EXHIBIT 10.4
CONTRACT RENEWAL AND EXTENSION
for
King Soopers
65 Tejon
Denver CO 80223
AUGUST 1999
C O N F I D E N T I A L
One Source [Logo}
Technologies, Inc.
2329 W Mescal #304
Phoenix AZ 85029
PHOENIX DENVER LAS VAGAS
RENO ALBUQUERQUE SALT LAKE CITY
SACREMENTO TUCSON
(C) Copyright 1999 OneSource Technologies, Inc.
All rights reserved.
<PAGE>
The Agreement between OneSource Technologies, Inc. and King Soopers, dated 1
September, 1998, (hereafter "the Agreement") is hereby renewed and extended to
encompass the period 1 September, 1999, through 31 August, 2002 (Three Years).
The Agreement is attached hereto and made a part of this contract renewal and
extension by reference. Other than the extended date changes noted herein, all
other terms and conditions of the Agreement remain in full force and effect with
the exception of the following adjustments.
EQUIPMENT COVERAGE INCLUDES:
On-Site Service and Repair
Register Systems - All Locations and including:
Registers (4683, 4693, 4694 Configurations) (8 hours per
day, 7 days per week) Keyboards Receipt Printers
LED Displays Cash Drawers Logic Boards, Power
Supplies, and Local (only) Cables/Connectors IBM
Bar Code Readers (Hand Held)
Controllers (Netfinity, 9557, 750, 310 Configurations) (24
hours per day, 7 days per week) Keyboards &
Controllers Motherboards
Servers (PCs)
Logic Boards, Power Supplies, and Local (only) Cables/Connectors
Monitors (Monochrome and Color)
Scanners - All Locations and including: (8 hours per day, 7 days per week)
NCR 7870-2000 Scanners (605 Total Scanners)
Backroom Operations - All Locations and including:
(8 hours per day, 7 days per week)
Vericash Units (Currently in 35 Stores)
IBM 2380 Printers (5 Printers per Store)
On-Site Swap Out Service
Scanner/Scales - All Locations and including:
(8 hours per day, 7 days per week)
All Scanner/Scales (Except NCR 7870-2000 Models)
WARRANTY SERVICE
OneSource will continue to provide coverage of IBM warranty service. IBM
warranty coverage has certain restricted limitations. OneSource service on IBM
warranted equipment far exceeds IBM's efforts. The following list outlines the
"extra" coverage OneSource provides to King Soopers on IBM warranty calls.
<TABLE>
<S> <C> <C>
Type of Coverage IBM OneSource
Technologies
Service Hours 8 - 5 Monday - Friday Covered Covered
Parts Replacement at no cost to consumer Covered Covered
No labor charges to consumer Covered Covered
Technician response time of 4 hours until technician is on-site Attempted Covered
Premium Service Hours on Register Systems & "Non-Mission Critical" 7 Days/Week Not Covered Covered
Premium Service Hours on Controllers 24 Hours per Day Seven Days per Week Not Covered Covered
Physical Damage as a result of abuse, negligence, or "crashing cart" or "spilling soda." Not Covered Covered
Assistance with software problem resolution Not Covered Covered
Repairs associated with non-IBM options, adapters, memory Not Covered Covered
Installation, configuration, and equipment setup Not Covered Covered
Telephone support and customer training Not Covered Covered
Preventive Maintenance performed on regular basis Not Available Covered
REPAIR time of 4 hrs. ("Non-mission critical") or 2 hrs. ("Mission critical") Not Available Covered
"Calling one vendor" convenience factor Not Available Covered
On-line extensive reporting Not Available Covered
</TABLE>
<PAGE>
FEE CALCULATIONS
Fees are calculated based on the original agreement and/or addenda fees with the
addition of a 2.5% increase per year. In determining credit for IBM warranty
OneSource based its calculations on 1) IBM's reimbursement rates as published in
Warranty Service:Product Warranty/Reimbursement Rates dated 7/20/99, and 2)
applying these rates to King Soopers' supplied schedule of equipment
installations and OneSource's service experience on actual service calls for
warranty equipment prorated for the contracted period. Based on this method,
OneSource calculated the estimated warranty reimbursement to be $ 205,428.84 for
the three year period. Traditionally, OneSource does not discount for warranty
service until the end of the billing period. At that time, the total amount
OneSource is reimbursed by the manufacturer is credited to OneSource's customer.
In this way, the customer knows the full value of their warranty.
Notwithstanding the foregoing, however, and in the interest of furthering our
relationship, OneSource has elected to adopt King Soopers' figures even though
OneSource is unfamiliar with such a calculation. Using King Soopers' warranty
credits, 68% of this credited warranty amount will be reapplied to OneSource's
fees to account for the additional coverage OneSource offers that is "above and
beyond" IBM's warranty service provisions.
The following table summarizes the fee calculations. These calculations are
based on store counts and relative equipment counts provided by King Soopers. In
the event these numbers change, fees will be adjusted based on additions or
deletions of equipment and/or stores as outlined in the agreement.
<TABLE>
<S> <C> <C> <C>
Period of Coverage Amount
Gross Fees 1 Sep 99 - 31 Aug 00 $ 637,932.88
1 Sep 00 - 31 Aug 01 $ 680,353.29
1 Sep 01 - 31 Aug 02 $ 700,390.61
-------------------
Subtotal $ 2,018,676.78
-------------------
IBM Warranty 1 Sep 99 - 31 Aug 00 $ (227,926.46)
Credits
1 Sep 00 - 31 Aug 01 $ (202,361.19)
1 Sep 01 - 31 Aug 02 $ (93,033.48)
-------------------
Subtotal $ (523,321.13)
-------------------
Adjust Totals (Gross Fees - IBM Warranty) $ 1,495,355.65
OneSource Additional At 68% of IBM Warranty $ 355,858.37
Fees for "Extended"
Warranty Coverage
-------------------
POS Totals $ 1,851,214.02 Per Store Per Year $ 7,811.03
-------------------- Based on 79 Stores for 3 years
Vericash Units Currently 35 Units $ 128,653.34
Two (2) additional units installed in October
--------------------
GRAND TOTAL $ 1,979,867.36
====================
Per Month $ 54,996.32
Paid Invoice #19588 for 1 Sep 99 - 1 Oct 99 $ 47,413.45
Additional Amount due $ 7,582.87
1 Oct 99 - 1 Nov 99 Invoice Amount $ 62,579.18
</TABLE>
All outstanding addenda, if executed, shall be subject the 2.5% price increases
in subsequent one-year intervals. If executed, the fees will be invoiced per the
outlined instructions in each addendum.
No other changes are being made at this time.
Executed this day of 199 .
----------------- ------------- ----------------
ONESOURCE TECHNOLOGIES, INC. DILLON COMPANIES
/s/ Donald Gause /s/ J Scott Sanders
----------------------------- -----------------------------
By By and on behalf of its
King Soopers Inc. Division
Donald Gause / Controller Scott Sanders
Printed Name and Title Printed Name and Title
Dir. of Rtail Info. Systems
