EXHIBIT 10.2
EQUIPMENT BLANKET SERVICE
REVISED PROPOSAL
for
KING SOOPERS
65 Tejon
Denver CO 80223
July 1998
C O N F I D E N T I A L
MICOR Technologies, Inc.
2329 West Mescal
Suite 304
Phoenix, Arizona 85029
602.216.9600 800.279.0859
602.216.9611 (Fax)
ARIZONA COLORADO NEVADA
W Mescal Wild Flowers Way Norwest Bank Warehouse
Suite 304 Castle Rock CO 80104 Micor Suite
Phoenix AZ 85029 800.279.0859 Polaris Ave
602.216.9600 Las Vegas NV 89102
800.279.0859
NEW MEXICO UTAH CALIFORNIA
10068 Menauel NE 3896 South 3060 West Paydirt Dr
Suite E-12 West Valley UT 84119 Placerville CA 95667
Albuquerue NM 87112 800.279.0859 800.279.0859
800.279.0859
<PAGE>
1.0 OVERVIEW
1.1 BUSINESS DESCRIPTION
Micor was founded in 1984 and incorporated as Micor Financial Systems in 1990.
In January 1994, the company's name was changed to Micor Technologies, Inc., as
a more descriptive representation of Micor's business activity. In the periods
following incorporation, Micor's operations have grown significantly.
Micor Technologies, Inc., ("Micor" and/or "the company") is a general office and
industry specific equipment service company providing equipment repair and
installation services primarily to the banking, financial service, and retail
industries. New product and technology sales are an additional focus of Micor's
business as it relates to Micor's customers.
1. PRODUCT SERVICE DESCRIPTION
Micor fills a unique market need as a sole source service provider for
substantially ALL business equipment at reduced rates due to greater efficiency
and economies of scale. When a Micor technician is called for repair, other
pieces of equipment at the location is checked for sound operation as well.
Should another piece of equipment require servicing, it is repaired at that
time. This creates generous cost reductions for Micor in that additional costs
of sending technicians back at a later time is significantly reduced.
More importantly, Micor customers benefit from the resulting:
* improved services;
* passed through cost savings;
* less equipment down time; and,
* increased equipment service lives.
Micor is currently unique in offering such broad service coverage for all
equipment items in the entire geographic areas required by customers, which in
most cases is multi-state.
1.3 UNIQUENESS OF SERVICE
To remain competitive, Micor's clients must control an array of overhead
expenses, a significant component of which are equipment maintenance and service
costs. Equipment maintenance costs generally increase as a regular course on an
annual basis or when a specific equipment category contract expires.
Historically, these costs have increased from lows of 10% per year to as much as
30% per contract period.
Micor, on the other hand creates wide based savings by servicing every equipment
items for a flat rate which constitutes the basis for a package price quote to
customers. Package pricing reduces equipment maintenance expenditure costs
across the board, often by as much as 50%. Micor's competitors generally cannot
price in this manner due to their inability to service every equipment type.
Competitors also often lack the technician training, certification and supply
sources for the repair parts which is required in order to offer package
pricing.
2.0 PROPOSAL
The following is Micor's proposal for providing on-site equipment maintenance of
King Soopers' IBM registers/controllers and for providing equipment swap outs of
scanner/scales at all the company's stores.
--------------------------------------------------------------------------------
MTI Equipment Blanket Service Proposal
King Scoopers
1
<PAGE>
Micor is uniquely qualified to meet and/or exceed King Soopers's objectives in
this regard. Specifically, Micor offers the following capabilities not commonly
found heretofore by vendors in the industry:
* single source, national coverage for service of ALL equipment items; * blanket
- discount pricing; * simplified administration and billing; and, *
financial/retail industry specialization.
SINGLE SOURCE VENDOR
While some vendors may provide both equipment sales and maintenance for certain
pieces of equipment, Micor is unique by virtue of its providing equipment
service and replacement and/or new technology sales for substantially all
equipment items in the organization. Micor is also able to provide this
capability throughout King Soopers' geographic operational territory.
