this Agreement.
I. In addition to any other rights Sears may have under this
Agreement or in law, since unauthorized use or disclosure of the
Confidential Personal Information may result in immediate and
irreparable injury to Sears for which monetary damages may not be
adequate, in the event Ascendant Solutions or any officer,
director, employee, agent or
-7-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
subcontractor of Ascendant Solutions uses or discloses, or in
Sears' sole opinion, any such party is likely to use or
disclose the Confidential Personal Information in breach of
Ascendant Solutions' obligations under this Agreement, Sears
shall be entitled to equitable relief, including temporary and
permanent injunctive relief and specific performance. Sears
shall also be entitled to the recovery of any pecuniary gain
realized by Ascendant Solutions from the unauthorized use or
disclosure of the Confidential Personal Information.
J. The provisions of this section shall survive the termination
of this Agreement.
[]CUSTOMER LISTS
A. Sears' customer information shall be deemed Confidential
Information within the meaning of this Agreement; and
Ascendant Solutions:
(i) shall not make any list, compilation, or other
memorialization of any customer information, except as
is necessary to perform the Services;
(ii) shall not reproduce, release or in any way make
available or furnish, either directly or indirectly, to
any person, firm, corporation, association or
organization, at any time, any of the customer
information, except as required to fulfill its
obligations under the Agreements;
(iii) shall use the customer information only in the
manner expressly permitted in this Agreement;
(iv) shall at all times maintain the customer information
physically and electronically separate and distinct
from any lists or information unrelated to the
Agreements;
(v) shall not conduct any operations which will or could
cause any part or all of the customer information to be
incorporated into Ascendant Solutions' house files;
(vi) upon demand by Sears and/or termination of the
Agreements for any reason, shall immediately deliver to
Sears all copies, in whatever medium or format, of any
part or all of the customer information; and
(vii) Ascendant Solutions further agrees that all
papers, tapes, discs and other retention or storage
devices bearing customer information shall be and
remain the exclusive property of Sears.
[] Sears agrees that until July 1, 2003, it will refrain from
knowingly hiring, either as an employee or independent
contractor (to be distinguished from the engagement or
consulting firm employing same) for any Sears catalog or
Internet businesses, any exempt employee or independent
contractor of Ascendant Solutions who worked directly on the
Lynx platform or the
-8-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Sears relationship at any time prior to July 1, 2001 to work
in any of the businesses related to customer management,
customer relationship management and / order fulfillment.
[ ] Sears agrees to deliver to Ascendant Solutions a check, within
three (3) days after the execution hereof and receipt of an
invoice for that amount from Ascendant Solutions, representing
an amount equal to $216,000, which such amount represents
expenses of Ascendant Solutions incurred in connection with
the development of the Web site.
[ ] Sears understands and agrees that Ascendant Solutions has not
made any warranties concerning the Services except to the
extent expressly set out in this amendment.
-9-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
WORK ORDER
(Call Center Services)
to
Amendment
to the
Services Agreement
================================================================
Description of Project:
----------------------
In connection with the Tool Catalog, Ascendant Solutions shall
answer customer inquiries ("Contacts"), provide Services, and
customer service. Such activity shall include credit
journals/authorizations, processing of credit requests, back-order
and card cancellation handling; chargeback handling; resolving
complaint notifications, United Parcel Service tracking and
tracing, internal Sears customer service assistance, handling of
drop ship vendor issues, processing daily reporting, and processing
of checks and money orders. Ascendant Solutions will assign
Telemarketing Service Representatives ("TSR") to achieve the
required service levels for incoming work. TSRs will be responsible
for the following Services, without limitation: take catalog
orders through the System, answer Customer service questions, and
answer questions concerning Sears credit card. All Services will be
conducted in accordance with scripts and training materials
approved by Sears to Ascendant Solutions. Ascendant Solutions will
provide any settlement or fulfillment services for catalog
purchases or other purchases. Sears will install, maintain and pay
all fees connected with voice and data communication required in
the provision of Services.
Call Center Services:
--------------------
Ascendant Solutions shall perform the following Services:
a. Hire and train personnel and staff call centers as
necessary to achieve the Ascendant Solutions Standards;
b. Maintain all Sears provided computer equipment, computer
software (the Licensed Software) and related supplies necessary to
(i) input and process all information relating to Customer Orders
and (ii) transfer Customer Order information to Sears designated
individuals for fulfillment;
c. Maintain all telephone systems and related equipment
necessary to respond to Customer telephone calls and to service
Customers as provided in this Agreement through the use of voice
and data lines provided by IBM Global Services, transmit and
receive data through the Ascendant Solutions system, or such other
supplier or contractor approved by Sears in connection with the
performance of Services under this Agreement;
d. Develop, in conjunction with and with the consent of
Sears, all scripts and other creative materials necessary to enable
customer service representatives to engage in add-on product
selling, substitution suggesting and cross-selling services (the
"Telemarketing Functions") during calls from Customers to place
Customer Orders;
-1-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
e. Receive and respond to all telephone calls from Customers
placing Customer Orders, including but not limited to, (i) in-
putting all Customer, credit and Customer Order information into
the Licensed Software, (ii) review and follow up credit approval
and credit authorizations issues, and (iii) perform all
telemarketing Functions;
f. Perform customer service functions, including
(i) receiving and responding to all Customer telephone calls, mail
and electronic inquiries relating to Customer Order status, credits
due and other general service issues, (ii) promptly processing all
customer service inquiries, and (iii) investigating and resolving
chargeback and complaint notifications as required by Sears;
g. Maintain complete and accurate records of (i) all
telephone calls and electronic inquiries received by the call
center, regardless of whether such calls are answered or abandoned,
(ii) all Customer Orders received and the status of such Customer
Orders, and (iii) all Customer service inquiries received and the
status of such inquiries;
h. Continue to generate standard reports of all telephone
calls received by the call center, all Customer Orders received and
their status, and all Customer service inquiries received and their
status, as currently provided, but in no event on less than a
weekly basis, generate contact handling statistics used to measure
the Service Goal;
i. Use Sears owned equipment only to fulfill its obligations
under this Agreement and in accordance with the manufacturer's
instructions. Arrange for routine maintenance of Sears owned
equipment during the term of this Agreement at Sears' expense. Upon
termination of this Agreement make equipment available to Sears or
its designee in good condition and repair; Sears to pack, insure
and ship at their expense;
j. Order Taking - Includes customer data verifications,
i.e., name, address, charge card and media code. The order taking
process also includes add-on product selling, suggested
substitutions, and cross selling as functions;
k. Credit Approval and Settlement Processing through
authorized credit cards - Sears, Visa, MasterCard, Discover Card,
and American Express;
l. Customer Service Calls - Responding to calls and mail
inquires from customers regarding order status, credit due and
general service issues, processing all customer service inquiries;
m. Provide call allocation management to assure achievement
of performance standards;
n. Provide call prompter in call center to include prompts
for English;
o. Perform the following Customer Service and accounting
functions:
- Credit Journals/Authorization
- Processing of Credit Requests
- Backorder & Cancel Card Handling
- Handling of chargeback and complaint notifications
- Handle customer correspondence
- UPS tracking and tracing
- Internal Service customer service assistant
- Drop ship vendor issues
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
- Processing of checks/money orders
- Daily reporting
p. Call Center Services to include all phone answering,
order calls, customer service, telephone expense, and clerical
support associated with Call Center operations.
Training:
--------
Ascendant Solutions shall be responsible for all training of
Ascendant Solutions associates relating to customer support
functions, processes and procedures. Sears will assist Ascendant
Solutions in the development and implementation of training
programs as well as, any ongoing training required during the
course of the Agreement. An Ascendant Solutions trainer will
provide training to Ascendant Solutions associates at any Ascendant
Solutions designated operations facility.
Projections:
-----------
Ascendant Solutions will provide and schedule sufficient staff in
order to achieve the Performance Standards required based on the
Sears provided forecast of estimated number of projected Contacts
expected to receive Services.
Incentive Activities:
--------------------
TSR's shall offer make reasonable efforts to telephone Contacts
additional merchandise to customers based on the prompts for add-on
sales offers if, (1) the item being requested is out of stock and
an alternative similar item is available or, (2) the item being
requested has accessories or partner items, and (3) weekly specials
(which are not prompted by the system). TSR's shall offer these
items to customers up to two times during a telephone contact.
Ascendant Solutions will be paid an additional fee for add-ons, as
agreed between the parties. Add-on sales shall be reported to Sears
on a daily, weekly and monthly basis by Ascendant Solutions.
Hours of Operation:
------------------
TSR's will be scheduled to handle Contacts from 24 hours 7 days
during the duration.
Reports and Delivery Dates:
--------------------------
Every day that Services are provided, Ascendant Solutions, at no
charge to Sears, will continue to provide Sears with standard
reports containing the following information:
* Volume of calls offered
* Volume of calls handled
* Call abandonment rate
* Average call length
* Average speed of answer for calls
* Service Levels
-3-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Status Meetings:
---------------
Ascendant Solutions/Sears status meetings shall be held at least
monthly (via telephone conference or in person) to evaluate the
effectiveness of the Services, Sears System, and customer
satisfaction. Sears shall meet with suppliers to resolve open
issues.
Key Personnel:
-------------
Program Management - Ascendant Solutions will continue to provide
an associate to serve as program manager with primary
responsibility of overseeing and managing Ascendant Solutions
performance and required Services.
Third Party Software Requirements:
---------------------------------
The system is subject to software licensed by Ascendant Solutions
and the Sears/IBM data line connections and maintenance agreement.
Ascendant Solutions shall be directly responsible for notification
to Sears or IBM Global Services in the event of connectivity or
System malfunctions.
