<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
Commission File Number 0-8164
MSI Holdings, Inc. f/k/a/ MICRO-MEDIA SOLUTIONS, INC.
(herein referred to as "Registrant", "Company", or "MSHI")
(Exact name of registrant as specified in charter)
UTAH 87-0280886
State or other jurisdiction of (I.R.S. Employer I.D. No.)
Incorporation or organization
Address of principal executive offices) 501 Waller Street,
Austin, Texas 78702
Issuer's telephone number, including area code (512) 476-6925
Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
Securities registered pursuant to section 12(g) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, None
Par Value $.10
Check whether the Issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes (X) No ( ) (2) Yes (X) No ( )
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.( )
State issuer's revenues for its most recent fiscal year: $2,740,821
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State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days.
Based on the closing price for the Company's Common Stock at June 17, 1998 of
$6.25 per share, the market value of shares held by non-affiliates would be
approximately $11,414,000.
As of March 31, 1998 the Registrant had 11,506,846 shares of common stock issued
and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the part
of the form 10-KSB (e.g., part I, part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or other
information statement; and (3) Any prospectus filed pursuant to rule 424 (b) or
(c) under the Securities Act of 1933:
None.
PART I
BUSINESS
Background
MSI Holdings, Inc., a Utah corporation ("MSHI" or the "Company"), headquartered
in Austin, Texas, is a communications services company specializing in turnkey
solutions for high-speed Internet connectivity, communication infrastructure
design and installation, and network system integration for customers in both
the private and public sectors. MSHI was formerly known as Micro-Media
Solutions, Inc.,(a Utah corporation). MSHI has two wholly-owned subsidiaries,
Micro-Media Solutions, Inc., a Texas corporation ("MSI") and TeleVista, Inc., a
Texas corporation, doing business as High Power.Net, ("TVI"). TVI was
incorporated in August, 1998 and has not yet commenced operations. The Company
is publicly traded on the NASD OTC Bulletin Board under the symbol "MSIA".
MSI was formed in 1993 to provide computer hardware, software programming,
system installation and support, maintenance, and media duplication to the
public and private sectors. MSI maintains certification as a minority-controlled
business enterprise and status as a Historically Underutilized Business ("HUB").
On June 23, 1997, the then shareholders of MSI entered into an agreement and
plan of reorganization (the "Combination Agreement") with Mountain States
Resources Corporation (now known as MSI Holdings, Inc.), whereby the Company
acquired all of the issued and outstanding stock of MSI in exchange for
9,310,000 shares of the Common Stock of the Company (the "Combination"). The
Combination was accounted for as a recapitalization.
<PAGE> 3
MSHI's facilities in east Austin, Texas are designed for final assembly-type
production, system integration services, depot repair (pick-up, repair and
return service), warehousing of computer equipment and collocation (remote site
Internet access by companies). Currently, the Company is not providing
collocation services, but is expected to be able to provide this service in
early 1999. These facilities are located in an economically challenged area of
Austin to introduce a non-traditional business into the area, to provide
high-tech employment skills to the typically underprivileged area residents, and
to access a loyal, under-utilized and readily available workforce. In the years
since its inception, the Company has grown from a 2 person operation to over 70
employees.
The Company has focused on systems design and system implementation services and
is a certified installer of copper and fiber optic cabling for use in local area
and wide area networks supporting data, voice, and video applications. MSHI's
computer networking services include system integration and design installation
as well as maintenance of local and wide area networks ("LAN/WAN"). In this
context the Company also provides hardware and software sales related to its
systems designs and implementation services.
Industry Overview
The Company, through its collocation services, intends to enter the Internet
access market in early 1999. According to Hoover's Online industry review of the
Internet/Online industry, the Internet access market is currently a $3 billion
industry and online services are predicted to generate revenues of $15 billion
per year by the year 2003. The significant growth in the telecommunications
industry is driven by increasing demand for data services and Internet
connectivity. Provider and consumer hardware and software technologies have been
rapidly advancing. In this evolving climate, global access to information has
become increasingly important. The Internet has evolved as the preferred medium
to handle the demand for increased data transmissions speeds. The Company
believes companies in the forefront of developing bandwidth capacity,
transmission and processing speeds, and Internet access are best positioned to
capitalize on the growth potential in this area of the telecommunications
industry. Modem manufacturers are developing faster modems, phone companies are
seeking to transmit more data bits through their lines and even direct-broadcast
satellite companies, like DIRECT TV, are entering the industry, including
Microsoft's recent $1 billion investment in Comcast.
One of the main impediments to Internet growth is data transmission speed. The
Company believes that, absent increased bandwidth to handle the increasing
traffic on the Internet, delays during downloads will continue to be costly and
turn away users. By offering bundled services, the Company will provide the
market with turn-key solutions to bridge the technology gap. The Company's
ability to provide comprehensive information technology solutions, including
wider bandwidths, will enhance, in the opinion of management, its ability to
provide competitive customer service and generate increasing revenues.
Services and Products
MSHI is a communications services company specializing in turnkey solutions for
high-speed Internet connectivity, communication infrastructure design and
installation, and network system integration in the private and public sectors.
The company has plans to implement collocation services in early 1999.
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Until the end of 1996, the Company emphasized the sale of electronics equipment
with a concentration in contracts that relied on MSI's HUB status. However, in
1997, the Company decided to change its direction to concentrate on
communications technology services. The Company intends to invest in the
development of core infrastructure to support collocation and Internet
connectivity services. By being able to provide high-speed bandwidth, coupled
with its current ability to provide wide-area fiber optic network installations,
MSHI should be in a position to satisfy a broad range of current market demands.
MSHI offers web design, development, hosting, and high speed Internet
connectivity services, and will provide turn-key collocation services (including
on-site services and support). Its system integration services include the
certified design and installation of advanced copper and fiber optic lines for
both intra- and inter-plant cabling projects in the private and public sectors.
The Company also evaluates, installs, maintains, and administers advanced
LAN/WAN systems. Its full service system integration services include the
procurement, installation, configuration, and testing of key components.
Further, the Company's service and support team currently provides service and
repair for wireless, data, and voice technology networks throughout the State of
Texas.
MSI's principle product is its technical expertise. The Company has taken a
proactive approach to developing a skilled labor force while decreasing its
requirements for carrying inventories of computer hardware. In addition, the
Company's facilities are located in Austin, Texas which has been attracting
technology driven industries. The inventory necessary to carry its technical
services is readily available within the region or, alternatively, from domestic
suppliers.
Strategic Opportunity
In July 1998, MSI entered into a renewable 10 year sublease with GTE Intelligent
Network Services, Inc. ("GTE") under which MSI agreed to lease a portion of its
east Austin facilities to GTE for installation of GTE's Point of Presence
("POP") equipment (the "Sublease"). On May 29, 1998, MSI entered into a three
year subscription to GTE's Internet Advantage version 5.1 Connection Service
granting MSI access to GTE's POP (the "Connection Service"). MSI has also
subscribed to GTE's Dialinx Service for 36 consecutive months, allowing for the
resale of internet access to end-users (the "Dialinx Service Service),(the
Sublease, Connection Service and Dialinx Service are collectively referred to as
the "GTE Agreement"). GTE's establishment, management and monitoring of multiple
domains on behalf of MSI is included in the Connection Service. The Connection
Service was upgraded to GTE's Internet Advantage version 6.0 on September 29,
1998. MSI will lease connections to the POP for access to the GTE Internet
network to other businesses. MSI will target companies that need direct,
high-speed access to the Internet through collocation services for high volume
(known as bandwidth) Internet web applications. Collocation is a service that
provides a high speed, high bandwidth connection to the Internet backbone using
various backup systems to increase the connection's fault tolerance. By
connecting directly to Internet via the POP, MSI is able to eliminate the local
link, the weakest component in an Internet connection. MSI will have the
capacity to support over five thousand collocation rack spaces. These rack
spaces will be used to host the net servers for MSI clients and provide those
clients with direct access to the Internet. When fully implemented, these
collocation services are expected to significantly increase MSHI's revenues over
the term of the Connection Service. The GTE Agreements provide the potential for
MSHI to increase revenue by selling Internet access to various high Internet
demand
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entities for such activities as commerce and academics. It is anticipated
that the requisite hardware will be operational in January 1999.
MSHI intends to develop critical business services, including high-speed,
high-bandwidth Internet connectivity, and network design and installations,
allowing MSHI to address a broad-range of the dynamic demands in the
marketplace. Currently MSHI's operations have been limited to within Texas.
However, MSHI plans to continue developing its marketing efforts to expand the
Company's licenses beyond its home state. The Company's strategic alliances are
also being utilized to promote this objective. The GTE Agreements allow MSHI to
satisfy the market's current dynamic demands and have the potential of quickly
moving the Company into other geographic markets.
MSHI's depot service operations and state-wide service networks allow MSHI to
provide inside /outside plant cable installations, development of data
processing and network technology and provide MSHI the opportunity to add
additional bundled-services to its product mix. MSHI is expanding its current
lines of depot services to include on-site service and depot operations for
maintaining computer equipment related to the Texas State Lottery. MSHI's
current depot services clients also include: GTECH Corporation, Transactive
Corporation, the State of Texas, CompUSA, Southwestern Bell Corporation and
various Texas school districts and University systems.
The Company's Internet expertise also affords it the opportunity to provide
certain, non-traditional information technology services, such as maintaining
"virtual" retail distribution centers. MSHI currently maintains the exclusive
Hewlett Packard online storefront, which provides web site access to Fortune 100
companies, federal, state and local governmental agencies. Hoover's Online
industry review estimates this market sector, with participants like Amazon.com,
as a $5 million annual business.
Competition
The telecommunications industry is highly competitive and the capital
requirements for entry are relatively low. The computer and information access
markets are characterized by rapidly changing technology and evolving industry
standards. Competition exists in both the processing and retail levels and is
based primarily on price, product features, reputation for service and quality,
sales promotions, merchandising terms, and availability of processing capacity.
The Company experiences significant competition from other network computer
manufacturers, suppliers of personal computers and workstations, and software
developers. Major competitors of the Company include Original Equipment
Manufacturers ("OEMs") and distributors, smaller niche-market installers, and
information technology providers including system consultants. The size and
capitalization of the Company's competitors range from small local companies to
multi-national providers such as IBM, DELL and America Online. However, due in
part to the Company's change in direction to concentrate on communication
technology services, the Company will be seeking a significant capital infusion.
Without this capital infusion it is likely that the Company will be unable to
compete with those entities that have greater capital. See Management's
Discussion and Analysis of Financial Condition and Results of Operation & Going
Concern Issues.
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Government Regulations
The Company has been dependant on its status as a HUB to develop is reputation
and business. It is currently well within the revenue and employee limits for
its SIC Code classification to maintain its HUB status. However, as the Company
continues to grow and develop, its revenue and employee characteristics and SIC
Code designation may change. In addition, for reasons beyond the Company's
control, the state and federal HUB programs may cease to exist. Though no such
event is anticipated, the potential loss of HUB status may have a material
adverse effect on the Company's revenue generating abilities. See Management's
Discussion and Analysis of Financial Condition and Results of Operation and
Potential Loss of HUB Status.
Employees
At March 31, 1998, MSI had a total of 60 employees, of which 53 are full-time
employees. None of MSI's employees are subject to a collective bargaining
agreement, and the Company believes its relations with its employees are good.
Legal Proceedings
The Company is currently involved in two material lawsuits, both of which relate
to the Company's relationship with a former consultant, Kenneth O'Neal
("O'Neal") and a firm which he controls, Argus Management, Inc. ("Argus"). On
December 18, 1997 Argus filed a lawsuit in Kerr County, Texas, 216th Judicial
District, to collect on two promissory notes in the aggregate principal amount
of $200,000. The Company is vigorously defending this lawsuit and it filed a
related suit against O'Neal and Argus in Travis County, Texas on February 6,
1998, alleging fraud, usury in connection with the promissory notes, and seeking
an order from the Court demanding that Argus transfer 293,185 shares of Common
Stock of MSI, held by Argus, to various shareholders who have previously
purchased such shares (the "Argus Related Shares").
Item 2. Properties
General
MSI's principal administrative, marketing, manufacturing and research and
development operations are located at 501 Waller Street in Austin, Texas. MSI's
two facilities in east Austin consist of approximately 39,500 square feet and
20,000 square feet, respectively, of leased office and warehouse space with the
leases expiring in July 31, 2008 and August 31, 2005, respectively. The
facilities are designed for collocation, production, system integration
services, depot repair, and warehousing. If it were to require additional space,
MSI believes that convenient office or warehouse space is readily available for
lease. The annual gross rent for these facilities for the year ended March 31,
1998 was $109,980. The Company believes its existing facilities to be adequate
for its present requirements.
Capital Expenditures
We believe that investment in the Company's core telecommunications, services
and hardware business will: Facilitate the introduction of new products and
services; Enhance our responsiveness to ever increasing competitive challenges;
and increase the operating efficiency and productivity of our service group.
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Growth in capital expenditures was driven by demands in our core business
coupled with internal expansions to prepare for the attraction of larger
contracts. Capital expenditures were $195,685, and $632,900 in 1998 and 1997,
respectfully. Our capital spending is based on customer needs and our business
plans. Investments in technologies that will enable us to provide customers with
new products and services represent a high priority.
Item 3. Legal Proceedings
For a discussion of legal proceedings, refer to Note 13, Contingency, in the
consolidated financial statements as of June 30, 1998.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders of MSI during the
quarter ending March 31, 1998. Annual meetings of the shareholders of MSI are
held in accordance with Utah law. The next annual shareholders meeting will be
set for September, 1998.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Company's Common Stock is traded over-the-counter and is quoted on the OTC
Electronic Bulletin Board under the symbol "MSIA". The table below sets forth
the high and low closing sale price of the Common Stock for the periods
indicated, as reported by the OTC Electronic Bulletin Board.
<TABLE>
<CAPTION>
Quarter Ended Low High
<S> <C> <C>
June 30,1996 N/A N/A
September 30, 1996 N/A N/A
December 31, 1996 0.0625 2.00
March 31,1997 0.25 2.00
June 30,1997 0.125 2.00
September 30, 1997 0.50 2.25
December 31, 1997 0.50 3.50
March 31, 1998 0.625 2.6875
</TABLE>
On March 31, 1998 there were approximately 5,390 registered holders of the
Registrant's common stock, including those persons having beneficial positions
in street name holdings.
Holders of common stock are entitled to receive such dividends as may be
declared by the Registrant's Board of Directors. Since its inception, the
Company has not paid any dividends and does not anticipate paying any cash
dividends on its Common Stock in the foreseeable future. The Company plans to
retain its future earnings, if any, to finance the growth and development of its
operations. With respect to the Common Stock, the declaration and payment of
dividends in the future, of which there can be no assurance, will be determined
by the Board of Directors in light of conditions then existing, including the
Registrant's earnings, financial condition, capital requirements and other
factors.
See Note 10 in the consolidated financial statements for March 31, 1998, for a
discussion of preferred stock.
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Item 6:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS SECTION AND OTHER PARTS OF THIS PROSPECTUS CONTAIN FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS
MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING
STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED BELOW.
Overview
Micro-Media Solutions, Inc. ("MSI"), the operating subsidiary of MSHI was
created in 1993 in Austin, Texas, to provide computer hardware, software
programming, system installation and support, maintenance, and media duplication
to the public and private sectors. MSI maintains certification as a
minority-owned business enterprise and status as a Historically Underutilized
Business ("HUB"). On June 23, 1997, the then shareholders of MSI entered into an
agreement and plan of reorganization (the "Combination Agreement") with Mountain
States Resources Corporation (now known as MSI Holdings, Inc.), whereby the
Company acquired all of the issued and outstanding stock of MSI in exchange for
9,310,000 shares of the Common Stock of the Company (the "Combination"). The
Combination was accounted for as a recapitalization.
Among the principal costs to market and sell the Company's products are
advertising and promotion costs, salaries and commissions, and general and
administrative expenses. MSHI's operating results may be subject to fluctuations
on a quarterly and an annual basis as a result of various factors, including,
but not limited to, fluctuating market pricing for computer and semiconductor
memory products, industry competition, seasonal government purchasing cycles,
and working capital restrictions on manufacturing and production. Therefore, the
operating results for any particular period are not necessarily indicative of
the results that may occur in any future period.
The Company's revenues consist of hardware sales, software sales and the
delivery of technical services, including installing and maintaining networks
system. The technical service sales of the Company typically yield a higher
gross margin than the hardware and software sales of the Company. This is due,
in part, to the intense competition in the hardware and software sales sector
from Original Equipment Manufactures ("OEM's") and distributors. As a result,
the Company, is attempting to strategically reposition itself from emphasizing
hardware sales to intensifying sales of technical services.
Recent Developments
In July 1998, MSI entered into a renewable 10 year sublease with GTE Intelligent
Network Services, Inc. ("GTE") under which MSI agreed to lease a portion of
their east Austin facilities to GTE for installation of GTE's Point of Presence
("POP") equipment (the "Sublease"). In May 1998, MSI entered into a three year
subscription to GTE's Internet Advantage version 5.1 Connection Service granting
MSI access to GTE's POP (the "Connection Service"). MSI has also subscribed to
GTE's Dialinx Service for 36 consecutive months, allowing for the resale of
internet access to end-users (the "Dialinx Service Service),(the Sublease,
Connection Service and Dialinx Service are collectively referred to as the "GTE
Agreement"). GTE's establishment, management and monitoring of multiple domains
on behalf of MSI is included in the Connection Service. The Connection Service
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was upgraded to GTE's Internet Advantage version 6.0 on September 29, 1998. MSI
will lease connections to the POP for access to the GTE Internet network to
other businesses. MSI will target companies that need direct, high-speed access
to the Internet through turn-key collocation services for high volume (known as
bandwidth) Internet web applications. Collocation is a service that provides a
high speed, high bandwidth connection to the Internet backbone using various
backup systems to increase the connection's fault tolerance. By connecting
directly to the Internet via the POP, MSI is able to eliminate the local loop,
the weakest component in localized Internet connections. MSI will have the
capacity to support over four thousand collocation rack spaces. These rack
spaces will be used to host the net servers for MSI clients and provide those
clients with direct access to the Internet. When fully implemented, these
collocation services are expected to significantly increase MSHI's revenues over
the term of the Connection Service. The GTE Agreements provide the potential for
MSHI to increase revenue by selling Internet access to various high Internet
demand entities for such activities as commerce and academics. It is anticipated
that the requisite hardware will be operational in January 1999.
In July 1998, MSI began providing systems integration, warehousing, systems
configuration and other fulfillment services for Siemens-Nixdorf Information
Systems, Inc. ("Siemens-Nixdorf") for Point of Sale ("POS") systems and
Automated Teller Machines for Siemens-Nixdorf's customers such as Sears-Roebuck
and Bealls department stores (the "Siemens-Nixdorf Agreement"). This agreement
provides that Siemens-Nixdorf will store its inventory at MSI, and MSI will
charge Siemens-Nixdorf for various systems integration services. This
arrangement provides MSHI with a revenue stream without a significant working
capital commitment.
MSHI formed TeleVista, Inc., a wholly owned subsidiary ("TVI") in September of
1998 to run the electronic commerce business for the on-line sale of hardware
and software over the Internet through the use of a secure server. Secure
servers allow for the accelerated receipt of funds through credit card payments
for hardware and software purchases made through their web sites operated by it.
Results of Operations
Year Ended March 31, 1998 Compared with the Year Ended March 31, 1997
Revenues for 1998 were $2,740,821 as compared to revenues for 1997 of
$4,665,749. Revenues for 1998 decreased $1,924,928 or (41.3%) from 1997. This
reduction in revenues in 1998 occurred primarily as a result of the completion
of a large network installation project without any new projects queued to
follow coupled with a leveling off of hardware sales.
Cost of goods sold for 1998 increased $62,399 or 2.1% from 1997. This increase
in cost of goods sold was primarily the result of increased costs of hardware
and services, partially offset by decreases in the costs associated with the
Company's network services. Costs of goods sold for 1998 as a percentage of
revenue was 111.7%. This percentage is extraordinarily high and resulted in a
negative gross margin of ($319,813) or (11.7%) of revenues for the year as
compared to a gross margin of $1,667,514 for 1997. The gross margin as a
percentage of revenues for 1997 was 35.7%. The gross margin percentage
experienced in 1997 more closely represents the gross margins Management is
working to attain. Extraordinary items experienced in cost of goods sold for
1998 include a cost overrun of approximately $500,000 on a large cabling project
for a Texas school district. The project was a lump sum contract and the overrun
was absorbed by the Company. Problems experienced with the
<PAGE> 10
substantial cost overrun situation have been addressed with better controls, new
middle management and improved accounting. Management does not anticipate
significant cost overruns in the future.
Selling, general and administrative expenses in 1998 of $3,447,137 represent
125.8% of revenues. The 1998 selling, general and administrative expenses
represent an increase over 1997 of $1,297,238 or 60.3%. Approximately 50% of the
expense increase, or approximately $623,000, represents the expenses associated
with the hiring of increased marketing and technical staff to enable the Company
to work on larger service contracts. Other increases include professional fees,
which increased approximately $314,923 due to additional legal, accounting and
other consultants associated with the Combination and the reporting requirements
attendant to being a publicly traded company. Interest expense also increased
$194,000 due to increased line of credit usage and late fees on overdue
accounts.
Going Concern Issues
The Company's significant historical losses raise a doubt as to the Company's
ability to continue as a going concern. The Company plans to address the going
concern issues described elsewhere in this filing through an additional private
placement and a possible $20 million debt issue. However, there can be no
assurance that the Company will be able to secure such additional capital.
Subsequent to March 31, 1998, the Company received $2 million dollars in
proceeds from Private Placement Phase III (as defined) that have been used to
retire debt, decrease past due accounts payable and for operating expenses. As a
result, the Company's current ratio has improved and its cash position has
increased. The Company is in the process of consummating a private placement of
a newly created Series E Preferred with net proceeds to the Company of
approximately $2.6 million (the "Proposed Private Placement").
Management believes that its contracts with GTE and Siemens-Nixdorf have the
possibility of producing revenues of approximately $3 million in 1999. The
Company's ability to fulfill its obligations under the GTE Agreement is
contingent upon the successful consummation of the Proposed Private Placement
and obtaining the working capital contemplated by the debt issue described in
the preceding paragraph.
Potential Loss of Hub Status
MSI is currently qualified in Texas as a "Historically Underutilized Business"
("HUB"). As long as MSI maintains its status as a HUB, it will continue to
receive favorable treatment by certain governmental entities in their granting
of contracts. The Company generated revenues of approximately $414,000 and
$919,000 during 1998 and 1997, respectively, from HUB related contracts, or 15%
and 20% of its gross revenues, respectively. MSI will graduate from its HUB
status upon the happening of any of the following events: (i) less than 51% of
the Company's voting stock is owned by minorities; (ii) such minority owners are
not active participants in the day-to-day operations and management of the
business; (iii) the four year average of gross revenues of MSI exceeds certain
levels based on the MSI's Standard Industrial Classification Code ("SIC Code");
or (iv) the four year average of total employment levels of MSI exceeds the
Small Business Administration established levels for businesses with a similar
four-digit SIC Code. Under the current SIC Code applicable to MSI, MSI must not
exceed 500 employees, it currently has 79 employees. The current SIC Code
classification does not impose a revenue ceiling, however, some SIC Code
classifications under which MSI operated placed a three year or a four year
<PAGE> 11
average of gross revenue limitation. The potential loss of HUB status may also
be contingent upon the SIC Code under which MSI operates in the future. Future
changes in operations may require the MSI to change its SIC Code, which could
alter the employee ceiling and impose revenue restrictions as low as $5 million
per year, averaged over periods as short as three years. There can be no
assurance that MSI will continue to qualify for HUB status. Further, there is no
assurance that HUB-type programs will not be eliminated by the state or federal
governments. If MSI's HUB status is lost, the Company anticipates a significant
loss of revenues.
Liquidity and Capital Resources
On November 18, 1997, the Company received $2,120,000 upon completion of a
private placement whereby 400,000 shares of Series B Preferred were sold to
Entrepreneurial Investors, Ltd. ("EIL") for $5.30 per share ("Private Placement
Phase I"). The Company also issued 20,000 shares of Series B Preferred to Equity
Services, Ltd. ("ESL") as a placement agent fee for the completion of Private
Placement Phase I. The Company received $371,000 in October 1997 from two
individuals pursuant to two senior convertible notes (the "Notes"), which are
secured by an aggregate of 1,050,000 shares of Common Stock of the Company. The
Notes were subsequently converted into an aggregate of 70,000 shares of Series B
Preferred. On February 4, 1998, the Company received $1,000,000 completing a
second private placement whereby 94,340 shares of Series C Preferred were sold
to EIL for a purchase price of $10.60 per share ("Private Placement Phase II").
As placement agent fee for the completion of Private Placement Phase II, the
Company issued 4,717 shares of Series C Preferred to ESL. By July, 1998, the
Company received $2,964,364 completing a third private placement, whereby
279,657 shares of Series D Preferred were sold to fourteen investors for a
purchase price of $10.60 per share ("Private Placement Phase III"). The expenses
for Private Placement Phase I, Private Placement Phase II, and Private Placement
Phase III, including broker fees, placement agent fee and legal and accounting
expenses totaled $634,800, $206,747, and $1,022,821, respectively.
For the years ended March 31, 1998 and 1997, the Company's total assets were
$2,699,452 and $2,514,308, respectively, with liabilities of $2,607,783 and
$2,617,892, respectively. Current assets of $1,898,621 and $1,310,495 represent
90.8% and 67.9% of current liabilities of $2,090,701 and $1,929,042.
Improvements in the Company's cash position are a result of the collection of
accounts receivable and funds from increases in shareholders equity resulting
from the previously consummated private placements more particularly described
above. Reductions in accounts receivable between 1998 and 1997 are a direct
reflection of the reduced level of sales experienced in 1998. Accounts
receivable balances at March 31, 1998 and 1997 reflect the charge off of $73,252
and $4,249, respectively, of uncollectable accounts receivable. The Company's
liabilities of $2,607,783 at March 31,1998 consist of $1,228,966 of a fully
secured credit line, $861,734 of current liabilities and $517,082 of long-term
liabilities.
The Company, subsequent to March 31, 1998, paid its Bank One Texas, NA loans in
full and substantially reduced the borrowings under its fully secured line of
credit (see Notes 4, 5 and 13 to the consolidated financial statements for the
year ended March 31, 1998). Net shareholders equity (deficit) as of March 31,
1998 and 1997 was $91,669 and ($103,584), respectively. During the year ended
March 31, 1998, the Company completed Private Placement Phase I and Private
Placement Phase II (See Note 10 to the financial statements for the year ended
March 31, 1998). Subsequent to June 30, 1998, the Company finalized funding of
<PAGE> 12
Private Placement Phase III with proceeds totaling $857,010. Receipt of these
funds enabled the Company to reduce its outstanding debt and pay off the past
due accounts payable.
During the year ended March 31, 1998, working capital increased $426,467 from
the prior year and the balances of its bank lines of credit were reduced as a
result of the application of the proceeds from the completion of Private
Placement Phase I and Private Placement Phase II. At March 31, 1998, the Company
had a working capital deficit of ($192,080) compared to a working capital
deficit of ($618,547) at March 31, 1997. At March 31, 1998 the Company's
accounts payable decreased by $575,699 or 65.7% a compared to March 31, 1997. As
of March 31, 1998, MSI was more than 30 days past due on $170,000 or 57% of its
accounts payable. Subsequent to March 31, 1998, all of the accounts payable over
thirty days past due were paid.
The Company has a critical need for additional working capital to meet
contractual obligations under the GTE Agreements. Management believes that the
GTE Agreements with the Siemens Nixdorf Agreements have the potential to
increase revenue levels, provided that sufficient working capital is obtained.
Year 2000 Issues.
As with other companies, the Company has initiated a program to study the impact
on its computer system in order to be Year 2000 compliant. This study involved
identifying any modifications or replacements of certain hardware and software
maintained by the Company. The study has been completed. The company has
identified the computer systems that will require either modification, upgrade
or replacement. Implementation of the Company's Year 2000 plan should be
completed by March 31, 1999. The Company anticipates that in-house personnel
will be primarily responsible for completing these tasks and that the costs will
be insignificant. As such, the Company believes that the planned modifications,
upgrades and replacements of existing systems will be completed in a timely
fashion to assure Year 2000 compliance, and any related cost will not have a
material impact on the Company's results of operations, cash flows, or financial
conditions in future periods. The Company has budgeted for $25,000 to address
these expenses. In addition, the Company is also taking actions to assure that
its customers and vendors are taking steps to remedy their Year 2000 issues.
The Company is not incurring any unique risks in connection with Year 2000
issues. It is however subject to the risk that information and financial
resources may be temporarily unavailable. This societal risk may temporarily
disrupt cash flows worldwide. The Company believes that by becoming, and
assisting its clients and vendors to become Year 2000 compliant, it is likely to
circumvent that threat. The Company expects to be Year 2000 compliant March 31,
1999. If compliance is not achieved by that date, the Company will reallocate
resources, as necessary, to ensure compliance within six months, thereafter.
Inflation.
Management does not believe that inflation will have a material impact on the
Company's pricing of goods or services since the Company, generally, has the
ability to adjust prices to meet the current market conditions.
<PAGE> 13
Item 7. Financial Statements and Supplementary Data
INDEX:
Independent Auditor's Report - Brown, Graham & Company, PC
Independent Auditor's Report - Salazar & Associates, CPAs
Consolidated Balance Sheet
Consolidated Statements of Operations
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flow
Notes to Consolidated Financial Statements
<PAGE> 14
MICRO-MEDIA SOLUTIONS, INC.
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITOR'S REPORT
FOR YEARS ENDED MARCH 31, 1998 AND 1997
<PAGE> 15
To the Board of Directors of Micro-Media Solutions, Inc.,
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheet of Micro-Media
Solutions, Inc. and Subsidiary (the "Company") as of March 31, 1998 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Micro-Media
Solutions, Inc. and Subsidiary as of March 31, 1998, and the results of their
operations and cash flows for the year then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, and the Company has suffered losses from
operations for the years ended March 31, 1998 and 1997, and current liabilities
exceed current assets by $192,080 at March 31, 1998, which raise substantial
doubt about its ability to continue as a going concern. The financial statements
do not include any adjustments relating to the recoverability and classification
of recorded assets, or the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue in existence.
As more fully described in Note 14, subsequent to the issuance of the Company's
March 31, 1998, financial statements and our report thereon dated June 9, 1998,
we became aware that those financial statements did not reflect certain
adjustments as described in Note 14. In our original report we expressed an
unqualified opinion on the March 31, 1998, financial statements as described in
paragraph three above, and our opinion on the revised statements, as expressed
herein, remains unqualified.
/s/ Brown, Graham & Company, P.C.
Georgetown, Texas
June 9, 1998, except as the fifth paragraph above and Note 14, which are as of
October 9, 1998
<PAGE> 16
SALAZAR & ASSOCIATES
CERTIFIED PUBLIC ACCOUNTANTS
JOSE SALAZAR, CPA FRANCES ORTIZ-SALAZAR, CPA
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of Mountain States Resources Corporation
We have audited the accompanying consolidated statements of operations,
stockholders equity and cash flows of Mountain States Resources Corporation and
subsidiary (the "Company") for the year ended March 31, 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the consolidated financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain a
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated results of their operations
and cash flows for the year ended March 31, 1997, in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 10 to
the consolidated financial statements, the Company has suffered losses from
operations and has a working capital deficiency, which raises substantial doubt
about its ability to continue as a going concern. Management's plans regarding
these matters is presented in Note 10 of these financial statements.
As more fully described in Note 11 and 12, subsequent to the issuance of the
Company's March 31, 1997 financial statements and our report thereon dated June
22, 1997, we became aware that those financial statements did not reflect
certain adjustments as described in Notes 11 and 12. In our original report we
expressed an unqualified opinion on the March 31, 1997, financial statements as
described in paragraph three above, and our opinion on the revised statements,
as expressed herein, remains unqualified.