Micor service technicians are cross-trained, experienced and authorized in
servicing ALL small equipment items typically utilized in bank, branch and
department operations, not just one or a few of the many types in use. The list
is extensive and includes, for example:
I. general office machines (facsimiles, typewriters, shredders, dictation,
microfiche/microfilm machines and copiers);
b) computers, computer networks, and other peripherals;
c) bank equipment (currency/coin counters, encoders, proof machines, check
protector/writers, teller machines);
d) retail equipment (scanners, registers); and,
e) security system equipment (cameras, monitors, and VCRs).
The advantages to King Soopers of such capabilities include:
a) one vendor to contact for all service requirements;
b) elimination of "finger pointing" by multiple vendors attempting to avoid
responsibility;
c) uniformity and consistency of provided service level throughout the
organization;
d) improved equipment reliability through preventive maintenance of other
equipment items at site during requested and/or regularly scheduled service
calls; and,
e) lower overall service costs.
2.2 BLANKET - DISCOUNT PRICING
Since Micor technicians are cross-trained and experienced in servicing all
equipment items, Micor realizes certain cost savings that can be passed to King
Soopers as part of its blanket service contract. These include:
--------------------------------------------------------------------------------
MTI Equipment Blanket Service Proposal
King Scoopers
2
<PAGE>
a) fewer required field visits;
b) more frequent and diligent preventative maintenance activities;
c) lower overhead costs per field service call; and
d) economies of scale realized through favored parts and supplies
relationships with manufacturers.
Micor's service costs, therefore, are always lower on an overall basis than the
collective charges of multiple vendor rates for one or a few equipment items.
Additional cost savings will accrue to King Soopers as well through extended
equipment service lives and reliability by Micor technicians being able to
provide preventative maintenance service on other equipment items during
requested and regularly scheduled service calls.
I. INCREASED EQUIPMENT UPTIME AND RELIABILITY
As previously mentioned, since Micor technicians are able to service on a
preventative maintenance basis all equipment at the branch, office, and
department during regular and requested service calls, King Soopers will realize
enhanced equipment uptimes and service reliability. This ability also instills a
high degree of employee confidence and acceptance as well.
II. SIMPLIFIED ADMINISTRATION AND BILLING
King Soopers will realize significant efficiencies and cost savings through
having to contact and deal with only one vendor for all equipment items, i.e.,
only one service contract rather than multiple one by machine, one service
number for help-line personnel to call and one consolidated monthly billing.
In addition, an integral part of Micor's blanket service contract concept
includes the maintenance of a comprehensive computer inventory (database) of all
preventative maintenance and repair service calls made by work order, machine,
branch, technician, etc.. Information in these databases can be made available
to King Soopers as required in a variety of reporting formats.
--------------------------------------------------------------------------------
MTI Equipment Blanket Service Proposal
King Scoopers
3
<PAGE>
ATTACHMENT A
SCOPE OF WORK
<PAGE>
The scope of work hereunder will be performed on a flat rate basis (as described
in Agreement Terms and Conditions - section 1: "General") and includes all the
equipment items specified in Attachment B based on an inventory provided by King
Soopers.
The total estimated annual service cost is $435,384.00, as detailed in
Attachment "B". This figure is based on the assumption the equipment count
supplied by King Soopers and Micor representatives are accurate and complete.
Further, the proposed amount assumes all equipment items are in satisfactory
working condition. In this regard, a Micor representative will inspect each
machine during the initial 45 days of the contract and will perform any repair
work required to bring equipment into good working order according to factory
specifications. There is no labor charge for this inspection, but any parts or
supplies required will be billed to King Soopers.
The proposed annual contract fee includes:
A. Register Systems:
The contract price is based on Micor providing on-site service for all IBM
registers/controller systems at all locations listed in Attachment B. This price
includes:
* preventative maintenance examinations of equipment items; * all
labor, replacement parts; and, * transportation and related
technician travel costs to and from the site.
B. Scanner/Scale Systems
Unlike the register/controller systems, Micor will not provide on-site repair of
scanner/scales. Rather, Micor will swap out defective units on-site only and
replace them with new or rebuilt units provided by King Soopers. Micor will,
however, perform regular preventative maintenance of scanners/scales as part of
its continuing on-site PM program.
When Micor is called for scanner/scale service, King Soopers shall provide Micor
technicians with a replacement scanner/scale unit. Scanner/Scale units may
either be supplied to each technician to carry and use on a "as needed" basis,
or stored at a designated location to be picked up for use as needed. After
replacing the defective unit, it will be delivered to King Soopers' general
office for repair.