Workstations:
------------
Ascendant Solutions will continue to provide all equipment and
tools within the call center necessary to handle Contacts and
orders, including but not limited to telephones and workstations.
Communications Facilities:
-------------------------
Ascendant Solutions will facilitate all connectivity requirements
(e.g., T-1 telephone lines) to the Ascendant Solutions-designed
site from which Services are provided.
Remote Call Monitoring:
----------------------
Sears may monitor telephone calls between Ascendant Solutions
associates and Contacts, from a remote Sears location. Sears agrees
that it will comply with all applicable laws and regulations and
will perform all requirements in connection with call monitoring.
Location(s) where Services will be provided:
-------------------------------------------
Dallas
[Signature page to follow]
-4-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
SEARS ASCENDANT SOLUTIONS
----- -------------------
Sears, Roebuck and Company ASD Systems, Inc. d/b/a
Ascendant Solutions
By: /s/ Kristine K. Crow By: /s/ David E. Bowe
------------------------- ---------------------------
Name: Kristine K. Crow Name: David E. Bowe
----------------------- --------------------------
Title: Vice President Title: Chief Executive Officer
--------------------- ------------------------
Relationship Products
---------------------
and Retail Marketing
---------------------
-5-
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
<PAGE>
WORK ORDER
(Fulfillment Services)
to
Amendment
to the
Services Agreement
================================================================
Description of Project:
In connection with the Tools Catalog offerings Ascendant Solutions
shall respond to and fulfill orders from Ascendant Solutions
software system ("System"). Such activity shall include receiving
and responding to all product orders, processing and shipping all
customer orders, back-order, United Parcel Service tracking and
tracing, internal Sears customer service assistance, handling of
drop ship vendor issues. Ascendant Solutions will be responsible
for the following services: processing catalog orders through the
System and shipping all customer orders.
Fulfillment Services:
Ascendant Solutions shall perform the following Services:
a. Hire and train personnel and staff facilities as
necessary to achieve the Performance Standards;
b. Maintain access to all Ascendant Solutions managed
computer equipment, computer software (including the Licenses
Software) and related supplies necessary to (i) input and process
all information relating to Customer Orders and the (ii) warehoused
products required to fulfill Customer Orders;
c. Maintain all Ascendant Solutions managed communication
systems and related equipment necessary to fulfill orders provided
in this Agreement through the use of data lines provided by IBM
Global Services, or such other supplier approved by Sears in
connection with the performance of Services under this Agreement;
d. Receive, organize and process all electronic transfers of
Customer Orders transmitted from Ascendant Solutions through the
Licensed Software;
e. Ship Product in accordance with the Customer Orders
received from Ascendant Solutions through carriers designated by
Sears, and obtain and maintain receipts of pickup by such carriers;
f. If requested by Sears, arrange for the Products to be insured
while in the possession of a carrier;
-6-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
g. Promptly forward to Sears all necessary shipping
documents, including such documents detailing the billing and
agreed upon shipping and handling expenses;
h Trace any lost or delayed shipments, as requested;
i. Maintain complete and accurate records of Products
received from, or returned by Ascendant Solutions to, Sears'
suppliers, shipped to Customers pursuant to Customer Orders,
returned to Ascendant Solutions by Customers, and in inventory on a
daily basis;
j. Continue to generate standard reports to Products
received, shipped and in inventory, as reasonably requested by
Sears, but in no event on less than a weekly basis;
k. Conduct one physical inventory of Products annually, at a
time mutually agreed upon by the Parties (provided that Ascendant
Solutions shall not reasonably disagree with the time chosen by
Sears for conduction any such physical inventories);
l. Transmit via the data lines a report to Sears of such
inventory designated by item and stock-keeping unit number, which
such inventories shall be taken at Sears' direction in the presence
of one or more Sears representatives. In addition, Ascendant
solutions shall provide cycle counts in accordance with procedures
currently in place;
m. Provide inventory management services in accordance with
the Ascendant Solutions Performance Standards;
n. Receive at Ascendant Solutions' facilities Products
shipped by or on behalf of Sears, or by or on behalf of any
suppliers to Sears;
o. Provide inventory replenishment services;
p. Provide, to authorized Sears' representatives, on-line
access to Ascendant Solutions' inventory system(s);
q. Replenishment services include forecasting, order
placement, order punch up and systems updates on order status.
r. Inspect the Products for damage, note any damage on the
freight bill, and promptly notify Sears and the pertinent carrier
and supplier of any damage to any Product. Sears and the relevant
supplier will be responsible for filing notices of claims for any
overages/shortages and any transportation claims;
s. Secure any damaged or excess Product received for
disposition in accordance with Sears' instructions;
t. Provide Sears, on at least a weekly basis, with a report
of all damaged or otherwise non-saleable Products in Ascendant
Solutions' possession, including a specification of those Products
that can and cannot be shipped. Ascendant Solutions will promptly
review the report and direct Ascendant Solutions as to disposition
of such Products;
u. Promptly report to Sears receipt of Products and forward to
Sears any necessary documentation of such receipt by Ascendant
Solutions; and
-7-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
v. Continue to maintain for the entire Term of this Work
Order a warehouse at Ascendant Solutions' facilities to receive,
handle, ship, and protect the Products from damage, theft, or loss.
Training:
--------
Ascendant Solutions shall be responsible for all training of
Ascendant Solutions associates relating to fulfillment, shipping
processes and procedures, and customer support functions as
required.
Start Date:
----------
Continuing
Hours of Operation:
------------------
Ascendant Solutions will schedule Staff to Ship orders Monday
through Friday unless the Parties mutually agree otherwise in a
Change Authorization or new Work Order.
Reports and Delivery Dates:
--------------------------
Every day that Services are provided, Ascendant Solutions, at no
charge to Sears, will continue to provide Sears with standard
reports containing the following information:
* Volume of orders placed
* Volume of orders handled
* Volume of orders shipped
* Service Levels
Risk of Loss:
------------
Ascendant Solutions shall be responsible for the safe handling and
safekeeping of Products delivered to Ascendant Solutions. Ascendant
Solutions shall reimburse Sears for the acquisition and shipping
costs of any lost, stolen, and/or damaged products if the Products
are lost, stolen, and/or damaged while in Ascendant Solutions'
possession or under Ascendant Solutions' control.
Status Meetings:
---------------
Ascendant Solutions /Sears status meetings shall be held at least
monthly (via telephone conference or in person) to evaluate the
effectiveness of the Services, the Sears System, and customer
satisfaction. Sears shall meet with suppliers to resolve open
issues.
Key Personnel:
-------------
Program Management - Ascendant Solutions will designate an
associate to serve as program manager with primary responsibility
of overseeing and managing Ascendant Solutions performance and
required Services.
Third Party Software Requirements:
---------------------------------
The integrated order System is subject to software licenses, the
Sears/IBM data line connections and maintenance agreements.
Ascendant Solutions shall be directly responsible for notification
to Sears or IBM Global Services in the event of connectivity or
system malfunctions of the IBM data line connections.
-8-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Ownership of Property:
---------------------
a. Ascendant Solutions acknowledges that the Products
delivered to Ascendant Solutions, and all documents received and
created by Ascendant Solutions while performing Services under this
Agreement (including, but not limited to, orders, bills of lading,
invoices, correspondence, reports, files, and records), are the
property of Sears.
b. Ascendant Solutions agrees to execute a security
agreement, UCC-1 financing statements, and any other documents
deemed necessary by Sears to protect Sears ownership of the
Products, any proceeds thereof, and any documents evidencing
ownership of or any interest in said Products.
c. Ascendant Solutions shall keep the Products segregated
from any other property that may be stored at the same facility,
including any property of Ascendant Solutions. Ascendant Solutions
shall affix and maintain signs designating the Products as the
property of Sears in such a manner so as to be clearly visible to
any third parties inspecting Ascendant Solutions' premises.
d. Ascendant Solutions shall not sell, transfer, or remove
any Products from Ascendant Solutions' location(s) except to
Customers in the ordinary course of business or upon written
instruction from Sears. Ascendant Solutions shall not, voluntarily
or involuntarily, pledge, mortgage, lease, assign, convey, or
otherwise alienate any interest in any of the Products, or allow
any liens to be placed upon any of the Products.
Upon termination of this Agreement, Ascendant Solutions shall
return all of the Products to Sears or as Sears directs. If Sears
wishes to prepare the Products for shipment and removal from
Ascendant Solutions' premises, then Sears shall have the right to
peaceably enter Ascendant Solutions' location(s) during normal
business hours to prepare and remove the Products.
Ascendant Solutions agrees that all scripts, computer tapes, ideas,
and other creative works prepared or performed by Ascendant
Solutions for Sears pursuant to this Agreement, and which come
within the definition of "Work Made for Hire" in Section 101 of
Title 17, U.S. Code, is to be considered a Work Made for Hire. If
any such work does not come within the definition of "Work Made for
Hire" in Section 101 of Title 17, U.S. Code, Ascendant Solutions
agrees to assign in writing to Sears all of Ascendant Solutions'
right, title, and interest in and to the copyrights for such work.
Ascendant Solutions further agrees to execute any instruments that
Sears considers necessary to release, assign, and transfer any
copyright, other right, title, or interest Ascendant Solutions may
have in any such work to Sears without the payment of further
consideration to Ascendant Solutions.
Sears agrees that all computer software used by Ascendant Solutions
in connection with this Agreement is and shall remain the
confidential property of Ascendant Solutions. Any software
developed and paid for by Sears shall be deemed Sears' property and
within the scope of the preceding subsection. All data pertaining
to the Products and the Services performed hereunder shall be
deemed the property of Sears.