/s/ Salazar and Associates
Salazar and Associates,
Austin, Texas
June 22, 1997, except as to the fifth paragraph above and Notes 11 and 12, which
are as of June 10, 1998
<PAGE> 17
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (RESTATED)
MARCH 31, 1998
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 25,786
Accounts receivable - Trade 150,851
Inventory 285,023
Short-term Investment, restricted (Note 4) 1,350,000
Other receivables - Advances (Note 2) 86,961
-----------
Total current assets 1,898,621
Property, plant and equipment, net (Note 3) 800,831
-----------
Total assets
$ 2,699,452
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 300,035
Other accrued expenses 169,336
Bank line of credit (Note 4) 1,228,966
Current maturities of long-term debt (Note 5) 151,267
Current portion of obligations under capital leases (Note 6) 41,097
Other notes payable (Note 13) 200,000
-----------
Total current liabilities 2,090,701
-----------
Long-term liabilities:
Notes payable (Note 5) 367,522
Obligations under capital leases (Note 6) 149,560
-----------
Total long-term Notes 517,082
-----------
Commitments and contingencies (Notes 9 & 13) --
-----------
Total liabilities 2,607,783
-----------
Stockholders' equity (Note 10)
Preferred stock Series B; $5.30 stated value;
490,000 shares authorized, issued & outstanding 2,597,000
Preferred stock Series C; $10.60 stated value;
99,057 shares authorized, issued & outstanding 1,050,004
Common stock at $.10 par value; 50,000,000
authorized, 11,506,846 shares issued & outstanding 1,150,685
Additional paid-in capital 2,666,099
Accumulated deficit (7,372,119)
-----------
Total stockholders' equity 91,669
-----------
Total liabilities and stockholders' equity $ 2,699,452
===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
<PAGE> 18
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Revenues:
Hardware, software and peripherals $ 1,350,869 $ 1,440,725
Service, support and integration 704,241 457,572
Networks, LAN/WAN 685,711 2,767,452
------------ ------------
Total revenues 2,740,821 4,665,749
------------ ------------
Cost of goods sold:
Hardware, software and peripherals 1,406,612 1,109,354
Service, support and integration 656,625 283,724
Networks, LAN/WAN 997,397 1,605,157
------------ ------------
Total cost of goods sold 3,060,634 2,998,235
------------ ------------
Gross margin (deficit) (319,813) 1,667,514
------------ ------------
Selling, general and administrative expenses:
Salaries and benefits 1,825,590 1,202,791
Professional fees and consultants 357,174 42,251
Occupancy 212,843 185,516
Depreciation 178,892 139,443
Vehicle expense 126,131 158,765
Other expense 379,057 316,820
Interest expense 294,198 100,064
Provision for uncollectible accounts 73,252 4,249
------------ ------------
Total selling, general and administrative expenses 3,447,137 2,149,899
------------ ------------
Net loss (3,766,950) (482,385)
Plus: Preferred stock dividends (3,471,170) --
------------ ------------
Net loss available to common stockholders $ (7,238,120) $ (482,385)
============ ============
Basic and diluted net loss per share $ (.66) $ (.05)
============ ============
Basic and diluted weighted average shares outstanding 10,998,874 10,026,400
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE> 19
MICRO-MEDIA SOLUTIONS, INC, AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
Series B Series C Common Stock
----------------------- ---------------------- --------------------------
Shares Amount Shares Amount Shares Amount
------- ----------- ------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance March 31, 1996 0 $ 0 0 $ 0 9,784,733 $ 978,473
Common stock
issued for services 0 0 0 0 480,000 48,000
Common stock options
exercised 0 0 0 0 500,000 50,000
Net loss 0 0 0 0 0 0
------- ----------- ------ ----------- ---------- -----------
Balance March 31, 1997 0 0 0 0 10,764,733 1,076,473
Common stock issued:
Interest 0 0 0 0 10,286 1,029
Compensation 0 0 0 0 414,900 41,490
Preferred stock dividend 0 0 0 0 23,742 2,374
Preferred stock issued:
Private Placement 420,000 2,226,000 99,057 1,050,004 0 0
Senior Debt 70,000 371,000 0 0 0 0
Preferred stock dividend
discount 0 0 0 0 0 0
Stock option for:
Compensation 0 0 0 0 0 0
Placement agents 0 0 0 0 0 0
Cash received for
uncertificated stock 0 0 0 0 293,185 29,319
Common stock-uncertificated
issued for note receivable 0 0 0 0 0 0
Note receivable offset against
common stock subscribed 0 0 0 0 0 0
Net loss 0 0 0 0 0 0
------- ----------- ------ ----------- ---------- -----------
Balance March 31, 1998 490,000 $ 2,597,000 99,057 $ 1,050,004 11,506,846 $ 1,150,685
======= =========== ====== =========== ========== ===========
<CAPTION>
Common Stock
------------------------- Additional
Subscribed (Discount on) Accum-
------------------------- Paid - In ulated
Shares Amount Capital Deficit Total
-------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance March 31, 1996 0 $ 0 $(1,046,058) 348,386 $ 280,801
Common stock
issued for services 0 0 0 0 48,000
Common stock options
exercised 0 0 0 0 50,000
Net loss 0 0 0 (482,385) (482,385)
-------- ----------- ----------- ----------- -----------
Balance March 31, 1997 0 0 (1,046,058) (133,999) (103,584)
Common stock issued:
Interest 0 0 4,114 0 5,143
Compensation 0 0 250,367 0 291,857
Preferred stock dividend 0 0 56,294 (58,668) 0
Preferred stock issued:
Private Placement 0 0 (841,547) 0 2,434,457
Senior Debt 0 0 0 0 371,000
Preferred stock dividend
discount 0 0 3,412,502 (3,412,502) 0
Stock option for:
Compensation 0 0 93,750 0 93,750
Placement agents 0 0 253,547 0 253,547
Cash received for
uncertificated stock 0 0 483,130 0 512,449
Common stock-uncertificated
issued for note receivable 543,000 407,250 0 0 407,250
Note receivable offset against
common stock subscribed (543,000) (407,250) 0 0 (407,250)
Net loss 0 0 0 (3,766,950) (3,766,950)
-------- ----------- ----------- ----------- -----------
Balance March 31, 1998 0 $ 0 $ 2,666,099 $(7,372,119) $ 91,669
======== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 20
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,766,950) $ (482,385)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation expense 178,892 139,443
Stock issued for compensation and placement agent fees 291,857 48,000
Stock options issued for compensation 93,750 --
Stock issued for interest 5,143 --
Change in trade receivables 832,062 (166,383)
Change in inventory (19,569) 189,040
Change in accounts payable (577,325) 307,855
Change in accrued expenses 57,775 60,875
----------- -----------
Net cash provided by (used by) operating activities (2,904,365) 96,445
----------- -----------
Cash flows from investment activities:
Purchase of property & equipment (195,685) (655,714)
Purchase of short term investment (1,350,000) --
Additional notes receivables (142,265) --
Proceeds from notes receivables 477,645 --
Proceeds from other receivables 162,793 --
Additional other receivables (121,341) (389,963)
----------- -----------
Net cash used by investing activities (1,168,853) (1,045,677)
----------- -----------
Cash flows from financing activities:
Proceeds from line of credit (net) 504,076 275,000
Proceeds from other notes payable 200,000 --
Payments on long-term debt (162,153) 467,654
Payments on capital lease obligations (32,485) 223,141
Proceeds from private placement of preferred stock 2,688,004 --
Proceeds from issuance of common stock 512,450 --
Proceeds from senior convertible debt 371,000 --
----------- -----------
Net cash provided by financing activities 4,080,892 965,795
----------- -----------
Net increase in cash 7,674 16,563
Cash as beginning of period 18,112 1,549
----------- -----------
Cash at end of period $ 25,786 $ 18,112
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE> 21
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW (RESTATED) - CONTINUED
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Supplemental disclosure:
Cash paid during the year for:
Interest $ 232,578 $ 97,143
========== ==========
Supplemental schedule of non-cash investing and financing activities:
Preferred stock issued for placement agent fees $ 156,000 $ --
Stock options:
Compensation 93,750 --
Common stock issued for:
Compensation 291,857 48,000
Interest on debt 5,143 --
Preferred stock dividends 58,668 --
Common stock subscribed for note receivable 407,250 --
Debt converted to preferred stock 371,000 --
Inventory received for other notes receivable 84,394 --
Discount on preferred stock issued for dividend 3,412,502 --
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE> 22
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS AND ORGANIZATION:
Micro-Media Solutions, Inc. (formerly Mountain States Resources Corporation,
("MSRC")), was organized under the laws of the State of Utah on April 15, 1969.
MSRC began operations in April 15, 1969, as a mining, mineral extraction and oil
and gas exploration company. MSRC discontinued its operations in 1993 and became
a development stage company as described in the Statement of Financial
Accounting Standards No.7, "Accounting and Reporting by Development Stage
Enterprises". On June 23, 1997, MSRC entered into an agreement and plan of
reorganization with the shareholders of Micro-Media Solutions, Inc. (a Texas
Corporation), ("MSI-Texas"), in which MSRC acquired 100% of the common stock of
MSI-Texas. As part of the reorganization, MSRC changed its name to Micro-Media
Solutions, Inc., (a Utah Corporation), ("MSI") (the "Company"). The transaction
was accounted for as a recapitalization.
MSI-Texas is an Austin, Texas, based technology corporation formed to provide
computer hardware, software programming, system support, maintenance, media
duplication, and kitting to the public and private sectors. In addition,
MSI-Texas is certified by the State of Texas as a Historically Underutilized
Business (HUB).
MSI-Texas is a business solutions technology integrator with infrastructure
design and implementation services. In addition, MSI-Texas' computer networking
services includes system integration and local and wide-area networks.
GOING CONCERN:
As shown in the accompanying consolidated financial statements, the Company has
incurred a net loss in the current year of $3,920,497. As of March 31, 1998, the
Company's current liabilities exceeded its current assets by $192,080 and owes
accounts payable with dates due in excess of thirty (30) days in the approximate
amount of $170,000. These factors create a substantial doubt about the Company's
ability to continue as a going concern. The ability of the Company to continue
as a going concern is dependent on the Company's obtaining additional financing
to fund the expenses related to operations and capital improvements.
Subsequent to March 31, 1998, the Company received $2 million in phase III of a
private placement agreement, (see Note 10), which have been used to retire debt,
decrease past due accounts payable and for operating expenses. In addition, the
Company is continuing discussions with private investment groups for a private
placement of a newly created series of preferred stock with net proceeds to the
Company of approximately $2.6 million, and plans a public offering in the year
ending March 31, 1999. Management has identified and closed substantial
contracts during the year ended March 31, 1999, and believes it can produce the
level of revenue necessary to return the Company to a positive earnings trend.
The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements for the years ended March 31, 1998 and
1997, include the accounts and transactions of MSI and MSI-Texas. All
significant inter-company accounts and transactions have been eliminated in the
accompanying consolidated financial statements. MSI, however, did not have any
material asset or liability accounts or account balances. With the exception of
MSI's equity accounts and a deficit retained earnings of $5.7 million, the
significant account balances belong to MSI-Texas.
CASH AND CASH EQUIVALENTS:
Cash equivalents consist primarily of funds invested in short-term
interest-bearing accounts. The Company considers all highly liquid investments
purchased with initial maturities of three months or less to be cash
equivalents.
<PAGE> 23
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
ACCOUNTS RECEIVABLE:
The Company follows the allowance method of expensing accounts receivable when
considered uncollectible. As of March 31, 1998, management believes all accounts
are collectible; and therefore, no allowance has been recorded.
INVENTORY:
Inventory is valued at lower of cost, using the FIFO method
(first-in/first-out), or market. Inventory consists principally of hardware and
software needed for maintaining and building network technology for customers.
PROPERTY, PLANT, AND EQUIPMENT:
Property and equipment are stated at cost. For financial statement purposes,
depreciation is computed using the straight-line method over the estimated
useful lives of the related assets. Amortization of leasehold improvements is
computed using the straight-line method over the shorter of the term of the
related lease or the useful life of the leasehold improvements. Accelerated
depreciation methods are used for tax purposes. Depreciation and amortization
are calculated over the following useful lives stated in years:
<TABLE>
<CAPTION>
Useful
Lives
-----
<S> <C>
Vehicles 5
Furniture and fixtures 5
Equipment 5
Leasehold improvements 20
</TABLE>
REVENUE AND COST RECOGNITION:
Revenue from sales of hardware, software and peripherals is recognized upon
shipment to the customer. Most hardware, software and peripherals sales are made
without the right of return. Product returns which are minimal are recorded as a
reduction of sales upon receipt of the product. Service, support and integration
sales are recognized upon completion of the service and is not subject to
warranty.
Revenue from fixed priced contracts is recognized on the
percentage-of-completion method of accounting, measured by the cost-to-cost
method. This method is used because management considers total costs incurred to
be the best available measure of progress on contracts.
Contract costs include all direct costs and those indirect costs related to
contract performance. Changes in job performance, job conditions, and estimated
profitability and final contract settlements may result in revisions to costs
and revenue and are recognized in the period in which the revisions are
determined.
The asset, "Costs and Estimated Earnings in Excess of Billings on Uncompleted
Contracts", represents revenue earned in excess of amounts billed. The liability
"Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts"
represents billings in excess of amounts earned.
Revenue and contract costs from fixed priced contracts are included in the
various categories of revenue and cost of goods sold. As of March 31, 1998,
there were no contracts in progress.
FEDERAL INCOME TAX:
The Company uses the liability method of accounting for income taxes as
prescribed by the Financial Accounting Standard Board Statement No. 109.
Deferred tax liabilities and assets are determined based on differences between
the financial statement and tax basis of assets and liabilities using enacted
tax rates expected to be in effect for the year in which the differences are
expected to reverse. The net change in deferred tax assets and liabilities is
reflected in the statement of operations.
<PAGE> 24
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
NEW ACCOUNTING PRONOUNCEMENTS:
The Company accounts for stock options and warrants issued to employees in
accordance with APB 25, "Accounting for Stock Issued to Employees". The Company
follows FASB Statement 123, "Accounting for Stock- Based Compensation" ("SFAS
No. 123") for financial statement disclosure purposes and issuance of options
and warrants to non-employees for services rendered.
In accordance with SFAS 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of", management reviews long-lived
assets and intangible assets for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be fully
recoverable. As part of this assessment, management prepares an analysis of the
undiscounted cash flows for each product that has significant long-lived or
intangible asset values associated with it. This analysis for the asset values
as of March 31, 1998, indicated there was no impairment to the carrying value of
these assets.
SFAS No. 130, "Reporting Comprehensive Income", effective for fiscal years
beginning after December 15, 1997, establishes standards for reporting and
display of comprehensive income and its components in a full set of general
purpose financial statements. This statement requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The Company has addressed the
requirements of SFAS No. 130 and no material impact on the financial statements
is expected.
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", effective for fiscal years beginning after December 15, 1997,
establishes standards for reporting information about operating segments in
annual financial statements and interim financial reports issued to
shareholders. Generally, certain financial information is required to be
reported on the basis that is used internally for evaluating performance or an
allocation of resources to operating segments. The Company has not yet
determined to what extent the standard will impact its financial statements.
USE OF ESTIMATES AND CERTAIN CONCENTRATIONS:
Management of the Company has made a number of estimates and assumptions
relating to the valuation and reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these consolidated
financial statements in conformity with generally accepted accounting
principles. Although actual results could differ from those estimates,
management believes its estimates are reasonable. Certain components,
subassemblies and software included in the Company's computer systems are
obtained from sole suppliers or a limited number of suppliers. The Company
relies, to a certain extent, upon the ability of its suppliers' to enhance
existing products in a timely and cost-effective manner, to develop new products
to meet changing customer needs and to respond to emerging standards and other
technological developments in the computer industry. The Company's reliance on a
limited number of suppliers involves several risks, including the possibility of
shortages and/or increases in costs of components and subassemblies, and the
risk of reduced control over delivery schedules.
FINANCIAL INSTRUMENTS:
Cash equivalents include highly liquid short-term investments with original
maturities of three months or less, readily convertible to known amounts of
cash. The amounts reported as cash equivalents, receivables, other assets,
accounts payable and accrued expenses and debt are considered by the Company to
be reasonable approximations of their fair values, based on market information
available to management as of March 31, 1998. The use of different market
assumptions and estimation methodologies could have a material effect on the
estimated fair value amounts. The reported fair values do not take into
consideration potential taxes or other expenses that would be incurred in an
actual settlement.
<PAGE> 25
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Financial instruments that potentially subject the Company to concentration of
credit risk consist principally of cash and cash equivalents and trade accounts
receivable. A concentration of credit risk may exist with respect to trade
receivables, as many of the Company's customers are in the computer and
telecommunications industries. The Company has a large number of customers on
which it performs ongoing credit evaluations and generally does not require
collateral from its customers. Historically, the Company has not experienced
significant losses related to receivables from individual customers or groups of
customers in any particular industry or geographic area.
NOTE 2 - OTHER RECEIVABLES
Other receivables include employee advances for travel and lodging for out of
town projects in the amount of $21,961. Also included in other receivables is
$65,000 of cost paid by the Company to the third parties in satisfaction of
obligations of Argus Management, Inc., (see Note 13).
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
A summary of the Company's investment in property, plant and equipment at March
31, 1998, is as follows (see Note 5 and 6):
<TABLE>
<S> <C>
Equipment, Furniture and Fixtures $ 613,184
Transportation Equipment 253,204
Leasehold Improvements 307,790
------------
1,174,178
Less Accumulated Depreciation 373,347
------------
Net Property, Plant and Equipment $ 800,831
============
</TABLE>
Depreciation charged against income for the years ended March 31, 1998 and 1997,
was $178,892 and $139,443, respectively.
NOTE 4 - BANK LINE OF CREDIT
The Company was in default on a secured line of credit agreement with Bank One
Texas, N.A. providing for borrowings of up to $725,000 based on the amount of
the Company's eligible receivables. As of March 31, 1998, the Company owed
$208,966 plus accrued interest at 18% in the amount of $19,219 secured by
accounts receivable. This amount was paid in full in April 1998 and was not
renewed. Under the agreement, the Company was subject to covenants including
certain financial ratios.
The Company has a secured line of credit agreement with Compass Bank for
$1,350,000 secured by two certificates of deposit aggregating $1,350,000 held in
the Company's name by Compass Bank and payable in monthly installments of
interest only. The balance as of March 31, 1998, was $1,020,000 plus accrued
interest at 8% per annum in the amount of $4,893. Subsequent to March 31, 1998,
the outstanding balance of the line of credit was reduced to $750,000 using
subsequent funding (see note 10) and matures February 5, 1999. The subsequent
reduction in the loans did not release the restriction on the certificates of
deposit. There are no additional loan covenants associated with this line of
credit.
<PAGE> 26
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
NOTE 5 - NOTES PAYABLE
Long-term notes payable consist of the following amounts at March 31, 1998:
<TABLE>
<S> <C>
Austin Community Development Corporation, $100,000 equipment loan dated May 29,
1996, secured by equipment and accounts receivable. Loan requires interest
payments at 9% for the first six months, principal and interest payments
thereafter of $2,224 beginning in February 1997. Loan will mature
over a 60 month period ending January 2002. $ 81,327
Austin Community Development Corporation, $100,000 working capital loan dated
June 14, 1995, secured by equipment and accounts receivable. Loan is due in 48
monthly principal installments of $2,083 along with interest of 9%
beginning in July 1996. Loan will mature in June 2000. 56,497
Neighborhood Commercial Management Program, $75,000 loan from City of Austin
dated June 8, 1995, secured by second lien on equipment and accounts receivable.
Loan is due in 60 monthly installments of principal and interest of $1,347
beginning January 1996. Interest rate of 0% until December 1995, thereafter 3%
rate to maturity. Loan will mature over a 60 month period
ending December 2000. 43,104
Neighborhood Commercial Management Program, $250,000 loan from City of Austin
dated August 12, 1996, secured by second lien on equipment and accounts
receivable. Loan is due in 60 monthly installments of principal and interest of
$4,492 beginning January 1997. Interest rate of 0% until December 1996,
thereafter 3% rate to maturity. Loan will mature over a 60 month period
ending December 2001. 191,194
Bank One Texas, N.A., $200,000 loan dated June 26, 1996, secured by a first lien
on equipment and leasehold improvements. Loan is due in 60 monthly principal
installments of $3,333 along with interest equal to the Bank One Texas, N.A.
base rate plus 2%.
Subsequent to March 31, 1998, loan was paid in full. 146,667
----------
518,789
Less current portion (151,267)
----------
$ 367,522
==========
</TABLE>
Following are maturities of long-term debt for each of the next five years:
<TABLE>
YEAR ENDED MARCH 31,
- --------------------
<S> <C>
1999 $ 151,267
2000 153,067
2001 134,348
2002 80,107
----------
$ 518,789
==========
</TABLE>
The officers of the Company have personally guaranteed all notes.
<PAGE> 27
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
NOTE 6 - OBLIGATIONS UNDER CAPITAL LEASES
The Company is lessee of transportation and telephone equipment under capital
leases expiring in various years through September 2001. The asset and
liabilities under capital leases are recorded at the lower of the present value
of the minimum lease payments or the fair value of the assets. The assets are
depreciated over the lower of their related lease terms or their estimated
productive lives. Depreciation of assets under capital leases is included in
depreciation expense (see Note 3).
Following is a summary of property held under capital leases:
<TABLE>
<S> <C>
Transportation Equipment $ 218,055
Communication Equipment 56,014
</TABLE>
Minimum future lease payments under capital leases as of March 31, 1998, for
each of the next five years and in the aggregate are:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
<S> <C>
1999 $ 68,077
2000 60,343
2001 74,985
----------
Total minimum lease payments 203,405
Less: Amount representing interest (12,748)
----------
190,657
Less current portion (41,097)
----------
$ 149,560
==========
</TABLE>
NOTE 7 - FEDERAL INCOME TAXES
A reconciliation of income tax at the statutory rate to the Company's effective
rate is as follows:
<TABLE>
<S> <C>
Computed at the expected statutory rate $ (1,281,000)
Non-deductible items 40,000
Valuation allowance 1,241,000
------------
Income tax $ --
============
Deferred tax assets are as follows:
Deferred tax asset $ 1,285,000
Valuation allowance (1,285,000)
------------
$ --
============
</TABLE>
The Company has available at March 31, 1998, $3,782,000 of unused operating loss
carryforwards that may be applied against future taxable income and that expire
in various years through 2013.
NOTE 8 - RELATED PARTY TRANSACTIONS
The Company had notes receivable from certain related parties at March 31, 1997,
in the amount of $419,774. These related parties are owned and controlled by
majority stockholders of the Company. During the year ended March 31, 1998, the
Company loaned an additional $142,265 to these related entities and received
payments in the amount of $562,039. At March 31, 1998, the Company did not have
any notes receivables or payables to related parties. The Company did not have
sales or purchases with the related parties for the years ended March 31, 1998
or 1997.
<PAGE> 28
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
NOTE 9 - COMMITMENTS
The Company leases its principal general offices and warehouse facilities. The
leases expire at May 31, 2008. Future minimum lease payments are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
<S> <C>
1999 $ 133,296
2000 142,464
2001 149,340
2002 168,480
2003 179,010
2004 189,540
2005 200,070
2006 210,600
2007 221,070
2008 231,660
2009 40,365
----------
TOTAL $1,865,895
===========
</TABLE>
The total rental obligation under the above contract for the year ended March
31, 1998, was $109,980.
NOTE 10 - STOCKHOLDERS' EQUITY
In October 1997, the Company completed a Private Placement Agreement, (the
"Agreement") with a group of accredited investors. The Agreement provides for
three "Phases" of financing.
Phase I of the Agreement was funded in November 1997. The Company received
$2,120,000 in exchange for 400,000 shares of series B preferred stock (5%
cumulative, convertible, non-voting, stated value $5.30) ,(the "Series B
Stock"). Each share of preferred stock is initially convertible into 10 shares
of the Company's common stock subject to adjustment and six warrants, (the
"Warrants") for the purchase of six shares of common stock at $1.50 per share.
The Company paid $302,000 and issued 20,000 shares of series B preferred stock
for placement agent fees in Phase I. Also options to purchase 400,000 shares of
common stock at $1.50 per share were issued as a part of the Agreement. The
common stock had a fair value of $0.57 per share at the grant date resulting in
$226,800 in placement agent fees. The Agreement states that conversion of the
preferred stock will not occur to the extent that the HUB status of the Company
is compromised. An additional 4,348,738 shares could be converted before the HUB
status would be lost.
The series B preferred stock can be converted to common stock. Therefore, a
discount in the amount of $6,151,978 has been realized. The discount is the
difference in the intrinsic value of the common stock and warrants less the net
proceeds from the series B preferred stock. The discount is accreted from the
date of issuance of the preferred stock to the date the stock can be converted.
Due to the limitation on the number of shares of stock that can be issued to
retain the HUB status, $3,412,502 has been recorded as dividends and as an
increase in additional paid-in capital in the accompanying financial statements.
The unrecognized portion of the discount in the amount of $2,796,524 will be
recorded if and when the preferred stock is converted or the HUB status changes.
Phase II of the Agreement was funded in February 1998. The Company received
$1,000,004 in exchange for 94,340 shares of series C preferred stock (6%
cumulative, convertible, non-voting, stated value, $10.60), (the "Series C
Stock). Each share of preferred stock is initially convertible into 10 shares of
the Company's common stock, subject to adjustment. The Company paid $130,000 and
issued 4,717 shares of series C preferred stock for placement agent fees. Also
options to purchase 47,170 shares of common stock at $4.00 per share were issued
as a part of the Agreement. The common stock had a fair value of $0.57 per share
at the grant date resulting in $26,747 in placement agent fees. The Agreement
states that conversion of the preferred stock will not occur to the that the HUB
status of the Company is compromised.
<PAGE> 29
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
NOTE 10 - STOCKHOLDERS' EQUITY - CONTINUED
The series C preferred stock can be converted to common stock. Therefore, a
discount in the amount of $615,851 has been realized. The discount is the
difference in the intrinsic value of the common stock less the net proceeds from
the series C preferred stock. Due to the limitation on the number of shares of
stock that can be issued to retain the HUB status, the unrecognized discount in
the amount of $615,851 will be recorded if and when the preferred stock is
converted or the HUB status changes.
Phase III of the Agreement was partially funded in April and May 1998 with the
completion of the funding planned in July 1998. The Company has received
$2,000,000 in the partial funding of Phase III.
Senior convertible debt in the amount of $371,000 was issued for cash in
November 1997. This debt was converted to 70,000 shares of series B preferred
stock (5% cumulative, convertible, non-voting, stated value, $5.30), in February
1998. Accrued interest in the amount of $5,143 was paid with the issuance of
10,286 shares of common stock. The discount on this issue of series B preferred
stock is included in the total series B discount detailed above.
Preferred stock dividends were accrued and paid through March 31, 1998, in the
amount of $58,668 by the issuance of 23,742 shares of common stock.
NOTE 11 - STOCK OPTIONS AND WARRANTS
A summary of the status of the Company's stock options as of March 31, 1998, is
presented below:
<TABLE>
<S> <C>
Options outstanding at March 31, 1997 --
Options granted 622,710
Options exercised --
Options canceled --
Less: options not exercisable at year end 222,710
-------
Options outstanding and
exercisable at March 31 400,000
=======
Weighted Average Exercise Price per Share $ 1.50
=======
</TABLE>
The following table summarizes the information about the stock options as of
March 31, 1998:
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Number Average Average Number Average
Range of Outstand- Remaining Exercise Exercisable Exercise
Exercise ing at Contractual Price At Price
Price March 31 Life (Total Shares) March 31 (Exer. Shares)
- -------- --------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 1.50 50,000 (1) 5 years $ 1.50 -- $ 1.50
2.25 25,000 (1) 2 years 2.25 -- 2.25
1.50 100,000 (1) 5 years 1.50 -- 1.50
1.50 400,000 (2) 5 years 1.50 400,000 1.50
4.50 47,170 (2) 6 years 4.00 -- 4.00
1.50
------ ------- ------- ------ ------- ------
$ 4.00 622,170 5 years $ 1.72 400,000 $ 1.50
====== ======= ======= ====== ======= ======
</TABLE>
(1) Options issued to employees for past services.
(2) Options granted for placement agent fees (Note 10)
<PAGE> 30
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
NOTE 11 - STOCK OPTIONS & WARRANTS - CONTINUED
Stock options to employees have been recorded as compensation as applied under
APB No. 25 in the amount of $93,750.
SFAS No. 123 requires the Company to provide pro forma information regarding net
income (loss) applicable to common stockholders and income (loss) per share as
if compensation cost for the Company's stock options granted to employees had
been determined in accordance with the fair value based method prescribed in
that Statement.
The Company estimated the fair value of each stock option at the grant date by
using the Black-Scholes option- pricing model with the following weighted
average assumptions used for grants as follows:
<TABLE>
<S> <C>
Dividend yield 0%
Expected volatility 16.46%
Risk-free interest rate 8.54%
Expected lives 5 Years
</TABLE>
The weighted fair value of options granted for compensation during the year
ended March 31, 1998, was $1.08.
Under the accounting provisions of SFAS No 123, the Company's net loss
applicable to common stockholders and loss pro forma amounts are indicated as
follows:
<TABLE>
<S> <C>
Net (loss) applicable to common stockholders:
As reported $(7,238,120)
Pro forma $(7,142,870)
Net (loss) per share:
As reported $ (.66)
Pro forma $ (.65)
</TABLE>
At March 31, 1998, the Company had warrants outstanding to acquire 2,940,000
shares of common stock. All of the warrants were eligible to be exercised at
year end. The following table summarizes the information about the warrants as
of March 31, 1998:
<TABLE>
<CAPTION>
Number
Exercise Outstanding Expiration
Price March 31 Date
-------- ----------- ----------
<S> <C> <C>
$ 1.50 120,000 1/31/2000
$ 1.50 2,400,000 1/31/2000
$0.795 300,000 1/31/2000
$0.795 120,000 1/31/2000
----------
2,940,000
==========
</TABLE>
In addition, all of the warrant contracts prohibit exercise of the warrants if
the HUB status of the Company is compromised upon such exercise.
<PAGE> 31
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
NOTE 12 - EARNINGS PER SHARE
The following data details the amounts used in computing earnings per share
(EPS) and the effect on income and the weighted average number of shares of
dilutive potential common stock.
<TABLE>
1998 1997
------------ ------------
<S> <C> <C>
Loss from continuing operations $ (3,766,950) $ (482,385)
Less: Preferred dividends (3,471,170)
------------ ------------
Loss available to common shareholders
used in basic EPS $ (7,238,120) $ (482,385)
============ ============
Weighted average number of common shares
used in basic EPS 10,998,874 10,026,400
Effect of dilutive securities:
Stock options -- --
Warrants -- --
------------ ------------
Weighted number of common shares and
dilutive potential common stock used
in diluted EPS 10,998,874 10,026,400
============ ============
</TABLE>
Options on 622,170 shares of common stock and warrants on 2,940,000 shares of
common stock were not included in computing diluted EPS for the year ended March
31, 1998, because their effects were antidilutive.
NOTE 13 - CONTINGENCY
On December 18, 1997, Argus Management, Inc. filed Plaintiff's Original Petition
in the 216th District Court of Kerr County, Texas. Argus claims the Company and
Mr. Jose G. Chavez, as joint obligors, defaulted on their obligation to Argus
pursuant to two promissory notes for $100,000 each, both dated June 2, 1997.
Argus is seeking a judgment for $200,000, together with interest on the notes at
the rate of 20% per annum from June 2, 1997, through the date the notes are
satisfied. As of March 31, 1998, $65,000 had been disbursed to third parties in
satisfaction of obligations of Argus Management, Inc. The $65,000 has been
recorded in other receivables in the accompanying financial statements.
On February 6, 1998, the Company filed Plaintiff's Original Petition in the
above-referenced case. The Company asserts breach of contract, fraud,
defamation, usury, and civil conspiracy claims against Argus Management, Inc.
The Company strongly disagrees with Argus' contentions and denies liability to
Argus under the notes and plans to oppose vigorously Argus' claims and recover
the amounts disbursed to third parties.
A lawsuit was filed by Manpower, Inc. to preserve its claims for certain
delinquent obligations that were reduced to approximately $38,000 which is
included in accounts payable at March 31, 1998. The full amount of the principal
and interest was paid on April 29, 1998, and a Notice of Dismissal was filed on
May 8, 1998.
On January 22, 1998, the Company filed a lawsuit against Bits Technical
Corporation for damages attributable to a breach of commitment. This matter is
still pending. On August 17, 1998, Bits Technical Corporation ("BTC") filed a
counterclaim against the Company in connection with the above case. In the
counterclaim, BTC asserts the Company fraudulently induced BTC to promise to
loan money to the company. In particular, BTC claims the Company promised
certain contracts and business opportunities to BTC that the Company was
unwilling or unable to deliver.
Bank One, Texas, NA filed a lawsuit against the Company for the collection of
approximately $355,633 of principal plus interest of $29,289 as well as attorney
fees and court costs of $10,000. The bank was paid in full in April 1998. The
bank then executed a Notice of Nonsuit to dismiss with prejudice the lawsuit on
April 29, 1998.
<PAGE> 32
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
NOTE 13 - CONTINGENCY - CONTINUED
On November 20, 1996, MCA Communications, Inc. ("MCA") filed a lawsuit against
the Company in County Court at Law No. 2 in Harris County, Texas. MCA claims the
Company owes $12,485.40 for certain goods and services that MCA claims to have
provided to MSI in connection with various projects for the Texas Department of
Health. MCA also seeks interest, costs, and attorneys' fees. On January 6, 1997,
the Company filed its answer and denied the above-referenced claim in its
entirety.
NOTE 14 - SUBSEQUENT CHANGE
Subsequent to issuing the March 31, 1998, audited financial statements and
accompanying auditor's report dated June 9, 1998, additional adjustments to the
financial statements were recorded for undocumented obligations of the Company's
common stock. An adjustment has been made to record the Company's obligation to
issue 362,400 shares of common stock for compensation in the amount of $256,295,
to the Company's employees, consultants and stockholder's prior to March 31,
1998. Also an adjustment was made to record 543,000 shares of common stock
subscribed in the amount of $407,250 for a note receivable. The note receivable
has been offset against the common stock subscribed in the accompanying
financial statements.
Additionally, 293,185 shares of uncertificated common stock has been reported
for the cash recorded and reported as of March 31, 1998, in the amount of
$512,450. An adjustment has been made to increase common stock and decrease
additional paid in capital in the amount of $29,319.
Also, an adjustment has been made to correct stock options issued for placement
agent fees recorded under SFAS No. 123. A decrease of $153,547 to additional
paid-in capital as an offset against preferred stock proceeds with a
corresponding increase in additional paid-in capital of $153,545 has been
recorded for the year ended March 31, 1998.
The following adjustments have been included in accompanying financial
statements:
<TABLE>
<CAPTION>
BALANCE AS BALANCE AFTER
PREVIOUSLY SUBSEQUENT
REPORTED ADJUSTMENTS ADJUSTMENTS
------------ ------------ -------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET ADJUSTMENTS:
Other accrued expenses $ 153,240 $ 16,096 $ 169,336
Common stock 1,085,126 65,559 1,150,685
Additional paid-in capital 2,491,459 174,640 2,666,099
Accumulated deficit (7,115,822) (256,297) (7,372,119)
CONSOLIDATED STATEMENT OF OPERATION ADJUSTMENT:
Selling, General and Administrative expenses 3,190,842 256,295 3,447,137
Net loss (3,510,653) (256,297) (3,766,950)
Preferred stock dividend 3,471,170 -- 3,471,170
Net loss available to common stockholders (6,981,823) (256,297) (7,238,120)
Basic and diluted loss per share (.65) (.01) (.66)
Basic and diluted shares outstanding 10,785,717 213,157 10,998,874
</TABLE>
On October 14, 1998, the Company changed its name to MSI Holdings, In.
<PAGE> 33
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
Changes have been previously reported on Forms 8-K and 8-K/A.
PART III
Item 9. Directors and Executive Officers of the Registrant The executive
officers, key employees and directors of the Registrant and their ages and
positions with the Registrant or its subsidiaries are as follows:
As of October 26, 1998, MSHI's current executive officers and directors, their
titles, ages and tenure are as follows:
<TABLE>
<CAPTION>
Period from
Name Age Position which served
<S> <C> <C> <C>
Jose G. Chavez 46 Chairman of the
Board Of Directors,
President and
Chief Executive Officer June 23, 1997
David W. Hill 32 Chief Financial Officer August 10, 1998
Mitchell C. Kettrick 32 Vice-President,
Secretary and Director June 23, 1997
Tom M. Upton 41 Vice-President Sales
and Marketing September 9, 1998
Jaime Munoz 37 Vice-President
of Operations November 15, 1997
Ernesto M. Chavarria 43 Director February 16, 1998
Blandida Cardenas 43 Director February 16, 1998
Daniel Dornier 36 Director July 21, 1998
</TABLE>
The Company has no knowledge of any arrangement or understanding in existence
between any executive officer named above and any other person pursuant to which
any such executive officer was or is to be elected to such office or offices.
All officers of the Company serve at the pleasure of the Board of Directors. All
Officers of the Company will hold office until the next annual meeting of the
Company.
<PAGE> 34
Biographical Information
Jose Chavez, the President and Chief Executive Officer of the Company, has over
25 years experience in manufacturing, engineering, system design and
development, energy engineering, and computer technology management. As
co-founder of MSI in 1993, Mr. Chavez has led the development of MSI from a
two-person start-up in 1993 to a multi-million dollar business enterprise. Mr.
Chavez was Plant Manager for HDS, a division of Hart Graphics, Inc., a computer
disk manufacturer for 1991 to 1993, and Manufacturing Manager for CompuAdd
Corporation, a personal computer manufacturer from 1989 to 1991. Prior to
working at CompuAdd, Mr. Chavez was a section head at Hughes Aircraft for nine
years. Mr. Chavez obtained a Master of Administrative Management from the
University of Redlands Business School in 1981 and a Bachelor of Science in
Electrical Engineering from the University of Texas at El Paso in 1975. Mr.
Chavez has been a director of the Company since June, 1997.
David W. Hill, Chief Financial Officer, brings over 10 years of experience in
executive financial management, mergers & acquisitions, investment development,
and strategic planning. Mr. Hill served as a Finance Manager for Dell Computers
Home and Small Business Group from 1997 to 1998. Mr. Hill served with Applied
Materials, Inc. in 1997. Additionally, Mr. Hill was President and Chief
Financial Officer of Discovery Technologies, Inc. from 1993 to 1997. Mr. Hill
filed for protection from creditors under Chapter VII of the Bankruptcy Code in
1998. He received his Master of Business Administration from Baylor University
in 1989 and a Bachelor of Science in International Trade from Texas Tech
University in 1987.
Mitchell Kettrick, Vice-President of Technical Operations, has over 12 years of
experience in manufacturing, test diagnostis and networking. As MSI's co-founder
and Chief Technology Officer, he oversees technical services, systems design,
and information services. Mr. Kettrick was the Quality Assurance Manager for
Hart Distribution Service, a computer disk manufacturer, in 1992 and the
Manufacturing Systems Test Manager for CompuAdd Corporation, a personal computer
manufacturer, from 1987 to 1991. Mr. Kettrick received an Associate Degree in
Computer Maintenance Technology from Texas State Technical College in 1987. Mr.
Kettrick has been a director of the Company since June, 1997.
Thomas M. Upton, Vice-President of Sales and Marketing, has 17 years high-tech
sales experience. From 1996 to 1998, Mr. Upton worked for Boundless
Technologies, Inc.,as their Vice President of the Global Distribution Division ,
Senior Director of Worldwide Sales, and Director of North American Sales . Mr.