The contract price does not include consumable (supply) items. These items will
be billed separately. (See Attachment B for exceptions to consumable items)
Manufacturers' service and repair manuals describe the items that are "consumed"
through normal usage. Accordingly, Micor follows manufacturer guidelines as to
distinguishing parts from consumable supply items. Specifically, "consumable
parts (supplies) are those which wear out and/or require periodic replacement as
a result of day-to-day use, wear and tear". (See Exhibit A for examples of
representative "consumable part and supply" items.)
As part of this proposal and not withstanding the foregoing, service calls
placed due to a King Soopers customer "spilling soda on a keyboard," or
"crashing a cart into a credit card reader" will not be considered operator
error, and accordingly, would be covered under this agreement. However, at the
next renewal period, the cost of this service will be considered when reviewing
the succeeding period's billing fee.
TIME AND MATERIAL PRICES
In the event that Micor is called upon to service and/or repair equipment items
not covered by this agreement, as detailed in Attachment B, Micor will charge on
a Time and Materials basis.
--------------------------------------------------------------------------------
MTI Equipment Blanket Service Proposal
King Scoopers
A-1
<PAGE>
Micor's per hour labor rates (non-contract), are $85.00 to $250.00 per hour
depending on the equipment type. These rates do not include parts or technician
transportation costs. Technician travel time will be billed at $50.00 for the
first fifty (50) miles of distance between MICOR's office location and the site
of repair and incremental $25.00 charges for each additional twenty-five (25)
miles. Parts will be billed separately on Time and Material service calls. Micor
will provide service warranties of 30 days for all repaired and/or serviced
equipment items.
The following summarizes Micor's recommendations for managing its equipment
service relationship with King Soopers.
PROGRAM MANAGEMENT
Dan Webb will be assigned to this account as Micor's Customer Service Manager
(CSM). He will be the "Account Representative" and will oversee ALL relationship
and administration activities between Micor and King Soopers. A Micor Field
Service Technician Supervisor (FSTS) will oversee ALL technical activities
between Micor and King Soopers. In the "Initial Implementation Phase," the FSTS
will meet with King Soopers representatives weekly and thereafter, in the
"Continuation Phase," the FSTS will meet with King Soopers representatives
bi-weekly. The purpose of these meetings is to seek out additional improvements,
changes, and procedures to accommodate the needs of King Soopers.
Micor Dispatch Personnel will work with King Soopers's Help Desk to ensure quick
response times to complete each service call as specified below. The CSM and the
FSTS will assist in defining and implementing appropriate procedures for use in
diagnosing equipment problems, creating and transmitting a "problem report" to
Micor, and tracking disposition of reports.
Micor agrees to provide King Soopers with service technicians who adhere to the
following:
1. Are adequately insured, (each technician is covered by $2 million of
general liability insurance and $100/$300 thousand auto liability
insurance. Micor, in addition carries and additional $2 million liability
umbrella policy and actual cash value baileys insurance for client
equipment items in Micor's possession);
2. Who can lucidly communicate in English.
3. Who carry authorized Micor identification badges.
SERVICE CALL DISPATCH PROCESS
Micor's CSM and FSTS will work with King Soopers representatives to define and
implement appropriate dispatching procedures in response to "problem reports"
received by Micor. In this regard and to ensure that MICOR provides King Soopers
with efficient dispatch service, King Soopers' Help Desk will contact Micor on a
dedicated King Soopers 800 number phone line. Vital information to be given to
Micor's Dispatcher includes:
* Store Number
* Equipment Type, Make, and Model
* Equipment location, e.g. deli, office, lane #
* Nature of problem
* Store contact and phone number
--------------------------------------------------------------------------------
MTI Equipment Blanket Service Proposal
King Scoopers
A-2
<PAGE>
CALL ESCALATION PROCESS
In order for Micor to provide King Soopers with a constant high level of
communication service, specific escalation procedures as defined in Micor's
"Call Process/Escalation Procedures" shall be implemented. See attachment of
extract from Micor's Dispatch Procedure Manual.