Ascendant Solutions acknowledges and agrees that no right, title or
interest shall be acquired in the name, service marks, or
trademarks of Sears or any of its affiliates, and that upon
termination of this Agreement, all use of the same by Ascendant
Solutions shall cease, except as may be otherwise expressly
authorized in writing by Sears.
-9-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Workstations:
------------
Ascendant Solutions will continue to provide all equipment and
tools necessary to handle orders.
Communications Facilities:
-------------------------
Ascendant Solutions will facilitate all connectivity requirements
(e.g., Data lines) to the Ascendant Solutions -designated sites
from which Services are provided.
Location(s) where Services will be provided:
-------------------------------------------
Dallas, Texas.
[Signature Page Follows]
-10-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
SEARS ASCENDANT SOLUTIONS
----- -------------------
Sears, Roebuck and Company ASD Systems, Inc. d/b/a
Ascendant Solutions
By: /s/ Kristine K. Crow By: /s/ David E. Bowe
---------------------- ----------------------------
Name: Kristine K. Crow Name: David E. Bowe
---------------------- ---------------------------
Title: Vice President Title: Chief Executive Officer
--------------------- --------------------------
Relationship Products
---------------------
and Retail Marketing
---------------------
-11-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
WORK ORDER
(Systems Services - Tools)
to
Amendment
to the
Services Agreement
===================================================================
Description of Project:
----------------------
In connection with the Sears catalog offerings Ascendant Solutions
shall process and manage Sears Power and Hand Tools catalog from
the integrated order system ("System"). Such activity shall include
but not be limited to, receiving and responding to all product
orders, processing and shipping all customer orders, pending back-
order, complaint notifications, United Parcel Service tracking and
tracing, internal Sears customer service assistance, handling of
drop ship vendor issues. Ascendant Solutions will be responsible
for the following Services, without limitation: processing catalog
orders by accessing the System, answer Customer service questions.
Sears will install, maintain and pay all fees connected with data
communications required in the provision of Services.
Systems Services (Tools):
------------------------
Ascendant Solutions shall perform the following Services:
a. Hire and train personnel and staff facilities as
necessary to achieve the Performance Standards;
b. Install the fully tested operational Licensed Software
System and operate hardware that will achieve the Performance
Standards. Provide systems and programmer support to achieve
Project requirements. Obtain and maintain access to all computer
equipment, computer software and related supplies necessary to
(i) input and process all information relating to the System and
the (ii) warehoused products required to fulfill Customer Orders;
c. Maintain all communication systems and related equipment
necessary to maintain the System as provided in this Agreement
though the use of Voice and Data Lines provided by Ascendant
Solutions and through IBM Global Services, or such other supplier
approved by Sears in connection with the performance of Services
under this Agreement;
d. Maintain all communication systems that establish
warehousing and fulfillment service functions, including but not
limited to the ability to (i) receive and respond to all product
orders, mail and electronic inquiries relating to Customer Order
status, and other general service issues, (ii) process and ship
customer orders, and (iii) investigate and resolve shipping
inquiries and complaint notifications as required by SWB;
-12-
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
<PAGE>
e. Maintain complete and accurate records of (i) all orders,
fulfillment schedules, and other inquires received, (ii) all
Customer Orders received and the status of such Customer Orders,
and (iii) all Customer service inquiries received and the status of
such inquiries;
f. Receive and communicate fulfillment orders for direct
shipment of Product by Vendors/Suppliers on behalf of Sears;
g. Verify direct Vendor/Supplier shipped orders and quantity
of Product received reconciles with the quantity indicated on the
bill of lading or other shipping document(s), and promptly notify
Sears and the pertinent carrier and supplier of any shortages or
overages of any Products, and match receiving quantities to
purchase orders;
h. Track data and develop reports for Product for damage;
i. Track data for damaged or excess Product;
j. Provide Sears, on at least a weekly basis, with a report
of all damaged or otherwise non-saleable Products in Ascendant
Solutions' possession, including a specification of those Products
that can and cannot be shipped. Sears will promptly review the
report and direct Ascendant Solutions as to disposition of such
Products;
k. Promptly report to Sears receipt of the Products and
forward to Sears any necessary documentation of such receipt by
Ascendant Solutions;
l. Provide catalog order processing from order entry through
fulfillment interfaces and Drop Shippers, including but not limited
to processing credit authorization and settlement, inventory
management, forecasting, transaction history, sales tax reporting,
sales reporting interfaces and exception handling;
m. Obtain and maintain all computer equipment, computer
software and related supplies necessary to (i) receive electronic
transfers of Customer Orders and Licensed Software and
(ii) organize, process and fulfill such Customer Orders on a timely
basis;
n. Receive, organize, and process all electronic transfers
of Customer Orders transmitted through the System;
o. Provide a weekly service level report which assesses
performance during the previous calendar week and month against the
service level objectives;
p. Promptly investigating and correcting failures to meet
the service level objectives by: (a) initiating problem
investigations to identify root causes of failures; (b) promptly
reporting problems to Sears that reasonably could be expected to
have a material adverse effect on catalog; (c) making written
recommendations to Sears for improvement in procedures; and (d)
attempting to identify root causes, correct problems and minimize
recurrences of missed service level objectives for which Ascendant
Solutions is responsible;
q. Promptly forward to Sears all necessary shipping
documents, including such documents detailing;
-13-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
r. Provide inventory management reports and transmit via the
data lines a report to Sears of such inventory, designated by item
and stock-keeping unit number;
s. Maintain complete and accurate records of shipped
Products received from, or returned by Sears' direct
Vendors/Suppliers, shipped to Customers pursuant to Customer
Orders, or returned by Customers;
t. Provide daily and monthly accounting and operational
reports from the Licensed Software, generate periodic reports of
Product orders received and shipped in the fulfillment services
inventory in accordance with the Sears Standards;
u. Provide Sears with copies of the Ascendant Solutions
Quality Control Reports based on the Service Level Performance
Standards.
Training:
--------
Ascendant Solutions shall be responsible for all training of
Ascendant Solutions associates relating to System support functions
in addition to order and fulfillment shipping reports and
procedures.
Start Date:
----------
Continuing
Hours of Operation:
------------------
Ascendant Solutions will schedule Staff to support the Systems
operation and maintenance twenty-four hours, seven days a week,
unless the Parties mutually agree otherwise in a Change
Authorization or new Work Order.
Reports and Delivery Dates:
--------------------------
Every day that Services are provided, Ascendant Solutions, at no
charge to Sears, will provide Sears with existing reports
transmitted to RMDS.
Status Meetings:
---------------
Ascendant Solutions/Sears status meetings shall be held at least
monthly (via telephone conference or in person) to evaluate the
effectiveness of the Services, the Sears System, and customer
satisfaction. Sears shall meet with suppliers to resolve open
issues.
Key Personnel:
-------------
Program Management - Ascendant Solutions will continue to provide
an associate to serve as program manager with primary
responsibility of overseeing and managing Ascendant Solutions
performance and required Services.
Ascendant Solutions:
The System is subject to the fully paid Ascendant Solutions
software licenses and the Sears/IBM data line connections and
maintenance agreements. Ascendant Solutions shall provide access to
the System for purpose
-14-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
of providing Services through the Software Licenses. Ascendant
Solutions shall be directly responsible for notification to Sears
or IBM Global Services in the event of connectivity or System
malfunctions.
Workstations:
------------
Ascendant Solutions will provide all equipment and tools required
by Ascendant Solutions personnel.
Communications Facilities:
-------------------------
Ascendant Solutions will facilitate all connectivity requirements
(e.g., Data lines) to the Ascendant Solutions -designated site from
which Services are provided.
Remote Monitoring:
-----------------
Sears may monitor data transmissions between Ascendant Solutions
and Ascendant Solutions, from a remote Sears location. Sears agrees
that it will comply with all applicable laws and regulations and
will perform all requirements in connection with call monitoring.
Location(s) where Services will be provided:
-------------------------------------------
Dallas, Texas
[Signature page to follow]
-15-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
This Project is subject to all the terms and conditions set forth
in the Service Agreement between the Parties effective as of
September 7, 2000.
SEARS ASCENDANT SOLUTIONS
----- -------------------
Sears, Roebuck and Company ASD Systems, Inc. d/b/a
Ascendant Solutions
By: /s/ Kristine K. Crow By: /s/ David E. Bowe
---------------------- ----------------------------
Name: Kristine K. Crow Name: David E. Bowe
----------------------- ---------------------------
Title: Vice President Title: Chief Executive Officer
---------------------- ---------------------------
Relationship Products
----------------------
and Retail Marketing
----------------------
-16-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
WORK ORDER
(Systems Services - Wishbook) and Wishbook.com
to
Amendment
to the Services Agreement
================================================================
Description of Project:
In connection with the Wishbook Catalog offerings Ascendant
Solutions shall process and manage Wishbook Catalog and Internet
transactions from the Lynx integrated order system ("System").
Such systems capabilities will include but not limited to catalog
order processing from order entry through order fulfillment with
both DART and Drop Shippers; including credit card authorization
and settlement, inventory management, transaction history, sale tax
reporting, daily and monthly accounting and operational reporting,
systems and application support to achieve service level
agreements, processing all customer orders, pending back-orders,
United Parcel Service tracking and tracing, internal SWB customer
service assistance, handling of drop ship vendor issues. Ascendant
Solutions will be responsible for the following Services, without
limitation: processing catalog orders by accessing the System,
answering Customer service questions, and providing Internet
navigation information. SWB will install, maintain, and pay all
fees connected with data communications required in the provision
of Services.