Upton was previously a Regional Manager of Major Accounts and served as National
Support Manager responsible for worldwide system support with Applied Digital
Data Systems, a subsidiary of AT&T, from 1981 to 1994. Mr. Upton has a Bachelor
of Science in Electrical Engineering degree from New York Institute of
Technology.
Jaime Munoz, Vice President of Operations, has over 10 years of direct
experience in project management implementation. Mr. Munoz manages MSI's
purchasing, warehouse operations, facilities, on-site production, security, and
human resources. His background includes extensive experience with strategic
planning, market assessment, new business development and operations management.
Prior to joining MSI, Mr. Munoz worked as a consultant for the American
Residential Services from 1997 to 1998, and served as Vice President/Chief
Marketing Officer for Infrastructure Services, Inc., in Houston, Texas from 1987
<PAGE> 35
to 1997. Mr. Munoz obtained a Bachelor of Science in Mechanical Engineering from
The University of Texas at El Paso.
Ernesto M. Chavarria, Director, has over 25 years experience providing
consulting services in the area of international business development and public
affairs to Fortune 500 Companies. Mr. Chavarria has been the President of ITBR,
Inc., an international overseas consulting company since 1990. Mr. Chavarria has
been a Director of the Company since November 1997.
Blandida Cardenas, Director, has been a Professor at the LBJ Institute for
Teaching and Learning since 1993 and has served as a Director of the Office of
Minorities in Higher Education. She has also served as the Commissioner of
Presidential Appointments to the U.S. Commission of Civil Rights. Ms. Cardenas
has also been an Associate Professor at the University of Texas at San Antonio
for over 14 years. Ms. Cardenas has been a Director of the Company since
November 1997.
Daniel Dornier, Director, brings over a decade's worth of investment banking
experience to the Company. Since 1995, Mr. Dornier has been the President of
Dornier Capital Advisers, where he manages investment portfolios for high net
worth in the U.S. and Europe. Between 1993 and 1995, Mr. Dornier was a private
investment manager for various companies owned by the Dornier family. He was
previously an investment banker at SBC Warburg, Dillon, Reed from 1991 to 1993.
In 1989, he obtained his Master of Business Administration from the City
University of Bellevue, Washington, the Zurich, Switzerland campus, and in 1984
he received a Bachelor of Business Administration from the University of
Nuertingen, Germany.
Board Committees
Pursuant to Private Placement Phase I and Private Placement Phase II, the
Company is required to establish (i) a Compensation Committee, consisting of
three Board Members, one of which to be designated by the holders of the Series
B Preferred and (ii) an Audit Committee consisting of three Board Members, one
of which to be designated by the holders of the Series C Preferred.
Compensation of Directors
Each director who is not an employee of the Company (the "Outside Directors")
will be paid the sum of $1,000 for each meeting of the Board of Directors
attended by them. Additionally, they will be reimbursed for expenses incurred in
attending meetings of the Board of Directors and related committees. MSHI has
the following three Outside Directors: Ernesto M. Chavarria, Blandida Cardenas
and Daniel Dornier.
Indemnification of Officers and Directors.
As permitted by the Utah Business Corporation Act, as amended, the Company has
included in its Revised Articles of Incorporation a provision that the Company
may indemnify its officers, directors, employees and agents under certain
circumstances, including those circumstances in which indemnification would
otherwise be discretionary, and the Company is required to advance expenses to
its officers and directors as incurred in connection with proceeding against
them for which they may be indemnified.
<PAGE> 36
Summary Compensation Table.
The following table sets forth compensation for the Chief Executive Officer
("CEO"), and the four most highly compensated other executive officers whose
salary and bonus for 1998 and was $100,000 or greater (collectively, the "Named
Executives"). Only the CEO and one other executive officer of MSI received
salaries and bonuses in excess of $100,000 in fiscal 1998. Consequently, only
the CEO and one other executive officer appear in this table.
Executive Compensation
Summary Compensation Table
Long Term Compensation
Item 10. Executive Compensation
Summary Compensation Table
(part 1 of 2)
<TABLE>
<CAPTION>
Annual Compensation
- -------------------------------------------------------
Awards Payouts
(a) (b) (c) (d) (e)
Name and
Principal Fiscal
Position Year Salary Bonus Other
<S> <C> <C> <C> <C>
Jose G.
Chavez, CEO &
President 1998 105,000
1997 50,500 34,000
1996 87,000 13,000
Mitchell.
Kettrick,
Vice President
and Secretary
1998 75,000
1997 52,000
1996 45,000
</TABLE>
Summary Compensation Table
(part 2 of 2)
<TABLE>
<CAPTION>
Long Term Compensation
- -----------------------------------------------------
Awards Payouts
----------------- ------------
(a) (b) (f) (g) (h) (i)
Name and Restricted
Principal Fiscal Stock Options LTIP All other
Position Year Awards SAR's Payouts Compensation
<S> <C> <C> <C> <C> <C>
Jose G.
Chavez, CEO &
President 1998 $62,500
1997
1996
Mitchell.
Kettrick,
Vice President
and Secretary 1998 $31,250
1997
1996
</TABLE>
<PAGE> 37
Employment Contracts
On June 15, 1997, the Company entered into employment agreements with Jose
Chavez, President and CEO (the "Chavez Agreement"), and Mitchell Kettrick, Vice
President (the "Kettrick Agreement"). Both of these agreements terminate on
March 31, 2001, subject to two one-year extensions.
The Chavez Agreement provides for an annual salary of $100,000 and
reimbursement of all reasonable out-of-pocket expenses. The Chavez Agreement
also provides for a grant dated March 31, 1998, of an option to purchase up to
100,000 shares of Common Stock at a price of $1.50 per share exercisable for a
period of five (5) years commencing on March 31, 1998. In addition, during the
term of the Chavez Agreement, Chavez is entitled to a bonus, at the discretion
of the Board of Directors, consisting of cash and common stock, calculated as
follows: (1) for each ten percent (10%) increase in revenues, from year to year,
above the base of $10,000,000 in fiscal 1998, Chavez shall be issued 100,000
shares of Common Stock at fifty percent (50%) of the then current market value,
not to exceed $1.70 per share; and (2) for each $1.00 increase in the Common
Stock value above the base value of $3.00 per share in fiscal 1998, calculated
on the last ninety (90) day average, the Company shall pay Chavez a cash bonus
of $100,000 due no later than June 30 of each fiscal year. Chavez also is
entitled to an automobile allowance of up to $650.00 per month. Mr. Chavez did
not receive a bonus for fiscal year ended March 31, 1998. Mr. Chavez has agreed
to renegotiate the Chavez Agreement's option terms, which negotiations are
expected to be concluded in November 1998.
The Kettrick Agreement provides for an annual salary of $75,000 per year
and reimbursement of all reasonable out-of-pocket expenses. Moreover, the
Kettrick Agreement provides for a grant, dated March 31, 1998, of a five-year
option to purchase up to 50,000 shares of Common Stock at a price of $1.50 per
share exercisable beginning July 1, 1998. Kettrick also has a second option,
dated March 31, 1998, for 25,000 shares at $2.25 per share exercisable for a
period of two (2) years. The Kettrick Agreement also provides for a bonus, at
the discretion of the Board of Directors, consisting of cash and Common Stock,
calculated as follows: (1) for each ten percent (10%) increase in revenues above
the base of $10,000,000 in fiscal 1998, Kettrick shall be issued 50,000 shares
of Common Stock at fifty percent (50%) of the then current market value, not to
exceed $1.70 per share; and (2) for each $1.00 increase in the Common Stock
value above the base value of $3.00 per share in fiscal 1998, calculated on the
last ninety (90) day average, the Company shall pay Kettrick a cash bonus of
$50,000 due no later than June 30 of each fiscal year. Kettrick is also entitled
to an automobile allowance of up to $500.00 per month. Mr. Kettrick did not
receive a bonus for fiscal year ended March 31, 1998. Mr. Kettrick has agreed to
renegotiate the Kettrick Agreement's option terms, which negotiations are
expected to be concluded in November 1998.
David W. Hill, Chief Financial Officer, and the Company are negotiating
certain terms of an employment agreement.
<PAGE> 38
Item 11. Security Ownership of Certain Beneficial Owners and Management
As of March 31, 1998, there were 11,506,846 shares of common stock issued and
outstanding.
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 31, 1998, by (i) each person
who is known by the Company to own beneficially more than five percent (5%) of
the Company's Common Stock, (ii) each director of the Company, (iii) each Named
Executive, and (iv) all directors and officers of the Company as a group. Except
as otherwise indicated, the Company believes that the beneficial owners of the
Common Stock listed below, based on information furnished by such owners, have
investment and voting power with respect to such shares, subject to community
property laws where applicable.
<TABLE>
Name and Address of Beneficial
Owner Common Stock (1) Percent of
<S> <C> <C>
Class (1)
Jose G. Chavez 7,225,000 62.79%
501 Waller
Austin, Texas
Mitchell C. Kettrick
501 Waller
Austin, Texas 1,500,000 13.04%
George Villalva
501 Waller
Austin, Texas 475,000 4.13%
All Directors and
Officers as a Group
9,200,000 79.96%
</TABLE>
Calculations are based on 11,506,846 outstanding shares of Common Stock as of
March 31, 1998 and the assumed conversion of all options and warrants held by
the above named group. All common shares held by the Officers and Directors
listed above are "restricted securities" and as such are subject to limitations
on resale. The shares held by the officers and directors may be sold pursuant to
Rule 144 under certain circumstances, subject to certain Lock-Up Agreements. See
"Shares Eligible for Future Sale-Lock-Up Agreements."
Rule 13d-3 under the Securities Exchange Act of 1934, involving the
determination of beneficial owners of securities, includes as beneficial owners
of securities, among others, any person who directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise has, or shares,
voting power and/or investment power with respect to such securities; and, any
person who has the right to acquire beneficial ownership of such security within
sixty days through means, including, but notice of any option, warrant or
conversion of a security. Any securities not outstanding which are subject to
such options, warrants or conversion privileges shall be deemed to be
outstanding securities of the class owned by such person, but shall not be
<PAGE> 39
deemed to be outstanding for the purpose of computing the percentage of the
class by any other person.
There are no contractual arrangements or pledges of the Registrant's securities,
known to the Registrant, which may at a subsequent date result in a change of
control of the Registrant.
Item 12. Certain Relationships and Related Transactions
Certain officers, directors, stockholders and employees of the Company have
ownership interests in entities to which the Company has advanced monies for
working capital and expenses. The advances have been converted to notes and are
personally guaranteed by the shareholders of the related entities. The schedule
below lists the name of the stockholder and their percentage of ownership.
<TABLE>
<CAPTION>
Prima Quality
Development & Communications, Inc. Salas
Name of Stockholder Construction, Inc. (Percentage of Ownership) Concessions, Inc.
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jose G. Chavez (1) 26 28 33
Frank Rodriguez (1) 15 5 --
Andrew Ramirez (1) 26 27 35
George Villalva (1) 15 5 4
Mitchell C. Kettrick (1) 18 10 13
Bruce Funderburk -- 20 --
Laurel Funderburk -- 5 --
Tammie Delaney -- -- 15
--- --- ---
TOTALS 100 100 100
</TABLE>
(1) Officers of MSI.
Certain officers and directors of the Company serve as officers directors and
advisors to these related companies on an as needed basis and their involvement
is minimal.
As of March 31, 1998 and 1997, the Company had amounts due from the following
related entities:
<TABLE>
<CAPTION>
10% Note Receivable from Related Parties 1998 1997
<S> <C> <C>
Prima Development & Construction, Inc. $ -0- $251,983
Quality Communications, Inc. -0- 84,394
Salas Concessions, Inc. -0- 83,397
----- --------
TOTAL $ -0- $476,425
===== ========
</TABLE>
The shareholders of MSI set forth above signed personal guarantees for all the
notes and leases. Prima Development & Construction, Inc. ("Prima"), a
construction and fiber optics cabling firm, executed the original loan agreement
during the year ended March 31, 1997, with the principal amount of the loan of
$185,000. Interest is due and payable monthly as it accrues, commencing on April
<PAGE> 40
10, 1997 and continuing on the same day of each month thereafter during the term
of the note. Principal and interest are payable in monthly installments of
$2,444.79. The annual interest rate on the note is 10%. An amendment to the loan
agreement with Prima was executed to incorporate funds advanced from MSI. The
principal amount of the amendment is $66,983. Interest is due and payable
monthly as it accrues, commencing on January 2, 1998 and continuing on the same
day of each month thereafter during the term of the note. Principal and interest
are payable in monthly installments of $885. The annual interest rate on the
note is 10%. The loan, as amended, was repaid during the year ended March 31,
1998. The ownership of Prima include owners of MSI and other outside investors.
Prima sub-contracts, on a project to project basis, fiber optic cabling and
related construction to MSI.
Quality Communications, Inc. ("QCI"), a telecommunications corporation, executed
a loan agreement during the year ended March 31, 1997, in the principal amount
of $84,394. Interest is due and payable monthly as it accrues, commencing on
April 10, 1997 and continuing on the same day of each month thereafter during
the term of the note. Principal and interest are payable in monthly installments
of $1,025. The annual interest rate on the note is 10%. The loan was repaid
during the year ended March 31, 1998. The shareholders of QCI include officers,
directors and shareholders of MSI and other outside investors. MSI sub-contracts
cabling projects with QCI on a project to project basis.
Salas Concessions, Inc. ("Salas"), a food service corporation, executed a loan
agreement during the year ended March 31, 1997, in the principal amount of
$83,397. Interest is due and payable monthly as it accrues, commencing on April
10, 1997 and continuing on the same day of each month thereafter during the term
of the note. Principal and interest are payable in monthly installments of
$1,767. The annual interest rate on the note is 10%. The loan was repaid during
the year ended March 31, 1998.
During the years ended March 31, 1997 and 1998, the above listed entities did
not pay interest to the Company. During the same periods, no other income or
expense was received from or paid to the above listed entities.
As of March 31, 1998, no amounts were owed to the Company by any of the entities
listed above. In addition, the Company does not intend to loan any additional
funds to the above named entities in the future.
<PAGE> 41
Item 13. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
Index
Contracts:
Exhibit 10.1
Texas Lottery Installation and Service Contract Between GTECH
and MSI
Exhibit 10.2
Agreement for Construction, Installation and/or Maintenance, dated as of April
9, 1997, between GTE and MSI
Exhibit 10.3
Contract, dated November 16, 1997 between SAN ANTONIO Independent School
District and MSI
Exhibit 10.4
Contract, dated August 25, 1997, between
Education Service Center 1 and MSI
Exhibit 10.5
Contract, dated August 25, 1997, between
Education Service Center 18 and MSI
Exhibit 10.6
Contract, dated August 25, 1997, between
Education Service Center 5 and MSI
Exhibit 10.7
Field Trial Agreement, dated October 1, 1997, between SOUTHWESTERN BELL
TELEPHONE and MSI
Exhibit 10.8
Subcontractor Agreement, dated July 23, 1997, between
SOUTHWESTERN BELL TELEPHONE and MSI
Exhibit 10.9
Field Trial Agreement, dated October 1, 1997, between SOUTHWESTERN BELL
TELEPHONE and MSI
<PAGE> 42
Exhibit 10.10
City Wide Contract for Personal Computers, dated May 23, 1997, between City of
Austin and MSI
Exhibit 10.11
Wide Area Network Contract, between
Texas Migrant Council and MSI
Exhibit 10.12
Machine Installation Contract, between Transactive, Inc
and MSI
Exhibit 10.13
Contract between Texas Department of Transportation
And MSI
Exhibit 10.14
Contract between Texas Department of Health and MSI
Exhibit 10.15
Employment Agreement, dated June 15, 1997, between
Jose Chavez and Micro-Media Solutions, Inc., a Utah corporation
Exhibit 10.16
Employment Agreement, Dated June 15, 1997, between
Mitchell Kettrick and Micro-Media Solutions, Inc., a Utah corporation
<PAGE> 43
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date November 9, 1988 /s/ Jose G Chavez
Jose G. Chavez, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of this
Registrant and in the capacities and on the dates indicated.
/s/ Jose G Chavez
Jose G. Chavez Chairman of the Board of
Directors and President November 9, 1998
/s/ Mitchell Kettrick
Mitchell Kettrick Vice-President and Director November 9, 1998
/s/ David Hill
David Hill Chief Financial Officer November 9, 1998
/s/ Ernesto Chavarria Director November 9, 1998
Ernesto Chavarria
<PAGE> 44
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
Exhibit 10.1 Texas Lottery Installation and Service Contract Between
GTECH and MSI
Exhibit 10.2 Agreement for Construction, Installation and/or Maintenance,
dated as of April 9, 1997, between GTE and MSI
Exhibit 10.3 Contract, dated November 16, 1997 between SAN ANTONIO
Independent School District and MSI
Exhibit 10.4 Contract, dated August 25, 1997, between Education Service
Center 1 and MSI
Exhibit 10.5 Contract, dated August 25, 1997, between Education Service
Center 18 and MSI
Exhibit 10.6 Contract, dated August 25, 1997, between Education Service
Center 5 and MSI
Exhibit 10.7 Field Trial Agreement, dated October 1, 1997, between
SOUTHWESTERN BELL TELEPHONE and MSI
Exhibit 10.8 Subcontractor Agreement, dated July 23, 1997, between
SOUTHWESTERN BELL TELEPHONE and MSI
Exhibit 10.9 Field Trial Agreement, dated October 1, 1997, between
SOUTHWESTERN BELL TELEPHONE and MSI
</TABLE>
<PAGE> 45
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
Exhibit 10.10 City Wide Contract for Personal Computers, dated May 23,
1997, between City of Austin and MSI
Exhibit 10.11 Wide Area Network Contract, between Texas Migrant Council
and MSI
Exhibit 10.12 Machine Installation Contract, between Transactive, Inc and
MSI
Exhibit 10.13 Contract between Texas Department of Transportation And MSI
Exhibit 10.14 Contract between Texas Department of Health and MSI
Exhibit 10.15 Employment Agreement, dated June 15, 1997, between Jose
Chavez and Micro-Media Solutions, Inc., a Utah corporation
Exhibit 10.16 Employment Agreement, Dated June 15, 1997, between Mitchell
Kettrick and Micro-Media Solutions, Inc., a Utah corporation
</TABLE>
<PAGE> 1
EXHIBIT 10.1
GTECH
Estimated Value of Contract: $360,000
Scope of Contract: Installation and service of Texas
Lottery Machines.
<PAGE> 1
EXHIBIT 10.2
GTE Telephone Operations
Central Area
8550 Esters Boulevard
Irving, Texas 75063-2205
800-346-2178
Fax: 2 l 4-621 -8159
04/09/97
JOSE CHAVEZ
MICRO-MEDIA SOLUTIONS, INC.
501 WALLER STREET
AUSTIN, TEXAS 78702
Subject: NOTIFICATION OF APPROVED CONTRACTOR STATUS
Your company has been selected by GTE Corporation to be added to our
Contractor's list.
Enclosed is an agreement packet for your review. Please sign and return the
Agreement (note Section A, Term of Agreement) along with the following
documentation:
A 1997 Certificate of Insurance from your insurance carrier. (Note the minimum
coverage stated in Section O of the Agreement.)
Information list (see attached).
An audited statement from your company, if it is available.
A schedule of Work Rates as outlined in Section D of the Agreement.
A listing of References (minimum of three) with all pertinent information (i.e.,
Name, Address, Telephone Number, etc.).
<PAGE> 2
This contract is non-negotiable. If the contract is not signed and returned
within thirty (30) days from the date of receipt, your company's name will be
purged from the list.
Your attention to these items will be greatly appreciated.
I look forward to the receipt of the above documents and to a working
relationship with your firm.
Sincerely,
/s/ Ida Garza
Ida Garza
Contractor Administrator
Enclosure
AGREEMENT FOR CONSTRUCTION, INSTALLATION AND/OR MAINTENANCE
This Agreement, hereinafter referred to as General Agreement, is made by and
between the GTE telephone operating companies enumerated on Addendum A,
hereinafter referred to individually or collectively as "GTE" and, MICRO-MEDIA
SOLUTIONS, INC. a sole proprietorship, partnership, corporation, organized and
existing under the laws of the State of Texas, with principal offices located at
501 WALLER STREET; AUSTIN, TEXAS 78702 hereinafter referred to as "CONTRACTOR".
In consideration of the mutual terms and conditions contained herein, the
parties agree as of the 9th day of APRIL 1997, as follows:
For and in consideration of the mutual promises and covenants hereinafter set
forth, GTE and Contractor agree as follows:
A. TERM OF AGREEMENT
This Agreement is for a term of one (1) year from the above date and shall be
automatically renewed from year to year on the renewal date unless terminated
pursuant to paragraphs L, U, or V.
B. SCOPE OF WORK
Contractor may, from time to time, be employed by GTE to perform certain work
for and in connection with construction, installation or maintenance of certain
equipment.
Contractor agrees to perform to work for GTE as more specifically outlined in
Exhibit 2A, Page 21, attached hereto and made a part hereof. Contractor shall
furnish persons, vehicle, materials, and tools to perform the work, and it shall
be done in a good and workmanlike manner and in accordance with applicable
industry standards.
<PAGE> 3
C. AWARD OF WORK
Contractor acknowledges, agrees and understands that Contractor will perform and
complete work for GTE only pursuant to a Letter of Authorization and Contractor
further acknowledges, agrees and understands that no agreement or contract with
GTE shall exist or purport to exist unless the Letter of Authorization is so
executed and that Contractor shall act at it's peril if it shall do otherwise.
Contractor acknowledges, agrees and understands that GTE shall make no
warranties, express or implied, other than those contained in this Agreement and
Contractor further acknowledges, agrees and understands that no employee of GTE,
other than an officer or other previously designated agent of GTE, shall have
the power of authority to bind GTE to any contractual agreements and Contractor
shall act its peril if Contractor shall do otherwise.
D. WORK RATES
Contractor shall furnish to GTE, as an addendum to this Agreement, a document
listing Contractor's current rates. Any subsequent changes in rates or charges
must be submitted, in writing, to GTE, and such charges, to be effective, must
first obtain written acceptance by GTE.
E. PAYMENT TERMS
Contractor shall invoice GTE after completion of job per the Contractor bid
request. The invoices shall be itemized with details as to all expenses. Payment
shall be due in thirty (30) days.
F. RIGHT TO AUDIT
Contractor shall be required to retain all records in regard to GTE transactions
and contracts for a minimum period of three (3) years, with the right of GTE to
use an independent auditing concern to review the records.
G. PERMITS
Contractor shall secure and pay for all permits necessary for the performance
and completion of the work.
H. COMPLIANCE WITH LAWS AND REGULATIONS
The parties shall comply with all federal, state, and local laws and regulations
applicable to their performance as described in this agreement.
<PAGE> 4
WORK ACCESS
GTE shall, at all times, have access to the work, whether it is in preparation
or progress, for the purpose of inspection. The acceptance of such work by GTE
shall be a condition precedent to the right of Contractor to receive payment for
such work.
WORK ALTERATIONS
GTE shall have the right, either before the commencement of the work or during
the progress of the work, to direct in writing any additions, deviations, or
omissions from the work. The bid price will be adjusted and agreed upon in
writing by GTE and Contractor prior to commencement of work on such additions,
deviations, or omissions.
WORK DELAY
Time is of the essence in this Agreement.
Not withstanding the foregoing, the performance by Contractor of the work
hereunder or in performance of any other obligations of Contractor under this
Agreement shall be excused because of Acts of God, war, riot, fire, explosion,
accident, flood, sabotage, inability to obtain fuel or power, governmental laws,
regulations or orders, acts or inaction of customer, inability of
contractor/subcontractors to perform or any other cause beyond the reasonable
control of
contractor or a labor trouble, strikes, lock-outs, or injunction. Contractor
shall notify GTE of any delay or performance within twenty-four (24) hours of
any such delay.
TERMINATION/MODIFICATION
GTE reserves the right to modify or terminate this Agreement at any time. If
this Agreement is modified, the cost for fees for work will be redefined to the
mutual satisfaction of both parties. In the case of termination, GTE will be
responsible for only those fees for days actually worked and expenses actually
incurred by the Contractor to the date of termination.
M. HAZARDOUS OR TOXIC SUBSTANCES
Contractor will indemnify and save harmless GTE, its agents and employees, from
and against all damages, claims, and/or liabilities, arising out of or related
to this Agreement and the performance of any work thereunder, or from the
violation of any federal, state, or local laws and regulations dealing with the
disposal or handling of hazardous waste.
<PAGE> 5
Contractor must provide a Material Safety Data Sheet (MSDS) on each hazardous or
toxic substance.
N. INDEMNIFICATION
Contractor agrees to indemnify, defend, and hold GTE harmless from any all
claims, actions, causes of action, damages, costs and expenses, including
reasonable attorney's fees, arising out of our or resulting in any manner from
the Contractor's performance of this Agreement Not withstanding the foregoing,
neither party shall be liable to the other for any loss of profit, special,
consequential or incidental damages.
O. INSURANCE
Contractor shall maintain Workman's Compensation Insurance as required by law
and Employer's Liability Insurance in the amounts of $100,000. Without limiting
the Contractor's liability hereunder, the Contractor shall also maintain the
following types of insurance with the specified limits:
a. General Liability
(Comprehension Form), including products/completed operation, contractual
liability, broad form property damage, independent contractor's coverage.
EACH EACH
PERSON OCCURRENCE
Bodily Injury N/A $1,000,000
Property Damage N/A $ 500,000
(including explosions, collapse,
and underground hazards)
OR
Bodily Injury and Property
Damage Combined N/A $1,000,000
b. Automobile Liability
(Comprehension Form)
Bodily Injury and Property $ 250,000 $ 500,000
OR
Bodily Injury and Property
Damage Combine N/A $ 500,000
NOTE: Excess Liability (Umbrella Form)
If any minimum coverage an items A and B are not met, then the Excess Liability
Coverage, if in effect, can be added to meet the minimums.
<PAGE> 6
c. Workers Compensation
(Each Accident) $ 500,000 &
(Disease-Policy limit) $ 500,000
Employers' Liability
(Disease-Each Employee) $ 250,000
NOTE: State required Worker's Compensation limitations if higher will supersede
minimums listed in item C.
d. Umbrella Excess Liability NOT MANDATORY
(Over Primary Insurance)
Prior to commencement of the work hereunder, Contractor shall furnish to GTE
certificate of such insurance.
P. WARRANTY
Contractor warrants that any construction, installation, and/or warranty work
performed under this Agreement shall meet applicable industry standards for a
period of one (1) year after acceptance by GTE. Contractor warrants that any
maintenance work performed under this Agreement shall meet applicable industry
standards for a period of (30) days after acceptance by GTE.
Q. SAFETY MEASURES
Contractor shall perform the work in a proper, safe, and secure manner to
prevent loss, injury, or damage to GTE's property or to the property on the
premises and to lives or persons, and shall comply with all applicable safety
laws, rules, and regulations of any governmental authority, including those
contained in or issued pursuant to the Occupational Safety and Health Act of
1970, as amended, and with all safety procedures which GTE may prescribe in
connection with the performance of the work.
Contractor shall report promptly to GTE any accident or unusual occurrence
during performance of the work, including personal injury or death to any
employee or any member of the public, or any member of the public, or any damage
to the work, the premises or adjacent property. Reports of severe personal
injury or death to any person shall be made within three (3) hours of the
accident. The Contractor shall submit a copy of all accident reports to GTE's
construction department or, if applicable, GTE's station superintendent at the
premises, within twenty-four (24) hours after an accident.
<PAGE> 7
R. INDEPENDENT CONTRACTOR
GTE and Contractor agree that Contractor will act as an independent contractor
in the performance of its duties under this Agreement. As such, the Contractor
will not be eligible for any benefits provided by GTE to its employee.
Contractor's shall be responsible for payment of all taxes arising out of
Contractor's activities in accordance with this Agreement, including but not
limited to federal and state income taxes, social security, unemployment
insurance taxes, and any other taxes or business license fees as required.
Contractor shall not represent, directly or indirectly, that it is an agent or
legal representative of GTE, nor shall the Contractor incur any liabilities or
obligations of any kind in the name of or on behalf of GTE other than those
specifically made part of this Agreement.
S. ASSIGNMENT
Contractor may not assign, subcontract, or delegate the performance of the work
under this Agreement without the express written consent of GTE.
T. NOTIFICATION
For the purposes of this Agreement, notices, and communications to the parties
hereto shall be directed to the addresses indicated on the face hereof. Such
addresses shall be deemed to be the most recent address of the addressee and
shall remain so until written notice of a change of address is provided to the
other by the party whose address has changed. All notices must be sent U.S.
Mail, postage prepaid, or by registered or certified mail.
U. DEFAULT
If either party refuses or fails, in any material respect, to properly perform
its obligations under this Agreement, or violates any of the material terms or
conditions of this Agreement, such refusal, failure, or violations shall
constitute a default. In such an event, the non-defaulting party may so notify
the other party in writing of the default and allow that party a period of
thirty (30) calendar days, the non-defaulting party shall have the right to
terminate this Agreement upon written notice to the other party.
<PAGE> 8
V. INSOLVENCY
Either party may terminate this Agreement by notice, in writing if the other
party admits insolvency, makes an assignment for the benefit of creditors, or
has a trustee or receiver appointed over all or any substantial part of its
assets.
W. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws
within State of issuance.
X. ENTIRE AGREEMENT
This Agreement represents the entire agreement between the parties and is not
subject to change or modification except by written agreement signed by both
parties.
Y. CONFIDENTIAL INFORMATION
Contractor agrees that any information received by the Contractor during
performance of the Contractor's obligations in accordance with this Agreement
will be treated by the Contractor in full confidence and will not be revealed to
any persons, firms, or organizations. This requirement will survive the
termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate the
day and year first above written and each party hereto acknowledged receipt of a
signed copy.
- --------------- ----------------
SIGNATURE TITLE
GTE CORPORATION
- --------------- ----------------
SIGNATURE TITLE
<PAGE> 1
EXHIBIT 10.3
SAN ANTONIO ISD
Estimated Value of Contract: $680,000
Scope of Contract: Annual Contract exclusively
San Antonio Independent School District
463 Holmgreen Road Bldg.
E San Antonio, Texas 7X220
Telephone (210) 359-8996 Fax (210) 359-9038
SAISD Technical Support Hotline(210)337-1224(Hours:8:00-4:00)
MICROCOMPUTER TECHNOLOGY SERVICES DIVISION BOARD OF EDUCATION
MARGARET MERELES
President
JULIAN H TREVINO
<PAGE> 2
Vice President
THOMAS D. GAFFNEY
To: Principals
MARY ESTHER BERNAL
Department Heads Assistant Secretary
THOMAS C. LOPEZ
Campus Technology Coordinators Member
Member
From: Patricia Holub, Senior Analyst Microcomputer Resources
SYLVIA WARD
VIA: Dr. James Parlett, Technology Steward
Superintendent
Date: November 18, 1997
Subject: Bid No .: 97- 139
Title: Catalog, Bid for Microcomputers and Network File Servers
Approved: November 17. 1997
Expiration: November 16. 1998
Catalog bids were awarded for the purchase of Microcomputers and Network File
Servers by the SAISD School Board on November 17, 1997. The discounts offered
off of the catalog list prices are good for one year from the date of the bid
award and apply to the current published catalog or price list by the vendor.
All workstations and file servers bid are listed on the Microsoft Hardware
Compatibility List. All vendors bidding are listed with the General Services
Commission as a Qualified Information Systems Vendor.
If you have budgeted funds for "D.P. Equipment" (6649), prepare a purchase
request (AB-16) with the proper signature and forward it to the Technology
Office.
According to the contractual agreement, bid 97-139, the following is to be
provided with each purchase: Service Campuses may be placed on the mailing list
for any or all of the individual vendors awarded the bid by contacting the
vendor and requesting this service. Campuses may also be removed from the
mailing list in the same manner.
Delivery is included in the cost of all items bid. All vendors offer setup
service for the workstations and File servers bid. Some vendors bid this cost
separately from the cost of the computer as indicated on the attachment. The
district is required to purchase the on-site setup for any workstation or file
server if this cost is listed separately.
All workstations purchased are delivered with the following: Microsoft Windows
95 CD-ROM and documentation, Microsoft Office 97 CD-ROM and documentation and an
operating manual.
<PAGE> 3
System Configuration
All equipment delivered must be new. No refurbished or previously used equipment
is allowed.
All workstations are delivered with the following software installed: Microsoft
Windows 95, Microsoft Office97 (including Microsoft Word, Excel, Access and
PowerPoint), and McAfee Antivirus Software.
The minimal configuration of workstations bid is listed. Several vendors bid
extensive catalogs listing workstations of several different configurations. Any
workstation purchased must meet at least these minimal configuration
requirements:
Pentium 200 MHz MMX motherboard with an Intel Processor.
2 1/2 GB hard disk drive 3 1/2" floppy disk drive
Enhanced keyboard with additional Windows 95 hot keys
PCI video card with 4 MB RAM
SVGA color 15 " monitor
Mouse
32 MB of memory (RAM)
Sound Card
16x internal CD-ROM drive
PCI 10/100 10 Base-T Ethernet Card
Warranty
All vendors offer a three-year on-site warranty, parts and labor, with pickup
and delivery service Some vendors bid tile warranty cost separately from the
cost of the computer as indicated on the attachment. The district is required to
purchase the three-year warranty for any workstation or file server if this cost
is listed separately.
To ensure that you, as a customer, receive the best possible service, please
note that you are obligated to do the following:
<PAGE> 4
Be prepared for the delivery of any equipment ordered by clearing an appropriate
space with access to electrical power. If the receiver of the equipment at your
campus denies setup service at the time of delivery the vendor is not required
to return to that site to perform the setup unless special arrangements are
made.
Retain paperwork on your equipment purchase. Ideally you should create a
warranty file with copies of paperwork (AB16s, invoices, etc.) on your purchase.
Proof of purchase is always required before any warranty repair can be
performed. This is the only way we can ensure that any repairs performed to
equipment during the warranty period is not charged to you.
If you need assistance, or if any of the above services and/or items are not
provided with your purchase, please contact the Technology Support's
Microcomputer Technology Services Division (MTSD) at 359-8996. Please post a
copy of this letter and retain the original letter on file for future reference.
<PAGE> 5
January 7, 1998
Ms. Patricia Parker
Purchasing Manager
Texas Workers' Compensation Commission
Southfield Building, Room 106, MS-72
4000 South IH-35
Austin, TX 78704-7491
Dear Ms. Parker:
Unisys is pleased to be selected by Micro-Media Solutions, Inc. (MSI) as a
technology and service partner for the Local Area Network (LAN) and Wide Area
Network (WAN) projects.
Our vast experience with complex projects ensures that the MSI and Unisys
project team will have the necessary skills to integrate the hardware and
software components of the proposed solution into a cohesive system for the
Texas Workers' Compensation Commission. Unisys will be responsible for providing
various systems h1tegration and implementation for the network portion of this
project. MSI and Unisys have proposed products and services that will help you
successfully implement the project, and we are prepared to coml11it the
resources and expertise of our company to see the project to a successful
conclusion.
We are looking forward to the opportunity of becoming your solution and
technology provider. As MSI is the prime contractor for this engagement, please
refer any questions or requests to Ms. Karla Gonzales, MSI Government Sales, at
(512) 476-6925
Sincerely,
/s/ Paul R Hall
Paul R. Hall
Network Sales Representative
<PAGE> 1
EXHIBIT 10.4
EDUCATION SERVICE CENTER 1
Estimated Value of Contract: $525,000
Scope of Contract: Provider of cabling and Network supplies.