SERVICE HOURS
Micor's service hours for King Soopers shall be a modified twenty-four (24)
hours per day, seven (7) days per week, including holidays as follows:
"Critical" systems, e.g. controllers and servers will be covered "24 X 7."
"Normal" systems, e.g. keyboards, LED displays, shall be covered under Micor's
standard hours under this agreement, 10:00 AM to 7:00 PM MST seven (7) days per
week.
LOANER EQUIPMENT
In the event a register/controller is removed from King Soopers premises for
shop reconditioning, or repair, MICOR will provide King Soopers with a loaner
machine, subject to availability.
PREVENTATIVE MAINTENANCE PROGRAM
While Preventative Maintenance can be scheduled in the traditional way based on
OEM recommended time and cycle criteria, Micor's approach is more often and
concentrated than the traditional way in two areas.
Initial Implementation Phase: Micor schedules "wholesale" Preventative
Maintenance on a location by location basis, where service technicians visit
sites for the sole purpose of performing Preventative Maintenance for all
covered equipment.
Continuation Phase: When a technician is dispatched to a customer site to repair
equipment it is Micor's policy to have the technician perform Preventative
Maintenance routines on a minimum of four additional equipment items as time
permits.
Both of these programs are performed in addition to suggested OEM requirements,
whether the equipment needs it or not. Micor's experience has demonstrated that
in doing so, in-bound repair service calls drop precipitously and ultimately
equipment service lives are significantly extended.
Micor's Preventative Maintenance field procedures consist of an initial
assessment and diagnoses of the overall operating performance of the equipment
item, followed by adjustments to bring the machine in concert with OEM specified
tolerances and, as applicable, oiling, lubricating and cleaning of the machine.
CUSTOMER SERVICE
Micor's CSM and FSTS will be responsible for all service matters related to
Micor's involvement with King Soopers.
Response Times: Micor's service response times for this proposal are as follows:
--------------------------------------------------------------------------------
MTI Equipment Blanket Service Proposal
King Scoopers
A-3
<PAGE>
"Mission Critical Systems"
When Micor receives a service call:
1. recognition of receipt of service call, within thirty (30) minutes. Micor's
technician will inform King Soopers's Help Desk of receipt of call and his
ETA; and,
2. dispatch of technician to site within one (1) hours for system/controller
devices and complete repair within two (2) hours; and,
3. after completion of the call and prior to leaving the site, Micor's
technician will contact King Soopers's Help Desk to inform of completion of
the call.
Penalties: Service calls requiring data backup are exempt from time commitments.
In the event that Micor fails to meet the outlined response commitment, Micor
will be subject to penalties on the following basis:
Every quarter, included with other reports (See section 8 -
"Reporting"), will be a breakdown of the average time to complete all
customer placed service calls. If this time averages more than two
and one-quarter (2 1/4) hours Micor agrees to be penalized $1,250.00,
to be adjusted in the following years billing fee.
"Non-Mission Critical Systems"
When Micor receives a service call:
1. recognition of receipt of service call, within thirty (30) minutes. Micor's
technician will inform King Soopers's Help Desk of the receipt of call and
ETA; and,
2. dispatch of technician to site within two (2) hours for keyboards, LED
displays, cash drawers, etc. and complete repair within four (4) hours;
and,
3. after completion of the call and prior to leaving the site, Micor's
technician will contact King Soopers's Help Desk to inform of completion of
the call.
Penalties: In the event that Micor fails to meet the outlined response
commitment, Micor will be subject to penalties on the following basis:
Every quarter, included with other reports (See section 8 -
"Reporting"), will be a breakdown of the average time to complete all
customer placed service calls. If this time averages more than four
and one-half (4 1/2) hours Micor agrees to be penalized $1,250.00, to
be adjusted in the following years billing fee.
At the end of the contract period, the penalties will to tallied. This amount
will be considered in the adjustment of the next year's billing.
7. YEAR 2000 COMPLIANCE
Micor will not be responsible for Year 2000 Compliance on any existing
equipment. Any complications incurred or system failures due to Year 2000
Compliance will not be covered under this agreement. Any upgrades on equipment
to accommodate Year 2000 Compliance are not covered under this agreement but
would be considered on a time and materials basis.