Systems Services (Wishbook) and Wishbook.com:
Ascendant Solutions shall perform the following services:
(a) Hire and train personnel and staff facilities as
necessary to achieve the Performance Standards;
(b) Install the fully tested operational Licensed
Software and System and operate hardware that will achieve the
Performance Standards. Provide systems and programmer support
to achieve Project requirements. Obtain and maintain access
to all computer equipment and computer software; (including
the licensed software and the UPP software) and related
supplies necessary to (i) input and process all information
relating to integrated customer order system and the (ii)
warehoused products required to fulfill customer orders;
(c) Maintain all communication systems and related
equipment necessary to maintain the System as provided in this
Agreement through the use of AT&T ISP voice and data lines and
the SWB IBM Global Services, or such other supplier approved
by SWB in connection with the performance of Services under
this Agreement;
(d) Maintain all communication systems that establish
warehousing and fulfillment service functions, including but
not limited to the ability to (i) receive and respond to all
product orders, mail and electronic inquiries relating to
Customer Order status, and other general service
-17-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
issues, (ii) process and ship customer orders, and
(iii) investigate and resolve shipping inquiries and complaint
notifications as required by SWB;
(e) Maintain complete and accurate records of (i) all
orders, fulfillment schedules, and other inquires received,
(ii) all Customer Orders received and the status of such
Customer Orders, and (iii) all Customer service inquiries
received and the status of such inquiries;
(f) Receive and communicate fulfillment orders for
direct shipment of Product by Vendors/Suppliers on behalf of
SWB;
(g) Track data for damaged or excess Product;
(h) Via transmission from the UPP Software to the
Licensed Software, promptly report to SWB receipt of the
Products and forward to SWB any necessary documentation of
such receipt by ASD;
(i) Host and support Wishbook.com;
* Wishbook.com Functionality (as of 9/13)
* Provide customer registration and check-
out processes
* Process customer orders and integrate
backend customer fulfillment
* Maintain search by category function
* Provide customer ability to check order
status online
* Create and maintain wish lists data base
* Email order related information to
customer
* Maintain active links between website
pages, and to and from sears.com
* Maintain item inventory availability and
pricing information
* Provide catalog request and order by item
capability
* Maintain sears online security standards
* Maintain wishbook.com item databases and
images as required
(j) Provide catalog and Wishbook.com order processing
from order entry through fulfillment interfaces with the
designated Telemarketers, Fulfillment Services and Drop
Shippers, including but not limited to processing credit
authorization and settlement, inventory management,
forecasting, transaction history, sales tax reporting, sales
reporting interfaces and exception handling;
(k) Obtain and maintain all computer equipment, computer
software (including the UPP Software link) and related
supplies necessary to (i) receive electronic transfers of
Customer Orders from SWB telemarketers through the data lines
and Licensed Software and (ii) organize, process and fulfill
such Customer Orders on a timely basis;
(l) Receive, organize, and process all electronic
transfers of Customer Orders transmitted through the System
from SWB's telemarketers to SWB's fulfillment services;
(m) Provide a weekly Service Level Report which assesses our
performance during the previous calendar week and month against the
service level objectives;
-18-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
(n) Promptly investigating and correcting failures to
meet the service level objectives by: (a) initiating problem
investigations to identify root causes of failures; (b)
promptly reporting problems to SWB that reasonably could be
expected to have a material adverse effect on the catalog
and/or Wishbook.com; (c) making written recommendations to
Sears for improvement in procedures; and (d) attempting to
identify root causes, correct problems and minimize
recurrences of missed service level objectives for which
Ascendant Solutions is responsible;
(o) Promptly forward to SWB all shipping documents,
including such documents detailing billing;
(p) Provide inventory management reports and transmit
via the Data Lines a report to SWB of such inventory,
designated by item and stock-keeping unit number;
(q) Maintain complete and accurate records of shipped
Products received from, or returned by SWB's direct
Vendors/Suppliers, shipped to Customers pursuant to Customer
Orders, or returned by Customers;
(r) Continue to provide daily and monthly accounting and
operational reports via transmission from the UPP Software to
the Licensed Software, generate periodic reports of Product
orders received, shipped and in the fulfillment services
inventory in accordance with the SWB Standards;
(s) Provide SWB with copies of the Ascendant Solutions
Quality Control Reports based on the Service Level Performance
Standards.
Training:
--------
Ascendant Solutions shall be responsible for all training of
Ascendant Solutions associates relating to System support functions
in addition to order and fulfillment shipping reports and
procedures. Ascendant Solutions shall train, certain designated
Sears personnel with the intent that said personnel can train other
Sears personnel specifically related to the System, as required by
SWB's designated Telemarketers and Fulfillment Service Providers in
the performance of their duties under any third party agreements
with SWB.
Start Date:
----------
Continuing.
Hours of Operation:
------------------
Ascendant Solutions will schedule Staff to support the Systems
operation and maintenance twenty-four hours, seven days a week,
unless the Parties mutually agree otherwise in a Change
Authorization or new Work Order.
Reports and Delivery Dates:
--------------------------
Every day that Services are provided, Ascendant Solutions, at no
charge to SWB, will provide SWB with standard reports currently
transmitted to RMDS.
-19-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Status Meetings:
---------------
Ascendant Solutions/SWB status meetings shall be held at least
monthly (via telephone conference or in person) to evaluate the
effectiveness of the Services, the SWB System, and customer
satisfaction. SWB shall meet with suppliers to resolve open
issues.
Key Personnel:
-------------
Program Management - Ascendant Solutions will continue to provide
an associate to serve as program manager with primary
responsibility of overseeing and managing Ascendant Solutions
performance and required Services.
Third Party Software Requirements:
---------------------------------
The System operation is subject to fully paid Ascendant Solutions
software licenses, the Sears/IBM data line connections and
maintenance agreement, and the Ascendant Solutions ISP agreement.
Ascendant Solutions shall provide access to the System for purpose
of providing Services through the Software Licenses as well as the
Dart UPP software integration. Ascendant Solutions shall be
directly responsible for notification to SWB or IBM Global Services
in the event of connectivity or System malfunctions.
Communication Facilities:
------------------------
Ascendant Solutions will facilitate all connectivity requirements
(e.g., Data lines) to the Ascendant Solutions-designated site from
which Services are provided.
Location(s) where Services will be provided:
-------------------------------------------
Services shall be performed in the following locations:
Ascendant Solutions Dallas, DART (Chicago, IL), ACS (Gray, TN and
Ashville, NC).
[Signature Page Follows]
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
SEARS ASCENDANT SOLUTIONS
----- -------------------
Sears Wishbook, Inc. ASD Systems, Inc. d/b/a
Ascendant Solutions
By: /s/David H. Shepherd By: /s/David E. Bowe
-------------------- ---------------------------
Name: David H. Shepherd Name: David E. Bowe
------------------- --------------------------
Title: President and CEO Title: Chief Executive Officer
------------------- ------------------------
Sears Wishbook, Inc.
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<PAGE>
CONFIDENTIAL TREATMENT
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(*) Confidential Material Redacted and
Filed Separately with the Commission
WORK ORDER
to
Amendment
to Define Transition Services
=============================================================
"Transition Services" shall be defined to mean the following:
* Equipment and property preparation and shipping
* Data related to:
Customers
Order status
Inventory availability
Billing
Miscellaneous
Electronic Files
Downloads
Hard copies
Shipping
Technical Assistance
Physical inventory
On-hand inventory (physical inventory vs. computer inventory)
Financial Records
Sales tax
Accounting
Billing
Inventory
Misc
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Transition Assistance
Access to facilities
Third party interfaces
Technical support
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Service Level Agreements
Amendment
to the
Services Agreement
================================================================
Service Level Agreements
Call Center Services:
--------------------
Sears shall advise Ascendant Solutions monthly, in good faith, of
the number of contacts that Ascendant Solutions should expect to
receive for each day during the month (the "Forecasts"). Forecasts
shall include information concerning (i) anticipated volume of
orders, (ii) product shipments, (iii) customer service or other
calls, (iv) any material promotions, (v) timing of catalog drops,
and (vi) such other information reasonably agreed to between the
parties. At least fourteen (14) days prior to any day contained in
the Forecasts, Sears has the ability to provide Ascendant Solutions
with a finalized forecast, which may not thereafter be changed (the
"Locked-in Forecasts"). If the Locked-in Forecasts are not timely
provided to Ascendant Solutions, the Forecasts shall govern.
Further, if Forecasts are not timely provided to ascendant
Solutions, the Locked-in Forecasts (or the Forecasts, as
applicable) last provided to Ascendant Solutions shall govern.
Notwithstanding the foregoing, Sears may adjust the Locked-in
Forecasts by up to ten percent (10%) up to seventy-two (72) hours
prior to any day by written notice to Ascendant Solutions.
Performance Standard Applicability Method of Measurement
2% Abandon Rate - Tools Reported Daily: Ascendant
Percentage of Solutions Scorecard based
inbound Customer on ACD Call Report
disconnects after
waiting in twenty This Performance Standard
second hold queue. will be measured over a
calendar week (herein the
"Measurement Period")
------------------
Abandon Rate is calculated
by percentage of inbound
Customer disconnects after
waiting in twenty second
hold queue divided by the
total number of calls
received, excluding any day
in which an Impact Event
(as defined below) occurs.
Operation is 7X24
Service Level Calls Tools Reported Daily:
answered - 90% of Statistics Report based
calls answered
within 20
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
on ACD Call Report.
This Performance
seconds. 90 percent Standard will be measured
of Telephone over a calendar week
Contacts to a TSR (herein the "Measurement
within twenty (20) Period"). -----------
seconds after a call ------
is first answered.
Service level is
reported to SWB using
Ascendant Solutions' ACD
report.
Service level is calculated
by taking all calls
answered by a TSR within
twenty (20) seconds of
being received by Ascendant
Solutions' ACD divided by
the total number of calls
answered during the
Measurement Period,
excluding calls answered
during days in which an
Impact Event (as defined
below) occurs.