1900 WEST SCHUNIOR EDINBURG TEXAS 78539
210/3S3-5611 FAX210/383-3524
August 25, 1997
To: Vendor Addressed
From: Paul Hylander
Subject: Cabling RFP
The Region One Education Service Center Board of Directors awarded one year
contacts to successful RFP respondents in August 20, 1997. Districts
participating in the Region One Technology Cooperative will be able to use the
services of the companied that were awarded contracts until August 31,
1998
Attached you will find a list of vendors that were awarded one year contract to
provide cabling services for the Region One Technology Cooperative. You will
need to send each school district 2 copies of your cabling RFP proposals in
order that you can provide for them. One copy of your RFP needs to be sent to
District Business Manager and one copy needs to be sent to the District
Technology Coordinator.
School districts will develop cabling specifications for projects within their
districts. Vendors from the approved list can be contacted in order to determine
who can provide the best service at the best price.
Please contact me at 956-383-5611 if you have any questions about the bid
awards.
<PAGE> 2
RFP Cable Installation Summary
Overview
Requests for cabling RFP's are designed to give each district with the maximum
flexibility when installing a local area network (LAN). This flexibility enables
districts to choose a vendor that best meets their cabling needs in the areas Of
purchasing supplies and equipment, labor costs, and costs of a turn key
solution.
The RFP was designed around five scenarios for various types of Internet
connectivity. These included:
Administrative Offices (10 drops)
Computer Lab (30 drops)
Library (12 drops)
Classrooms (80 drops)
Total Campus (132 (Drops)
Each vendor must be able to meet or exceed the LAN cabling standards found in
Appendix A of the RFP as well as meet the general and specific specifications of
the RFP.
School districts will need to write their own cabling specifications for
specific projects and vendors must be able to comply with all requirements of
the districts and the RFP Districts will be able to negotiate the best deal from
the approved vendor list that best meets the needs of the district.
Approved Vendors for Cabling and Equipment/Supplies
August 20, 1997-August 31, 1998
Vendor
Micro Media Solutions
D'Tcl Communication
ATE Telecom Solutions
Cable Com
Lucent Technologies
Southwestern Bell
Ecomm Systems
Carroll Systems
Anixter/NaCom
GTE
Walks Office Technology
Sabre Data
ANS Computers
Data Comm
Vendors Approved for Equipment and Supplies
August 20, 1997 August 31, 1998
Valmac Electric
Icon Technology
Micro Warehouse
Kent Data Comm
<PAGE> 3
January 20, 1998
To: Vendor Addressed
From: Paul Hylander
Subject: Approved Bid Awards
Enclosed you will find copies of the approved bid awards for the following
categories:
Computers and Computer parts
Software
Computer Maintenance
Printers and Scanners
You are requested to send two (2) copies of your catalog to the school districts
in Region One. One copy goes to the District Business Manager and one copy goes
to the Technology Coordinator. Failure to send out copies of your catalog could
result in the termination of your bid award contract approved by the Region One
Board of Directors on December 16, 1997.
The bid awards are in effect until December 31, 1998 and Region One ESC has the
option to renew this contract for an additional year.
Please contact Paul Hylander at 956-383-5611 if you need additional information.
<PAGE> 4
Multimedia Cooperative
Bid Awards
1997-1998
Computers and Computer Systems
December 31, 1997 to December 31, 1998
Generic Computers
Insight Direct Compu Connect
3820 South Harl Ave 777 S Central Expressway Ste. 5 D
Tempe, AZ 85282 Richardson, TX 75080
Phone 800-476-4888 x5151 Phone 972-680-3999
Fax 602-333-3400 972-680-9253
QIV Systems Small Business Computer
4242 Woodcook Suite 101 409 E. Jackson
San Antonio, Tx 78228 Harlingen, TX 78550
Phone 800-288-4126 Phone 956-421-3279
Fax 210-736-4054 Fax 956-421-3177
CRC Solutions Plus More
201 North 15th 4106 N. 22 Suite 3
McAllen, TX 78501 McAllen, TX 78504
Phone 956-631-2321 Phone 956-664-1933
Fax 956-631-4636 Fax 956-664-9776
M&A Technology Micro Solutions
4407 Alpha Rd 1311 E. Hackberry
Dallas, TX 75244 McAllen, TX 78501
Phone 972-490-5803 Phone 956-682-18l9
Fax 972-490-0616 Fax 956-682-6560
Computers at Sunrise Mall Arlington Computers
SPID #37B & H 39, TX 78412 Parts & Service
2801 E Pioneer Parkway Suite 122
Phone 512-994-8887 Arlington, TX 76010
Fax 512-994-8988 Phone 817-649-1968
Fax 817-649-2055
Wholesale Computers NBA Computer Service
4610 San Bernardo Ste B 4017 Frederickburg Rd, Suite E
Laredo, TX 78041 San Antonio, TX 78201
Phone 956-725-3460 Phone 210-732-1492
Fax 956-725-0133 Fax 713-732-1495
HB Distribution Ameritel
9630 Clarewood Dr. Suite Bl 11120 N Stemmon's Frwy
Houston, TX 77036 Dallas, TX 75229
Phone 713-776-4778 Phone 972-484-8549
Fax 713-776-4770 Fax 972-484-5491
Walks Foremost Technologies
115 Boca Chica PO Box 3392
Brownsville, TX 78520 Brownsville, TX 78532
Phone 800-481-0151 Phone 956-831-4444
Fax 956-542-0803 Fax 956-831-2257
<PAGE> 5
Corby Company Tangent Computer
401 Isom Suite 500 197 Airport
San Antonio, TX 78216 Burlingame, CA 94010
Phone 210-340-2113 Phone 800-342-9388
Fax 210-340-1217 Fax 650-342-9388
Download Computer D D Computer Warehouse
11321 Richmond Ave 4642 Everhart
Suite 106-C Corpus Christi, TX 78411
Houston, TX 77082 Phone 512-993-5895
Phone 888-217-9121 Fax 512-993-5897
Fax 281-870-8355
McCall Services Genesys
800 N Shoreline 1289 Hammerwood Ave
Suite 1100 South SunnyVale, CA 94089
Corpus Cbristi, TX 78401 Phone 408-541-1800 x 126
Phone 512-883-2060 Fax 408-541-1700
Fax 512-883-0500
CPU Data Cimarron
1122 Pecan 1830 NASA Road One
McAllen, TX 78501 Houston, TX 77058
Phone 956-631-4477 Phone 281-335 5840
Micro World
326 Maple Ave
Torrance, CA 90503
Phone 310-533-1177 x270
Fax 310-533-0501
Gateway Computers
Omtex Gateway 2000 Major Accounts
1221 S Main Suite 207 610 Gateway Dr
Boerne, TX 78006 N. Sioux City, SD 57049
Phone 800-482-8397 Phone 800-779-2000
Fax 830-249-3319 Fax 605-232-2701
<PAGE> 6
HP Computers
Insight Direct MSI
3820 South Harl 501 Waller
Tempe, AZ 85282 Austin, TX 78702
Phone 800-476-4888 x 5151 Phone 512-476-6925
Fax 602-333-3400 Fax 512-473-2371
QIV Systems Ameritel
4242 Woodcook Suite 101 11120 N Stemmons Frwy
San Antonio, TX 78228 Dallas, TX 75229
Phone 800-288-4126 Phone 972-484-8549
Fax 210-736-4054 Fax 972-484-5491
Walks CGES
145 Boca Chica 444 Scott Dr
Brownsville, TX 78520 Bloomingdale, IL 60108
Phone 800-481-0151 Phone 800-543-2437
Fax 956-542-0803 Fax 630-924-6850
Download Computer D D Computer Warehouse
1321 Richmond Ave Suite 106-C 4642 Everhart
Houston, TX 77082 Corpus Christi, TX 7X411
Phone 888-217-9121 Phone 512-993-5895
Fax 281-870-8355 Fax 512-993-5897
CPU Data Argon Technologies
1122 Pecan 1531 W IH 30
McAllen, TX 78501 Greenville, TX 75402
Phone 956-631-4477 Phone 903-455-5036
Fax 956-787-1805 Fax 903-455-2115
Cimarron Education Access
1830 NASA Road One 295 Santa Ana Ct
Houston, TX 77058 Sunnyvale, CA 94086
Phone 281-335-5840 Phone 800-741-8826 x 3145
Fax 281-335-5890 Fax 800-741-X827
Dell Computers
QIV Systems Dell
4242 Woodcook Suite 101 One Dell Way
San Antonio, TX 78228 Round Rock, TX 78682
Phone 800-288-4126 Phone 800-274-7799
Fax 210-736-4054 Fax 800-433-9528
Ameritel Download Computer
11120 N Stemmons Frwy 11321 Richmond Ave
Dallas, TX 75229 Suite 106-C
Phone 972-484-8549 Houston, TX 77082
Fax ###-##-#### Phone 888-217-9121
Fax 281-870-8355
McCall Services
800 N Shoreline Suite 1100 South
Corpus Christi, TX 78401
Phone 512-883-2060
Fax 512-883-0500
<PAGE> 7
Toshiba Computers
Insight Direct MSI
3820 South Harl Ave 501 Waller
Tempe, AZ 85282 Austin, TX 78702
Phone 800-476-4888 x 5151 Phone S12-476-6925
Fax 602-333-3400 Fax 512-473-2371
Solutions Plus More Wholesale Computers
4106 N 22 Suite 3 4610 San Bernard Ste B
McAllen, TX 78504 Laredo, TX 78041
Phone 956-664-1933 Phone 956-725-3460
Fax 956-664-9776 Fax 956-725-0133
Ameritel Download Computer
11120 N Stemmons Frwy 11321 Richmond Ave
Dallas, TX 75229 Suite 106-C
Phone 972-484-8549 Houston, TX 77082
Fax 972-484-5491 Phone 888-217-9121
Fax 281-870-8355
D D Computer Warehouse Cimarron
642 Everhart 1830 NASA Road, One
Corpus Christie, TX 78411 Houston, TX 77058
Phone 512-993-5895 Phone 281-335-5890
Fax 512-993-5897 Fax 281-335-5890
Acer Computers
Insight Direct Solutions Plus More
3820 South Harl Ave 4106 N. 22 Suite 3
Tempe, AZ 85282 McAllen, TX 78504
Phone 800-476-4888 x 5151 Phone 956-664-1933
Fax 602-333-3400 Fax 956-664-9776
Wholesale Computers Ameritel
4610 San Bernardo Ste B 11120 N Stemmons Frwy
Laredo, TX 78041 Dallas, TX 75229
Phone 956-725-3460 Phone 972-484-8549
Fax 956-725-0133 Fax 972-484-5491
Arsys Innotech Walks
10518 Harwin Dr 145 Boca Chica
Houston, TX 77036 Brownsville, TX 78520
Phone 713-988-9988 Phone 800-481-0151
Fax 713-988-9989 Fax 956-542-0803
Foremost Technologies Download Computer
P O Box 3392 11321 Richmond Ave
Brownsville, TX 78532 Suite 106-C
Phone 956-831-4444 Houston, TX 77082
Fax 956-831-2257 Phone 888-217-9121
Fax 281-870-8355
D D Computer Warehouse CPU Data
4642 Everhart 1122 Pecan
Corpus Christi, TX 78411 McAllen, TX 78501
Phone 512-993-5895 Phone 956-631-4477
Fax 512-993-5897 Fax 956-787-1805
Cimarron Micro World
1830 NASA Road One 326 Maple Ave
Houston, TX 77058 Torrance, CA 90503
Phone 281-335-5840 Phone 310-533-1177x270
Fax 281-335-5890 Fax 310-533-0501
<PAGE> 8
IBM Computers
Computer City Insight Direct
300 W 3rd St Suite 1500 3820 South Harl Ave
Fort Worth, TX 76102 Tempe, AZ 85282
Phone 817-415-3250 Phone 800-476-4888 x5151
Fax 817-415-3350 Fax 602-333-3400
MSI Computer Education Solutions
501 Waller 11211 N Main
Austin, TX 78702 McAllen, TX 78501
Phone 512-476-6925 Phone 800-303-8689
Fax 512-473-2371 Fax 956-584-3961
QIV Systems Computerland
4242 Woodcook Suite 101 115 W Main
San Antonio, TX 78228 Uvalde, TX 78801
Phone 800-288-4126 Phone 803-278-6665
Fax 210-736-4154 Fax 830-278-1513
Solutions Plus More Arsys Innotech
4106 N.22 Suite 3 10518 Harwin Dr
McAllen, TX 78504 Houston TX 77036
Phone 956-664-1933 Phone 713-988-9988
Fax 956-664-9776 Fax 713-988-9989
CGES Download Computer
444 Scott Dr 11321 Richmond Ave Suite 106C
Bloomingdale, IL 60108 Houston, TX 77082
Phone 910-543-2437 Phone 888-217-9121
Fax 630-924-6850 Fax 281-870-8355
CPU Data Argon Technologies
1172 Pecan 1531 W IH 30
McAllen, TX 78501 Greenville, TX 75402
Phone 956-631-4477 Phone 903-455-5036
Fax 956-787-1805 Fax 903-455-2115
<PAGE> 9
Apple Computers
Small Business Computer Apple Corp
409 E. Jackson 1846 N Shore Dr
Harlingen, TX 78550 Port Isabel, TX 78587
Phone 956-421-3279 Phone 956-943-3145
Fax 956-421-3177 Fax 956-943-3144
Apple Computer
P O Box 149116
Austin, TX 78714
Phone 800-800-2775
Fax 512-919-2974
Sun Computers
MSI Sun Microsystems
501 Waller 6034 W Courtyard Dr Suite 200
Austin. TX 78702 Austin, TX 78730
Phone 512-476-6925 Phone 512-346-8761
Fax 512-473-2371 Fax 512-346-8761
Internet Devices
Internet Products
8947 A Complex Dr
San Diego, CA 92123
Phone 888-468-3742
Fax 619-574-4111
Computer Software
December 31, 1997 to December 31, 1998
<PAGE> 10
Productivity Software
Computer City QIV Systems
300 W 3rd St Suite 1500 1242 Woodcook Suite 1111
Fort Worth, TX 76102 San Antonio, TX 78228
Phone 817-415-3250 Phone 800-288-4126
Fax 817-415-3350 Fax 210-736-4054
Computerland Dell
115 W Main One Dell Way
Uvalde, TX 78801 Round Rock, TX 78682
Phone 803-278-6665 Phone 800-433-9528
Fax 830-278-1513 Fax 800-433-9528
M&A Technology Micro Solutions
4407 Alpha Rd 1311 E. Hackberry
Dallas TX 75244 McAllen, TX 78501
Phone 972-490-5803 Phone 956-682-1819
Fax 972-490-0616 Fax 956-682-6560
Arlington Computers Wholesale Computers
Parts & Service 4610 San Bernardo
2801 E Pioneer Parkway Ste B
Suite 122 Laredo, TX 78041
Arlington, TX 76010 Phone 956-725-3460
Phone 817-649-1968 Fax 956-725-0133
Fax 817-649-2055
HB Distribution Ameritel
9630 Clarewood Dr Suite B 1 11120 N Stemmons Frwy
Houston, TX 77036 Dallas TX 75229
Phone 713-776-4778 Phone 972-484-5491
Fax 713-776-4770 Fax 972-484-5491
The Software Source Foremost Technologies
1750 Brielle A-2 PO Box 3392
Ocean, NJ 07712 Brownsville TX 78532
Phone 732-695-2100 Phone 956-831-4444
Fax 732-695-1070 Fax 956-831-2257
Tangent Computer Download Computer
Airport 11321 Richmond Ave
Burlingame, CA 94010 Suite 106-C
Phone 800-342-9388 Houston TX 77082
Fax 650-342-9388 Phone 888-217-9121
Fax 281-870-8355
D D Computer Warehouse Cimarron
4642 Everhart l830 NASA Road One
Corpus Christi, TX 78411 Houston TX 77058
Phone 512-993-5895 Phone 281-335-5840
Fax 512-993-5897 Fax 281-335-5890
Azarat Marketing
2809 Bird Ave Suite 299
Miami FL 33133
Phone 305-285-7297
Fax 305-285-8879
<PAGE> 11
Education Software
Computer City ET&T/Regency
300 W 3rd St Suite 1500 1214 C Stonghollow Dr
Fort Worth, TX 76102 Kingwood, TX 77339
Phone 817-415-3250 Phone 800-419-9119
Fax 817-415-3350 Fax 280-358-7397
Computers at Sunrise Mall Arlington Computers
SPID #37B & # 39 Parts & Service
, TX 78412 2801 E Pioneer Parkway
Phone 512-994-8887 Suite 122
Fax 512-994-8988 Arlington, TX 76010
Phone 817-649-1968
Fax 817-649-2055
Wholesale Computers Educational Resources
4610 San Bernardo Ste B 8523 Pioneer Gold
Laredo, TX 78041 San Antonio, TX 78249
Phone 956-725-3460 Phone 800-624-2926
Fax 956-725-0133 Fax 210-684-7670
Ameritel Computer Tutor
11120 N Stemmons Frwy Rt. 1 Box 31 G
Dallas, TX 75229 Farmersville, TX 75442
Phone 972-484-8549 Phone 800-472-0071
Fax 972-484-5491 Fax 903-776-2100
School Visions of Texas
704 Nightingale #8
McAllen, TX 78504
Phone 956-687-3210
Fax 956-782-1019
ILS Software
New Century Jostens
220 Old New Brunswick 7878 N 16th Suite 100
Piscataway, NJ 08854 Pheonix, AZ 85020
Phone 800-833-6232 Phone 800-422-4339
Fax 732-981-0552 Fax 602-230-7034
Small Business Computer ET&T/Regency
409 E. Jackson 1214C Stonghollow Dr
Harlingen, TX 78550 Kingwood, TX 77339
Phone 956-421-3279 Phone 800449-9119
Fax 956-421-3177 Fax 280-358-7397
Computerland Tangent Computer
115 W Main 197 Airport
Uvalde, TX 78801 Burlingame, CA 94010
Phone 803-278-6665 Phone 800-342-9388
Fax 830-278-1513 Fax 650-342-9388
<PAGE> 12
Computer Maintenance
December 31, 1997 to December 31. 1998
Computer Maintenance
Computer City MSI
300 W 3rd St Suite 1500 501 Waller
Fort Worth, TX 76102 Austin, TX 78702
Phone 817-415-3250 Phone 512-476-6925
Fax 817-415-3350 Fax 512-473-2371
QIV Systems Small Business Computer
4242 Woodcook Suite 101 409 F. Jackson
San Antonio, TX 78228 Harlingen, TX 78550
Phone 800-288-4126 Phone 956-421-3279
Fax 210-736-4054 Fax 956-421-3177
CRC Computerland
201 North 15tb 115 W Main
McAllen, TX 78501 Uvalde, TX 78801
Phone 0956-631-2321 Phone 803-278-6665
Fax 956-631-4636 Fax 830-278-1513
Solutions Plus More M&A Technology
4106 N. 22 Suite 3 4407 Alpha Rd
McAllen, TX 78504 Dallas, TX 75244
Phone 956-664-1933 Phone 972-490-5803
Fax 956-664-9776 Fax 972-490-0616
Micro Solutions Computers at Sunrise Mall
1311 E. Hackberry 5858
McAllen, TX 78501 SPID #37B & # 39, TX 78412
Phone 956-682-1819 Phone 512-994-8887
Fax 956-682-6560 Fax 512-994-8988
Wholesale Computers NBA Computer Service
4610 San Bernardo Ste B 4017 Frederickburg Rd,
Laredo, TX 78041 Suite E
Phone 956-725-3460 San Antonio, TX 78201
Fax 956-725-0133 Phone 210-732-1492
Fax 713-732-1495
HB Distribution Ready Smart Systems
9630 Clarewood Dr Suite B 1 801 Quince, Ste 14
Houston, TX 77036 McAllen, TX 78501
Phone 713-776-4778 Phone 956-686-9518
Fax 713-776-4770 Fax 956-686-9518
Foremost Technologies Tangent Computer
P O Box 3392 197 Airport
Download Computer D D Computer Warehouse
11321 Richmond Ave Suite 106 4642 Everhart
Houston, TX 77082 Corpus Christi, TX 78411
Phone 888-217-9121 Phone 512-993-5895
Fax 281-870-8355 Fax 512-993-5897
Computer Command McCall Services
708 E. Goodwin 800 N Shoreline
Victoria, TX 77901 Suite 1100 South
Phone 800-460-3305 Corpus Christi, TX 78401
Fax 512-576-4259 Phone 512-883-2060
Fax 512-883-0500
CPU Data
1122 Pecan
McAllen, TX 78501
Phone 956-631-4477
Fax 956-787-1805
<PAGE> 13
Printers and Scanners
Insight Direct MSI
3820 South Harl Ave 501 Waller
Tempe, AZ 85282 Austin, TX 78702
Phone 800-476-4888 X 5151 Phone 512-473-2371
Fax 602-333-3400 Fax 512-473-2371
Compu Connect QIV Systems
777 S. Central 4242 Woodcook Suite 101
Expressway Ste 5D San Antonio, TX 78228
Richardson, TX 75080 Phone 800-288-4126
Phone 972-680-3999 Fax 210-736-4054
Fax 972-680-9253
Apple Corp CRC
1846 N Shore Dr 201 North 15th
Port Isabel, TX 78587 McAllen, TX 78501
Phone 956-943-3145 Phone 956-631-2321
Fax 956-943-3144 Fax 956-631-4636
Computerland Dell
15 W Main One Dell Way
Uvalde, TX 78801 Round Rock, TX 78682
Phone 803-278-6665 Phone 800-274-7799
Fax 830-278-1513 Fax 800-433-9528
Solutions Plus More M&A Technology
4106 N. 22 Suite 3 4407 Alpha Rd
McAllen, TX 78504 Dallas, TX 75241
Phone 956-664-1933 Phone 972-490-5803
Fax 956-664-9776 Fax 972-490-0616
Computers at Sunrise Mall Wholesale Computers
5858 4610 San Bernardo Ste 1
SPID #37B & # 39, TX 78412 Laredo, TX 78041
Phone 512-994-8887 Phone 956-725-3460
Fax 512-994-8988 Fax 956-725-0133
Dean Williams Business Educational Resources Machines
5755 Bonhom Suite 416 8523 Pioneer Gold
Houston, TX 77036 San Antonio, TX 78249
Phone 713-266-3622 Phone 800-624-2926
Arsys Innotech Walks
10518 Harwin Dr 145 Boca Chica
Houston, TX 77036 Bronwnsville, TX; 78520
Phone 713-988-9988 Phone 800-481-0151
Fax 713-988-9989 Fax 956-542-0803
CGES Foremost Technologies
444 Scott Dr PO Box 3392
Bloomingdale, IL 60108 Brownsville, TX 78532
Phone 800-543-2437 Phone 956-831-4444
Fax 630-924-6850 Fax 956-831-2257
Matrix Data Tangent Computer
21555 Drake 197 Airport
Cleveland, OH 44136 Burlingame, CA 94010
Phone 800-456-3325 Phone 800-342-9388
Fax 216-238-4546 Fax 650-342-9388
Apple Computer Download Computer
P O Box 149116 11321 Richmond Ave
Austin, TX 78714 Suite 106-C
Phone 800-800-2775 Houston, TX 77082
Fax 512-919-2974 Phone 888-217-9121
Fax 281-870-8355
Northshore Computer Plus D D Computer Warehouse
935 Freeport 4642 Everhart
Houston, TX 77015 Corpus Christi, TX 78411
Phone 713-450-2270 Phone 512-993-5895
Fax 713-450-2577 Fax 512-993-5897
Computer Command McCall Services
708 E. Goodwin 800 N Shoreline
Vlctoria, TX 77901 Suite 1100 South
Phone 800-460-3305 Corpus Christi, TX 78401
Fax 512-576-4259 Phone 512-883-2060
Fax 512-883-0500
Genesys CPU Data
1289 Hammerwood Ave 1122 Pecan
SunnyVale, CA 94089 McAllen, TX 78501
Phone 408-541-1800 x 126 Phone 956-631-4477
Fax 408-541-1700 Fax 956-787-1805
Cimmaron Education Access
1830 NASA Road One 295 Santa Ana Ct
Houston, TX 77058 Sunnyvale, CA 94086
Phone 281-335-5840 Phone 800-741-8826 x 3145
Fax 281-335-5890 Fax 800-741-8827
<PAGE> 1
EXHIBIT 10.5
EDUCATION SERVICE CENTER 18
Estimated Value of Contract: $525,000
Scope of Contract: Provider of computer Hardware and
Software.
REGION 18
August 28, 1997
To the Vendor Addressed:
RE: Region 18 Education Service Center
Purchasing Cooperative Members
A few months ago you responded to Region 18 Education Service Center's "open
catalog" bid This letter is to formally advise you that you are an approved
vendor for the Region 18 Education Service Center Purchasing Cooperative for the
period June 23, 1997 June22, 1998
According to the information submitted, you are an approved vendor in the
following:
Category:
R18C015 - School and Office Supplies, Instructional Materials and furniture
R18C016 - Computer Hardware, Software, Supplies and Accessories
R18C017 - P E and Athletic Supplies and Equipment
Enclosed for your file and reference is a list showing the members of tile
Region 18 Purchasing Cooperative. Each member is responsible for their own
purchasing and orders are not processed through Region 18 ESC
<PAGE> 2
Your cooperation regarding this matter is greatly appreciated Should you have
any questions or concerns, please do not hesitate to call me at (915) 567- 3958
Thank you for your patience regarding; this matter
Sincerely,
/s/ Gary Bond
Gary E. Bond
Purchasing Assistant
cc H. Whitehead
REGION 18 EDUCATION SERVICE CENTER
1997-1998 Purchasing Cooperative Members
Kermit ISD Marathon ISD Marfa ISD
Curtis Barnett Fred Stair Linda Gutierrez
601 S Poplar P O Box 416 P O Box T
Kermit TX 79745-4712 Marathon TX 79842 Marfa TS 79843
915-586-1015 915-386-4474 915-729-4252
Big Spring ISD Canutillo ISD Coahoma ISD
Ronald Plumlee Kay Fraser Gina McEndree
708 11th Place P O Box 100 P O Box 110
Big Spring TX 79720 Canutillo TX 79835 Coahoma TX 79511
915-264-3620 915 877 -7430 915-394-4290
Colorado ISD Coppell ISD Crane ISD
Geneva Findley Ralph M Seeley David Roberson
P O Box 1047 200 S Denton Tap Rd 511 W 8th Street
Colorado City Coppell Crane
TX 79512 TX 75019 TX 79731-3099
915-728-5312 214-471-1111 915-558-1020
Culberson County
Allamore ISD Desoto ISD Ector County ISD
Angelica Robledo Mel McFarling Dan Wilkinson
P O Box 899 200 E Belt Line Rd P O Box 3912
Horn TX 79855 DeSoto TX 79760-3912 Odessa TX 75115-5795
915-283-2245 972-274-8266 915-332-9151
<PAGE> 3
Forsan ISD Fort Davis ISD Fort Stockton ISD
Diana Lanspery Sharon Lippe Charles Roberts
P O Drawer A P O Box 1339 101 W Division
Forsan TX 79733 Fort Davis TX 79734 Fort Stockton TX 79735
915-457-2223 915-426-3917 915-336-4000
Glasscock ISD Grady ISD Grandfalls-Royalty ISD
JoAnn Turner Johnny Tubb Paula Francisco
P O BOX 9 HCR 72 Box 4 P O Box 10
Garden City TX 79739 Lenorah TX 79749-9702 Grandfalls TX 79742-0010
915-354-2230 915-459-2444 915-547-2266
Greenwood ISD Highland Park ISD Howard County Jr. College
Larry McGough Mary Bingham Dennis Churchwell
2700 FM 1379 701 S Westchester 1001 Birdwell Lane
Midland TX 79706 Dallas TX 75205 Big Spring TX 79720
915-685-7803 214-523-1600 915-264-5167
Kermit ISD Marathon ISD Marfa ISD
Curtis Barnett Fred Stair Linda Gutierrez
601 S Poplar P O Box 416 P O Box T
Kermit TX 79843 Marathon TX 79745-4712 Marfa TX 79842
915-586-1015 915-386-4474 915-729-4252
Monahans-Wickett
McCamey ISD Midland ISD Pyote ISD
Ronnie Page Leon Hartter Joe Hayes
P O Box 934 P O Box 2298 606 S Betty
McCamey TX Midland TX Monahans TX
79752 79701 79756
915-652-3141 915-689-1752 915-943-6711
<PAGE> 4
Pecos-Barstow
Paris ISD -Toyah ISD Presidio ISD
Ben Coker Cookie Canon Gloria Baeza
P O Box 1159 P O Box 869 P O Box S
Paris TX 75460 Pecos TX 79772 Presidio TX 79845
903-737-7473 915-447-7203 915-229-3010
Rankin ISD Reagan County ISD Region 18 ESC
Joyce Everidge Delbert Dodds Gary Bond
P O Box 90 1111 12th Street P O Box 60580
Rankin TX Big Lake TX Midland TX
79778 76932 79711-0580
915-693-2461 915-884-3705 915-567-3258
Rockwall ISD Stanton ISD Terlingua ISD
Eva Kozlovsky Rob Roberson Kathy Killingsworth
801 E Washington P O Box 730 P O Box 256 Street
Rockwall TX Stanton TX Terlingua TX
75087 79782 79852-0256
972-771-0605 915-756-2226 915-371-2281
Terrell County ISD Ward County courthouse Wink-Loving ISD
Blain Chriesman Judge Sam Massey Holly Bryan
P O Box 747 Courthouse P O Box 637
Sanderson TX Monahans TX Wink TX
79848 79756 79789-0637
915-345-2251 915-943-3209 915-527-3700
EDUCATION SERVICE CENTER Region 1
Estimated Value of Contract: $525,000
Scope of Contract: Provider of cabling and Network supplies.
1900 WEST SCHUNIOR
EDINBURG TEXAS 78539
210/3S3-5611 FAX 210/383-3524
August 25, 1997
<PAGE> 5
To: Vendor Addressed
From: Paul Hylander
Subject: Cabling RFP
The Region One Education Service Center Board of Directors awarded one year
contacts to successful RFP respondents in August 20, 1997. Districts
participating in the Region One Technology Cooperative will be able to use the
services of the complained that were awarded contracts until August 31, 1998
Attached you will find a list of vendors that were awarded one year contract to
provide cabling services for the Region One Technology Cooperative. You will
need to send each school district 2 copies of your cabling RFP proposals in
order that you can provide for them. One copy of your RFP needs to be sent to
District Business Manager and one copy needs to be sent to the District
Technology Coordinator.
School districts will develop cabling specifications for projects within their
districts. Vendors from the approved list can be contacted in order to determine
who can provide the best service at the best price.
Please contact me at 956-383-5611 if you have any questions about the bid
awards.
RFP Cable Installation Summary
Overview
Requests for cabling RFP's are designed to give each district with the maximum
flexibility when installing a local area network (LAN). This flexibility enables
districts to choose a vendor that best meets their cabling needs in the areas Of
purchasing supplies and equipment, labor costs, and costs of a turn key
solution.
The RFP was designed around five scenarios for various types of Internet
connectivity.
These included:
Administrative Offices (10 drops)
Computer Lab (30 drops)
Library (12 drops)
<PAGE> 6
Classrooms (80 drops)
Total Campus (132 (Drops)
Each vendor must be able to meet or exceed the LAN cabling standards found in
Appendix A of the RFP as well as meet the general and specific specifications of
the RFP.
School districts will need to write their own cabling specifications for
specific projects and vendors must be able to comply with all requirements of
the districts and the RFP Districts will be able to negotiate the best deal from
the approved vendor list that best meets the needs of the district.
Approved Vendors for Cabling and Equipment/Supplies
August 20, 1997-August 31, 1998
Vendor
Micro Media Solutions
D'Tcl Communication
ATE Telecom Solutions
Cable Com
Lucent Technologies
Southwestern Bell
Ecomm Systems
Carroll Systems
Anixter/NaCom
GTE
Walks Office Technology
Sabre Data
ANS Computers
Data Comm
Vendors Approved for Equipment and Supplies
August 20, 1997 August 31, 1998
Valmac Electric
Icon Technology
Micro Warehouse
Kent Data Comm
<PAGE> 7
January 20 1998
To: Vendor Addressed
From: Paul Hylander
Subject: Approved Bid Awards
Enclosed you will find copies of the approved bid awards for the following
categories:
Computers and Computer parts
Software
Computer Maintenance
Printers and Scanners
You are requested to send two (2) copies of your catalog to the school districts
in Region One. One copy goes to the District Business Manager and one copy goes
to the Technology Coordinator. Failure to send out copies of your catalog could
result in the termination of your bid award contract approved by the Region One
Board of Directors on December 16, 1997.
The bid awards are in effect until December 31, 1998 and Region One ESC has the
option to renew this contract for an additional year.
Please contact Paul Hylander at 956-383-5611 if you need additional information.