--------------------------------------------------------------------------------
MTI Equipment Blanket Service Proposal
King Scoopers
A-4
<PAGE>
MICOR Technologies, Inc. operating systems and accounting/management systems are
Year 2000 Compliant.
8. BILLING
Billing will be payable in advance at the rate of one twelfth (1/12) the total
contractual fee established herein and found on Attachment B.
If there are any changes in equipment, whether additions or deletions, the
changes will be accounted for as per the Agreement and Terms section 1 -
"General."
Penalties if any incurred by Micor's performance will be based on Micor's
response time. At the end of the contract period, the total "earned" penalties
will be applied to the renewal fee.
9. REPORTING
On-Line reporting will be available on or before January 1, 1999. At that time,
King Soopers Help Desk will have access to our server. Following logon protocol,
real-time data reports will be available showing the status of all open calls
and complete information regarding any closed calls based on date of completion.
Until Micor's on-line service is available, Micor will provide King Soopers Help
Desk with daily reports showing a recap of call activity, specifically:
* the status of each open call and
* complete information on each closed call during the past two (2) days.
Each quarter MICOR will provide King Soopers with a detailed "Service Activity
Report" that itemizes every service activity MICOR has performed including:
* Total number of service calls,
* Total number of service calls per type of equipment,
* Service call responses,
* Preventative maintenance work,
* Average "fix rate" time, i.e. item repaired on the first, second, third
call, etc., and
* Other and/or special e.g. redeployments and etc.
--------------------------------------------------------------------------------
MTI Equipment Blanket Service Proposal
King Scoopers
A-5
<PAGE>
ATTACHMENT B
PRICING
<PAGE>
MICOR TECHNOLOGIES, INC.
CALL PROCESS/ESCALATION PROCEDURES
<PAGE>
Micor's Call Process/Escalation Procedure
--------------------------------------------------------------------------------
CALL PROCESS
1. King Soopers places call to Micor's dispatch center.
2. Dispatch notifies tech of service request.
3. Technician calls dispatch, King Soopers' helpdesk and the site manager to
confirm receipt of call and ETA.
4. Upon arrival at the site, technician calls dispatch and King Soopers' Help
Desk to notify them of his arrival.
5. Technician repairs equipment.
6. Technician calls dispatch to close calls and calls King Soopers' helpdesk
to notify them that the call is complete.
The purpose of Call Escalation is to provide a constant high level of service.
Communication media used to escalate calls include pager, telephone, voice mail,
and cell-phones.
The point of contacts for call escalation is as follows:
* The technician assigned to the call.
* The dispatcher or service coordinator.
* The account supervisor.
* If necessary, the call would then be escalated to a Micor regional service
manager.
During each step of the escalation process, actions are carefully documented and
entered into the system for future reporting purposes. This allows corporate
personnel, field personnel and the customer to see the company chronology of
events that have occurred on each and every service request.
The two primary goals are:
* To resolve the problem and to ensure the customer that the problem will be
resolved.
* To eliminate the problem that created the need for the escalation by
developing service skills or by providing better resources to the
technician responsible for the service request.
Ownership:
First level of ownership belongs to the technician. The technician is
responsible for ensuring;
* that he/she responds to pages within the required time,
* that he/she arrives at the customer site during the scheduled time of all
calls he/she accepts and
* that he/she keeps the customer updated regarding the call status.
<PAGE>
ESCALATION TYPES AND TIME FRAMES
The four types of escalations are as follows:
* Commit escalation - initiated when the assigned technician has not
committed to the service call within the specified time period.
* Arrive escalation - initiated when the assigned technician has not reported
his or her arrival at the customer site within the contractual time period.
* Complete escalation - initiated when the service provider has not reported
the completion of a call within the specified time period.
* Complaint escalation - initiated whenever a complaint is received and is
not based on specified time frames.
Commit, arrive and complete escalations have defined time frames. Please refer
to "Escalation Parameters" for time frames.
Escalation Parameters
<TABLE>
<S> <C> <C> <C>
Commit Escalation
Completion Deadline Service Dispatch Field Supervisor (FSTS) Region Manager (CSM)
2 HR 15 MIN 30 MIN 1 HR
4 HR 30 MIN 1 HR 1.5 HRS
</TABLE>
* Initiated when the assigned technician has not committed to the service
call within the specified time period. Step 3 of "Call Process".