Operation is 7X24
Impact Event Tools Events subject to Force
Majeure.
Total daily Contacts
greater than ten percent
of the Locked-In
Forecasts for such day.
Default Tools Continual failure To meet 95% of
performance standards with no plan
for or progress towards correction,
SWB shall have the right to terminate
this agreement for cause.
Fulfillment Center Services
Performance Standard Applicability Method of Measurement
97% Orders Shipped in Tools Reported Weekly:
24 Hours and 100% Statistics Report based on
Orders Shipped in 48 Ascendant Solutions Scorecard
Hours - Percentage of Report
Customer orders
received and shipped This Performance Standard
within x hours of order will be measured over a
receipt. calendar week (herein the
"Measurement Period")
-------------------
Orders to Shipping in x
Hours is calculated by orders
shipped within x hours of
receipt divided by credit
approved orders received.
Order Available to Ship
excludes
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
pending credit, back order,
and pending money orders
currently reported on
Ascendant Solutions Scorecard
Report and daily shipping
exception reports.
Shipping Days are defined
as Monday-Friday excluding
Thanksgiving Day, Christmas
Day and New Years Day. I.e.
Order received on Friday at
1:00 p.m. must ship by 1:00
p.m. Monday to meet the
performance standard as
defined.
Pick & Pack Accuracy - Tools Reported Weekly: Pick &
99% Order Picking Pack Accuracy will be added to
Accuracy. Ascendant Solutions Scorecard
Report.
This Performance Standard
will be measured over a
calendar week (herein the
"Measurement Period").
------------------
Pick & Pack Accuracy is
calculated based on the number
of missing or incorrect items
shipped (reported to Call
Center or indicated as Return
reason) divided by the total
number of items shipped.
Receiving: Dock to Tools Reported Weekly:
Stock - 99% of products Receiving - Dock to Stock will
received, inspected and be added to Ascendant
put away within 24 Solutions Scorecard Report
hours.
This Performance Standard
100% within 48 hours will be measured over a
calendar week (herein the
"Measurement Period").
------------------
Receiving: Dock to Stock
is calculated based on
Receiving Time Stamp
indicating items received and
Put Away Time Stamp indicating
items stored in bulk storage
or pick lanes as appropriate
and available for sale.
Processing Days are
defined as Monday-Friday.
Products received Friday may
be processed Monday.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Tools Reported Weekly: Returns
will be added to Ascendant
Solutions Scorecard Report
Returns - 99% of
products received, This Performance Standard
inspected, Customer will be measured over a
adjustment processed, calendar week (herein the
and resalable items not "Measurement Period").
requiring special ------------------
handling restocked in
48 hours of receipt. Returns percentage is
calculated based on the
100% restocked in 72 number of Returns processed
hours within 48 hours divided by the
number Returns received within
48 hours.
Processing Days are
defined as Monday-Friday.
Returns received Friday may be
processed Monday/Tuesday.
Replenishment - Tools Reported Daily:
Maintain a 92% Initial Replenishment will be added to
Fill Rate and 7 Annual Ascendant Solutions Scorecard
Inventory Turns. Report
This Performance Standard
will be measured over a
calendar week (herein the
"Measurement Period").
------------------
Initial Fill Rate is
calculated using Initial
Orders Filled divided by Total
Orders
as reported on the Gross
Sales Summary daily.
Annual Inventory Turns is
calculated using rolling
prior twelve (12) month period
to calculate an annual run
rate.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Default Tools Continual failure To
meet 95% of performance standards
with no plan for or progress towards
correction, SWB shall have the right
to terminate this agreement for
cause.
Systems Services
Credit Authorization - Tools Reported Weekly: Credit
99% of Orders received Authorization will be added
submitted to Sears for Wishbook to Ascendant Solutions
credit authorization Scorecard Report
within 24 hours.
This Performance Standard
100% submitted to Sears will be measured over a
for credit calendar week (herein the
authorization within 48 "Measurement Period").
hours. -------------------
Credit Authorizations will
be calculated by dividing
requests available to
process by requests
received.
Processing Days are defined
as Monday-Sunday.
Authorized Orders to Tools Reported Weekly: Drop
Drop Ship Vendor(s) Ship Orders will be added to
Daily - 99% of Orders Wishbook Ascendant Solutions Scorecard
credit authorized by Report
Sears to Drop Ship
Vendor(s) within 24 This Performance Standard
hours. will be measured over a
calendar week (herein the
100% of Orders credit "Measurement Period").
authorized by Sears to ------------------
Drop Ship Vendor(s)
within 48 hours Orders to Drop Ship
Vendors will be calculated by
dividing Drop Shop Authorized
Orders processed by Total Drop
Ship Authorized Orders.
Processing Days are
defined as Monday-Sunday.
Shipped Orders Settled Tools Reported Weekly: Settled
Daily - 99% of Orders Orders will be added to
shipped settled within Wishbook Ascendant Solutions Scorecard
24 hours. Report
100% of Orders shipped This Performance Standard
settled within 48 hours will be measured over a
calendar week (herein the
"Measurement Period").
------------------
Percent Settled Orders
will be calculated by dividing
number of Orders
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
-28-
settled by Total Orders
shipped.
Processing Days are
defined as Monday-Sunday.
Return Credits to Tools Reported Weekly: Return
Customers - 99% of Credits Processed will be
Return Credits Wishbook added to Ascendant Solutions
processed within 24 Scorecard Report
hours.
This Performance Standard
100% of Return Credits will be measured over a
processed within 48 calendar week (herein the
hours "Measurement Period").
------------------
Percent Returns Processed
will be calculated by dividing
Returns Processed by Total
Returns received.
Processing Days are
defined as Monday-Friday.
Returns received Friday may be
processed Monday.
Reports Processed Daily Tools Reported Weekly: Reports
- Reports Correct and Processed Daily is currently
Available by 8:00 a.m. Wishbook reported on the Ascendant
CST via Ascendant Solutions Scorecard Report
Solutions Website.
This Performance Standard
Reports processed daily will be measured over a
and files provided to calendar week (herein the
Sears RMDS by 8:00 a.m. "Measurement Period").
CST. ------------------
Percent Reports Processed
Daily will be calculated by
dividing Reports Processed by
correctly and available by
8:00 a.m. CST by Total Reports
produced.
Processing Days are
defined as Monday-Sunday.
Default Tools/Wishbook Continual failure To
meet 95% of performance standards
with no plan for or progress towards
correction, SWB shall have the right
to terminate this agreement for
cause.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
TABLE
-----
WISHBOOK.COM STANDARDS OF MEASUREMENTS
--------------------------------------
Performance Area Standard How To Measure
------------- ------ ------------
Wishbook.com System 99.5% Available Hours
Availability divided by (total
hours less Excused
Downtime)
System availability
from Ascendant
Solutions Router
where AT&T circuit
terminates to
wishbook.com servers
(includes system,
internal network,
forwall)
Availability of 98% Integration to back-
Wishbook application end system
components
Web orders balanced 98% daily All order posted -
by day to Gross Sales 100% over time same day
Summary report All orders posted
within time
Average page download time TBD* Keynote Consumer 40
(dial up and T1)
Successful page retrievals TBD* Keynote Consumer 40
(dial up and T1)
* Mutually agreeable standard between the parties based on the work
still to be completed by Navigator to maximize the performance of
the current configuration, and any written agreement between the
parties to take necessary steps to reduce or improve load times and
page retrievals.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
TABLE
-----
continued
---------
SERVICE LEVEL OBJECTIVES PERFORMANCE STANDARDS
Help Desk Service Levels Measurement
Service Level failures shall
require a written plan
satisfactory to SWB that
details ASD steps to ensure
future compliance.
Service Level - no more than
four per month.
* Availability - number of
occurrences over five minutes
(following initiation of the
first call attempt) to reach
a live person Service Level - no more than
one per month.
* Notification - number of
occurrences over 15 minutes
to notify the designated ASD
System Support Engineer, via
telephone (or hearing a
message if no answer) and/or Service Level is no more than
pager, following receipt and three occurrences per month.
logging of a system problem
report
* Initial Contact with Problem
Originator Number of
occurrences over one hour for
designated System Support
Engineer to contact the Service Level - shall be no
originator or if the more than one occurrence per
originator is not a Customer month.
employee, the engineer will
begin calling and/or paging
the SWB listed contacts until
a Customer employee is
reached and apprised of the
problem.
* Time Before Escalation -
Number of occurrences over
two hours for System Support
Engineer to escalate
unresolved problems to the
appropriate technical support
group and/or
hardware/software
manufacturer technical
support.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
SERVICE LEVEL OBJECTIVES AND PERFORMANCE STANDARDS DEFINITIONS
--------------------------------------------------------------
Term Definition
---- ----------
Availability The percentage of time measured
as follows:
Availability %= (scheduled time-
unexcused downtime)
100/scheduled time
Unit of measure is minutes
Excused Downtime Of the scheduled minutes, the
aggregate number of minutes in
any month during which service
is unavailable due to any
applicable scheduled outages
Schedule Time The total number of minutes
over which a Service Level
Objective is measured (e.g.
440,640 minutes in a 31 day
month). Scheduled time is
calculated on a 60x24x7x365(6)
basis.
Scheduled Outage Of the scheduled minutes, the
aggregate number of minutes in
any month during which the
system is scheduled to be
unavailable due to such things
as emergency maintenance,
emergency upgrades, etc.
Scheduled outages are mutually
agreed upon.