Multimedia Cooperative
Bid Awards
1997-1998
Computers and Computer Systems
December 31,1997 to December 31, 1998
<PAGE> 8
Generic Computers
Insight Direct Compu Connect
3820 South Harl Ave 777 S Central Expressway Ste. 5 D
Tempe, AZ 85282 Richardson, TX 75080
Phone 800-476-4888x5151 Phone 972-680-3999
Fax 602-333-3400 972-680-9253
QIV Systems Small Business Computer
4242 Woodcook Suite 101 409 E. Jackson
San Antonio, Tx 78228 Harlingen, TX 78550
Phone 800-288-4126 Phone 956-421-3279
Fax 210-736-4054 Fax 956-421-3177
CRC Solutions Plus More
201 North 15th 4106 N. 22 Suite 3
McAllen, TX 78501 McAllen, TX 78504
Phone 956-631-2321 Phone 956-664-1933
Fax 956-631-4636 Fax 956-664-9776
M&A Technology Micro Solutions
4407 Alpha Rd 1311 E. Hackberry
Dallas, TX 75244 McAllen, TX 78501
Phone 972-490-5803 Phone 956-682-18l9
Fax 972-490-0616 Fax 956-682-6560
Computers at Arlington Computers
Sunrise Mall 5858 Parts & Service
SPID #37B & H 39 2801 E Pioneer Parkway Suite 122
TX 78412 Arlington, TX 76010
Phone 512-994-8887 Phone 817-649-1968
Fax 512-994-8988 Fax 817-649-2055
Wholesale Computers NBA Computer Service
4610 San Bernardo 4017 Frederickburg Rd,
Ste B Suite E
Laredo, TX 78041 San Antonio, TX 78201
Phone 956-725-3460 Phone 210-732-1492
Fax 956-725-0133 Fax 713-732-1495
HB Distribution Ameritel
9630 Clarewood Dr. 11120 N Stemmon's Frwy
Suite Bl Dallas, TX 75229
Houston, TX 77036 Phone 972-484-8549
Phone 713-776-4778 Fax 972-484-5491
Fax 713-776-4770
Walks Foremost Technologies
115 Boca Chica PO Box 3392
Brownsville. TX 78520 Brownsville TX; 78532
Phone 800-481-0151 Phone 956-831-4444
Fax 956-542-0803 Fax 956-831-2257
Corby Company Tangent Computer
401 Isom Suite 500 197 Airport
San Antonio, TX 78216 Burlingame, CA 94010
Phone 210-340-2113 Phone 800-342-9388
Fax 210-340-1217 Fax 650-342-9388
<PAGE> 9
Download Computer D D Computer Warehouse
11321 Richmond Ave 4642 Everhart
Suite 106-C Corpus Christi, TX 78411
Houston, TX 77082 Phone 512-993-5895
Phone 888-217-9121 Fax 512-993-5897
Fax 281 -870-8355
McCall Services Genesys
800 N Shoreline South 1289 Hammerwood Ave
Suite 1100 SunnyVale, CA 94089
Corpus Christi, Phone 408-541-1800 x 126
TX 78401 Fax 408-541-1700
Phone 512-883-2060
Fax 512-883-0500
CPU Data Cimarron
1122 Pecan 1830 NASA Road One
McAllen, TX 78501 Houston, TX 77058
Phone 956-631-4477 Phone 281-335 5840
Micro World
326 Maple Ave
Torrance, CA 90503
Phone 310-533-1177x270
Fax 310-533-0501
Gateway Computers
Omtex Gateway 2000 Major Accounts
1221 S Main Suite 207 610 Gateway Dr
Boerne, TX 78006 N. Sioux City, SD 57049
Phone 800-482-8397 Phone 800-779-2000
Fax 830-249-3319 Fax 605-232-2701
HP Computers
Insight Direct MSI
3820 South Harl 501 Waller
Tempe, AZ 85282 Austin, TX 78702
Phone 800-476-4888 Phone 512-476-6925 x 5151
Fax 602-333-3400 Fax 512-473-2371
QIV Systems Ameritel
4242 Woodcook 11120 N Stemmons Frwy
Suite 101 Dallas, TX 75229
San Antonio, TX 78228 Phone 972-484-8549
Phone 800-288-4126 Fax 972-484-5491
Fax 210-736-4054
Walks CGES
145 Boca Chica 444 Scott Dr
Brownsville, TX 78520 Bloomingdale, IL 60108
Phone 800-481-0151 Phone 800-543-2437
Fax 956-542-0803 Fax 630-924-6850
<PAGE> 10
Download Computer D D Computer Warehouse
1321 Richmond Ave 4642 Everhart
Suite 106-C Corpus Christi, TX 7X411
Houston, TX 77082 Phone 512-993-5895
Phone 888-217-9121 Fax 512-993-5897
Fax 281-870-8355
CPU Data Argon Technologies
1122 Pecan 1531 W IH 30
McAllen, TX 78501 Greenville, TX 75402
Phone 956-631-4477 Phone 903-45S-5036
Fax 956-787-1805 Fax 903-455-2115
Cimarron Education Access
1830 NASA Road One 295 Santa Ana Ct
Houston, TX 77058 Sunnyvale, CA 94086
Phone 281-335-5840 Phone 800-741-8826 x 3145
Fax 281-335-5890 Fax 800-741-X827
Dell Computers
QIV Systems Dell
4242 Woodcook Suite 101 One Dell Way
San Antonio, TX 78228 Round Rock, TX 78682
Phone 800-288-4126 Phone 800-274-7799
Fax 210-736-4054 Fax 800-433-9528
Ameritel Download Computer
11120 N Stemmons Frwy 11321 Richmond Ave
Dallas, TX 75229 Suite 106-C
Phone 972-484-8549 Houston, TX 77082
Fax ###-##-#### Phone 888-217-9121
Fax 281-870-8355
McCall Services
800 N Shoreline Suite 1100
South Corpus Christi, TX 78401
Phone 512-883-2060 Fax 512-883-0500
<PAGE> 11
Toshiba Computers
Insight Direct MSI
3820 South Harl Ave 501 Waller
Tempe, AZ 85282 Austin, TX 78702
Phone 800-476-4888 Phone S12-476-6925
x 5151 Fax 512-473-2371
Fax 602-333-3400
Solutions Plus More Wholesale Computers
4106 N 22 Suite 3 4610 San Bernard Ste B
McAllen, TX 78504 Laredo, TX 78041
Phone 956-664-1933 Phone 956-72S-3460
Fax 956-664-9776 Fax 956-725-0133
Ameritel Download Computer
11120 N Stemmons Frwy 11321 Richmond Ave Suite 106-C
Dallas, TX 75229 Houston, TX 77082
Phone 972-484-8549 Phone 888-217-9121
Fax 972-484-5491 Fax 281-870-8355
D D Computer Warehouse Cimarron
642 Everhart 1830 NASA Road, One
Corpus Christie, TX 78411 Houston, TX 77058
Phone 512-993-5895 Phone 281-335-5890
Fax 512-993-5897 281-335-5890
Acer Computers
Insight Direct Solutions Plus More
3820 South Harl Ave 4106 N. 22 Suite 3
Tempe, AZ 85282 McAllen, TX 78504
Phone 800-476-4888 Phone 956-664-1933
x 5151 Fax 956-664-9776
Fax 602-333-3400
Wholesale Computers Ameritel
4610 San Bernardo Ste B 11120 N Stemmons Frwy
Laredo, TX 78041 Dallas, TX 75229
Phone 956-725-3460 Phone 972-484-8549
Fax 956-725-0133 Fax 972-484-5491
Arsys Innotech Walks
10518 Harwin Dr 145 Boca Chica
Houston, TX 77036 Brownsville, TX 78520
Phone 713-988-9988 Phone 800-481-0151
Fax 713-988-9989 Fax 956-542-0803
Foremost Technologies Download Computer
P O Box 3392 11321 Richmond Ave Suite 106-C
Brownsville, TX 78532 Houston, TX 77082
Phone 956-831-4444 Phone 888-217-9121
Fax 956-831-2257 Fax 281-870-8355
D D Computer Warehouse CPU Data
4642 Everhart 1122 Pecan
Corpus Christi, TX 78411 McAllenl TX 78501
Phone 512-993-5895 Phone 956-631-4477
Fax 512-993-5897 Fax 956-787- 1805
<PAGE> 12
Cimarron Micro World
1830 NASA Road One 326 Maple Ave
Houston, TX 77058 Torrance, CA 90503
Phone 281-335-5840 Phone 310-533-1177x270
Fax 281-335-5890 Fax 310-533-0501
IBM Computers
Computer City Insight Direct
300 W 3rd St Suite 1500 3820 South Harl Ave
Fort Worth, TX 76102 Tempe, AZ 85282
Phone 817-415-3250 Phone 800-476-4888 x5151
Fax 817-415-3350 Fax 602-333-3400
MSI Computer Education Solutions
501 Waller 11211 N Main
Austin, TX 78702 McAllen, TX 78501
Phone 512-476-6925 Phone 800-303-8689
Fax 512-473-2371 Fax 956-584-3961
QIV Systems Computerland
4242 Woodcook Suite 101 115 W Main
San Antonio, TX 78228 Uvalde, TX 78801
Phone 800-288-4126 Phone 803-278-6665
Fax 210-736-4154 Fax 830-278-1513
Solutions Plus More Arsys Innotech
4106 N.22 Suite 3 10518 Harwin Dr
McAllen, TX 78504 Houston TX 77036
Phone 956-664-1933 Phone 713-988-9988
Fax 956-664-9776 Fax 713-988-9989
CGES Download Computer
444 Scott Dr 11321 Richmond Ave Suite 106C
Bloomingdale, IL 60108 Houston, TX 77082
Phone 910-543-2437 Phone 888-217-9121
Fax 630-924-6850 Fax 281-870-8355
CPU Data Argon Technologies
1172 Pecan 1531 W IH 30
McAllen, TX 78501 Greenville, TX 75402
Phone 956-631-4477 Phone 903-455-5036
Fax 956-787-1805 Fax 903-455-2115
<PAGE> 13
Apple Computers
Small Business Computer Apple Corp
409 E. Jackson 1846 N Shore Dr
Harlingen, TX 78550 Port Isabel, TX 78587
Phone 956-421-3279 Phone 956-943-3145
Fax 956-421 -3177 Fax 956-943-3144
Apple Computer
P O Box 149116
Austin, TX 78714
Phone 800-800-2775
Fax 512-919-2974
Sun Computers
MSI Sun Microsystems
501 Waller 6034 W Courtyard Dr Suite 200
Austin. TX 78702 Austin, TX 78730
Phone 512-476-6925 Phone 512-346-8761
Fax 512-473-2371 Fax 512-346-8761
Internet Devices
Internet Products
8947 A Complex Dr
San Diego, CA 92123
Phone 888-468-3742
Fax 619-574-4111
Computer Software
December 31, 1997 to December 31, 1998
ACProductivity Software
Computer City QIV Systems
300 W 3rd St Suite 1500 1242 Woodcook Suite 1111
Fort Worth, TX 76102 San Antonio, TX 78228
Phone 817-415-3250 Phone 800-288-4126
Fax 817-415-3350 Fax 210-736-4054
Computerland Dell
115 W Main One Dell Way
Uvalde, TX 78801 Round Rock, TX 78682
Phone 803-278-6665 Phone 800-433-9528
Fax 830-278-1513 Fax 800-433-9528
<PAGE> 14
M&A Technology Micro Solutions
4407 Alpha Rd 1311 E. Hackberry
Dallas TX 75244 McAllen, TX 78501
Phone 972-490-5803 Phone 956-682-1819
Fax 972-490-0616 Fax 956-682-6560
Arlington Computers Wholesale Computers
Parts & Service
2801 E Pioneer Parkway Suite 122 4610 San Bernardo Ste B
Arlington, TX 76010 Laredo, TX 78041
Phone 817-649-1968 Phone 956-725-3460
Fax 817-649-2055 Fax 956-725-0133
HB Distribution Ameritel
9630 Clarewood Dr 11120 N Stemmons
Frwy Suite B 1 Dallas TX 75229
Houston, TX 77036 Phone 972-484-5491
Phone 713-776-4778
Fax 713-776-4770 Fax 972-484-5491
The Software Source Foremost Technologies
1750 Brielle A-2 PO Box 3392
Ocean. NJ 07712 Brownsville TX 78532
Phone 732-695-2100 Phone 956-831-4444
Fax 732-695-1070 Fax 956-831-2257
Tangent Computer Download Computer
Airport 11321 Richmond Ave Suite 106-C
Burlingame, CA 94010 Houston TX 77082
Phone 800-342-9388 Phone 888-217-9121
Fax 650-342-9388 Fax 281-870-8355
D D Computer Warehouse Cimarron
4642 Everhart l830 NASA Road One
Corpus Christi. TX 78411 Houston TX 77058
Phone 512-993-5895 Phone 281-335-5840
Fax 512-993-5897 Fax 281-335-5890
Azarat Marketing
2809 Bird Ave Suite 299
Miami FL 33133
Phone 305-285-7297
Fax 305-285-8879
Education Software
Computer City ET&T/Regency
300 W 3rd St Suite 1500 1214 C Stonghollow Dr
Fort Worth, TX 76102 Kingwood, TX 77339
Phone 817-415-3250 Phone 800-419-9119
Fax 817-415-3350 Fax 280-358-7397
<PAGE> 15
Computers at Sunrise Arlington Computers
Mall Parts & Service
5858 2801 E Pioneer Parkway Suite 122
SPID #37B & # 39, TX 78412 Arlington, TX 76010
Phone 512-994-8887 Phone 817-649-1968
Fax 512-994-8988 Fax 817-649-2055
Wholesale Computers Educational Resources
4610 San Bernardo Ste B 8523 Pioneer Gold
Laredo, TX 78041 San Antonio, TX 78249
Phone 956-725-3460 Phone 800-624-2926
Fax 956-725-0133 Fax 210-684-7670
Ameritel Computer Tutor
11120 N Stemmons Frwy Rt. 1 Box 31 G
Dallas, TX 75229 Farmersville, TX 75442
Phone 972-484-8549 Phone 800-472-0071
Fax 972-484-5491 Fax 903-776-2100
School Visions of Texas
704 Nightingale #8
McAllen, TX 78504
Phone 956-687-3210
Fax 956-782-1019
ILS Software
New Century Jostens
220 Old New Brunswickq 7878 N 16th Suite 100
Picataway, NJ 08854 Pheonix, AZ 85020
Phone 800-833-6232 Phone 800-422-4339
Fax 732-981-0552 Fax 602-230-7034
Small Business Computer ET&T/Regency
409 E. Jackson 1214C Stonghollow Dr
Harlingen, TX 78550 Kingwood, TX 77339
Phone 956-421-3279 Phone 800449-9119
Fax 956-421-3177 Fax 280-358-7397
Computerland Tangent Computer
115 W Main 197 Airport
Uvalde, TX 78801 Burlingame, CA 94010
Phone 803-278-6665 Phone 800-342-9388
Fax 830-278-1513 Fax 650-342-9388
<PAGE> 16
Computer Maintenance
December 31, 1997 to December 31. 1998
Computer Maintenance
Computer City MSI
300 W 3rd St Suite 1500 501 Waller
Fort Worth, TX 76102 Austin, TX 78702
Phone 817-415-3250 Phone 512-476-6925
Fax 817-415-3350 Fax 512-473-2371
QIV Systems Small Business Computer
4242 Woodcook Suite 101 409 F. Jackson
San Antonio, TX 78228 Harlingen, TX 78550
Phone 800-288-4126 Phone 956-421-3279
Fax 210-736-4054 Fax 956-421-3177
CRC Computerland
201 North 15tb 115 W Main
McAllen, TX 78501 Uvalde, TX 78801
Phone 0956-631-2321 Phone 803-278-6665
Fax 956-631-4636 Fax 830-278-1513
Solutions Plus More M&A Technology
4106 N. 22 Suite 3 4407 Alpha Rd
McAllen, TX 78504 Dallas, TX 75244
Phone 956-664-1933 Phone 972-490-5803
Fax 956-664-9776 Fax 972-490-0616
Micro Solutions Computers at Sunrise Mall
1311 E. Hackberry 5858
McAllen, TX 78501 SPID #37B & # 39, TX 78412
Phone 956-682-1819 Phone 512-994-8887
Fax 956-682-6560 Fax 512-994-8988
Wholesale Computers NBA Computer Service
4610 San Bernardo Ste B 4017 Frederickburg Rd, Suite E
Laredo, TX 78041 San Antonio, TX 78201
Phone 956-725-3460 Phone 210-732-1492
Fax 956-725-0133 Fax 713-732-1495
HB Distribution Ready Smart Systems
9630 Clarewood Dr 801 Quince, Ste 14
Suite B 1 McAllen, TX 78501
Houston, TX 77036 Phone 956-686-9518
Phone 713-776-4778 Fax 956-686-9581
Fax 713 776-4770
Foremost Technologies Tangent Computer
P O Box 3392 197 Airport
Download Computer D D Computer Warehouse
11321 Richmond Ave 4642 Everhart
Suite 106 Corpus Christi, TX 78411
Houston, TX 77082 Phone 512-993-5895
Phone 888-217-9121 Fax 512-993-5897
Fax 281-870-8355
<PAGE> 17
Computer Command McCall Services
708 E. Goodwin 800 N Shoreline Suite 1100 South
Victoria, TX 77901 Corpus Christi, TX 78401
Phone 800-460-3305 Phone 512-883-2060
Fax 512-576-4259 Fax 512-883-0500
CPU Data
1122 Pecan
McAllen, TX 78501
Phone 956-631-4477
Fax 956-787-1805
Printers and Scanners
Insight Direct MSI
3820 South Harl Ave 501 Waller
Tempe, AZ 85282 Austin, TX 78702
Phone 800-476-4888 X 5151 Phone 512-473-2371
Fax 602-333-3400 Fax 512-473-2371
Compu Connect QIV Systems
777 S. Central Expressway 4242 Woodcook Suite 101
Ste 5D San Antonio, TX 78228
Richardson, TX 75080 Phone 800-288-4126
Phone 972-680-3999 Fax 210-736-4054
Fax 972-680-9253
Apple Corp CRC
1846 N Shore Dr 201 North 15th
Port Isabel, TX 78587 McAllen, TX 78501
Phone 956-943-3145 Phone 956-631-2321
Fax 956-943-3144 Fax 956-631-4636
Computerland Dell
15 W Main One Dell Way
Uvalde, TX 78801 Round Rock, TX 78682
Phone 803-278-6665 Phone 800-274-7799
Fax 830-278-1513 Fax 800-433-9528
Solutions Plus More M&A Technology
4106 N. 22 Suite 3 4407 Alpha Rd
McAllen, TX 78504 Dallas, TX 75241
Phone 956-664-1933 Phone 972-490-5803
Fax 956-664-9776 Fax 972-490-0616
Computers at Sunrise Wholesale Computers
Mall 5858 4610 San Bernardo Ste 1
SPID #37B & # 39, TX 78412 Laredo, TX 78041
Phone 512-994-8887 Phone 956-725-3460
Fax 512-994-8988 Fax 956-725-0133
<PAGE> 18
Dean Williams Educational Resources
Business Machines
5755 Bonhom Suite 416 8523 Pioneer Gold
Houston, TX 77036 San Antonio, TX 78249
Phone 713-266-3622 Phone 800-624-2926
Arsys Innotech Walks
10518 Harwin Dr 145 Boca C'hie;a
Houston, TX 77036 Bronwnsville, TX; 78520
Phone 713-988-9988 Phone 800-481-0151
Fax 713-988-9989 Fax 956-542-0803
CGES Foremost Technologies
444 Scott Dr PO Box 3392
Bloomingdale, IL 60108 Brownsville, TX 78532
Phone 800-543-2437 Phone 956-831-4444
Fax 630-924-6850 Fax 956-831-2257
Matrix Data Tangent Computer
21555 Drake 197 Airport
Cleveland, OH 44136 Burlingame, CA 94010
Phone 800-456-3325 Phone 800-342-9388
Fax 216-238-4546 Fax 650-342-9388
Apple Computer Download Computer
P O Box 149116 11321 Richmond Ave Suite 106-C
Austin, TX 78714 Houston, TX 77082
Phone 800-800-2775 Phone 888-217-9121
Fax 512-919-2974 Fax 281-870-8355
Northshore Computer Plus D D Computer Warehouse
935 Freeport 4642 Everhart
Houston, TX 77015 Corpus Christi, TX 78411
Phone 713-450-2270 Phone 512-993-5895
Fax 713-450-2577 Fax 512-993-5897
Computer Command McCall Services
708 E. Goodwin 800 N Shoreline Suite 1100 South
Victoria, TX 77901 Corpus Christi, TX 78401
Phone 800-460-3305 Phone 512-883-2060
Fax 512-576-4259 Fax 512-883-0500
Genesys CPU Data
1289 Hammerwood Ave 1122 Pecan
SunnyVale, CA 94089 McAllen, TX 78501
Phone 408-541-1800 x 126 Phone 956-631-4477
Fax 408-541-1700 Fax 956-787-1805
<PAGE> 1
EXHIBIT 10.6
EDUCATION SERVICE CENTER 5
Estimated Value of Contract: $525,000
Scope of Contract: Provider of computer Hardware and
Software.
Region V
Education Service Center
2295 Delaware Street, Beaumont, Texas 77703-4299
(409)838-5555 TDD:(409)835-5168 FAX:(409)833-9755
Telecommunications Device - Deaf
June 26, 1997
Micro-Media Solutions, Inc.
Karla Gonzales
501 Waller
Austin, Texas 78702
Dear Karla Gonzales:
Thank you for submitting a bid for Computer, Peripherals and Operating Systems
which was opened on June 1 7, 1997. The Region V Education Service Center has
compiled all of the bid sheets which the vendors have submitted and will send a
booklet to each of the participating districts.
We are now asking that you make sure that you send a minimum of two catalogs or
bound price lists for use in product selection to each district Purchasing
Departments and Region V Education Service Center as stated in the Specific
Terms and Conditions of said bid. These bound documents must be clearly labeled
on front cover with the name of said bid and date bid is good through.
Again thank you for submitting a bid and our cooperative looks forward to doing
business with you as our needs arise.
Sincerely,
/s/ John Applebach
John Applebach
Business Manager
JA:srv
<PAGE> 2
Attachment - Listing of Participating School Districts
Overview
Southwestern Bell Integrated Technologies (SWB IT) is
issuing this Request For Quote
(RFQ) to secure subcontractors on state and/or local basis to install and
maintain for a 3 year period: CSU/DSUs, routers hubs NTl/TAs, printers,
Category 5 wiring and personal computers in rural and metro areas across the
state of Texas. There are approximately 1000 locations across the state that
will be installing the equipment and services described below. The timeline for
this project is January 1998 through March 1999. There are two designs that
will be described below; each will be used to provide Internet access to
schools and public libraries across the state. Responses are due on 9/1/97at
5:00 P.M.
Scope of Work
Each subcontractor will provide a turnkey cost to SWB for the installation
designs discussed and illustrated below for both installation and a three-year
on site maintenance contract. It will be the contractors' responsibility to
coordinate addressing of the network equipment with the end user customer.
Contractor will also be responsible for extended wiring (if necessary) from the
demarcation point to the equipment location.
Design #1
This design includes a two port ISDN terminal adapter (TA) that will be shared
by two PCs. Using a port on the TA, these P'Cs will use Windows NT 4.0 dial-up
networking To connect via a B-channel to an ISP. The NT workstations will also
use a 10Base2 Ethernet LAN to share a printer. The printer will be attached to
the parallel port of one workstations and shared via Microsoft Networking to
the other workstation. Each workstation will be configured with Windows NT
Workstation 4.0, Microsoft Internet Explorer (latest version at time of
install), and Norton Anti-virus for Windows NT (with auto-protect enabled).
Further
<PAGE> 3
configuration of the PCs will be according to the forms in Attachment D. The
successful subcontractor(s) will provide installation of all hardware and
software from the SWB point of demarcation up to and including the PC for
Internet access. SWB will provide all equipment (i.e., NT1/TA, PCs, Printer,
and Network cables)SWB will ship all equipment to the work site or to the
subcontractor prior to the installation date. The subcontractor will provide
installation, configuration, testing, documentation, and any incidental wiring
(plenum rated, if necessary). A sketch of this design is included as Attachment
A. All incidental hardware will be provided by the contractor (i.e., d-rings.
tie wraps, wire mold, etc.) It will be the contractors' responsibility to
pre-survey and coordinate the installations of all sites.
Design # 2
Design # 2 is more complicated than design #1. In short it is a hub site and
up to 2 remotes or a hub site plus up to 7 remotes. The HUB Site will use a
router to connect to an ISP at TI speed. The only difference between the two
hub sites is the upgrade of the router from a Cisco 2524 to a 4500. The remotes
will all be the same configuration and hardware. The goal of this design is to
complete a network-to-network" dedicated connection between the local LANs and
the Internet. this will allow all workstations and servers attached to the
local LANs access to the Internet. The hub site will include a Windows NT
Server (acting as a domain controller, file server and WINS server) and four
Windows N1 Workstations (with Microsoft Internet Explorer -latest version- and
Norton Anti-virus -with auto-protect enabled). The Server and Workstations will
be configured to use Microsoft Networking over IP. A printer will be attached
to the parallel port of a workstation. The printer will be shared for use by
all other workstations. The remote sites (up to two or seven depending on
router used) will have two Windows NT workstations with similar configurations
as the one at the host, including a local printer to be shared between the two.
Further configuration of the PCs and workstations will be according to the
forms in Attachment E. The successful subcontractor(s) will provide
installation of all hardware and software from the SWB point of demarcation up
to and including the PC for internet access. SWB will provide all equipment
(i.e., CSU/DSU, PCs, Printers, Racks, Routers! and Network cables) and will
ship it to the work site or to the subcontractor prior to the installation
date. The subcontractor will provide installation, configuration,
<PAGE> 4
testing and documentation of all equipment plus Category 5 wiring from the hub
to the information outlet. All wiring will be certified 100BaseT, category 5,
unshielded twisted pair, plenum rated cabling is includes patch panels,
wiring, information outlets, and incidental hardware. A sketch of this design
is included in Attachment B for the 2500 router and Attachment C for the 4500
router. It will be the contractors' responsibility to pre-survey and coordinate
the installations of all sites. All incidental hardware will be provided by the
contractor (i.e., d-rings, tie wraps, wire mold, etc.).
Maintenance
The successful subcontractor(s) will be required to provide a 3 year, next day,
on site maintenance package, available 8 hours per day for 5 days per week.
This package must include a minimum two-hour phone response during hours
covered. The package must also cover all hardware and software. SWB will
maintain the communication lines, however, it may be necessary at times for the
contractor(s) to assist in determining the problem is related to
hardware/software, the telecommunications network, or both. Generally, any
trouble will be referred directly to the subcontractor from the end user
customer. However, SWB may establish a single point for all trouble reporting
and coordination. If we elect this option, all trouble dispatches will
originate from the Technical Assistance Center (TAC). It will be the
subcontractor(s)' responsibility to dispatch their own personnel to close the
trouble report and respond to the TAC SWB will purchase the PCs, Printers,
routers, HUBs and communications equipment with 3year replacement parts
warranty that will be passed on to the subcontractor. Paper, print cartridges,
and consumables are not included in the three-year maintenance.
Conclusion
It is understood that it is almost impossible for one subcontractor to have a
presence across the state. It is SWB's intent to establish a network of
subcontractors to cover the entire state; therefore, it is extremely important
that each potential bidder clearly identify their geographic area of coverage.
<PAGE> 5
Technical questions may be referred to Rick Reyes on (713)
5674605 or Mark Hajda on (713) 567 vIS00. Contract or
procedural issues may be referred to Elayne Donahue
Duncan on (713) 567-7680
Bid Sheet
Design # 1
Turn key installation of Design #1 per site $
Includes any incidental wiring
Maintenance of Design # 1 per site $
Design # 2
Turn key network installation of hub site Design # 2 per
site $
Using Cisco 2524 Router
Or
Turn key network installation of hub site Design # 2 per
site $
Using Cisco 4500 Router
Turn key wiring installation of Design # 2 per hub site $_ Turn key remote
site installation of Design # 2 per site S Includes any incidental wiring
Maintenance of Design # 2 per hub site $ Using Cisco 2524 Router
Or
Maintenance of Design # 2 per hub site $
Using Cisco 4500 Router
Maintenance of Design # 2 per remote site $_
Hourly Charge for after hours work (other than M-F 8-5) $
Do you have a Help Desk with toll fee (1-800 number) access?
YES NO
-- --
<PAGE> 6
If Yes;
Three year total charge for Design #1 $
Three year total charge for Design #2 $
- -with 2524 router (hub site)
Three year total charge for Design #2 $
- -with 4500 router (hub site)
Three year total charge for each remote site in Design $/2 S
Geographic area of the state where you are able to provide this service, please
is list cities, counties, genera] area you prefer to work, etc Please indicate
your preference below:
<PAGE> 1
EXHIBIT 10.7
Field Trial Agreement No. 970097
FIELD TRIAL AGREEMENT
Southwestern Bell Telephone Company (SMIBT)
a Missouri Corporation
One Bell Center
St. Louis, Missouri 63101
and
Micro Media Solutions, Inc. (MSI) (MSI)
a Texas Corporation
501 Waller Street
Austin, Texas 78702
<PAGE> 2
INDEX
<TABLE>
<S> <C>
PREAMBLE ................................................... 3
TERM ....................................................... 3
ASSIGNMENT ................................................. 3
BREACH OF AGREEMENT ........................................ 3
CHOICE OF LAW .............................................. 3
COMPLAINTS ................................................. 4
COMPLIANCE WITH LAWS ....................................... 4
CONFLICT OF INTEREST ....................................... 4
CURE ....................................................... 4
SWBT'S INFORMATION ......................................... 4
SWBT'S OBLIGATION .......................................... 5
EMERGENCY SUPPORT .......................................... 5
ENTIRE AGREEMENT ........................................... 6
FORCE MAJEURE .............................................. 6
INFRINGEMENT ............................................... 6
INSIGNIA ................................................... 7
INSURANCE .................................................. 7
LIABILITY .................................................. 8
LICENSES ................................................... 8
NO FIDUCIARY ............................................... 8
NO PARTNERSHIP ............................................. 9
NON-EXCLUSIVE MARKET RIGHTS ................................ 9
NON WAIVER ................................................. 9
NOTICES .................................................... 9
PERFORMANCE ................................................ 10
PUBLICITY .................................................. 10
PURCHASE OPTION ............................................ 10
RELEASES VOID .............................................. 10
RIGHT OF ACCESS ............................................ 10
SEVERABILITY ............................................... 11
SERVICES ................................................... 11
SUBCONTRACTING ............................................. 11
MSI'S INFORMATION .......................................... 11
SURVIVAL OF OBLIGATIONS .................................... 11
TAXES ...................................................... 11
TERMINATION ................................................ 12
WARRANTY ................................................... 12
WORK HEREUNDER ............................................. 12
APPENDIX A - NONDISCRIMINATION COMPLIANCE AGREEMENT
APPENDIX B - SERVICES
</TABLE>
<PAGE> 3
PREAMBLE
SWBT and MSI agree that MSI shall act as SWBT's agent and furnish to SWBT
customers, ADSL Fulfillment services and Customer Premises Equipment
Installation and Maintenance services, hereinafter referred to as "Services",
in accordance with the terms and conditions and specifications of this field
trial agreement ("Agreement") Services are outlined in Appendix B, attached
hereto by this reference. This Agreement is formed solely to provide a means
for SWBT to evaluate the potential use of the Service in SWBT's operating area
in the form of a field trial. This Agreement in no way implies or expresses any
purchase of MSI's services or any future purchase of equipment or services
similar to service furnished by MSI, unless provided for in a separate written
agreement. In consideration of the mutual covenants and promises contained
herein, the parties agree as follows:
TERM
This Agreement shall be effective for the duration of the field trial
evaluation which shall begin on October 1, 1997 and shall continue in effect
through September 30, 1998 unless earlier terminated as provided for herein.
TERM
Neither party shall assign or otherwise transfer its rights or obligations
under this Agreement except with prior written consent of the other, said
consent not to be unreasonably withheld; provided, however, SWBT shall have the
right to assign this Agreement to any present or future affiliate, subsidiary
or parent corporation of SWBT without securing the consent of MSI and may grant
to any such assignee the same rights and privileges SWBT enjoys under this
Agreement. Any attempted assignment not assented to in the manner as prescribed
herein shall be void.
BREACH OF AGREEMENT
In the event MSI shall be in breach or default of any of the terms, conditions
or covenants of this Agreement, and said breach or default shall continue for a
period of ten (10) days after the giving of written notice to MSI, thereof,
then in addition to all other rights and remedies at law or in equity, SWBT
shall have the right to cancel this Agreement at no penalty to SWBT and/or
enforce the provisions set forth in the PERFORMANCE clause hereof.
CHOICE OF LAW
This Agreement shall be governed by the laws of the state of Missouri.
COMPLAINTS
SWBT reserves the right to notify MSI in cases where SWBT has identified
current or potential problem areas concerning MSI's SERVICE furnished
hereunder.
MSI agrees to accept and acknowledge such notices and to work with SWBT on a
reasonable resolution of such problems. Notice of the disposition and solution
of such problems shall be provided to SWST within ten (10) days of SWBT's
notification to MSI. Periodic reporting of the status of such open problems or
complaints will be furnished to SWST by MSI together with a proposed schedule
of resolution. Such resolution shall not exceed thirty (30) days.
COMPLIANCE WITH LAWS
MSI and all persons furnished by MSI shall comply with the provision of all
applicable federal, state, county and local laws, ordinances, regulations and
codes (including identification and procurement of required permits,
certificates, approvals and inspections) in MSI's performance under this
Agreement. MSI further agrees during the term of this Agreement to comply with
all applicable Executive and Federal regulations as set forth in Appendix A,
Nondiscrimination Compliance Agreement, attached hereto and made a part of this
Agreement. MSI agrees to indemnify SWBT for any loss or damage sustained
because of MSI's noncompliance.
<PAGE> 4
CONFLICT OF INTEREST
MSI represents and warrants that no officer, employee, or
agent of SWBT has been or will be employed, retained, paid a fee, or otherwise
has received or will receive any personal compensation or consideration by or
from MSI or any of MSI's officers, employees or agents in connection with the
obtaining, arranging, or negotiation of this Agreement or other documents or
Agreements entered into or executed in connection herewith.
CURE
SWBT shall not be deemed to be in default under any of the terms of this
Agreement and MSS shall not seek or be entitled to enforce any remedy for any
claimed default, unless SWBT shall fail to cure or correct said claimed default
within thirty (30) days following receipt of written notice by MSI to SWBT of
said claimed default.
SWBT'S INFORMATION
Any specifications, drawings, sketches, models, samples, tools, computer or
other apparatus programs, technical or business information or data, field
trial results and/or reports, written, oral or otherwise (all hereinafter
designated "Information") furnished to MSI under this Agreement or in
contemplation of this Agreement, shall remain SWBT's property. All copies of
such Information in written, graphic or other tangible form shall be returned
to SWBT at SWBT's request. Unless such Information was previously known to MSI
free of any obligation to keep it confidential, or has been or is subsequently
made public by SWBT or a third party, it shall be kept confidential by MSI,
shall be used only in performing this Agreement, and may not be used for other
purposes except such terms as may be agreed upon between MSI and SWBT in
writing.
MSI understands and agrees that any and all field trial results prepared by
SWBT are and shall remain the property of SWBT and are hereby considered SWBT's
Proprietary Information. Therefore, it shall be SWBT's option, in its
sole discretion, to furnish MSI copies of such documents or to discuss such
documents with MSI. MSI's use of field trial reports furnished by SWBT shall be
governed by the provisions of the PUBLIC clause in addition to the provisions
contained in this clause, SWBT's INFORMATION.
SWBT'S OBLIGATION
MSI agrees SWBT has no obligation or liability whatsoever for expenses incurred
in the development of MSI's SERVICE or to provide MSI with results of SWBT's
field trial evaluation
EMERGENCY SUPPORT
MSI shall provide SWBT with an updated current listing of MSI's technical
support personnel together with after-hours telephone procedures to contact MSI
to correct out-of-service conditions.
<PAGE> 5
In the event SERVICE provided pursuant to this Agreement should affect SWBT's
ability to provide telecommunications services to SWBT's subscribers, MSI
shall, without charge, provide field technical personnel to make temporary
modifications and arrangements to mitigate the effects of out-of-service
conditions.
MSI agrees that expenses incurred by SWBT, if any, to mitigate or correct
out-of-service conditions caused by SERVICE shall be substantiated by SWBT and
paid by MSI.
ENTIRE AGREEMENT
This Agreement shall constitute the entire agreement between the parties and
shall not be modified or amended except by a writing signed by both parties.
Estimates furnished by SWBT shall not constitute commitments. The provisions of
this Agreement shall supersede all prior oral and written quotations,
communications, agreements and understandings of the parties in respect of the
subject matter of this Agreement.
FORCE MAJEURE
Neither party shall be held responsible for any delay or failure in performance
of any part of this Agreement to the extent that such delay or failure is
caused by fire, flood, explosion, war, strike, embargo, government requirement,
civil or military authorities, Act of God or by the public enemy, or other
causes beyond the control of MSI or SWBT. If any force majeure condition
occurs, the party delayed or unable to perform shall give immediate notice to
the other and the party affected by the other's inability to perform may elect
to;
(a) terminate this Agreement;
(b) suspend this Agreement for the duration of the force majeure condition; or
(c) resume performance under this Agreement once the force majeure condition
ceases with an option in the affected party to extend the period of this
Agreement up to the length of time the force majeure condition endured.
Unless written notice is given within thirty (30) days after such affected
party is notified of the force majeure condition, (b) shall be deemed selected.
<PAGE> 6
INFRINGEMENT
MSI shall indemnify SWBT for any loss, damage, expense (including attorney's
fees) or liability arising out of any infringement, or claim of infringement,
of any patent, trademark, copyright, trade secret or other proprietary interest
based on the manufacture, normal or intended use, installation, lease, sale or
resale of SERVICE or part thereof (including but not limited to, any program,
documentation, services and/or equipment) furnished to SWBT under this
Agreement or in contemplation of this Agreement.
If SWBT's normal or intended use, installation, lease, sale or resale of the
SERVICE shall be prevented by injunction or court order because of any such
infringement for which MSI is responsible, MSI shall, in addition to the above
indemnity, at no expense, loss or damage to SWBT: (I) replace such SERVICE
with equally suitable Service free of infringement; or (2) modify such SERVICE
See of infringement, or (3) by license or other release from claim of
infringement procure for SWBT's benefit the right to use, install, lease, sell
or resell such SERVICE, or (4) after MSI has demonstrated its good faith
efforts to achieve the foregoing without success, MSI shall refund to SWBT the
full SERVICE purchase price (less a reasonable amount of use of the SERVICE) if
any.
INSIGNIA
SWBT's Insignia will not be affixed, used or otherwise displayed on the SERVICE
furnished or in connection therewith without SWBT's written approval.