<TABLE>
<S> <C> <C> <C>
Arrive Escalation
Completion Deadline Service Dispatch Field Supervisor (FSTS) Region Manager (CSM)
2 HR 30 MIN 45 MIN 1 HR
4 HR 3 HRS 3.5 HRS 4 HRS
</TABLE>
* Initiated when the assigned technician has not reported his or her arrival
at the customer site within the contractual time period. Step 4 of "Call
Process".
<TABLE>
<S> <C> <C> <C>
Complete Escalation
Completion Deadline Service Dispatch Field Supervisor (FSTS) Region Manager (CSM)
2 HR 1 HR 1.25 HRS 1.30 HRS
4 HR 3 HRS 3.5 HRS 4 HRS
</TABLE>
* Initiated when the service provider has not reported the completion of a
call within the specified time period. Step 6 of "Call Process".
Complaint Escalation
Complaint is given to FSTS. FSTS must report complaint, solution, and steps to
achieve solution to CSM.
<PAGE>
EXHIBIT A
CONSUMABLE PARTS (SUPPLY) ITEMS
<PAGE>
The following examples are provided as a general guide for identifying supply
items for which separate billing is required. Please note: Micor is not
responsible for Year 2000 Compliance on any existing equipment. See the
manufacturer for Y2K compliance.
<TABLE>
<S> <C> <C> <C>
Currency Counters Document Guides Micro Filmers Film
Paper
Lamps
Check Writer/Signer Name Die Computers/Printers Ribbons
Proms/Eproms Software
Ink/Ribbons Media
Drum Cartridges
Toner
Developer Unit
Waste Toner Bottle
Time Clocks Ribbons Fiche Viewers Lamps
Year Wheel Replacement Lens
Adders Ribbons Coin Counters Draws
Paper Arms Bags/Sleeves
Covers
Typewriters Print Wheel Teller Machines Programs
Type Elements Paper Arms
Ribbons Paper/Ribbons
Batteries
Copiers Paper Facsimiles Paper
Trays/Cassette Toner/Ink
Waste Toner Bottles Trays/Cassette
Toner* Toner Film
Developer/Drum* Drum Cartridge
* These items are included in some copier contracts Developer Unit
CCTV VCR Tapes
Check Encoders Print Wheels Proof Machines Ribbons
Ribbons Paper
Trays Spools
Programming* Ink Rolls
*Minor programming included in contracts, e.g. Transfer Ribbons
editing existing functions. Major programming, e.g. Stamp Impressions
adding functions, total reprogramming are considered Overhead Projectors Lamps
consumable.
Paper Shredders Bags/Oil
</TABLE>
--------------------------------------------------------------------------------
MTI Equipment Blanket Service Proposal
King Scoopers
1
<PAGE>
AGREEMENT TERMS AND CONDITIONS
for
KING SOOPERS
65 Tejon
Denver CO 80223
September 1, 1998
TO
SEPTEMBER 1, 1999
C O N F I D E N T I A L
MICOR TECHNOLOGIES, INC.
2329 West Mescal
Suite 304
Phoenix, Arizona 85029
602.216.9600 800.279.0859
602.216.9611 (Fax)
ARIZONA COLORADO NEVADA
W Mescal Wild Flowers Way Norwest Bank Warehouse
Suite 304 Castle Rock CO 80104 Micor Suite
Phoenix AZ 85029 800.279.0859 Polaris Ave
602.216.9600 Las Vegas NV 89102
800.279.0859
NEW MEXICO UTAH CALIFORNIA
10068 Menauel NE 3896 South 3060 West Paydirt Dr
Suite E-12 West Valley UT 84119 Placerville CA 95667
Albuquerue NM 87112 800.279.0859 800.279.0859
800.279.0859
<PAGE>
MICOR TECHNOLOGIES, INC., ("MICOR"), hereby agrees to provide and King Soopers
("the Client") hereby agrees to accept maintenance service as described in
Attachment "A" hereto, for the equipment specified and listed in Attachment "B"
hereto, in accordance with the terms and conditions contained hereinafter in
this Agreement.