Unexcused Downtime The time that the system is
unavailable during the
scheduled hours that is not
excused downtime.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Time Rates for Special Services
as of September 8, 2000
Service description Standard Rate
Call Center Agent (*)[XXXXX]/hour
Data Admin. (*)[XXXXX]/hour
Warehouse Labor (*)[XXXXX]/hour
Network Engineer (*)[XXXXX]/hour
Application Developer (*)[XXXXX]/hour
Senior Application Developer (*)[XXXXX]/hour
Systems Architect (*)[XXXXX]/hour
Implementation/Project Manager (*)[XXXXX]/hour
Additional Time and Materials Charges:
1. Time and Materials Rates for Travel Expenses: Sears
will pay Ascendant Solutions for all reasonable travel, lodging and
subsistence expenses incurred by Ascendant Solutions' personnel
while traveling pursuant to the Agreements or this Amendment
provided they adhere to Sears' travel policy. Sears is responsible
for all travel, lodging and subsistence expenses of Sears' own
employees.
2. Reasonable Travel Time: Reasonable travel time
incurred by Ascendant Solutions personnel pursuant to this
Agreement to and from Sears' work site will be invoiced at such
person's standard hourly rate.
3. Time and Materials Rates for Out-Of-Pocket Expenses:
Sears will reimburse Ascendant Solutions for all expenses
reasonably incurred for tapes, fax, forms and similar supplies,
telephone, freight, and photocopies, together with any expenses
incurred for special handing or Special Services requested by
Sears.
Special Services include, but are not limited to:
Creation of client specific documentation
Application modifications and/or enhancements (new
features/functions)
Software development
Configuration changes (setup and testing of existing
features/functions not currently in use).
-33-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Network changes (Call Center moves, configuration and
implementation of new e-commerce servers).
Custom report development & generation
Physical inventory other than contractual annual inventory
Technology/Solutions evaluations, such as, evaluating and
recommending a wishbook.com fail-over proposal.
Project Management
Migration Services
Product/Technology research
-34-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
ATTACHMENT B
"Agreements" as used in the letter from Kristine K. Crow to David
E. Bowe dated September 14, 2000, means the following:
1. Agreement between Sears, Roebuck and Company ("Sears Roebuck")
and Ascendant Solutions dated January 4, 1995, and subsequently
amended on June 11, 1998, and April 9, 1999, including all exhibits
thereto;
2. Software License Agreement between Sears, Roebuck and
Ascendant Solutions last dated October 10, 1995;
3. Security Agreement between Sears, Roebuck and Ascendant
Solutions executed contemporaneously with the agreement identified
in paragraph 1 of this attachment;
4. The course of conduct between the parties to the agreements
identified in paragraphs 1 through 3 hereof;
5. Agreements between Sears Wishbook, Inc. ("SWB") and Ascendant
Solutions dated August 16, 1996, and subsequently amended
September 15, 1997, December 14, 1998, and July 2, 1999, including
all Exhibits thereto;
6. The course of conduct between the parties to the agreements
identified in paragraph above.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
THREE-PARTY ESCROW AGREEMENT
BETWEEN
ASD SYSTEMS, INC., d/b/a ASCENDANT SLOUTIONS, PRODUCER,
FORT KNOX,
SEARS, ROEBUCK AND COMPANY, AND SEARS WISHBOOK, INC., LICENSEE
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Software Escrow Agreement
This Escrow Agreement ("Agreement") is made as of September
15, 2000, by and between ASD Systems, Inc., d/b/a Ascendant
Solutions, Inc. ("Producer"), Fort Knox Escrow Services, Inc.
("Fort Knox") and Sears, Roebuck and Company and Sears Wishbook,
Inc. (Licensee").
Preliminary Statement. Producer intends to deliver to Fort
Knox a sealed package containing magnetic tapes, disks, disk packs,
or other forms of media, in machine readable form, and the written
documentation prepared in connection therewith, and any subsequent
updates or changes thereto (the "Deposit Materials") for the
computer software products (the "System(s)"), all as identified
from time to time on Exhibit B hereto. Producer desires Fort Knox
to hold the Deposit Materials, and, upon certain events, deliver
the Deposit Materials (or a copy thereof) to Licensee, in
accordance with the terms hereof.
Now, therefore, in consideration of the foregoing, of the
mutual promises hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Delivery by Producer. Producer shall be solely
responsible for delivering to Fort Knox the Deposit Materials as
soon as practicable. Fort Knox shall hold the Deposit Materials in
accordance with the terms hereof and shall have no obligation to
verify the completeness or accuracy of the Deposit Materials.
2. Duplication; Updates.
(a) Fort Knox may duplicate the Deposit Materials by any
means in order to comply with the terms and provisions of this
Agreement, provided that Licensee shall bear the expense of
duplication. Alternatively, Fort Knox, by notice to Producer, may
reasonably require Producer to promptly duplicate the Deposit
Materials.
(b) Producer shall deposit with Fort Knox any modifications,
updates, new releases or documentation related to the Deposit
Materials by delivering to Fort Knox an updated version of the
Deposit Materials ("Additional Deposit") on a weekly basis after
the modifications, updates, new releases and documentation have
been developed by Producer. Fort Knox shall have no obligation to
verify the accuracy or completeness of any Additional Deposit or to
verify that any Additional Deposit is in fact a copy of the Deposit
Materials or any modification, updates, or new release thereof.
3. Notification of Deposits. Simultaneous with the delivery
to Fort Knox of the Deposit Materials or any Additional Deposit, as
the case may be, Producer shall deliver to Fort Knox and to
Licensee a written statement specifically identifying all items
deposited and stating that the Deposit Materials or any Additional
Deposit, as the case may be, so deposited have been inspected by
Producer and are complete and accurate. Fort Knox shall, within ten
(10) business days of receipt of any Deposit Materials, send
notification to Producer and Licensee that it has received from
Producer such Deposit Materials.
4. Delivery by Fort Knox
4.1 Delivery by Fort Knox to Licensee. Fort Knox shall
deliver the Deposit Materials, or a copy thereof, to Licensee only
in the event that:
-2-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
(a) Producer notifies Fort Knox to effect such delivery to
Licensee at a specific address, the notification being accompanied
by a check payable to Fort Knox in the amount of one hundred
dollars ($100.00); or
(b) Fort Knox receives from Licensee:
(i) written notification that Producer has
failed in a material respect to support the
applicable Systems as required by a license
agreement ("License Agreement") between Licensee and
Producer or that Producer has otherwise defaulted in
a material respect under the License Agreement
("Producer Default");
(ii) evidence satisfactory to Fort Knox that
Licensee has previously notified Producer of such
Producer Default in writing;
(iii) a written demand that the Deposit
Materials be released and delivered to Licensee;
(iv) a written undertaking from the Licensee
that the Deposit Materials being supplied to the
Licensee will be used only as permitted under the
terms of the License Agreement;
(v) specific instructions from the Licensee
for this delivery; and
(vi) an initial check payable to Fort Knox in
the amount of one hundred dollars ($100.00).
(c) If the provisions of paragraph 4.1(a) are satisfied, Fort
Knox shall, within five (5) business days after receipt of the
notification and check specified in paragraph 4.1(a), deliver the
Deposit Materials in accordance with the applicable instructions.
(d) If the provisions of paragraph 4.1(b) are met, Fort Knox
shall, within five (5) business days after receipt of all the
documents specified in paragraph 4.1(b), send to Producer a
photostatic copy of all such documents. Producer shall have thirty
(30) days from the date on which Producer receives such documents
("Objection Period") to notify Fort Knox of its objection
("Objection Notice") to the release of the Deposit Materials to
Licensee and to request that the issue of Licensee's entitlement to
a copy of the Deposit Materials be submitted to arbitration in
accordance with the following provisions:
(i) If Producer shall send an Objection Notice
to Fort Knox during the Objection Period, the matter
shall be submitted to, and settled by arbitration
by, a panel of three (3) arbitrators chosen by the
Atlanta Regional Office of the American Arbitration
Association in accordance with the rules of the
American Arbitration Association. The arbitrators
shall apply Georgia law. At least one (1)
arbitrator shall be reasonably familiar with the
computer software industry. The decision of the
arbitrators shall be binding and conclusive on all
parties involved, and judgment upon their decision
may be entered in a court of competent jurisdiction.
All costs of the arbitration incurred by Fort Knox,
including reasonable attorneys' fees and costs,
shall be paid by the party which does not prevail in
the arbitration; provided, however, if the
arbitration is settled prior to a decision by the
arbitrators, the Producer and Licensee shall each
pay 50% of all such costs.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
(ii) Producer may, at any time prior to the
commencement of arbitration proceedings, notify Fort
Knox that Producer has withdrawn the Objection
Notice. Upon receipt of any such notice from
Producer, Fort Knox shall reasonably promptly
deliver the Deposit Materials to Licensee in
accordance with the instructions specified in
paragraph 4.1(b)(v).
(e) If, at the end of the Objection Period, Fort Knox has not
received an Objection Notice from Producer, then Fort Knox shall
reasonably promptly deliver the Deposit Materials to Licensee in
accordance with the instructions specified in paragraph 4.1(b)(v).
Both Producer and Licensee agree that Fort Knox shall not be
required to deliver such Deposit Materials until all such fees then
due Fort Knox have been paid.
4.2 Delivery by Fort Knox to Producer. Fort Knox shall
release and deliver the Deposit Materials to Producer upon
termination of this Agreement in accordance with paragraph 7(a)
hereof.
5. Indemnity. Producer and Licensee shall, jointly and
severally, indemnify and hold harmless Fort Knox and each of its
directors, officers, agents, employees and stockholders ("Fort Knox
Indemnities") absolutely and forever, from and against any and all
claims, actions, damages, suits, liabilities, obligations, costs,
fees, charges, and any other expenses whatsoever, including
reasonable attorneys' fees and costs, that may be asserted against
any Fort Knox Indemnitee in connection with this Agreement or the
performance of Fort Knox or any Fort Knox Indemnitee hereunder.