INSURANCE
With respect to performance hereunder, MSI shall maintain, at all times during
the term of this Agreement the following insurance coverage and any additional
insurance and or bonds required by law:
(1) Workers Compensation Insurance in compliance with the laws of the state in
which the work is to be performed,
(2) Employers Liability Insurance with minimum limits of S100,000 for Bodily
Injury by accident, $100,000 for Bodily Injury by disease per employee and
$500,000 for Bodily Injury by disease policy aggregate;
(3) General Liability Insurance with minimum limits of $1,000,000 per
occurrence for Bodily Injury and Property Damage arising out of
Premises/Operations, $1,000,000 per occurrence Personal Injury and $1,000,000
General Policy Aggregate (applicable to Commercial General Liability Policies),
$1,000,000 per occurrence/aggregate for Products/Completed Operations. Coverage
must include
<PAGE> 7
Blanket Contractual, Independent Contractors Liability and Broad Form Property
Damage. If general liability is Claims-Made coverage, retroactive date must be
prior to or coincident with the inception date of the contract and shall not be
advanced during the term of the contract. SWST is to be named as Additional
Insured as respects general liability; and if use of motor vehicles is required;
(4) Automobile Liability Insurance with minimum limits of $1,000,000 per
occurrence for Bodily Injury and Property Damage. Coverage shall extend to all
owned, hired, and non-owned autos. Insurance Companies affording coverage shall
be acceptable to SWBT and have a Best's Rating of B+VII or better. MSI shall be
prepared, prior to the start of work, to furnish certificates or other adequate
proof of the foregoing insurance, if so requested by SWBT. SWBT is to be
notified in writing at least thirty (30) days prior to cancellation or any
Service change of foregoing insurance.
LIABILITY
MSI shall indemnify, defend and save harmless SWBT (including its officers,
agents and employees) from and against any and all liability, loss, damages,
costs, attorneys' fees, or other expense of any kind, which arises out of any
claim or any suit for damages, injunction or other relief, caused by, resulting
from, or in connection with, the SERVICE or acts or omissions of MSI (including
any of MSI's, agents or subcontractors but excepting the negligent acts or
omissions solely of SWST) in the furnishing of SERVICE or in the performance of
services hereunder. This indemnity shall survive the delivery, inspection or
acceptance of SERVICE or performance of services hereunder.
MSI agrees to defend SWBT, at SWBT's request, against any such liability,
claim, demand or SWBT. SWBT agrees to notify MSI within a reasonable time of
any written claims or demands against SWBT for which MSI is responsible under
this clause.
MSI agrees not to implead or bring any action against SWBT or SWBT's employees
based on any claim by any person for personal injury or death that occurs in
the course or scope of employment of such person by SWBT and that arises out of
SERVICE or services furnished under this Agreement.
LICENSES
No licenses, express or implied, under any patents are granted by SWBT to MSI
under this Agreement,
<PAGE> 8
NO FIDUCIARY
The parties hereto recognize and agree that this Agreement resulted from
arms-length bargaining and therefore, that the parties owe no fiduciary duty to
each other as a result of this Agreement. The parties have the right to pursue
independently other evaluation agreements outside the scope of this Agreement.
NO PARTNERSHIP
It is not the intent of the patties hereto to form a partnership, whether
express or implied, or general or limited, as a result of their entering into
this Agreement. Relations between the parties are intended to be governed by
this Agreement and Interpreted pursuant to the law of contracts, rather than
pursuant to the Missouri partnership law.
NON-EXCLUSIVE MARKETING RIGHTS
It is expressly understood and agreed that this Agreement does not grant MSI an
exclusive privilege to provide to SWBT any or all SERVICE of the type described
in this Agreement nor require the purchase of any products from MSI by SWBT. It
is, therefore, understood that SWBT may contract with other manufacturers and
MSIs for the procurement or trial of comparable Services.
NON-WAIVER
No course of dealing or failure of either party to strictly enforce any term,
right or condition of this Agreement shall be construed as a waiver of such
term, right or condition.
NOTICES
Any notice or demand which under the terms of this Agreement, or under any
statute must or may be given or made by MSI or SWBT shall be in writing and
shall be given or made by confirmed facsimile or similar communication or by
certified or registered mail addressed to the respective parties as shown:
<TABLE>
<S> <C> <C>
To SWBT To MSI
Name Steve Forrnhals Jose Chavez
Address One Bell Center, 501 Waller
City,State,ZIP St. Louis, MO 63101 Austin, TX 78702
Telephone (314)235-1917 (512)476-6925
</TABLE>
Such notice or demand shall be deemed to have been given or made when sent by
confirmed facsimile or other communication or when deposited, postage prepaid
in the U.S. mail.
<PAGE> 9
The above addresses may be changed at any time by giving thirty (30) days prior
written notice as above provided.
PERFORMANCE
Consistent with the provisions of the FORCE MAJEURE clause of this Agreement,
MSI, having confirmed and agreed to a schedule or specific date(s) in the
performance of this Agreement} as outlined in the TERM clause hereof shall be
expected to meet the schedules or date(s) contained herein. Expenses incurred
by SWBT due to MSI's nonperformance of Service by committed dates, through no
fault of SWST, shall be substantiated by SWBT and paid by MSI within thirty
(30) days of written notice from SWBT.
PUBLICITY
MSI shall not advertise, or otherwise make known to others, any confidential
information regarding this Agreement. MSI further agrees not to use in any
advertising or sales promotion, press releases or other publicity matters any
endorsements, direct or indirect quotes, or pictures implying endorsement by
SBT or any of SWBT's employees without SWBT's prior written approval. MSI shall
submit to SWBT for written approval, prior to publication, all publicity
matters that mention or display SWBT's name and/or marks or contain language
from which a connection to said name and/or marks may be inferred or implied.
PURCHASE OPTION
SWBT may, at SWBT's option, elect to purchase the SERVICE from MSI at the end
of this Agreement under a separate written agreement at a price to be mutually
agreed upon by SWBT and MSI.
RELEASES VOID
Neither MSI nor SWBT shall require waivers or releases of any rights from
representatives of the other in connection with visits to MSI and SWBT's
respective premises, and no such releases or waivers shall be pleaded by MSI or
SWBT or third persons in any action or proceeding
RIGHT OF ACCESS
MSI shall normally not be permitted access to SWBT's facilities in connection
with work under this Agreement and, however, if access is granted while on
SWBT's premises, shall comply with all plant rules and regulations, and where
required by government regulations, submit satisfactory clearance from the U.S.
Department of Defense and other federal authorities concerned. No charge will
be made for such visits.
<PAGE> 10
SEVERABILITY
If any of the provisions of this Agreement shall be invalid or unenforceable,
such invalidity or unenforceable shall not invalidate or render unenforceable
the entire Agreement, but rather the entire Agreement shall be construed as if
not containing the particular invalid or unenforceable provision or provisions,
and the rights and obligations of MSI and SWBT shall be construed and enforced
accordingly. However, in the event such provision is considered essential
element of this Agreements MSI and SWBT shall promptly negotiate a replacement
therefor.
SERVICES
Appendix B outlines MSI's responsibilities, is incorporated herein, and made a
part of this Agreement by this reference and applies to the SERVICE under this
Agreement.
SUBCONTRACTING
MSI shall not, without the prior written consent of SWBT, subcontract any
portion of the work covered by this Agreement. Subcontracting by MSI shall not
relieve M51 of any responsibilities hereunder and MSI shall remain responsible
for compliance by any subcontractor with all provisions of this Agreement.
MSI'S INFORMATION
No specifications. drawings, sketches, models, samples, tools, computer or
other apparatus programs, technical information or data, written, oral or
otherwise, furnished by MSI to SWBT under this Agreement or in contemplation of
this Agreement shall be considered by MSI to be confidential or proprietary.
SURVIVAL OF OBLIGATIONS
MSI's obligations under this Agreement which by their nature would continue
beyond the termination, cancellation or expiration of this Agreement,
including, by way of illustration only and not limitation, those in the
PERFORMANCE, COMPLIANCE WINI LAWS, INFRINGEMENT, LIABILITY, RELEASES VOID,
SEVERABILITY, SWBT's INFORMATION, and WARRANTY clauses shall survive
termination, cancellation or expiration of this Agreement.
TAXES
Federal manufacturer's or retailer's excise and state and
local sales or use taxes, When applicable, shall be paid by
MSI.
<PAGE> 11
TERMINATION
SWBT may terminate this Agreement without penalty in whole or in part by giving
MSI at least thirty (30) days prior written notice. Upon termination, MSI shall
return to SWBT any equipment or documents that had been provided to MST.
WARRANTY
Seller agrees to perform the SERVICES in a first-class, workmanlike manner,
with care, skill and diligence, and in accordance with applicable standards
currently recognized by Seller's profession. Seller further agrees to be
responsible for the professional quality, technical accuracy, completeness and
coordination of all reports, designs, drawings, plans, information,
specifications and other items and SERVICES furnished under this Contract. If
Seller fails to meet applicable professional standards, Seller will, without
additional compensation, correct or revise any errors or deficiencies in its
reports, drawings, specifications, designs or other items or SERVICES furnished
hereunder.
Any replacement, repair, modification, installation, or other service performed
by MSI shall be warranted as herein provided based upon the date performance of
the service is completed and accepted by SWBT.
WORK HEREUNDER
It is understood that visits by MSI or MSI's representatives for inspection,
adjustment, or other similar purposes in connection with SERVICE, shall for all
purposes be deemed "work hereunder" and shall be at no charge to SWBT unless
otherwise agreed in writing with SWBT.
In WITNESS WHEREOF, the foregoing Agreement has been executed by the parties
hereto, in duplicate this 1st day of
October, 1997.
MSI Accepted: SWBT Accepted:
Micro-Media Solutions, Inc, Southwestern Bell Telephone Company
By /s/ Jose Chavez By /s/ Dara Druhe
------------------------- -------------------------
Name: Jose Chavez Name: Dara Druhe
Title: President Title: Contract Manager
Date:9/24/97 Date: 9/24/97
<PAGE> 12
NONDISCRIMINATION COMPLIANCE AGREEMENT (SW-9368)
Contractor recognizes its responsibility to comply with all federal and state
laws governing performance of this contract including, but not limited to:
Executive Order 11246, Executive Order 11625,Executive Order 12138, Section 503
of the Rehabilitation Act of 1973 Is amended and the Vietnam Era Veteran's
Readjustment Assistance Act of 1974.
I. EQUAL EMPLOYMENT OPPORTUNITY DUTIES OF GOVERNMENT CONTRACTORS (APPLICABLE TO
CONTRACTS AND SUBCONTRACTS EXCEEDING $10,000)
During the performance of this contract, the contractor agrees as follows;
(1) The Contractor will not discriminate against any employee or applicant for
employment because of race color, religion, sex, or national origin. The
Contractor will take affirmative action to ensure that applicants are employed,
and that employees are treated during employment without regard to their race,
color, religion, sex, or national origin. Such action shall include, but not be
limited to the following Employment, upgrading, promotion, or transfer,
recruitment or recruitment advertising; layoff or termination; rates of pay or
other forms of compensation; and selection for training, including
apprenticeship. The Contractor agrees to post in conspicuous places, available
to employees and applicants for employment, notices to be provided by the
Contracting officer setting forth these provisions of this nondiscrimination
clause.
(2) The Contractor will, in all solicitations or advertisements for employees
placed by or on behalf of the Contractor, state that all qualified applicants
will receive consideration for employment without regard to race, color,
religion, sex or national origin.
(3) The Contractor will send to each labor union or representative of workers
with which he has a collective bargaining agreement or other contract or
understanding, a notice to be provided by the agency contracting officer,
advising the labor union or workers' representative of the Contractor's
commitments under section 202 of Executive Order 11246 Of September 24, 1965,
and shall post copies of the notice in conspicuous places available to
employees and applicants for employment.
(4) The Contractor will comply with all provisions of Executive Order 11246 of
September 24, 1965, and of the
<PAGE> 13
rules, regulations, and relevant orders of the Secretary of Labor.
(5) The Contractor will furnish all information and reports required by
Executive Order 11246 of September 24, 1965, and by the rules, and regulations,
and orders of the Secretary of Labor, or pursuant thereto, and will permit
access to his books, records, and accounts by the contracting agency and the
Secretary of Labor for purposes of investigation to ascertain compliance with
such rules, regulations, and orders
(6) In the event of the Contractor's noncompliance with the nondiscrimination
clauses of this contract or with any of such rules, regulations, or orders This
contract may be cancelled, terminated or suspended in whole or in part and the
Contractor may be declared ineligible for further Government contracts in
accordance with procedures authorized in Executive Order 1 1246 of September
24, 1965, and such other sanctions may be imposed and remedies invoked as
provided in Executive Order 11246 Of September 24, 1965, or by rule,
regulation, or order of thc Secretary of Labor, or other vise provided by law
(7) The Contractor will include the provisions of paragraphs (1) through (7) in
every subcontract or purchase order unless exempted by rules, regulations, or
order of the Secretary of Labor issued pursuant to action 204 of Executive
Order 11246 of September 24, 1965, so that such provisions will be binding upon
each subcontractor or vendor. The Contractor will take such action with respect
to any subcontract or purchase order as may be directed by the Secretary of
labor as a means of enforcing such provisions including sanctions for
noncompliance: Provided, however, that in the event the Contractor becomes
involved in, or Is threatened with, litigation with a subcontractor or vendor
as a result of such direction, the contractor may request the United States to
enter into such litigation to protect the interests of the United States
II. CERTIFICATION OF NON SEGREGATED FACILITIES (APPLICABLE TO CONTRACTS AND
SUBCONTRACTS EXCEEDING $10,000)
I the Contractor certifies that it does not and will not maintain any
facilities it provides for it's employees in a segregated manner, or permit its
employees to perform their services at any location under its control where
segregated facilities are maintained; and that it will obtain a similar
certification, prior to the award of any nonexempt subcontract
<PAGE> 14
III. EMPLOYER INFORMATION REPORT (APPLICABLE IF VALUE OF CONTRACT IS $50,000 OR
MORE AND CONTRACTOR HAS 50 OR MORE EMPLOYEES)
Contractor agrees and certifies that it will file complete and accurate report
(EEO-I) per the current instructions and file such other compliance reports as
may be required under Executive Order 11246, as amended, end rules and
regulations adopted thereunder.
IV. WRITTEN AFFIRMATIVE ACTION PROGRAM (APPLICABLE IF VALUE OF CONTRACT IS
$50,000 OR MORE AND CONTRACTOR HAS 50 OR MORE EMPLOYEES)
Contractor will develop an affirmative action compliance program for each of
its establishments as required by 41 C.F.R Part 60-1 .40 and 60 2.
V. CERTIFICATIONS OF COMPLIANCE WITH VETERAN RESPONSIBILITIES (APPLICABLE TO
CONTRACTS AND SUBCONTRACTS OF $10,000 OR MORE)
In accordance with the Vietnam Veterans Readjustment Assistance Act Or 1974 and
41 C P R Part 60250, as amended, the parties incorporate by reference the
Affirmative Action For Disabled Veterans and Veterans of the Vietnam Era"
clause and such other regulations and contract clauses required to be made part
of government contracts and subcontracts.
VI. EMPLOYMENT OF THE HANDICAPPED (APPLICABLE TO CONTRACTS AND SUBCONTRACTS OF
$2,500 OR MORE)
In accordance with the Rehabilitation Act of 1973, as amended, Executive Order
11 75S and 41 C FR, Part 60-741, the parties incorporate by reference the
Affirmative Action For Handicapped Workers clause and all other regulations and
contract clauses required to be made part of government contracts and
subcontracts.
VII. UTILIZATION OF SMALL BUSINESS CONCERNS AND SMALL DISADVANTAGED BUSINESS
CONCERNS (APPLICABLE WHEN GOVERNMENT CONTRACT IS EXPECTED TO BE OVER $500,000)
(a) It is the policy of the United States that small business concerns and
small business concerns owned and controlled by socially and economically
disadvantaged individuals shall have the maximum practicable opportunity to
participate in performing contracts let by any Federal agency.
<PAGE> 15
(b) The Contractor hereby agrees to carry out this policy in the awarding of
subcontracts to the fullest extent consistent with efficient contract
performance. The Contractor further agrees to cooperate in any studies or
surveys as may be conducted by the United States Small Business Administration
or the awarding agency of the United States as may be necessary to determine
the extent of the Contractor's compliance with this clause.
(c) As used in this contract the term small business concern shall mean a small
business is defined pursuant to section 3 of the Small Business Act and
relevant regulations promulgated pursuant thereto. The term small business
concern owned and controlled by socially and economically disadvantaged
individuals shall mean small business concern.
(1) Which is at least 51 percent owned by one or more socially and economically
disadvantaged individuals; or in the case of any publicly owned business at
least 51 percent of the stock of which is owned by one or more socially and
economically disadvantaged individuals; and
(2) Whose management and daily business operations are controlled by one or
more of such individuals.
The Contractor shall presume that socially and economically disadvantaged
individuals include Black Americans, Hispanic Americans, Native Americans,
Asian-Pacific Americans, Asian-Indian Americans and other minorities or any
other individual found to he disadvantaged by the Administration pursuant to
section 8(a) of The Small Business Act.
(d) Contractor acting in good faith may rely on written representations by
their subcontractors regarding their status as either small business concern or
a small business concern owned and controlled by socially and economically
disadvantaged individuals.
VIII. SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS SUBCONTRACTING PLAN
(IF SUBCONTRACT OF GOVERNMENT CONTRACT EXCEEDS $500,000)
Contractor will adopt a subcontracting plan similar to the plan agreed to by
Southwestern Bell Telephone Company.
IX. UTILIZATION OF WOMEN OWNED SMALL BUSINESSES
Women owned small businesses as used in this clause means businesses that are
at least 5l percent owned by women who are United States citizens and who also
control and operate the business.
<PAGE> 16
Control as used in this clause means exercising the power to make policy
decisions.
Operate as used in this clause means being actively involved in the day-to-day
management of the business.
(b) It is the policy of the United States that women owned small businesses
shall have the maximum practicable opportunity to participate in performing
contracts awarded by any Federal agency.
(c) The Contractor agrees to use its best efforts to give women-owned small
businesses the maximum practicable opportunity to participate; in the
subcontracts it awards to the fullest extent consistent with the efficient
performance of its contract
Field Trial Agreement No. 970097
SERVICES
Program
Objectives: MSI will provide SWBT with high volume ADSL Fulfillment services
and Customer Premises Equipment Installation and Maintenance services.
* SWBT's objective is to achieve high customer satisfaction for deployment of
the ADSL CPE.
Teaming:
ADSL is a new network technology. Successful implementation of ADSL technology
will require strong team work among SWBT and the MSI. As such, MSI shall
provide a single contact for project management and coordination activities in
all areas of presence throughout SWBT's territories in Arkansas, Kansas,
Missouri, Oklahoma and Texas.
At a future date, SWBT may wish to provide additional products to be
implemented as part of this proposal. MSI shall promptly indicate its ability
to support future requests.
<PAGE> 17
Market Opportunity
The SWBT estimate of the potential market for ADSL CPE installation and
maintenance services is between 10,000 and 30,000 sites over the next 18 to 24
months for business and residential markets. Installation rates of between 45
and 75 installations per day, throughout SWBT's territory, are anticipated.
Geographic Territory
Initially, four wire centers in the Austin area, starting in the fourth quarter
of 1997. Long term, beginning second quarter 1998, in major metropolitan areas
throughout SWBT's five state territory.
Thirty days from execution of this Agreement, MSI shall provide information
which indicate its geographic coverage by zip-code.
Program Schedule
MSI shall have processes in place by October 1, 1997 for pre-deployment
trials. MSI to provide plan on how MSI will achieve this objective.
MSI shall be prepared to provide fulfillment, Installation and Maintenance
services of ADSL CPE to the market, in support of SWBT's ADSL roll-out,
beginning in October, 1997.
CPE
MSI to receive CPE as consigned SWBT inventory stock, stage, provide equipment
in pre-packaged installation kits to send to installers and end customers.
Installation kits are defined in Attachment 4 of this Appendix.
ADSL CPE has already been pre-selected by SWBT.
Pricing Information
Pricing is outlined in Attachment 6 of this Appendix. MSI commits to fixed
2 year fixed pricing, independent of location beginning in October, 1997 for
the following:
Fixed fee, per site, for each of the Installation options as identified:
ADSL modem and splitter (outdoor environment ready)
Inside wire
Computer installation of browser software
Installation & configuration of NIC, including software installation
<PAGE> 18
Fixed fee, per site, for each of the Maintenance options identified:
Next day parts
Next day onsite service
Same Day onsite service
Fixed fee per each requested delivery of pre-packaged installation kits to end
customers upon order request from SWBT.
Fixed fee, per unit, for delivery of each of the installation kits as
identified, with CPE ADSL modem with splitter, software, and NIC cards provided
by SWBT.
Installation
Installation Scope of Work for installing the ADSL Modern and splitter,
Network Interface Card, and wiring requirements are defined in Attachments 1,
2, and 3 respectively.
MSI will provide detail information on what their proposed wiring methodology
is for installing the wiring from the SWBT NID (Network Interface Device) to
the ADSL modem in the residence, when using existing IW (inside wiring). In
cases where existing IW is not available or Cat 5, a Cat 5 home run, Som NID to
ADSL modem location, will be provided as defined in Attachment 3 of this
Appendix.
Installation Requirements
SWBT will schedule the end customer Installation appointment dates. SWBT will
then communicate Installation and maintenance schedule to MSI.
MSI normal installation hours shall be Monday through Friday, 7:30arn to
9:30pm, CST/CDT. MSI to provide fees for work performed outside normal
installation hours.
MSI agrees to provide capabilities for supporting installations and
maintenance on Saturday. MSI agrees to confirm ability to meet installation
schedules per SWBT's commitment to customer.
MSI agrees to provide plan for making up missed appointments independent of
scheduling rates for new work.
MSI agrees to be required to install the oldest inventoried equipment first to
ensure warranty coverage is maintained.
MSI agrees to be required to maintain records on date of receipt of equipment
by serial number.
Installation Completion
MSI agrees to complete the individual customer installation project upon
successful establishment of either a bi-directional 384/256Kbps or 1.5M/3841tbps
ADSL
<PAGE> 19
ATM PVC connection to the Internet or corporate host
Installation and checkout test plan is included as Attachments 1, 2 and 3.
MSI shall ship the installation kits from fulfillment center to customers who
only want the CPE installation kits, as identified in Attachment 4 of this
Appendix, within five(5) working days of notification.
Wiring
MSI shall wire the ADSL modem to the ADSL modular termination jack and shall
utilize the cord supplied with the ADSL modem. (This cord will be two pair, Cat
3 wire with RJ14 terminations on both ends, not to exceed 20 feet in length.)
IW from the modular termination jack to the SWBT NID will be standard 24 or 26
gauge, Cat 3 wiring. Cabling to and from the PC to the ADSL Modem will be over
l0BascT CAT 3 cable.
MSI shall provide new wiring from the SWBT network termination point, at the
customers location, to the ADSL Modem as described in Attachment 3.
Maintenance
MSI will provide a toll-free call center for maintenance and repair handling
including warranty handling. "WISI shall offer next day parts, same day
onsite, next day onsite, and 2 day onsite maintenance. Hours of operation
shall be 7:30am to 9:30pm CST/CDT, five (5) days a week (Monday - Friday).
Installation and Maintenance
MSI shall supply own transportation, including vehicles, Field Service
licensed and insured drivers, and adequate liability Requirements insurance.
MSI shall immediately provide each of its own installers with PC/Mac Laptop
with integral Ethernet and/or AFTM NIC card with SWBT ADSL Project software for
testing and verifying proper operation including ADSL network testing.
MSI shall provide testing software as required by SWBT to ensure proper
operation of NIC card in PC.
MSI shall provide installers with appropriate tools, cabling, wiring,
identification required to complete installations and maintenance dispatches
on a 97% first time basis to the scheduled installation date, measured by
<PAGE> 20
dividing the number of first visit installations successfully completed on
time by the number of scheduled installations.
MSI shall submit, a plan demonstrating how MSI intends to achieve this goal
and what measurement tools are proposed to monitor status.
MSI shall supply all ancillary parts as required to support installation.
MSI shall provide all training to installers and maintenance personnel.
MSI shall provide a typical test platform at SWBT for each PC (such as
ISA,PC1) or Mac that NIC card is installed with appropriate operating system
software. (such as Windows 3. 1, 3. I 1, or later version, Windows 95, Windows
NT.)
MSI shall be responsible for its own inventory and field logistics system;
such systems must be described to SWBT, and must be adequate to support
supplier's field operation in a manner which meets service level requirements.
MSI shall have and maintain capability to communicate by phone, fax, and
e-mail.
Installation and Maintenance
MSI shall have the proven resources and financial Capabilities strength, or
demonstrate a plan to support SWBT in the deployment of the installations
territory-wide in volumes.
MSI shall indicate the volume of installations and maintenance levels that MSI
can commit to by zip code on a per-week basis.
MSI shall provide the scope of their coverage by timeline, both current and
planned.
MSI shall provide toll free end customer telephone assistance to diagnose
potential service issues and provide, at its expense, delivery, to the
customer, a unit to replace the unit that is suspect.
MSI shall indicate what its capability to support installations for
multi-language (including. but not limited to Spanish, Chinese, Tagalog,
Japanese, Vietnamese, Portuguese, etc.) and hearing impaired customers.
<PAGE> 21
Large Program Experience
MSI shall identify past experience in fulfilling programs of this scope and
magnitude.
MSI shall provide customer references for programs of similar scope and size.
Project Management
MSI shall provide a Project Manager, assigned to manage installations for
ADSL, for SWBT. he Project Manager will manage the installation processes and
work with the end customers, as well as the SWBT ADSL Customer Service Team,
to ensure successful implementations. The Project Manager shall be responsible
for collecting, maintaining, and assembling all ADSL specific documentation
which will include at a minimum:
"Deployment Plan with timeline, equipment standard templates, deployment
locations, protocols and addressing as defined by SWBT, an inventory of
equipment, including serial numbers and network installed, procedures for
service calls, and equipment configurations.
MSI will supply resumes for proposed Project Manager. SWBT reserves the right
to interview and accept or decline any proposed Project Manager.
Licenses
MSI shall be licensed for residential and business installations in SWBT's
territory. MSI shall have all required federal, state, county and city
licenses to complete the ADSL installations successfully.
MSI shall meet all building codes as required by city and counties.
MSI shall comply with all applicable laws, rules and regulations.
Customer Satisfaction
End Customer satisfaction is of key concern to SWBT. SWBT welcomes innovations
where methods to increase customer satisfaction are addressed.
MSI shall provide how MSI intends to provide a safe installation to the end
customer without risk of personal safety or risk of loss of the end customers
personal property (i.e., hiring and screening programs for new employees,
safety training, etc.).
<PAGE> 22
Tracking and Reporting
MSI shall provide a tracking and reporting format to track installation
activity by day, week, and month, showing force to load, and actual schedule
performance. Performance management reporting for volume of installations and
maintenance activities is a mandatory requirement.
MSI shall provide monthly performance reports that identify among other items,
number and trend of calls, missed installations, second installations,
equipment failure meets and customer satisfaction levels.
MSI shall provide sample reports, and the methods used to gather the data upon
which these reports are based.
MSI shall specify how each piece of serialized equipment will be tracked and
identified, and reported to SWBT for provisioning and warranty tracking
purposes
Timelines
MSI shall provide an overall program implementation timeline.
Subcontracting
MSI shall provide list of potential major sub-contractors that MSI may use to
implement this project with their qualifications.
SWBT reserves the right to decline the use of any proposed sub-contractor.
Installation Services
ADSL Modem and Splitter
MSI shall perform the following services in the installation, configuration
and testing of the ADSL modem and passive splitter. Installation shall
include; physical installation of ADSL modem, connecting to power, attaching
modem to the ADSL network, configuration of ADSL Modem, installation of
operating software, checkout of operation, and demonstration to customer of
connection
Installation crew will call the business customer the day before the
installation is to commence to remind the customer that the installation is to
take place the following day either in the morning or afternoon.
Configuration
Configuration parameters will be set at the manufacturer's recommended
defaults, or as defined by SWBT. Specific customer requirements will be
accommodated during the configuration and installation process. MSI will
confirm the use of web service to ensure ADSL connectivity with the ISP or
corporate location. Full operational testing of all the parameters of the
local software and it's inter-operation with the ADSL network may be at an
additional fee.
<PAGE> 23
Protocol Addressing
Protocol addressing for the customers PC or Mac (NIC) to allow the ADSL Modems
to communicate with the host or Internet shall be defined by SWBT and will be
provided for in the configuration of the unit. Although the ADSL modem will
support one Internet connection, the installer shall be able to support
interconnecting to one of 20 different Internet Service providers script, to be
provided by SWBT.
Other specific addressing or configuration requested (i.e. other Group Address,
SNMP, etc.) is the responsibility of customer to provide.
Physical Placing of Unit
The ADSL modem will be placed as instructed by customer and may be either wall
or desktop mounted. Typical installation is expected to be desktop mounting.
The appropriate hardware for each instance will be provided by SWBT. Cables
from unit to the 'telco' jack, and ADSL Modem to terminating equipment (for
example PC or Mac) will be connected. Appropriate cable lengths should be
ordered and supplied with the unit to be installed. Power outlets to be
provided by customer and shall be within 5 feet of the ADSL modem. ADSL Modem
Network Testing
Step 1, Configuration Process
1. Ensure PC and ADSL modem powers on
2. Ensure configuration is taken by PC and ADSL modem
3. Ensure ports can be seen by software and are configurable
Step 2, Test Connection to ADSL WAN Network
1. LAN and phone circuits are active and working properly
2. Network protocol is active
3. Addressing is not causing errors
4. Protocol is up
5. Review for network errors (lost packets, short frames, CRC, etc.)
Step 3, Test Other Connections
1. LAN or Serial port is active
2. Protocol is up
<PAGE> 24
3. Addressing is not causing error
Installation Complete
Installation is complete when:
1. ADSL Modem and PC is configured per manufacturer specifications or other
customer required configuration.
2. ADSL Modem and PC is connected to SWBT network.
3. ADSL Modem and PC has been tested with network service provided by
SWBT (or other carrier as appropriate and available) and connection with CO end
established.
4. ADSL Modem and PC operates as per manufacturer specifications
Installer(s) shall leave behind a customer satisfaction survey for customer to
fill out and mail to SWBT.
Installation Services Ethernet or ATM 25 Mbps IBM PC Compatible Network
Interface Card (NIC) Installation
MSI will install and configure either a lOBaseT Ethernet Network Interface Card
(N1C) or a 25 Meg ATM NIC card as a connecting product to the ADSL Network
modem. The NIC may be either ISA or PCI form factors. The installation includes
opening of the PC or Mac, inserting the NIC and adding the driver software
provided with the NIC. Configuration of the NIC software is based on a specific
PC class with specific software provided by SWBT to run on a IBM class PC
operating Windows 95 or Mac running System 7. Other optional configurations may
be defined as part of this RFP in further attachments. MSI will develop a
specific installation script on the installation process to be approved by
SWBT. Customer must have a minimum configuration as defined by SWBT to operate
with the ADSL network.
Configuration
Configuration parameters will be set at the manufacturer's recommended defaults
for software selectable interrupts and jumper settings. Specific customer
requirements shall be accommodated during the configuration and installation
process when made available to the onsite MSI technician or Project
Coordinator, as approved by SWBT, prior to installation. MSI shall load the
software in a separate directory and called up by the software command
specified by the software.
<PAGE> 25
Physical Placement of Unit
The NIC will be installed in thc desired PC where slots are available. An
appropriate cable for connecting the NIC to the ADSL modem will be supplied
with the unit to be installed. Additional cables or longer cables, if
appropriate, but not to exceed 20 feet in length, shall be provided by the
installer technician.
Connecting Device Testing
Level I Testing:
During configuration process;
1. Ensure PC and NIC powers on properly,
2. Ensure configuration is taken by device
3. Ensure NIC can be seen by software and is configurable
4. Ensure that the NIC can transfer data from the PC to the ADSL modem and
network
Installation Complete
NIC Installation is complete when:
1. NIC is configured per manufacturer specifications or ADSL specific required
configuration.
2. NIC is connected to ADSL modem.
3 NIC accepts software drivers and operates as per manufacturer specifications
to the ADSL modem.
4. PC is able to browse the desired web site successfully on the ADSL network.
Installer(s) shall leave behind a customer satisfaction Survey for customer to
fill out mail to SWBT.
Inside Wiring
Residential
MSI shall provide, at its expense, new residential wiring from the ADSL Modem
connection to the SWBT network interface device (MD) at thc residence.
The MSI shall perform the following: audit the (NAD), determine which pair is
in use for the ADSL connection, install the ADSL splitter in the NID, or other
adjacent SWBT approved enclosure, per SWBT provided instructions, ensure
conditioning on the pairs, install new telco grade Cat 3 wire (24 gauge) up to
150 feet of telephone cable to the ADSL modem, provide termination in wall for
ADSL network connection via modular termination jack, place ADSL modem in
properly vented location, and connect the appropriate cables to the ADSL modem
and PC or Mac.
<PAGE> 26
If wiring is performed separately than at time of installation of ADSL modem or
NIC, Installers) shall leave behind a customer satisfaction survey for customer
to fill out and mail to SWBT.
Business Wiring
Wiring for ADSL in a business environment will follow SWBT/MSI standard
business practices. Before a Proposal is proposed, MSI shall perform a walk
through for estimating costs to accurately estimate the costs of the
installation.
ADSL Installation Packs
Option 1
MSI will sent Installation Pack to customers who perform their own ADSL modem
installation ADSL Modem.
ADSL Splitter (Outdoor environment ready, with outdoor boots for wiring
connections provided if required.) (A separate splitter enclosure may also be
included.)
ISP browser software, as required.
Windows '95, Windows for Workgroups 3. 11,Windows NT 3 .51, Windows NT 4.0 or
Mac client software driver stack for the NIC being used.
ADSL RJI I or R114 modular termination jack.
ADSL network line interconnection cable to the modern, 6 foot length. 10BaseT
cable, 6 foot length.
'How to' instructions guide.
Modem Manual, or other manufacturer's instructions.
Misc. screws and plastic parts.
100 foot of telco interconnection cable. Box marked with PB and SWBT logo.
Option 2
MSI will send Installation Pack to customers who perform their own ADSL modem
and NIC card installation ADSL Modem.
ADSL Splitter (Outdoor environment ready, with outdoor boots for wiring
connections provided if required.) (A separate splitter enclosure may also be
included.)
Ethernet NIC with software drivers.
ISP browser software, as required.
Windows '95, Windows for Workgroups 3.11, Windows NT 3 .51, Windows NT 4.0 or
Mac client software driver stack for the NIC being used.
ADSL RJI 1 or R114 modular termination jack.
ADSL network line interconnection cable to the modem, 6 foot length.
1OBaseT cable, 6 foot length.
'How to' instructions guide.
Modem Manual, or other manufacturer's instructions.
Misc. screws and plastic parts.
100 foot of telco interconnection cable.
Box marked with PB and SWBT logo.
<PAGE> 27
Option 3
MSI will send Installation Pack to installers to perform the ADSL modem
installation for customers
ADSL Modem.
ADSL Splitter (Outdoor environment ready, with outdoor boots for wiring
connections provided if required.) (A separate splitter enclosure may also be
included.)
ISP browser software, as required.
Windows '95, Windows for Workgroups 3.11 ,Windows NT 3.51, Windows NT 4.0 or
Mac client software driver stack for the NIC being used.
ADSL RJ11 or RJ14 modular termination jack.
ADSL network line interconnection cable to the modem, 6 foot length.
10BascT cable, 6 foot length.
Modem Manual, or other manufacturer's instructions, for customer.
Option 4
MSI will sent Installation Pack to installers who perform the ADSL modem and
NIC card installation for customers
ADSL Modem.