1. General. This is a flat rate contract that covers ("Blankets") all equipment
types specified on Attachment B hereto based on equipment counts determined via
an inventory provided by King Soopers. If equipment is added to the inventory
during the contract year, MICOR will cover it without increasing the contract
amount. If equipment is deleted from the inventory during the contract year,
there is no change in the contract amount. During the year MICOR and King
Soopers each agree to endure the risk of equipment movements and changes.
Annually MICOR will update the inventory and make appropriate fee adjustments to
reflect actual equipment count and price circumstances. The only caveat to the
fixed-count-fee will be major equipment realignments like branch or department
dissolution or additions and acquisitions. At such times, if any, MICOR will
conduct a new inventory and make appropriate changes to be agreed to by the
parties.
2. Scope of Work. Service provided by this Agreement is described in
Attachment A and includes:
a) Labor for:
i) adjustments;
ii) repairs and replacement of damaged and/or inoperative parts
necessitated by normal use of the equipment;
iii) lubrication; and,
iv) cleaning as determined appropriate and necessary by authorized
Micor service representatives during service calls.
b) replacement parts required by normal use of the equipment; and,
c) transportation and related technician travel costs to the equipment
site.
3. Limitations. The contract does not include replacement of consumable items
(see item 4) exterior covers, brackets, supports, cassettes, trays, doors,
panels or hinges. Damage to equipment items detailed in Attachment "B" or
parts to such equipment necessitated by or arising out of client misuse,
abuse, negligence or causes beyond MICOR control, including but not limited
to theft, fire, or acts of God are not covered by this Agreement (See item
4).
a) Alterations and Modifications. Alterations and modifications to
equipment must be approved and/or recommended by the manufacturer of
that equipment. MICOR will not alter or modify equipment at the
request of the operator nor will MICOR be responsible for supporting
the use of equipment that is being used outside the manufacturer's
design specifications.
b) Technology and Obsolescence. Under the terms of this contract MICOR
cannot be held liable for the unavailability of parts due to:
equipment age; technology changes; manufacturer availability or a)
reliability; or, any other factor beyond MICOR's control. If it is
determined that parts or supplies for equipment under contract are no
longer available to MICOR, King Soopers's representative will be
notified and appropriate adjustments made in the next contract period
renewal.
c) Other Limitations:
i) MICOR reserves the right to deem any equipment not repairable if
repair cost exceeds fifty percent (50%) of the cost for a new
equivalent piece of equipment. If this decision is made, Micor
will inform King Soopers' Help Desk before any other action or
repair is started.
ii) Shipping costs covered under this contract are those incurred as
a result of ordinary ground rates. It is MICOR's policy to stock
on hand high mortality or critical need parts to support all
equipment on maintenance contracts. However, on occasion there
may be a need for a
--------------------------------------------------------------------------------
MTI Equipment Blanket Service Proposal
King Scoopers
1
<PAGE>
part that is not stocked or is currently out of stock. In
situations where the customer feels that a delay in repair due to
a need to order a part(s) would be unacceptable, MICOR will, at
the customer's request, have the parts shipped second day or next
day air directly to the customer. The additional charge for this
expedited delivery is not covered under this contract. Any
additional special shipping charges will be billed at Micor's
cost. Micor will not profit from special shipping charges.
iii) Any part, module, component assembly, cartridge, or unit designed
by the manufacturer to be replaced by the operator is considered
a supply item.
4. Damage to equipment items detailed in Attachment "B" or parts to such
equipment necessitated by or arising out of client misuse, abuse,
negligence or causes beyond MICOR control, including but not limited to
fire, theft, or acts of God are not covered by this Agreement and
accordingly, all labor, parts and other costs required as a result of such
factors will be accumulated to the end of each quarter, i.e. March, June,
September, and December, of King Soopers' physical quarter.
Notwithstanding the foregoing, service calls placed due to a King Soopers
customer's acts or omissions including but not limited to "spilling soda on
a keyboard," or "crashing a cart into a credit card reader" will not be
considered operator error, and accordingly, would be covered under this
agreement. However, at the next renewal period, the cost of this service
will be considered when reviewing the succeeding period's billing fee.