6. Disputes and Interpleader.
(a) Fort Knox may submit the matter to any court of competent
jurisdiction in an interpleader or similar action other than a
matter submitted to arbitration after Fort Knox's receipt of an
Objection Notice under Section 4 and the parties under this
Agreement submit the matter to such arbitration as described in
Section 4 of this Agreement. Any and all costs incurred by Fort
Knox in connection therewith, including reasonable attorneys' fees
and costs, shall be borne 50% by each of Producer and Licensee.
(b) Fort Knox shall perform any acts ordered by any court of
competent jurisdiction, without any liability or obligation to any
party hereunder by reason of such act.
7. Term and Renewal.
(a) The initial term of this Agreement shall be two (2)
years, commencing on the date hereof (the "Initial Term"). This
Agreement shall be automatically extended for an additional term of
one year ("Additional Term") at the end of the Initial Term and at
the end of each Additional Term hereunder unless, on or before
ninety (90) days prior to the end of the Initial Term or an
Additional Term, as the case may be, any party notifies the other
parties that it wishes to terminate the Agreement at the end of
such term.
(b) In the event of termination of this Agreement in
accordance with paragraph 7(a) hereof, Licensee shall pay all fees
due Fort Knox and shall promptly notify Producer that this
Agreement has been terminated and that Fort Knox shall return to
Producer all copies of the Deposit Materials then in its
possession.
8. Fees. Producer and Licensee shall pay to Fort Knox the
applicable fees in accordance with Exhibit A as compensation for
Fort Knox's services under this Agreement. The first years fees
are due upon receipt of the signed contract or Deposit Materials,
whichever comes first, and shall be paid in U.S. Dollars.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
(a) Payment. Fort Knox shall issue an invoice to Licensee
following execution of this Agreement ("Initial Invoice"), on the
commencement of any Additional Term hereunder, and in connection
with the performance of any additional services hereunder. Payment
is due upon receipt of invoice. All fees and charges are exclusive
of, and Licensee is responsible for the payment of, all sales, use
and like taxes. Fort Knox shall have no obligations under this
Agreement until the Initial Invoice has been paid in full by
Licensee.
(b) Nonpayment. In the event of non-payment of any fees or
charges invoiced by Fort Knox, Fort Knox shall give notice of non-
payment of any fee due and payable hereunder to the Licensee and,
in such an event, the Licensee shall have the right to pay the
unpaid fee within ten (10) days after receipt of notice from Fort
Knox. If Licensee fails to pay in full all fees due during such
ten (10) day period, Fort Knox shall give notice of non-payment of
any fee due and payable hereunder to Producer and, in such event,
Producer shall have the right to pay the unpaid fee within ten (10)
days of receipt of such notice from Fort Knox. Upon payment of the
unpaid fee by either the Producer or Licensee, as the case may be,
this Agreement shall continue in full force and effect until the
end of the applicable term. Failure to pay the unpaid fee under
this paragraph 8(b) by both Producer and Licensee shall result in
termination of this Agreement.
9. Ownership of Deposit Materials. The parties recognize
and acknowledge that ownership of the Deposit Materials shall
remain with Producer at all times.
10. Available Verification Services. Upon receipt of a
written request from Licensee, Fort Knox and Licensee may enter
into a separate agreement pursuant to which Fort Knox will agree,
upon certain terms and conditions, to inspect the Deposit Materials
for the purpose of verifying its relevance, completeness, currency,
accuracy and functionality ("Technical Verification Agreement").
Upon written request from Producer, Fort Knox will issue to
Producer a copy of any written technical verification report
rendered in connection with such engagement. If Fort Knox and
Licensee enter into such Technical Verification Agreement, Producer
shall reasonably cooperate with Fort Knox by providing its
facilities, computer systems, and technical and support personnel
for technical verification whenever reasonably necessary. If
requested by Licensee, Producer shall permit one employee of
Licensee to be present at Producer's facility during any such
verification of the Deposit Materials.
11. Bankruptcy. Producer and Licensee acknowledge that this
Agreement is an "agreement supplementary to" the License Agreement
as provided in Section 365 (n) of Title 11, United States Code (the
"Bankruptcy Code"). Producer acknowledges that if Producer as a
debtor in possession or a trustee in Bankruptcy in a case under the
Bankruptcy Code rejects the License Agreement or this Agreement,
Licensee may elect to retain its rights under the License Agreement
and this Agreement as provided in Section 365 (n) of the Bankruptcy
Code. Upon written request of Licensee to Producer or the
Bankruptcy Trustee, Producer or such Bankruptcy Trustee shall not
interfere with the rights of Licensee as provided in the License
Agreement and this Agreement, including the right to obtain the
Deposit Material from Fort Knox.
12. Miscellaneous.
(a) Remedies. Except for intentional misrepresentation,
gross negligence or intentional misconduct, Fort Knox shall not be
liable to Producer or to Licensee for any act, or failure to act,
by Fort Knox in connection with this Agreement. Any liability of
Fort Knox regardless of the cause shall be limited to the fees
exchanged under this Agreement. Fort Knox will not be liable for
special, indirect, incidental or consequential damages hereunder.
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CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
(b) Natural Degeneration; Updated Version. In addition, the
parties acknowledge that as a result of the passage of time alone,
the Deposit Materials are susceptible to loss of quality ("Natural
Degeneration"). It is further acknowledged that Fort Knox shall
have no liability or responsibility to any person or entity for any
Natural Degeneration. For the purpose of reducing the risk of
Natural Degeneration, Producer shall deliver to Fort Knox a new
copy of the Deposit Materials at least once every three years.
(c) Permitted Reliance and Abstention. Fort Knox may
rely and shall be fully protected in acting or refraining from
acting upon any notice or other document believed by Fort Knox in
good faith to be genuine and to have been signed or presented by
the proper person or entity. Fort Knox shall have no duties or
responsibilities except those expressly set forth herein.
(d) Independent Contractor. Fort Knox is an independent
contractor, and is not an employee or agent of either the Producer
or Licensee.
(e) Amendments. This Agreement shall not be modified or
amended except by another agreement in writing executed by the
parties hereto.
(f) Entire Agreement. This Agreement, including all exhibits
hereto, supersedes all prior discussions, understandings and
agreements between the parties with respect to the matters
contained herein, and constitutes the entire agreement between the
parties with respect to the matters contemplated herein. All
exhibits attached hereto are by this reference made a part of this
Agreement and are incorporated herein.
(g) Counterparts; Governing Law. This Agreement may be
executed in counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall
constitute one and the same Agreement. This Agreement shall be
construed and enforced in accordance with the laws of the State of
Georgia.
(h) Confidentiality. Fort Knox will hold and release the
Deposit Materials only in accordance with the terms and conditions
hereof, and will maintain the confidentiality of the Deposit
Materials.
(i) Notices. All notices, requests, demands or other
communications required or permitted to be given or made under this
Agreement shall be in writing and shall be delivered by hand or by
commercial overnight delivery service which provides for evidence
of receipt, or mailed by certified mail, return receipt requested,
postage prepaid. If delivered personally or by commercial
overnight delivery service, the date on which the notice, request,
instruction or document is delivered shall be the date on which
delivery is deemed to be made, and if delivered by mail, the date
on which such notice, request, instruction or document is received
shall be the date on which delivery is deemed to be made. Any
party may change its address for the purpose of this Agreement by
notice in writing to the other parties as provided herein.
(j) Survival. Paragraphs 5, 6, 8, 9 and 12 shall survive any
termination of this Agreement.
(k) No Waiver. No failure on the part of any party hereto to
exercise, and no delay in exercising any right, power or single or
partial exercise of any right, power or remedy by any party will
preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. No express waiver or assent by
any party hereto to any breach of or default in any term or
condition of this Agreement shall constitute a waiver of or an
assent to any succeeding breach of or default in the same or any
other term or condition hereof.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
IN WITNESS WHEREOF each of the parties has caused its duly
authorized officer to execute this Agreement as of the date and
year first above written.
Fort Knox Escrow Services, Inc.
2100 Norcross Parkway
Suite 150
Norcross, Georgia 30071
E-mail: [email protected]
Phone: 1-800-875-5669
Fax: 1-770-239-9201
By:___________________ Title:_________________________
Print Name:___________________________________________
Producer ASD Systems, Inc., d/b/a Ascendant Solutions
By: /s/ David Bowe
-------------------- Title: President and CEO
Print Name: David Bowe Date: 9/15/00
----------------------
Address: 3737 Grader Street, Suite 110
Garland, Texas 75041
Phone: 214 348-7200 Fax: 214 343-2924
E-mail: ascendantsolutions.com
Licensee Sears, Roebuck and Company
By: /s/ Kristine K. Crow Date: 9/15/00
---------------------- -----------
Kristine K. Crow
Title: Vice President, Relationship Products and Retail
Marketing
Address: Sears, Roebuck and Company
3333Beverly Road A4-185A
Hoffman Estates, Illinois 60179
Phone: 847 286-7184 Fax: 847 286-8536
E-mail: [email protected]
Sears Wishbook, Inc.