ADSL Splitter (Outdoor environment ready, with outdoor boots for wiring
connections provided if required.) (A separate splitter enclosure may also
be included.)
Ethernet NIC with software drivers. ISP browser software, as required.
Windows '9S, Windows for 51Vorkgroups 3.1 I ,Windows NT 3 .51, Windows NT 4.0
Or Mac client software driver stack for the NIC being used.
ADSL RJ11 or RJ14 modular termination jack.
ADSL network line interconnection cable to the modem, 6 foot length.
10BaseT cable, 6 foot length.
Modem Manual, or other manufacturer's instructions, for customer.
FULLFILLMENT CENTER
MSI's Fulfillment Center
1. The Fulfillment Center will have all selected ADSL CPE and installation
components readily available for sale to SWBT customers (i.e. Self-installers),
within 5 business days of receipt of an order from SWBT.
2. MSI Fulfillment Center will provide weekly reports to SWBT which track the
delivery and servicing of CPE.
3. MSI Fulfillment Center will deliver CPE directly to SWBT customers or
designated installation partners within intervals determined by SWBT; currently
SWBT's expectation is that S business days would be the maximum
<PAGE> 28
delivery time anywhere in SWBT territory, and delivery volumes may eventually
be greater than 75 ADSL kits per day.
4. MSI Fulfillment Center will support all warranties, exchange policies and
discount structures offered by the manufacturer(s) defined by SWBT.
5. MSI Fulfillment Center employees will provide manufacturer instructions and
or any other provided collateral for CPE use to customers, as required.
6. MSI Fulfillment Center will provide a toll free number for customer support.
The number will be included in the CPE: packaging.
7. MSI will be required to have and/or implement a program to perform
pre-employment screening, bonding, and safety training prior to having its
employees perform services on behalf of SWBT.
Installation and Maintenance
8, MSI will have the necessary tools) equipment, and transportation to install
ADSL CPE components.
9. MSI will have a logistics system in place to efficiently receive and
distribute CPE to the installer responsible for the installation within the
intervals determined by SWBT.
10. MSI will have a process to adequately handle force to load issues and
scheduling for timely installation of CPE that customers have selected.
11. MS0's Installation and Maintenance function will support all warranties,
and exchange policies offered by the manufacturer(s) selected by SWBT.
12 MSI will provide weekly reports to SWBT which track the receiving time from
the Fulfillment center, the interval from receipt of equipment, to the time the
customer order is completed; and tracking of orders not completed on the first
visit.
13. MSI will provide customers with instructions on how to use the ADSL
service, and demonstrate to the customer that the service is in working order
before leaving the premises.
14. MSI will hand the customer a customer satisfaction survey to allow the
customer to provide feedback to SWBT concerning the quality of services
provided
<PAGE> 29
15. MSI shall provide all CPE components with backup supplies to each
installer.
16. MSI shall provide respond to CPE trouble calls within the interval period
determined by SWBT. (Currently expected to be 4 hours or less from receipt of
trouble call, based on a rolling clock. A rolling clock is defined as any
hourly increment being rounded to the next hour. i.e. a call received at 1:05
PM will be counted as received at 2:00 PM.)
17. MSI shall provide trained personnel to successfully install multiple ADSL
configurations, and to be able to handle a multitude of installation variables.
18. MSI will be required to have and/or implement a program to perform
pre-employment screening, bonding, and safety training prior to having its
employees perform services On behalf of SWBT.
19. MSI will work with SWBT to implement a process to accommodate language
dependent customers.
20. At SWBT's request, thc MSI Installation and Maintenance force will make all
necessary arrangements to accommodate hearing impaired customers. This
includes, but is not limited to, the ability to interact with a
Telecommunications Device for the
Deaf (TTY).
21. MSI is required to handle all SWBT geographic regions, by zip-code
(preferred) or by County, for the full range of installation and maintenance
services.
<PAGE> 1
EXHIBIT 10.8
SOUTHWESTERN BELL
Estimated Value of Contract: $1,200,000
Scope of Contract: Exclusive Contract with
Southwestern Bell and Hewlett Packard
for up to 1,100 high schools. Includes
servers, workstations, cabling and
routers. Indefinite date. Statewide.
$1.5 billion is planned for 9 more
years.
SUBCONTRACTOR AGREEMENT
Between
Southwestern Bell Telephone Company ("SWBT")
A Missouri Corporation
One Bell Center
St. Louis, Missouri 63101
and
Micro-Media Solutions, Inc. ("Subcontractor"}
A Texas Corporation
501 Waller
Austin, Texas 78702
<PAGE> 2
Table of Contents
<TABLE>
<S> <C>
INTRODUCTION ........................................................ 2
1. SCOPE OF WORK .................................................... 2
2. COMPENSATION ..................................................... 2
3. AGREEMENT GOVERNS ................................................ 2
4. AUTHORITY OF SUBCONTRACTOR ....................................... 3
5. CONFLICT OF INTEREST ............................................. 3
6. RISK OF LOSS ..................................................... 3
7. CONTRACTOR'S WARRANTIES .......................................... 3
8. SUBCONTRACTORS ................................................... 3
9. COMPLIANCE WITH LAWS ............................................. 3
10. HARMONY ......................................................... 4
11. PAYMENT TO SUBCONTRACTOR ........................................ 4
12. RECORDS AND AUDIT ............................................... 4
13. FORCE MAJEURE ................................................... 4
14. INTELLECTUAL PROPERTY, PROPRIETARY INFO./OWNERSHIP OF
DOCUMENTS ..................................................... 4
15. SUBCONTRACTOR'S STATUS .......................................... 5
16. INSURANCE ....................................................... 5
17. ADVERTISING AND PUBLICITY ....................................... 5
18. PAYMENT OF TAXES ................................................ 6
19. INFRINGEMENT .................................................... 6
20. LABOR AND MATERIAL .............................................. 7
21. SEVERABILITY .................................................... 7
22. NON-WAIVER ...................................................... 7
23. CUMULATIVE RIGHTS AND REMEDIES .................................. 7
24. NOTICES ......................................................... 7
25. CHOICE OF LAW ................................................... 7
26. ASSIGNMENT ...................................................... 8
27. LIABILITY ....................................................... 8
28. MODIFICATION TO CONFORM TO LAWS ................................. 8
29. NON-EXCLUSIVE DEALING ........................................... 8
30. TERMINATION ..................................................... 8
31. PLANT AND WORK RULES ............................................ 9
32. ENTIRE AGREEMENT ................................................ 9
APPENDIX A - SAMPLE PURCHASE ORDER
APPENDIX B - PRICE SCHEDULE
APPENDIX C - NONDISCRIMINATION COMPLIANCE AGREEMENT
(SW-9368)
</TABLE>
<PAGE> 3
SUBCONTRACTOR AGREEMENT
THIS SUBCONTRACT AGREEMENT (the "Agreement") between Micro-Media Solutions,
Inc. (Subcontractor), a Texas corporation having its principal offices at 501
Waller, Austin, Texas 78702, and Southwestern Bell Telephone Company ("SWBT"),
a Missouri corporation having its principal offices at One Bell Center, St.
Louis, Missouri 63101, is for a term beginning on duly 23, 1997 and continuing
until August 31, 1999, unless terminated sooner or extended as provided herein.
INTRODUCTION
WHEREAS, SWBT is in the business of, among other things, selling
telecommunications solutions and services for it's customers; and WHEREAS,
Subcontractor has the capability of installing and/or maintaining Wide Area
Networks (WANS) (the "Services") and has represented to SWBT that it is
skilled, experienced and knowledgeable in such business; and
WHEREAS, SWBT desires to contract with Subcontractor to provide Services and
Materials in connection with WAN Installation and Maintenance (hereinafter
defined) upon which SWBT is or will be performing for its Customer; and
WHEREAS, the parties desire to agree on terms pursuant to which Services and
Materials will be provided by SWBT;
NOW, THEREFORE, the parties agree, 1. SCOPE OF WORK Subcontractor will provide
Installation and Maintenance services as requested by SWBT on SWBT's Purchase
Orders in the form of Appendix A (sample), including but not limited to
Installation and Maintenance of WAN equipment and networks at the designated
rates in CLAUSE 2 COMPENSATION.
GENERAL: Upon receipt of SWBT's Purchase Order(s), stipulating installation
addresses, and equipment to be installed, the "Subcontractor" shall promptly
commence the installation services to meet SWBT's commitment to their Customer.
Regardless of whether reference is made to this Agreement, all work performed
for SWBT by the Subcontractor shall be subject to the provisions of this
Agreement unless such work is performed under a separate written agreement.
Where the work requested is not specifically provided for as provided under
Clause 2 Compensation, the price will be as mutually agreed between the parties,
but otherwise the work shall be subject to all the terms and provisions of this
Agreement. SWBT may make changes in the work by altering, adding to or deducting
from, the work. The Contractor's price shall be adjusted for such change on the
basis of the appropriate work unit price. No change in the contract price shall
be made for minor changes not involving extra cost. All other adjustments in the
Agreement price by reason of any change shall be agreed to by the parties. SWBT
does not commit itself to order any specific quantity of work under this
Agreement and may have the same or similar work performed by its own employees
or other contractors; per NON-EXCLUSIVE DEALING Clause 29.
<PAGE> 4
2. COMPENSATION
SWBT agrees to pay for Services in accordance with the rates specified in each
Purchase Order in accordance with the Price Schedule set forth in Appendix B
attached hereto and made a part hereof
3. AGREEMENT GOVERNS In the event of any inconsistency or conflict between the
terms of any Order or any attachment(s) thereto and this Agreement, this
Agreement will govern unless the Order expressly notes the inconsistency or
conflict and expressly states that the Order will govern. SWBT will have the
right to accept or reject any term in an Order which conflicts with this
Agreement.
4. AUTHORITY OF SUBCONTRACTOR Subcontractor represents and warrants that it has
full power and authority to enter into this Agreement and perform its
obligations hereunder, and that such performance will not result in a violation
of (i) any applicable statute, law, ordinance, decree, order, rule or
regulation of any governmental body, (ii) the provisions of Subcontractor's
Articles of Incorporation or Bylaws, or (iii) any license, franchise, contract,
indenture, evidence of indebtedness, security agreement or other agreement to
which Subcontractor is a party or by which it may be bound.
5. CONFLICT OF INTEREST Each party hereby represents and warrants that no
officer, director, employee or agent of the other party has been or will be
employed, retained, paid a fee or otherwise has received or will receive any
personal compensation, "kickback" or any other consideration, whether directly
or indirectly, in connection with or in contemplation of the execution of this
Agreement or any Order.
6. RISK OF LOSS Subcontractor agrees to protect any Material furnished by SWBT
in connection with a Project and bear the risk of loss or damage thereto upon
acceptance of delivery thereof until the Services are completed and accepted
according to the applicable Order and in accordance with Clause 7,
SUBCONTRACTOR'S WARRANTIES. However, Subcontractor will not be liable for
damage caused by the negligence or willful act of SWBT, Customer or for defects
in any Material furnished by SWBT.
7. SUBCONTRACTOR'S WARRANTIES Subcontractor warrants that it is knowledgeable
and proficient in performing all SERVICES required under this Agreement. All
SERVICES shall be performed in a good, workmanlike manner and all materials
furnished by Subcontractor shall be of first quality unless a different quality
is specified. Subcontractor shall correct at its expense all defects and
deficiencies in the SERVICES which are discovered within 365 days from the date
the SERVICES are accepted, whether said defects or deficiencies result from
material furnished by Subcontractor or its subcontractors, or are the result of
poor workmanship or failure to follow the plans drawings or other
specifications made a part of this Agreement, and notwithstanding that full or
partial payment therefore has been made. Acceptance of the SERVICES by SWBT
shall not constitute a waiver of any such defects or deficiencies. SWBT, at its
option, may remedy any defects and deficiencies and Subcontractor shall pay
SWBT the cost there.
<PAGE> 5
8. SUBCONTRACTORS Subcontractor may not subcontract any part of the Services to
be performed hereunder without obtaining SWBT's prior written consent in each
instance. Any installation resulting from Services performed by a subcontractor
prior to the receipt of SWBT's written approval or which does not comply with
industry standards will be subject to rejection and removal from the Project
site at Subcontractors expense. Subcontractor will bind any approved
subcontractor by contract to all the terms and conditions of this Agreement.
Further, SWBT will not be liable or incur any obligation with respect to any
subcontractor, nor will any such approval relieve Subcontractor from any
responsibility or liability for the full performance of this Agreement or any
accepted Order(s), including, without limitation, Services performed by any
such subcontractor.
9. COMPLIANCE WITH LAWS Subcontractor agrees to comply with the provisions of
the Fair Labor Standards Act, the Occupational Safety and Health Act, and all
other applicable federal, state, county and local laws, ordinances, regulations
and codes (including the identification and procurement of required permits,
certificates, approvals and inspections) in Subcontractor's performance under
this Agreement. Subcontractor further agrees, during the term of this
Agreement, to comply with all applicable Executive and Federal regulations as
set forth in Form SW9368, a copy of which is attached hereto as Appendix C and
incorporated herein. Subcontractor will defend, indemnify and hold SWBT
harmless from and against any loss, liability, damage or expense (including
attorneys' fees and court costs) sustained by SWBT because of Subcontractors
noncompliance herewith
Southwestern Bell Telephone
10. HARMONY Subcontractor will undertake such actions as are necessary to
insure that all of its agents, employees, suppliers and subcontractors interact
and interface with all agents, employees, subcontractors and consultants of
SWBT and any other contractors or entities working or present at a Project
location in a harmonious and fully cooperative manner. Subcontractor will
schedule and coordinate the performance of the Services with the work of SWBT
and any other consultants or contractors retained by SWBT.
11. PAYMENT TO SUBCONTRACTOR Subcontractor's request for payment will detail
the specific Services billed referencing SWBT's Purchase Order and bear the
signature of Subcontractor's duly authorized representative, certifying
Subcontractor's completion of the Services. SWBT reserves the right to verify
that Subcontractor's performance is in accordance
<PAGE> 6
with the requirements of the Purchase Order and the provisions of Clause 7
hereof, SUBCONTRACTOR'S WARRANTIES, prior to accepting Subcontractor's
Services. Payment will be made net thirty (30) days after SWBT's receipt of
Subcontractor's invoice.
12. RECORDS AND AUDIT Subcontractor agrees that it will: (a) Maintain complete
and accurate records of all amounts billable to and payments made by SWBT
hereunder in accordance with standard recognized accounting practices. (b)
Retain such records and reasonable billing detail for a period of three (3)
years from the date of final payment for Services. (c) Provide reasonable
supporting documentation to SWBT concerning any disputed invoice amount within
thirty (30) calendar days after receipt of written notification of such
dispute. (d) Permit SWBT, through its accredited representatives, to inspect
and audit during normal business hours the time and material charges invoiced
to SWBT hereunder. Should SWBT request an audit, Subcontractor will make
available any and all pertinent records and files.
13. FORCE MAJEURE Neither party will be held responsible for any delay or
failure In performance of any part of this Contract to the extent that such
delay or failure is caused by fire, flood, explosion, war, strike, embargo,
government requirement, civil or military authorities, Act of God, public
enemy, acts or omissions of carriers, or other causes beyond the control of
Subcontractor or SWBT. If any force majeure condition occurs, ("Condition") the
party delayed or unable to perform will give immediate notice to the other
party and the notified party may elect to: (a) Terminate this Contract or any
Order or part of either as to Services not already performed. (b) Suspend this
Contract for the duration of the Condition, buy or sell elsewhere Services to
be bought or sold hereunder, and deduct from any commitment the quantity bought
or sold or for which such commitments have been made elsewhere. (c) Resume
performance once the Condition ceases with an option in the notified party to
extend the term of this Contract up to the length of time the Condition
endured.
Unless written notice to the contrary is given within thirty (30) days after
such notified party is notified of the Condition, option (b) above will be
deemed selected,
<PAGE> 7
14. INTELLECTUAL PROPERTY, PROPRIETARY INFORMATION AND OWNERSHIP OF DOCUMENTS
Both parties acknowledge and agree that all patents, copyrights, trademarks,
trade-names, proprietary information, trade secrets, documents, materials,
products, programs, concepts, drawings, plans, technology, designs,
methodologies, formulae, specifications, information, samples, models,
calculations, hardware, software and the like belonging to one party, whether
tangible or intangible and whether written or oral (collectively, the
"Information"), which have or may come into the possession or knowledge of the
other party, constitute or consist of confidential and proprietary information
and/or trade secrets, the disclosure of which will cause serious harm and
damage to the disclosing party. Accordingly, each party agrees that it will
protect all Information received from the other party (the "Disclosing Party")
with the same degree of care and confidentiality that it uses to protect its
own proprietary and confidential information and will not make any use thereof
other than in connection with the activities contemplated by this Agreement.
Each party further agrees that, in the event that it is required by a judicial
or administrative body to furnish Information regarding
Southwestern Bell
14. INTELLECTUAL PROPERTY, PROPRIETARY INFORMATION AND OWNERSHIP OF DOCUMENTS
(continued) this or any Order, it will notify the Disclosing Party immediately
and assist the Disclosing Party, at the Disclosing Party's expense, in
protecting the Information. All Information will remain the property of the
Disclosing Party and will be returned to that party upon request. Neither party
will appropriate any Information for its own use. Upon the termination of this
Agreement or any Order(s), each party will return all Information to the
Disclosing Party or destroy same if so directed.
15. SUBCONTRACTOR'S STATUS Neither Subcontractor nor its employees, agents or
representatives are employees, servants, partners or joint ventures of or with
SWBT. Subcontractor is in all respects an independent Subcontractor and will at
all times direct, control and supervise all of its employees, agents and
representatives and their respective activities.
All persons working for or furnished by Subcontractor in connection with the
performance of Subcontractor's
<PAGE> 8
obligations hereunder, including without imitation agents, employees, suppliers
and subcontractors, will be under the exclusive control and supervision of
Subcontractor who will be solely responsible and liable for the compliance of
all such persons and firms with, and their observance of, this Agreement,
Orders and all federal, state and local statutes, laws, regulations, rules,
ordinances, orders and codes (collectively, the "Laws"), including without
limitation those Laws regarding working conditions, hours of work,
compensation, workers' compensation, Immigration Reform and Control Act
requirements and payment of all taxes (including without limitation
unemployment, social security and other payroll taxes) and contributions to
pension or retirement plans or programs.
16. INSURANCE With respect to performance hereunder, Subcontractor agrees to
maintain, at all times during the term hereof the following insurance coverage
and any additional insurance and/or bonds required by law:
(a) Workers' Compensation insurance with benefits afforded under the laws of
the state in which the work is to be performed.
(b) Employer's Liability insurance with minimum limits of $100,000 for bodily
injury by accident,$100,000 for bodily injury by disease per employee and
$500,000 for bodily injury by disease policy aggregate.
(c)General Liability insurance with the minimum limits of $1,000,000 per
occurrence for bodily injury and property damage arising out of
Premises/Operations, $1,000,000 per Occurrence Personal Injury and $1,000,000
General Policy aggregate (applicable to Commercial General Liability Policies),
and $1,000,000 per occurrence/aggregate for Products/Completed Operations.
Coverage must include Blanket Contractual, Independent Subcontractor's
Liability and Broad Form Property Damage and name SWBT as an "Additional
Insured." (d) If use of motor vehicles is required, Automobile Liability
insurance with minimum limits of$1,000,000 per occurrence for bodily injury and
property damage, which coverage will extend to all owned, hired and non-owned
autos.
Insurance companies affording coverage hereunder must have a Best's Rating of
B+VII or better.
<PAGE> 9
Upon SWBT's request, Subcontractor agrees to furnish certificates or other
acceptable proof of the foregoing insurance which will provide for SWBT to be
notified in writing at least thirty (30) days prior to cancellation of or any
material change in any of the insurance evidenced thereby.
17. ADVERTISING AND PUBLICITY Subcontractor agrees not to use in any
advertising or sales promotion, press releases or other publicity matters any
endorsements, direct or indirect quotes, or pictures implying endorsement by
SWBT or any of its employees without SWBT's prior written approval.
Subcontractor further agrees to submit to SWBT for written approval, prior to
publication, all publicity matters that mention or display SWBT's name and/or
marks or contain language from which a connection to said name and/or marks may
be referred or implied.
Southwestern Bell Telephone
18. PAYMENT OF TAXES In the event that SWBT is liable under federal law for
excise taxes or under state or local law for sales taxes collected by
Subcontractor on the Services or Material provided hereunder, Subcontractor
will bill such taxes as separate items, listing each tax jurisdiction involved.
SWBT will have the right to require Subcontractor to contest with the imposing
jurisdiction, at SWBT's expense, any taxes or assessments which SWBT may deem
to be improperly levied. Subcontractor agrees to furnish to SWBT statements
evidencing that taxes and assessments for which SWBT is responsible hereunder
have been paid.
19. INFRINGEMENT Subcontractor agrees to indemnify and hold SWBT harmless from
and against any loss, liability, damage or expense (including increased damages
for willful infringement, punitive damages, attorneys' fees and court costs)
that may result by reason of any infringement, or claim of infringement, of any
trade secret, patent, trademark, copyright or other proprietary interest of any
third party based on the normal use or installation of any Material, Software,
Documentation, program or Services furnished to SWBT hereunder, except to the
extent that such claim arises from Subcontractor's compliance with SWBT's
detailed instructions for which SWBT agrees to indemnify Subcontractor. Such
exception will not, however, include:
(a) Merchandise available on the open market or the same as such merchandise.
<PAGE> 10
(b) Items of Subcontractor's origin, design of selection.
Subcontractor warrants that it has made reasonable independent investigation
(including obtaining legal opinions) to determine the legality of its right to
produce and sell the Material/Equipment/Services provided herein.
If an injunction or order is obtained against SWBT's use of any Material,
Software, Documentation, program or Services, or if in Subcontractor's opinion
any Material, Software, Documentation, program or Service is likely to become
the subject of a claim of infringement, Subcontractor will, at its expense:
(i) Procure for SWBT the right to continue using the Material, Software,
Documentation, program or Service; or
(ii) After consultation with SWBT, replace or modify the Material, Software,
Documentation, program or Service to make it a substantially similar
functionally equivalent, non-infringing Material, Software, Documentation,
program or Service.
If the Material, Software, Documentation, program or Service is purchased or
licensed and neither (I) or (ii) above is possible, SWBT may cancel the
applicable Purchase Order and require Subcontractor to remove such Material,
Software, Documentation, program or Service from SWBT's customer location and
refund any charges paid therefor to SWBT In no event will SWBT be liable to
Subcontractor for any charges after the date that SWBT no longer uses the
Material, Software, Documentation, program or Service because of actual or
claimed infringement.
Each party hereto agrees to defend or settle, at its own expense, any action or
suit against the other party hereto for which it is responsible under this
clause. Each party further agrees to notify the other party promptly of any
claim of infringement for which the other party is responsible hereunder and
cooperate in every reasonable way to facilitate the defense thereof.
in the event that Subcontractor, after notification of any claim for which
Subcontractor is responsible, does not assume the defense of such action,
Subcontractor will reimburse SWBT for all of its costs incurred in the defense
of the claim, including, but not limited to attorneys' fees and interest on
Suct1 Buyer's payment of said amounts from the date of SWBT's payment of said
amounts.
<PAGE> 11
Southwestern Bell Telephone
20. LABOR AND MATERIAL Subcontractor will furnish all supervision, labor,
tools, power, transportation, Material and supplies specified in a Purchase
Order except any items specifically listed as being furnished by SWBT or
others. It is Subcontractor's duty to inspect all Labor and Material furnished
by Subcontractor in connection with the Services, and to report all defects of
which Subcontractor becomes aware in the performance of the Services. Such
inspection will include, without limitation, inspection for defects which could
cause property damage or personal injury. Subcontractor will not use any
Material, or permit it to be incorporated into the Services,which is defective
or which would otherwise result in an unreasonable risk of harm to persons or
property.
21. SEVERABILITY If any provision of this Agreement is determined to be invalid
such invalidity will not invalidate the entire Agreement, but rather the entire
Agreement will be construed as if it did not contain the particular invalid
provision(s) and the rights and obligations of SWBT and Subcontractor will be
construed accordingly.
22. NON-WAIVER No course of dealing or failure of either party to strictly
enforce any term, right or condition hereof will be construed as a waiver of
such term, right or condition. The waiver by SWBT in one instance of any
default of Subcontractor hereunder will not be deemed a waiver of any other
default of Subcontractor. The express provision herein for certain rights and
remedies of SWBT are in addition to any other legal and equitable rights and
remedies to which SWBT would otherwise be entitled.
23. CUMULATIVE RIGHTS AND REMEDIES The various rights, options, and remedies
contained herein will be construed as cumulative and no one of them will be
exclusive of any others, or of any other legal or equitable remedy which either
party might otherwise have in the event of a breach or default in the
performance of the terms, conditions, covenants and agreements set forth
herein, and the exercise of one right or remedy by either party will not impair
or waive its rights to any other right or remedy.
24. NOTICES
Any notice or demand which under the terms hereof must or may be given or made
by SWBT or Subcontractor will be in writing and given or made by facsimile, or
similar communication or by certified or registered mail, return receipt
requested, addressed to the respective parties as shown:
<PAGE> 12
(a) If to Subcontractor:
Micro-Media Solutions, Inc.
501 Waller
Austin, Texas 78702
Attn.: Jose Chavez
(b) If to SWBT:
Southwestern Bell Telephone Company
712 E. Huntland, Rm. 107
Austin, Texas 78752
Attn.: Manager Purchasing
(c) If to SWBT:
Southwestern Bell Telephone Company
712 E. Huntland, Rm. 107
Austin, Texas 78752
Attn.: Senior Systems Integrator
Such notice or demand will be deemed to have been given or made when sent, if
sent by facsimile, or similar communication, or when deposited, postage
prepaid, in the US mail. The above addresses may be changed at any time by
giving thirty (30) days' prior written notice as above provided.
25. CHOICE OF LAW This Agreement will be governed by the laws of the State of
Texas. Southwestern Bell Telephone
26. ASSIGNMENT Neither party hereto may assign, subcontract or otherwise
transfer its rights or obligations under this Agreement except with the prior
written consent of the other party which consent will not be unreasonably
withheld; provided, however SWBT will have the right to assign this Agreement
to any present or future affiliate subsidiary or parent corporation, without
securing the consent of Subcontractor, and may grant to any such assignee the
same rights and privileges SWBT enjoys hereunder. Any attempted assignment not
assented to in the manner prescribed herein, except an assignment confined
solely to moneys due or to become due, will be void. It is expressly agreed
that any assignment of moneys will be void if (a) Subcontractor fails to give
SWBT at least thirty (30) days' prior written notice thereof, or (b) such
assignment attempts to impose upon SWBT obligations to the assignee in
addition to the payment of such moneys or preclude SWBT from dealing solely and
directly with Subcontractor in all matters pertaining hereto including the
negotiation of amendments or settlements of charges due.
27. LIABILITY Subcontractor agrees to indemnify, defend and save SWBT harmless
(including its officers, directors, agents and employees) from and against any
and all liability, loss, damage or expense (including attorneys' fees and court
costs) incurred by SWBT in connection with any claim, demand or suit caused by,
arising from, or attributable to the Material or Services provided by
Subcontractor or the acts or omissions of Subcontractor (including any of its
suppliers, agents or subcontractors) but excepting the negligent acts or
omissions solely of SWBT in
<PAGE> 13
furnishing the Material or performing Services. This indemnity will survive the
delivery, inspection and acceptance of Material or performance of Services
hereunder. SWBT agrees to promptly notify Subcontractor of any claim or demand
for which Subcontractor is or may be responsible hereunder. Subcontractor
agrees not to implead or bring any action against SWBT or SWBT's employees
based on any claim for personal injury or death that occurs in the course or
scope of employment of any person by SWBT arising out of Material or Services
furnished hereunder.
28. MODIFICATION TO CONFORM TO LAWS This Agreement and SWBT's obligations
hereunder will be subject to all applicable laws, court orders, rules and
regulations (collectively, "LAWS") including, by way of illustration and not
limitation, to the 1996 Telecommunications Act. In the event this Agreement, or
any of the provisions hereof or the operations contemplated hereunder, are
found to be inconsistent with or contrary to any Laws, the latter will be
deemed to control and, if commercially practicable, this Agreement will be
regarded as modified accordingly and will continue in full force and effect as
so modified. If such modified Agreement is not commercially practicable, in the
opinion of either party, then the parties agree to meet promptly and discuss
any necessary amendments or modifications to this Agreement. If the parties are
unable to agree on necessary amendments or modifications in order to comply
with any Laws, then this Agreement may be terminated immediately by either
party. In the event of such termination, Customer will pay SWBT all amounts due
for SERVICES and MATERIAL provided hereunder by SWBT up to and including the
effective date of termination.
29. NON-EXCLUSIVE DEALING It is expressly understood and agreed that this
Agreement does not grant Subcontractor an exclusive right to provide the
Services or Materials described herein and that SWBT may itself perform, or
contract with other suppliers to provide, the Services or Materials.
30. TERMINATION Either party hereto may terminate this Agreement in whole or in
part by giving the other party hereto at least three (3) months' prior written
notice. Upon termination, SWBT will
<PAGE> 14
pay Subcontractor all amounts due for Material and Services by Subcontractor up
to and including the effective date of termination, which payment will
constitute a full and complete discharge of SWBT's payment obligations
hereunder. If Subcontractor terminates this Agreement, Subcontractor will pay
SWBT the difference between the cost of acquiring Materials and Service from a
third party and the amount stated in Clause 2 Compensation for each order that
is outstanding at the time of termination. Termination hereof as set forth
herein will also constitute a full and complete discharge of Subcontractor's
obligations hereunder. Southwestern Bell Telephone
31. PLANT AND WORK RULES Each party's employees and agents will, while on the
premises of the other or at any other location while performing SERVICES under
this agreement for SWBT, comply with all plant rules and regulations,
including, but not limited to, the section of SBC Communications' Code of
Business Conduct," a copy of which is available upon request, which prohibits
the possession of any weapon or implement which might be used as a weapon on
SWBT properties. In addition, the parties agree that, where required by
government regulations, it will submit satisfactory clearance from the U.S.
Department of Defense and/or other federal authorities concerned.
32. ENTIRE AGREEMENT THE TERMS AND PROVISIONS CONTAINED HEREIN CONSTITUTE THE
ENTIRE AGREEMENT BETWEEN THE PARTIES WHICH MAY NOT BE MODIFIED EXCEPT BY A
WRITTEN INSTRUMENT SIGNED BY BOTH PARTIES. The provisions hereof supersede all
prior oral and written quotations, communications, agreements and
understandings of the parties, if any, with respect to the subject matter
hereof.
SO AGREED:
Micro-Media Solutions, Inc. Southwestern Bell Telephone Company
("Subcontractor") ("SWBT")
By: By:
--------------------------- ---------------------------
Title: Title: Manager of Purchasing
------------------------
Date: 7/23/97 Date: 7/24/97
<PAGE> 1
EXHIBIT 10.9
February 13, 1998
Micro Media Solutions, Inc.
501 Waller St.
Austin, Texas 78702
Attn: Gary Salbeck, Operation Manager
Re: Executed copy of the Field Trial Agreement
Gary:
Actually, I work for SBC here in California, but they only let me use Pacific
Bell letterhead. Thank you for the update and I am glad we could talk about how
things are going so far. We urgently need some more ISP's to get into the action
soon, so the sooner MSI is involved the better.
I have enclosed a copy of the agreement as promised and I apologize that you did
not receive a clean copy months ago. Please feel free to call if you have any
questions.
Respectfully,
Mark A. Gaither
Contract Manager
FasTrak DSL
510-8637-5192
cc: S. P. Formhals (SBC) Field Trial Agreement No. 970097
<PAGE> 2
Southwestern Bell Telephone Company (SWBT)
a Missouri Corporation
One Bell Center
St. Louis Missouri 63101
and
Micro-Media Solutions. Inc. (MSI) (MSI)
a Texas Corporation
501 Waller Street
Austin, Texas 78702
<TABLE>
<CAPTION>
INDEX
<S> <C>
PREAMBLE 3
TERM 3
ASSIGNMENT 3
BREACH OF AGREEMENT 3
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
CHOICE OF LAW 3
COMPLAINTS 4
COMPLIANCE WITH LAWS 4
CONFLICT OF INTEREST 4
CURE 4
SWBT'S INFORMATION 4
SWBT'S OBLIGATION 5
EMERGENCY SUPPORT 5
ENTIRE AGREEMENT 6
FORCE MAJEURE 6
INFRINGEMENT 6
INSIGNIA 7
INSURANCE 7
LIABILITY 8
LICENSES 8
NO FIDUCIARY 8
NO PARTNERSHIP 9
NON-EXCLUSIVE MARKET RIGHTS 9
NON-WAIVER 9
NOTICES 9
PERFORMANCE 10
PUBLICITY 10
PURCHASE OPTION 10
RELEASES VOID 10
RIGHT OF ACCESS 10
SEVERABILITY 11
SERVICES 11
SUBCONTRACTING 11
MSI'S INFORMATION 11
SURVIVAL OF OBLIGATIONS 11
TAXES 11
TERMINATION 12
WARRANTY 12
WORK HEREUNDER 12
APPENDIX A - NODISCRIMINATION COMPLIANCE AGREEMENT
APPENDIX B - SERVICES
</TABLE>
PREAMBLE
SWBT and MSI agree that MSI shall act as SWBT's agent and furnish to SWBT
customers, ADSL Fulfillment services and Customer Premises Equipment
Installation and Maintenance services, hereinafter referred to as "Services", in
accordance with the terms and conditions and specifications
<PAGE> 4
of this field trial agreement ("Agreement"). Services are outlined in Appendix
B, attached hereto by this reference. This Agreement is formed solely to provide
a means for SWBT to evaluate the potential use of the Service in SWBT's
operating area in the form of a future purchase of equipment or services similar
to service furnished by MSI, unless provided for in a separate written
agreement. In consideration of the mutual convenants and promises contained
herein, the parties agree as follows:
TERM
This Agreement shall be effective for the duration of the field trial evaluation
which shall begin on October 1, 1997 and shall continue in effect through
September 30, 1998 unless earlier terminated as provided for herein.
ASSIGNMENT
Neither party shall assign or otherwise transfer its rights or obligation under
this Agreement except with prior written consent of the other, said consent
known to be unreasonably withheld; provided. However, SWBT shall have the right
to assign this Agreement to any present or future affiliate, subsidiary or
parent corporation of SWBT without securing the consent of MSI and may grant to
any such assigned the same rights and privileges SWBT enjoys under this
Agreement. Any attempted assignment not assented to in the manner as prescribed
herein shall be void.
BREACH OF AGREEMENT
In the event MSI shall be in breach or default of any of the terms, conditions
or covenants of this Agreement, and said breach of default shall continue for a
period of ten (10) days after the giving of written notice to MSI, thereof, then
in addition to all other rights and remedies at law or in equity, SWBT shall
have the right to cancel this Agreement at no penalty to SWBT and/or enforce the
provisions set forth in the PERFORMANCE clause hereof.
CHOICE OF LAW
This Agreement shall be governed by the laws of the state of Missouri
<PAGE> 5
COMPLAINTS
SWBT reserves the right to notify MSI in cases where SWBT has identified current
or potential problem areas concerning MSI's SERVICE furnished hereunder.
MSI agrees to accept and acknowledge such notices and to work with SWBT on a
reasonable resolution of such problems. Notice of the disposition and solution
of such problems shall be provided to SWBT within ten (10) days of SWBT's
notification to MSI. Periodic reporting of the status of such open problems or
complaints will be furnished to SWBT by MSI together with a proposed schedule of
resolution. Such resolution shall not exceed thirty (30) days.