5. Consumables. The cost and installation of consumable parts and supplies is
not covered by this Agreement. (See Attachment B for exceptions to
consumable items.) Consumable parts and supplies are defined herein to be
those parts and/or supplies that wear out, are consumed and/or require
periodic replacement as a result of day-to-day use, wear and tear. The cost
of consumable items and their installation will be billed separately. See
Exhibit "A" hereto which includes examples of consumable part and supply
items.
6. Preventative Maintenance. Preventative maintenance service consists of an
initial assessment and diagnoses of the overall operating performance of
the equipment item, followed by adjustments to bring the machine in concert
with OEM specified tolerances and, as applicable, oiling, lubricating and
cleaning of the machine.
7 Reconditioning. When, in its sole discretion, MICOR determines a shop
reconditioning is necessary to keep the equipment in appropriate working
condition, MICOR will submit to the Client an estimate of needed repairs
and the cost thereof, which cost will be accumulated to the end of the
quarter of King Soopers physical quarter. Billing for these repairs will be
invoiced separately. If Client does not authorize such reconditioning,
MICOR may, at its option discontinue service of the equipment item.
7. Loaner Equipment. In the event a machine is removed from the Client's
premises for shop reconditioning, or repair, MICOR may, at its option,
provide Client with a loaner machine, subject to availability.
8. Term. The term of this Agreement shall be from the date herein specified
through a consecutive twelve (12) month period. Thereafter, King Soopers
shall review the Agreement. Micor will inform King Soopers of the renewal
ninety (90) days before the agreement renews and Kings Soopers will inform
Micor no less than thirty (30) days of any changes, additions, or
deletions. After Micor and King Soopers agree on any adjustment or changes,
the agreement will be renewed for a successive one (1) year period, subject
to receipt by MICOR of the maintenance charge in effect at the time of the
renewal, as specified in Attachment "A" hereto, provided the Client is not
in default as to any previous payment or billing. During the first ninety
(90) days of this agreement, neither party, Micor or King Soopers, may
cancel this agreement. Thereafter, either party to this Agreement may
terminate the Agreement at any time by delivering written notice to the
other party thirty (30) days prior to the intended termination date. In the
event MICOR terminates the Agreement, the unused balance of the annual
maintenance charge, as specified in Attachment "A" hereto, will be prorated
and refunded to the Client.
9. Progress Payments. Client agrees to pay one twelfth (1/12) of the annual
contract fee to Micor due on the fifteenth of the preceding month, i.e. for
service during the month of January 1999, payment will be due on December
15, 1998. At contract renewal, appropriate adjustments will be made to
allow for significant equipment increases/decreases, specific penalties,
and cost of living increases.
--------------------------------------------------------------------------------
MTI Equipment Blanket Service Proposal
King Scoopers
2
<PAGE>
10. IN NO EVENT WILL MICOR BE LIABLE FOR ANY LOSS OF DATA, LOST PROFITS, LOST
SAVINGS OR OTHER CONSEQUENTIAL DAMAGES, EVEN IF MICOR HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES OR FOR ANY CLAIM AGAINST THE CLIENT BY ANY
OTHER PARTY UNLESS DUE TO THE ACTS OR OMISIONS OF MICOR. EXCEPT AS
EXPRESSLY PROVIDED HEREIN, MICOR DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANT-IBILITY, FITNESS FOR
USE OR FITNESS FOR A PARTICULAR PURPOSE OTHER THAN THOSE SET FORTH HEREIN.
11. Governing Law. This Agreement shall be governed by and construed according
to the laws of the State of Colorado.
12. Exclusive Agreement. This Agreement, which includes all attachments and
exhibits, constitutes the complete and exclusive understanding of the
parties hereto and Supersedes all other oral or written communications and
any prior agreements between MICOR and the Client relating to the
maintenance service of Client's equipment. In order to be binding on the
parties, any modification to this Agreement must be made in writing and
acknowledged (signed) by both parties to the Agreement.
Executed this day of 199 .
MICOR TECHNOLOGIES, INC. DILLON COMPANIES, INC.
/s/ Jerry Washburn /s/ Bob Letcher
----------------------------------- -----------------------------------
By By and on behalf of its
King Snoopers Inc. Division
Jerry Washburn / President Bob Letcher
----------------------------------- -----------------------------------
Printed Name and Title Printed Name and Title
Dir Store Services
3