By: /s/ David H. Shepherd Date: 9/15/00
---------------------- -----------
David H. Shepherd
Title: President Sears Wishbook, Inc.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
Address: Sears Wishbook, Inc. Phone: 847 286-4045
5407 Trillium Boulevard Suite 170 Fax: 847 286-5024
Hoffman Estates, Illinois 60192 email: [email protected]
-8-
<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
EXHIBIT A
FEE SCHEDULE
Fees to be paid by Licensee shall be as follows:
Initialization fee (one time only) $850
($ 765 for current clients)
*Annual maintenance/storage fee $ 900
[] includes two Deposit Material updates
[] includes one cubic foot of storage space
*If party is outside continental U.S. additional $100
Additional Services Available:
Additional Updates $ 150/Product
(above two per year)
Additional Storage Space $ 150/Cubic foot
Payable by Licensee or Producer Only Upon Release Request:
Due Only Upon Licensee's or Producer's
Request for Release of Deposit Materials $ 100/Product per
Licensee for initial
2 hrs. and $ 50/hour for
each additional hour
Fort Knox benefits its clients by offering extended services
including: software testing & verification, media conversion,
document capture & retrieval, image processing, high-speed laser
printing, data conversion, information software and IT consultancy.
Fees due in full, in US dollars, upon receipt of signed
contract or deposit material, whichever comes first.
Thereafter, fees shall be subject to their current pricing,
provided that such prices shall not increase by more
than 10% per year. The renewal date for this Agreement
will occur on the anniversary of the first invoice.
If other currency acceptance is necessary, please contact
your Account Manager to make arrangements.
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
EXHIBIT B
B1. Product Name: Lynx- Sears Tools, Lynx- Wishbook, and Wishbook.
Com (Website) Version #:___________________________________________
Prepared and Confirmed by:_________________________________________
Title: ____________________________ Date:_____________________
Signature:_________________________________________________________
Type of deposit:
---------------
____ Initial Deposit
____ Update Deposit to replace current deposits
____ Other (please describe)________________________________
Items Deposited:
----------------
Quantity Media Type Description of Material
A) 1 Tape Lynx- Sears Tools, , and
B) 1 Tape Lynx- Wishbook
C) 1 Tape Wishbook. Com (Website)
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
AMENDED AND RESTATED
SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT is entered into
as of September 15, 2000, by and between ASD SYSTEMS, INC. d/b/a
Ascendant Solutions, Inc., a Texas corporation (hereinafter called
"ASD"), and SEARS, ROEBUCK AND CO. ("Sears Roebuck"), a New York
corporation, and Sears Wishbook, Inc. ("SWB") (collectively,
"Sears").
WHEREAS, Sears Roebuck and Athletic Supply of Dallas, Inc.
("Athletic Supply") entered into an agreement dated as of January
4, 1995 as amended from time to time (herein the Agreement")
whereby Sears Roebuck utilized Athletic Supply to provide
receiving, warehousing and shipping services with respect to tools
and health care items purchased by Sears Roebuck from third parties
and shipped to Athletic Supply and in connection therewith Athletic
Supply executed a Security Agreement securing its obligations under
the Agreement (the "Prior Security Agreement"); and
WHEREAS, various assets of Athletic Supply were ultimately
transferred to ASD, including Athletic Supply's rights under the
Agreement and the related documents, and ASD assumed obligations
under the Agreement and the Prior Security Agreement; and
WHERAS, ASD and Sears Roebuck are entering into an amendment
of the Agreement (hereinafter all references to the Agreement shall
refer to it as so amended and modified) and Sears Roebuck, SWB and
ASD entered into a letter agreement of even date herewith (the
"Letter Agreement") (herein the Agreement and the Letter Agreement
are collectively referred to as the "Sears Agreements") and, in
conjunction with the amendment and modification and the execution
of the Letter Agreement, ASD is granting to Sears a security
interest in the collateral described on Exhibit A, attached hereto
and incorporated herein (hereinafter referred to as the
"Collateral").
WHEREAS, Sears owns the Collateral as indicated on Exhibit A
and ASD acknowledges Sears's ownership of the Collateral; and
WHEREAS, the Collateral is and will be located at or on the
premises of ASD at 3737 Grader Street, Suite 110, Garland, Texas
75041, and at 10812 Alder Court, Dallas, Texas 75238, and possibly
at other locations operated by ASD; and
WHEREAS, ASD agrees that Sears may continue to store the
Collateral on said premises of ASD pursuant to the Agreement until
Sears gives ASD instructions to ship Collateral to Sears's
customers or otherwise make the Collateral available to Sears; and
WHEREAS, Sears and ASD desire to have this Amended and
Restated Security Agreement secure Sears's ownership of the
Collateral and all of ASD's obligations to Sears with respect to
the Collateral under the Agreement;
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
NOW, THEREFORE, Sears Roebuck, SWB and ASD hereby agree as
follows:
1. ASD hereby grants to Sears a continuing security interest
in the Collateral as indicated on Exhibit A and further ASD agrees
that the security interest created pursuant to the Prior Security
Agreement shall continue in the Collateral covered by the Prior
Security Agreement to secure Sears Roebuck's ownership of the
Collateral and the performance of all obligations of ASD to Sears
under the Sears Agreements.
2. The Collateral shall include the entire inventory of
tools and health care goods purchased by Sears Roebuck from various
manufacturers and suppliers, and which are shipped to ASD by or on
behalf of Sears, whether now or hereafter located on the premises
of ASD at 3737 Grader Street, Suite 110, Garland, Texas 75041,
pursuant to the Sears Agreements, or at such other location to
which such inventory may hereafter be shipped or removed, and all
proceeds of such inventory.
3. ASD shall ship the Collateral pursuant to instructions given
by Sears Roebuck as provided in the Agreement. ASD agrees that the
Sears Agreements shall apply to all facilities operated by ASD at
which any Collateral is located.
4. ASD shall at all times keep the Collateral physically
separated and segregated from any property not owned by Sears
Roebuck. ASD shall not allow any tags, labels, trademarks, or
other Sears identification to be removed from the Collateral while
in ASD's facility, unless authorized by Sears in writing for
liquidation of any portion of the Collateral to a third party.
5. ASD shall protect the Collateral against fire and other
casualty, loss, damage, mysterious disappearance, and theft in
accordance with the Sears Agreements.
6. ASD shall not lend, rent, lease, or otherwise dispose of the
Collateral or any interest therein, and ASD shall not grant any
liens, encumbrances, or security interests in or on the Collateral,
other than the security interest of Sears created hereunder. ASD
shall sign and execute any and all financing statements and other
documents necessary to protect the security interest of Sears under
this Amended and Restated Security Agreement against the rights or
interests of third persons. ASD shall at all times keep accurate
and complete records of the Collateral and its proceeds.
7. Misrepresentation or misstatement in connection with this
transaction, or noncompliance with or nonperformance of any of
ASD's obligations or agreements under this Amended and Restated
Security Agreement and ASD's failure to cure same within thirty
(30) days after receiving written notice thereof from Sears, shall
constitute a default. In addition, ASD shall be in default if
bankruptcy or insolvency proceedings are instituted by or against
ASD or if ASD makes any assignment for the benefit of creditors.
In the event of any default by ASD, Sears shall have all of the
rights and remedies provided by the Uniform Commercial Code in
effect in the State of Texas. In addition, Sears may require ASD
to assemble the Collateral
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
and to make it available to Sears at a place Sears designates, and
Sears may remedy or waive any default without waiving the default
remedies or without waiving any other prior or subsequent default.
ASD shall pay all expenses and reimburse Sears for any
expenditures, including reasonable attorneys' fees and legal
expense, in connection with Sears's exercise of any of its rights
and remedies under this Paragraph.
8. Sears may enter ASD's facility at any reasonable time to
inspect the Collateral and ASD's books and records pertaining to
the Collateral or its proceeds, or to take possession of the
Collateral, and ASD shall assist Sears in making any such
inspection or in taking such possession.
9. ASD agrees and affirms that information supplied and
statements made by ASD in any financial, credit, or accounting
statement prior to or pursuant to this Security Agreement are or
will be true and correct. ASD further agrees and affirms that it
has not signed, filed, or consented to the filing of, any financing
statement covering the Collateral or its proceeds in any public
office in favor of anyone but Sears as provided herein; that,
except for the security interest granted in this Security
Agreement, ASD has not created or granted any lien, security
interest or encumbrance adverse to Sears in or on the Collateral;
that the Collateral will be held only at ASD's facility at 3737
Grader Street, Suite 110, Garland, Texas 75041, or at 10812 Alder
Court, Dallas, Texas 75238; and that ASD will not remove the
Collateral or allow the Collateral to be removed except pursuant to
instructions from Sears.
10. ASD shall have all of the rights and remedies before or after
default provided in the Uniform Commercial Code in the State of
Texas.
11. The terms "ASD" and "Sears," as used in this Security
Agreement, shall include the successors and permitted assigns of
those parties.
IN WITNESS WHEREOF, the parties have caused this Security
Agreement to be executed by their respective, duly-authorized
officers as of the date first above stated.
SEARS, ROEBUCK AND CO. ASD SYSTEMS, INC. d/b/a Ascendant
Solutions
By: /s/Kristine K. Crow By: /s/ David E. Bowe
-------------------- -------------------------
Name: _________________________ Name:____________________________
Title:_________________________ Title:___________________________
SEARS WISHBOOK, INC.
By: /s/ David H. Shepherd
-----------------------------
Name: _________________________
Title: _________________________
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<PAGE>
CONFIDENTIAL TREATMENT
----------------------
(*) Confidential Material Redacted and
Filed Separately with the Commission
EXHIBIT A
TO
AMENDED AND RESTATED
SECURITY AGREEMENT
Collateral shall consist of the following:
1. All inventory of power tools, hand tools, healthcare goods,
and other consumer goods shipped to ASD by, for, or on behalf of
Sears, Roebuck and Co., and all proceeds thereof (owned by Sears
Roebuck).
2. All computer hardware and servers paid for by Sears Wishbook,
Inc., along with all software (including only systems operating
software and not Lynx) software licenses and data files related
thereto or used in connection therewith (owned by SWB).
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