COMPLIANCE WITH LAWS
MSI and all persons furnished by MSI shall comply with the provision of all
applicable federal, state, county and local laws, ordinances, regulations and
codes (including identification and procurement of required permits,
certificates, approvals and inspections) in MSI's performance under this
Agreement. MSI further agrees during the term of this Agreement to comply with
all applicable Executive and Federal regulations as set forth in Appendix A,
Nondiscrimination Compliance Agreement, attached hereto and made a part of this
Agreement. MSI agrees to indemnify SWBT for any loss or damage sustained because
of MSI's noncompliance.
CONFLICT OF INTEREST
MSI represents and warrants that no officer, employee, or agent of SWBT has been
or will be employed, retained, paid a fee, or otherwise has received or will
receive any personal compensation or consideration by or from MSI or any of
MSI's officers, employees or agents in connection with the obtaining, arranging,
or negotiation of this Agreement or other documents or Agreements entered into
or executed in connection herewith.
CURE
SWBT shall not be deemed to be in default under any of the terms of this
Agreement and MSI shall not seek or be entitled to enforce any remedy for any
claimed default, unless SWBT shall fail to cure or correct said claimed default
within thirty (30) days following receipt of written notice by MSI to SWBT of
said claimed default.
<PAGE> 6
SWBT'S INFORMATION
Any specifications, drawings, sketches, models, samples, tools, computer or
other apparatus programs, technical or business information or data, field trial
results and/or reports, written, oral or otherwise (all hereinafter designated
"Information") furnished to MSI under this Agreement or in contemplation of this
Agreement, shall remain SWBT's property. All copies of such Information in
written, graphic or other tangible form shall be returned to SWBT at SWBT's
request. Unless such Information was previously known to MSI free of any
obligation to keep it confidential, or has been or is subsequently made public
by SWBT or a third party, it shall be kept confidential by MSI, shall be used
only in performing this Agreement, and may not be used for other purposes except
such terms as may be agreed upon between MSI and SWBY in writing.
MSI understands and agrees that any and all field trial results prepared by SWBT
are and shall remain the property of SWBT and are hereby considered SWBT's
Proprietary Information. Therefore it shall be SWBT's option, in its sole
discretion, to furnish MSI copies of such documents or to discuss such documents
with MSI. MSI's use of field trial reports furnished by SWBT shall be governed
by the provisions of the PUBLICITY clause in addition to the provisions
contained in this clause, SWBT'S INFORMATION.
SWBT'S OBLIGATION
MSI agrees SWBBT has no obligation or liability whatsoever for expenses incurred
in the development of MSI's SERVICE or to provide MSI with results of SWBT's
field trial evaluation.
EMERGENCY SUPPORT
MSI shall provide SWBT with an updated current listing of MSI's technical
support personnel together with after-hours telephone procedures to contact MSI
to correct out-of-service conditions.
<PAGE> 7
In the event SERVICE provided pursuant to this Agreement should affect SWBT's
ability to provide telecommunications services to SWBT's subscribers, MSI
shall, without charge, provide field technical personnel to make temporary
modifications and arrangements to mitigate the effects of out-of-service
conditions.
MSI agrees that expenses incurred by SWBT, if any, to mitigate or correct
out-of-service conditions caused by SERVICE shall be substantiated by SWBT and
paid by MSI.
ENTIRE AGREEMENT
This Agreement shall constitute the entire agreement between the parties and
shall not be modified or amended except by a writing signed by both parties.
Estimates furnished by SW13T shall not constitute commitments. The provisions of
this Agreement shall supersede all prior oral and written quotations,
communications, agreements and understanding of the parties in respect of the
subject matter of this Agreement.
FORCE MAJEURE
Neither party shall be held responsible for any delay or failure in performance
of any part of this Agreement to the extent that such delay or failure is caused
by fire, flood, explosion, war strike. embargo, government requirement, civil or
military authorities, Act of God or by the public enemy, or other causes beyond
the control of MSI or SWBT. If any force majeure condition occurs. the party
delayed or unable to perform shall give immediate notice to the other and the
party affected by the other's inability to perform may elect to:
A terminate this Agreement;
B suspend this Agreement for the duration of the force majeure condition: or
C resume performance under this Agreement once the force majeure condition
ceases with an option in the affected party to extend the period of this
Agreement up to the length of time the force majeure condition endured.
Unless written notice is given within thirty (30) days after such affected party
is notified of the force majeure condition, (b) shall be deemed selected.
<PAGE> 8
INFRINGEMENT
MSI shall indemnify SWBT for any loss, damage, expense (including attorney's
fees) or liability arising out of any infringement, or claim of infringement, of
any patent, trademark, copyright, trade secret or other proprietary interest
based on the manufacture, normal or intended use, installation, lease, sale or
resale of SERVICE or part thereof (including but not limited to, any program.
documentation, services and/or equipment) furnished to SWBT under this Agreement
or In contemplation of this Agreement.
If SWBT's normal or intended use, installation, lease, sale or resale of the
SERVICE shall be prevented by injunction or court order because of any such
infringement for which MSI is responsible, MSI shall. in addition to the above
indemnity, at no expense, loss or damage to SWBT: (1 ) replace such SERVICE with
equally suitable Service free of infringement: or (2) modify such SERVICE free
of infringement. or (3) by license or other release from claim of infringement
procure for SWBT's benefit the right to use, install, lease. sell or resell such
SERVICE or (4) after MSI has demonstrated its good faith efforts to achieve the
foregoing without success. MSI shall refund to SWBT the full SERVICE purchase
price (less a reasonable amount of use of the SERVICE) if any.
INSIGNIA
SWBT's Insignia will not be affixed, used or otherwise displayed on the SERVICE
furnished or in connection therewith without SWBT's written approval.
INSURANCE
With respect to performance hereunder, MSI shall maintain, at all times during
the term of this agreement the following insurance coverage and any additional
insurance and/or bonds required by law:
(1) Worker's Compensation Insurance in compliance with the laws of the state in
which the work is to be performed,
(2) Employers Liability Insurance with minimum limits of $100.000 for Bodily
Injury by accident, $100.000 for Bodily Injury by disease per employee and
$500,000 for Bodily Injury by disease policy aggregate;
(3) General Liability Insurance with minimum limits of $1,000,000 per occurrence
for Bodily Injury and Property Damage arising out of Premises/Operations,
$1,000,000 per
<PAGE> 9
occurrence Personal Injury and $1,000,000 General Policy Aggregate (applicable
to Commercial General Liability Policies), $1,000,000 per occurrence/aggregate
for Products/Completed Operations. Coverage must include Blanket Contractual,
Independent Contractors Liability and Broad Form Property Damage. If general
liability is Claims-Made coverage, retroactive date must be prior to or
coincident with the inception date of the contract and shall not be advanced
during the term of the contract. SWBT is to be named as Additional Insured as
respects general liability; and if use of motor vehicles is required;
4) Automobile Liability Insurance with minimum limits of $1,000,000 per
occurrence for Bodily Injury and Property Damage. Coverage shall extend to all
owned, hired, and non-owned autos. Insurance Companies affording coverage shall
be acceptable to SWBT and have a Best's Rating of B+VII or better. MSI shall be
prepared, prior to the start of work, to furnish certificates or other adequate
proof of the foregoing insurance, if so requested by SWBT. SWBT is to be
notified in writing at least thirty (30) days prior to cancellation or any
Service change of foregoing insurance.
LIABILITY
MSI shall indemnify, defend and save harmless SWBT (including its officers,
agents and employees) from and against any and all liability, loss, damages,
costs, attorneys' fees, or other expense of any kind, which arises out of any
claim or any suit for damages, injunction or other relief, caused by, resulting
from, or in connection with, the SERVICE or acts or omissions of MSI (including
any of MSI's agents or subcontractors but excepting the negligent acts or
omissions solely of SWBT) in the furnishing of SERVICE or in the performance of
services hereunder. This indemnity shall survive the delivery, inspection or
acceptance of SERVICE or performance of services hereunder.
MSI agrees to defend SWBT, at SWBT's request, against any such liability, claim,
demand or suit. SWBT agrees to notify MSI within a reasonable time of any
written claims or demands against SWBT for which MSI is responsible under this
clause.
<PAGE> 10
MSI agrees not to implead or bring any action against SWBT or SWBT's employees
based on any claim by any person for personal injury or death that occurs in the
course or scope of employment of such person by SWBT and that arises out of
SERVICE or services furnished under this Agreement.
LICENSES
No licenses, express or implied, under any patents are granted by SWBT to MSI
under this Agreement.
NO FIDUCIARY
The parties hereto recognize and agree that this Agreement resulted from
arms-length bargaining and therefore, that the parties owe no fiduciary duty to
each other as a result of this Agreement. The parties have the right to pursue
independently other evaluation agreements outside the scope of this Agreement.
NO PARTNERSHIP
It is not the intent of the parties hereto to form a partnership, whether
express or implied, or general or limited, as a result of their entering into
this Agreement. Relations between the parties are intended to be governed by
this Agreement and interpreted pursuant to the law of contracts. rather than
pursuant to the Missouri partnership law.
NON-EXCLUSIVE MARKET RIGHTS
It is expressly understood and agreed that this Agreement does not grant MSI an
exclusive privilege to provide to SWBT any or all SERVICE of the type described
in this Agreement nor require the purchase of any products from MSI by SWBT. It
is, therefore, understood that SWBT may contract with other manufacturers and
MSIs for the procurement or trial of comparable Services.
NON-WAIVER
No course of dealing or failure of either party to strictly enforce any term,
right or condition of this Agreement shall be construed as a waiver of such
term, right or condition.
<PAGE> 11
NOTICES
Any notice or demand which under the terms of this Agreement, or under any
statute must or may be given or made by MSI or SWBT shall be in writing and
shall be given or made by confirmed facsimile or similar communication or by
certified or registered mail addressed to the respective parties as shown:
To SWBT To MSI
Name Steve Formhals Jose Chavez
Address One Bell Center, 501 Waller
City, State, ZIP St. Louis, MO 63101 Austin, TX 78702
Telephone (314)235-1917 (512)476-6925
Such notice or demand shall be deemed to have been given or made when sent by
confirmed facsimile or other communication or when deposited, postage prepaid in
the U.S. mail.
The above addresses may be changed at any time by giving thirty (30) days prior
written notice as above provided.
PERFORMANCE
Consistent with the provisions of the FORCE MAJEURE clause of this Agreement,
MSI, having confirmed and agreed to a schedule or specific date(s) in the
performance of this Agreement, as outlined in the TERM clause hereof shall be
expected to meet the schedules or date(s) contained herein. Expenses incurred by
SWBT due to MSI's nonperformance of Service by committed dates, through no fault
of SWBT, shall be substantiated by SWBT and paid by MSI within thirty (30) days
of written notice from SWBT.
PUBLICITY
MSI shall not advertise, or otherwise make known to others, any confidential
information regarding this Agreement. MSI further agrees not to use in any
advertising or sales promotion, press releases or other publicity matters any
endorsements, direct or indirect quotes, or pictures implying endorsement by
SWBT or any of SWBT's employees
<PAGE> 12
without SWBT's prior written approval. MSI shall submit to SWBT for written
approval, prior to publication, all publicity matters that mention or display
SWBT's name and/or marks or contain language from which a connection to said
name and/or marks may be inferred or implied.
PURCHASE OPTION
SWBT may, at SWBT's option, elect to purchase the SERVICE from MSI at the end of
this Agreement under a separate written agreement at a price to be mutually
agreed upon by SWBT and MSI.
RELEASES VOID
Neither MSI nor SWBT shall require waivers or releases of any rights from
representatives of the other in connection with visits to MSI's and SWBT's
respective premises, and no such releases or waivers shall be pleaded by MSI or
SWBT or third persons in any action or proceeding.
RIGHT OF ACCESS
MSI shall normally not be permitted access to SWBT's facilities in connection
with work under this agreement and, however, if access is granted while on
SWBT's premises, shall comply with all plant rules and regulations, and where
required by government regulations, submit satisfactory clearance from the U.S.
Department of Defense and other federal authorities concerned. No charge will be
made for such visits.
SEVERABILITY
If any of the provisions of this Agreement shall be invalid or unenforceable,
such invalidity or unenforceability shall not invalidate or render unenforceable
the entire Agreement, but rather the entire Agreement shall be construed as if
not containing the particular invalid or unenforceable provision or provisions,
and the rights and obligations of MSI and SWBT shall be construed and enforced
accordingly. However, in the event such provision is considered essential
element of this Agreement, MSI and SWBT shall promptly negotiate a replacement
therefor.
<PAGE> 13
SERVICES
Appendix B outlines MSI's responsibilities, is incorporated herein, and made a
part of this Agreement by this reference and applies to the SERVICE under this
Agreement.
SUBCONTRACTING
MSI shall not, without the prior written consent of SWBT, subcontract any
portion of the work covered by this Agreement. Subcontracting by MSI shall not
relieve MSI of any responsibilities hereunder and MSI shall remain responsible
for compliance by any subcontractor with all provisions of this Agreement.
MSI'S INFORMATION
No specifications, drawings, sketches, models, samples, tools, computer or other
apparatus programs, technical information or data, written, oral or otherwise,
furnished by MSI to SWBT under this Agreement or in contemplation of this
Agreement shall be considered by MSI to be confidential or proprietary.
SURVIVAL OF OBLIGATIONS
MSI's obligations under this Agreement which by their nature would continue
beyond the termination, cancellation or expiration of this Agreement, including,
by way of illustration only and not limitation, those in the PERFORMANCE,
COMPLIANCE WITH LAWS, INFRINGEMENT, LIABILITY, RELEASES VOID, SEVERABILITY,
SWBT'S INFORMATION, and WARRANTY clauses shall survive termination, cancellation
or expiration of this Agreement.
TAXES
Federal manufacturer's or retailer's excise and state and local sales or use
taxes, when applicable, shall be paid by MSI.
TERMINATION
SWBT may terminate this Agreement without penalty in whole or in part by giving
MSI at least thirty (30) days prior written notice. Upon termination, MSI shall
return to SWBT any equipment or documents that had been provided to MSI.
<PAGE> 14
WARRANTY
Seller agrees to perform the SERVICES in a first-class, workmanlike manner, with
care, skill and diligence, and in accordance with applicable standards currently
recognized by Seller's profession. Seller further agrees to be responsible for
the professional quality, technical accuracy, completeness and coordination of
all reports, designs, drawings, plans, information, specifications and other
items and SERVICES furnished under this Contract. If Seller fails to meet
applicable professional standards, Seller will, without additional compensation,
correct or revise any errors or deficiencies in its reports, drawings,
specifications, designs or other items or SERVICES furnished hereunder.
Any replacement, repair, modification, installation, or other service performed
by MSI shall be warranted as herein provided based upon the date performance of
the service is completed and accepted by SWBT.
WORK HEREUNDER
It is understood that visits by MSI or MSI's representatives for inspection,
adjustment, or other similar purposes in connection with SERVICE, shall for all
purposes be deemed "work hereunder" and shall be at no charge to SWBT unless
otherwise agreed in writing with SWBT.
In WITNESS WHEREOF, the foregoing Agreement has been executed by the parties
hereto, in duplicate this 1st day of October, 1997.
MSI Accepted: SWBT Accepted:
Micro-Media Solutions, Inc. Southwestern Bell Telephone Company
By: By:
------------------------------- ----------------------------------
Name: Name:
---------------------------- --------------------------------
Title: Title:
--------------------------- -------------------------------
Date: Date:
---------------------------- --------------------------------
<PAGE> 15
NONDISCRIMINATION COMPLIANCE AGREEMENT (SW-9368)
Contractor recognizes its responsibility to comply with all federal and state
laws governing performance of this Contract including, but not limited
to:Executive Order 11246, Executive Order 11625, Executive Order 12138, Section
503 of the Rehabilitation Act of 1973 as amended and the Vietnam Era Veterans
Readjustment Assistance Act of 1974.
I. EQUAL EMPLOYMENT OPPORTUNITY DUTIES OF GOVERNMENT CONTRACTORS (APPLICABLE TO
CONTRACTS AND SUBCONTRACTS EXCEEDING $10,000)
During the performance of this contract, the Contractor agrees as
follows:
(1) The Contractor will not discriminate against any employee or applicant for
employment because of race, color, religion, sex, or national origin. The
Contractor will take affirmative action to ensure that applicants are employed,
and that employees are treated during employment without regard to their race,
color, religion, sex, or national origin. Such action shall include, but not be
limited to the following: Employment, upgrading, demotion, or transfer,
recruitment or recruitment advertising; layoff or termination; rates of pay or
other forms of compensation; and selection for training, including
apprenticeship. The Contractor agrees to post in conspicuous places, as
available to employees and applicants for employment notices to be provided by
the contracting officer setting forth the provisions of this nondiscrimination
clause.
(2) The Contractor will, in all solicitations or advertisements for employees
placed by or on behalf of the Contractor, state that all qualified applicants
will receive consideration for employment without regard to race, color,
religion, sex, or national origin.
(3) The Contractor will send to each labor union or representative of workers
with which he has a collective bargaining agreement or other contract or
understanding, a notice to be provided by the agency contracting officer,
advising the labor union or worker's representative of the Contractor's
commitments under section 202 of Executive Order 11246 of September 24, 1965,
and shall post copies of the notice in conspicuous places available to employees
and applicants for employment.
<PAGE> 16
(4) The Contractor will comply with all provisions of Executive Order 11246 of
September 24, 1965, and of the rules, regulations, and relevant orders of the
Secretary of Labor.
(5) The Contractor will furnish all information and reports required by
Executive Order 11246 of September 24, 1965, and by the rules,regulations, and
orders of the Secretary of Labor, or pursuant thereto, and will permit access to
his books, records, and accounts by the contracting agency and the Secretary of
Labor for purposes of investigation to ascertain compliance with such rules,
regulations, and orders.
(6) In the event of the Contractor's noncompliance with the nondiscrimination
clauses of this contract or with any of such rules, regulations, or orders. This
contract may be cancelled, terminated or suspended in whole or in part and the
Contractor may be declared ineligible for further Government contracts in
accordance with procedures authorized in Executive Order 11246 of September 24,
1965, and such other sanctions may be imposed and remedies invoked as provided
in Executive Order 11246 of September 24, 1965, or by rule, regulation, or order
of the Secretary of Labor, or as otherwise provided by law.
(7) The contractor will include the provisions of paragraphs (1) through (7) in
every subcontract or purchase order unless exempted by rules,regulations, or
orders of the Secretary of Labor issued pursuant to section 204 of Executive
Order 11246 of September 24, 1965, so that such provisions will be binding upon
each subcontractor or vendor. The Contractor will take such action with respect
to any subcontract or purchase order as may be directed by the Secretary of
Labor as a means of enforcing such provisions including sanctions for
noncompliance: Provided, however, that in the event the Contractor becomes
involved in, or is threatened with, litigation with a subcontractor or vendor as
a result of such direction, the Contractor may request the United States to
enter into such litigation to protect the interests of the United States.
II. CERTIFICATION OF NON-SEGREGATED FACILITIES (APPLICABLE TO CONTRACTS AND
SUBCONTRACTS EXCEEDING $10,000)
The Contractor certifies that it does not and will not maintain any
facilities it provides for its employees in a segregated manner, or permit its
employees to perform their services at any location under its control where
segregated facilities are maintained; and that it will obtain a similar
certification, prior to the award of any nonexempt subcontract
III. EMPLOYER INFORMATION REPORT (APPLICABLE IF VALUE OF CONTRACT IS $50,000 OR
MORE AND CONTRACTOR HAS 50 OR MORE EMPLOYEES)
Contractor agrees and certifies that it will file complete and accurate
report (EEO-1) per the current instructions and file such other compliance
reports as may be required under Executive Order 11246, as amended, and rules
and regulations adopted thereunder.
IV. WRITTEN AFFIRMATIVE ACTION PROGRAM (APPLICABLE IF VALUE OF CONTRACT IS
$50,000 OR MORE AND CONTRACTOR HAS 50 OR MORE EMPLOYEES)
Contractor will develop an affirmative action compliance program for
each of its establishments as required by 41 C.F.R. Part 60- 1.40 and 60.2.
Contractor recognizes its responsibility to comply with all federal and state
laws governing performance of this Contract including, but not limited
to:Executive Order 11246, Executive Order 11625, Executive Order 12138, Section
503 of the Rehabilitation Act of 1973 as amended and the Vietnam Era Veterans
Readjustment Assistance Act of 1974.
I. EQUAL EMPLOYMENT OPPORTUNITY DUTIES OF GOVERNMENT CONTRACTORS (APPLICABLE TO
CONTRACTS AND SUBCONTRACTS EXCEEDING $10,000)
During the performance of this contract, the Contractor agrees as
follows:
(5) The Contractor will not discriminate against any employee or applicant for
employment because of race, color, religion, sex, or national origin. The
Contractor will take affirmative action to ensure that applicants are employed,
and that employees are treated during employment without regard to their race,
color, religion, sex, or national origin. Such action shall include, but not be
limited to the following: Employment, upgrading, demotion, or transfer,
recruitment or recruitment advertising; layoff or termination; rates of pay or
other forms of compensation; and selection for
<PAGE> 17
training, including apprenticeship. The Contractor agrees to post in conspicuous
places, as available to employees and applicants for employment notices to be
provided by the contracting officer setting forth the provisions of this
nondiscrimination clause.
(6) The Contractor will, in all solicitations or advertisements for employees
placed by or on behalf of the Contractor, state that all qualified applicants
will receive consideration for employment without regard to race, color,
religion, sex, or national origin.
(7) The Contractor will send to each labor union or representative of workers
with which he has a collective bargaining agreement or other contract or
understanding, a notice to be provided by the agency contracting officer,
advising the labor union or worker's representative of the Contractor's
commitments under section 202 of Executive Order 11246 of September 24, 1965,
and shall post copies of the notice in conspicuous places available to employees
and applicants for employment.
(8) The Contractor will comply with all provisions of Executive Order 11246 of
September 24, 1965, and of the rules, regulations, and relevant orders of the
Secretary of Labor.
(5) The Contractor will furnish all information and reports required by
Executive Order 11246 of September 24, 1965, and by the rules, regulations, and
orders of the Secretary of Labor, or pursuant thereto, and will permit access to
his books, records, and accounts by the contracting agency and the Secretary of
Labor for purposes of investigation to ascertain compliance with such rules,
regulations, and orders.
(6) In the event of the Contractor's noncompliance with the nondiscrimination
clauses of this contract or with any of such rules, regulations, or orders. This
contract may be cancelled, terminated or suspended in whole or in part and the
Contractor may be declared ineligible for further Government contracts in
accordance with procedures authorized in Executive Order 11246 of September 24,
1965, and such other sanctions may be imposed and remedies invoked as provided
in Executive Order 11246 of September 24, 1965, or by rule, regulation, or order
of the Secretary of Labor, or as otherwise provided by law.
(8) The contractor will include the provisions of paragraphs (1) through (7) in
every subcontract or purchase order unless exempted by rules,regulations, or
orders of the Secretary of Labor issued pursuant to section 204 of Executive
Order 11246 of September 24, 1965, so that such provisions will be binding upon
each subcontractor or
<PAGE> 18
vendor. The Contractor will take such action with respect to any subcontract or
purchase order as may be directed by the Secretary of Labor as a means of
enforcing such provisions including sanctions for noncompliance: Provided,
however, that in the event the Contractor becomes involved in, or is threatened
with, litigation with a subcontractor or vendor as a result of such direction,
the Contractor may request the United States to enter into such litigation to
protect the interests of the United States.
II. CERTIFICATION OF NON-SEGREGATED FACILITIES (APPLICABLE TO CONTRACTS AND
SUBCONTRACTS EXCEEDING $10,000)
The Contractor certifies that it does not and will not maintain any
facilities it provides for its employees in a segregated manner, or permit its
employees to perform their services at any location under its control where
segregated facilities are maintained; and that it will obtain a similar
certification, prior to the award of any nonexempt subcontract
III. EMPLOYER INFORMATION REPORT (APPLICABLE IF VALUE OF CONTRACT IS $50,000 OR
MORE AND CONTRACTOR HAS 50 OR MORE EMPLOYEES)
Contractor agrees and certifies that it will file complete and accurate
report (EEO-1) per the current instructions and file such other compliance
reports as may be required under Executive Order 11246, as amended, and rules
and regulations adopted thereunder.
IV. WRITTEN AFFIRMATIVE ACTION PROGRAM (APPLICABLE IF VALUE OF CONTRACT IS
$50,000 OR MORE AND CONTRACTOR HAS 50 OR MORE EMPLOYEES)
Contractor will develop an affirmative action compliance program for
each of its establishments as required by 41 C.F.R. Part 60- 1.40 and 60.2.
<PAGE> 19
V. CERTIFICATION OF COMPLIANCE WITH VETERAN RESPONSIBILITIES (APPLICABLE TO
CONTRACTS AND SUBCONTRACTS OF $10,000 OR MORE)
In accordance with the Vietnam Veteran's Readjustment Assistance Act of
1974 and 41 C.F.R Part 60-250, as amended, the parties incorporate by reference
the "Affirmative Action For Disabled Veterans and Veterans of the Vietnam Era"
clause and such other regulations and contract clauses required to be made part
of government contracts and subcontracts.
VI. EMPLOYMENT OF THE HANDICAPPED (APPLICABLE TO CONTRACTS AND SUBCONTRACTS OF
$2,500 OR MORE)
In accordance with the Rehabilitation Act of 1973, as amended,
Executive Order 11758 and 41 C.F.R., Part 60-741, the parties incorporate by
reference the "Affirmative Action For Handicapped Workers" clause and all other
regulations and contract clauses required to be made part of government
contracts and subcontracts.
VII. UTILIZATION OF SMALL BUSINESS CONCERNS AND SMALL DISADVANTAGED BUSINESS
CONCERNS (APPLICABLE WHEN GOVERNMENT CONTRACT IS EXPECTED TO BE OVER $500,000)
(a) It is the policy of the United States that small business concerns and
small business concerns owned and controlled by socially and economically
disadvantaged individuals shall have the maximum practicable opportunity to
participate in performing contracts let by any Federal agency.
(b) The Contractor hereby agrees to carry out this policy in the awarding
of subcontracts to the fullest extent consistent with efficient contract
performance. The Contractor further agrees to cooperate in any studies or
surveys as may be conducted by the United States Small Business Administration
or the awarding agency of the United States as may be necessary to determine the
extent of the Contractor's compliance with this clause.
(c) As used in this contract, the term "small business concern" shall mean
a small business as defined pursuant to section 3 of the Small Business Act and
relevant regulations promulgated pursuant thereto. The term "small business
concern owned and controlled by socially and economically disadvantaged
individuals" shall mean a small business concern-
<PAGE> 20
(1) Which is at least 5l percent owned by one or more socially and economically
disadvantaged individuals; or, in the case of any publicly owned business, at
least 51 percent of the stock of which is owned by one or more socially and
economically disadvantaged individuals; and
(2) Whose management and daily business operations are controlled by one or more
of such individuals.
The Contractor shall presume that socially and economically disadvantaged
individuals include Black Americans, Hispanic Americans, Native Americans,
Asian-Pacific Americans, Asian-Indian Americans and other minorities, or any
other individual found to be disadvantaged by the Administration pursuant to
section 8(a) of the Small Business Act.
(d) Contractors acting in good faith may rely on written representations by
their subcontractors regarding their status as either a small business concern
or a small business concern owned and controlled by socially and economically
disadvantaged individuals.
VIII. SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS SUBCONTRACTING PLAN (IF
SUBCONTRACT OF GOVERNMENT CONTRACT EXCEEDS $500.000)
Contractor will adopt a subcontracting plan similar to the plan agreed to
by Southwestern Bell Telephone Company.
IX. UTILIZATION OF WOMEN-OWNED SMALL BUSINESSES
(a) "Women-owned small businesses," as used in this clause, means
businesses that are at least 51 percent owned by women who are United States
citizens and who also control and operate the business.
"Control," as used in this clause, means exercising the power to make
policy decisions.
"Operate," as used in this clause, means being actively involved in the
day-to-day management of the business.
(b) It is the policy of the United States that women-owned small
businesses shall have the maximum practicable opportunity to participate in
performing contracts awarded by any Federal agency.
(c) The Contractor agrees to use its best efforts to give women-owned small
businesses the maximum practicable opportunity to participate in the
subcontracts it awards to the fullest extent consistent with the efficient
performance of its contract.
<PAGE> 21
Appendix B
SERVICES
Program Objectives:
MSI will provide SWBT with high volume ADSL Fulfillment services and Customer
Premises Equipment Installation and Maintenance services.
SWBT's objective is to achieve high customer satisfaction for development of the
ADSL CPE.
Teaming:
ADSL is a new network technology. Successful implementation of ADSL technology
will require strong team work among SWBT and the MSI. As such, MSI shall
provide a single contact for project management and coordination activities in
all areas of presence throughout SWBT's territories in Arkansas, Kansas,
Missouri, Oklahoma and Texas.
At a future date, SWBT may wish to provide additional products to be
implemented as part of this proposal. MSI shall promptly indicate its ability
to support future requests.
Market Opportunity
The SWBT estimate of the potential market for ADSL CPE installation and
maintenance services is between 10,000 and 30,000 sites over the next 18 to 24
months for business and residential markets. Installation rates of between 45
and 75 installations per day, throughout SWBT's territory, are anticipated.
Geographic Territory
Initially, four wire centers in the Austin area, starting in the fourth quarter
of 1997. Long term, beginning second quarter 1998, in major metropolitan areas
throughout SWBT's five state territory.
Thirty days from execution of this Agreement, MSI shall provide information
which indicate its geographic coverage by zip-code.
<PAGE> 22
Program Schedule
MSI shall have processes in place by October 1, 1997 for pre-deployment trials.
MSI to provide plan on how MSI will achieve this objective.
MSI shall be prepared to provide fulfillment. Installation and Maintenance
services of ADSL CPE to the market, in support of SWBT's ADSL roll-out,
beginning in October, 1997.
CPE
MS1 to receive CPE as consigned SWBT inventory stock, stage, provide equipment
in pre-packaged installation kits to send to installers and end customers.
Installation kits are defined in Attachment 4 of this Appendix.
ADSL CPE has already been pre-selected by SWBT.
Pricing Information
Pricing is outlined in Attachment 6 of this Appendix. MSI commits to fixed 2
year fixed pricing, independent of location beginning in October, 1997 for the
following:
Fixed fee, per site, for each of the Installation options as identified:
ADSL modem and splitter (outdoor environment ready)
Inside wire
Computer installation of browser software
Installation & configuration of NIC, including software installation
Fixed fee, per site, for each of the Maintenance options identified:
Next day parts
Next day onsite service
Same Day onsite service
Fixed fee per each requested delivery of pre-packaged installation kits to end
customers upon order request from SWBT.
Fixed fee, per unit, for delivery of each of the installation kits as
identified, with CPE ADSL modem with splitter, software, and NIC cards provided
by SWBT.
<PAGE> 23
Installation
Installation Scope of Work for installing the ADSL Modem And splitter, Network
Interface Card, and wiring requirements are defined in attachments 1,2, and 3
respectively.
MSI will provide detail information on what their proposed wiring methodology is
for installing the wiring from the SWBT NID (Network Interface Device) to the
ADSL modem in the residence, when using existing IW (inside wiring). In cases
where existing IW is not available or Cat 5, a Cat 5 home run. From NID to ADSL
modem location, will be provided as defined in attachment 3 of this appendix.
Installation Requirements
SWBT will schedule the end customer installation appointment dates. SWEBT will
then communicate installation and maintenance schedule to MSI.
MSI normal installation hours shall be Monday through
Friday, 7:30am to 9:30pm, CST/CDT. MSI to provide fees for
work performed outside normal installation hours.
MSI agree to provide capabilities for supporting installations and maintenance
on Saturday.
MSI agrees to confirm ability to meet installation schedules per SWBT's
commitment to customer.
MSI agrees to provide plan for making up missed appointments independent of
scheduling rates for new work.
MSI agreed to be required to install the oldest inventoried equipment first to
ensure warranty coverage is maintained.
MSI agrees to be required to maintain records on date of receipt of equipment by
serial number.
Installation Completion
MSI agrees to complete the individual customer installation project upon
successful establishment of either a bi-directional 384/256Kbps ADSL ATM PVP
connection to the internet or corporate host.
<PAGE> 24
Installation and checkout test plan is included as Attachments 1, 2, and 3.
MSI shall ship the installation kits from fulfillment center to customers who
only want the CPE installation kits, as identified in Attachment 4 of this
appendix, within five (5) working days of notification.
Wiring
MSI shall wire the ADSL modem to the ADSL modular termination jack and shall
utilize the cord supplied with the ADSL modem. (This cord will be two pair, Cat
3 wire with RJ14 terminations on both ends, not to exceed 20 feet in length.) IW
from the modular termination jack to the SWBT NID will be standard 24 or 26
gauge, CAT 3 wiring. Cabling to and from the OC to the ADSL Modem will be over
10BaseT Cat 2 cable.
MSI shall provide new wiring from the SWBT network termination point, at the
customers location, to the ADSL Modem as described in attachment 3
Maintenance
MSI will provide a toll free call center for maintenance and repair handling,
including warranty handling.
MSI shall offer next day parts, same day onsite, next day onsite, and 2 day
onsite maintenance. Hours of operation shall be 7:30am to 9:30 pm CST/CDT, five
(5) days a week (Monday - Friday).
Installation and Maintenance Field Service Requirements
MSI shall supply own transportation, including vehicles, licensed and insured
drivers, and adequate liability insurance.
MSI shall immediately provide each of its own installers with PC/Mac Laptop with
integral Ethernet and or ATM NIC card with SWBT ADSL Project software for
testing and verifying proper operation including ADSL network testing.
MSI shall provide testing software as required by SWBT to ensure proper
operation of NIC card in OC.
MSI shall provide installers with appropriate tools, cabling, wiring,
identification required to complete installations and maintenance dispatches on
a 97% first
<PAGE> 25
time basis to the scheduled installation date, measured by dividing the number
of first visit installations successfully completed on time by the number of
scheduled installations.
MSI shall submit, a plan demonstrating how MSI intends to achieve this goal and
what measurement tools are proposed to monitor status.
MSI shall supply all ancillary parts as required to support installation.
MSI shall provide all training to installers and maintenance personnel.
MSI shall provide a typical test platform at SWBT for each PC (such as ISA, PCI)
or Mac that NIC card is installed with appropriate operating system software.
(such as Windows 3.1, 3.11, or later version, Windows 95, Windows NT)
MSI shall be responsible for its own inventory and field logistics system; such
systems must be described to SWBT, and must be adequate to support supplier's
field operation in a manner which meets service level requirements.
MSI shall have and maintain capability to communicate by phone, fax, and e-mail.
MSI shall have the proven resources and financial strength, or demonstrate a
plan to support SWBT in the deployment of the installations territory-wide in
volumes.
MSI shall indicate the volume of installations and maintenance levels that MSI
can commit to by zip-code on a per-week basis.
MSI shall provide the scope of their coverage by timeline both current and
planned.
MSI shall provide toll free end customer telephone assistance to diagnose
potential service issues and provide, at its expense, delivery, to the customer,
a unit to replace the unit that is suspect.
MSI shall indicate what its capability to support installations for
multi-language (including, but not limited to Spanish, Chinese, Tagalog,
Japanese, Vietnamese, Portugese, etc.) and hearing impaired customers.
<PAGE> 26
Experience
MSI shall identify past experience in fulfilling programs of this scope and
magnitude.
MSI shall provide customer references for programs of similar scope and size.
Project
MSI shall provide a Project Manager, assigned to manage installations for
Management ADSL, for SWBT. The Project Manager will manage this installation
processes and work with the end customers, as well as the SWBT ADSL Customer
Service Team, to ensure successful implementations. The Project Manager shall be
responsible for collecting, maintaining, and assembling all ADSL specific
documentation which will include at a minimum:
Deployment Plan with timeline, equipment standard templates, deployment
locations, protocols and addressing as defined by SWBT, an inventory of
equipment, including serial numbers and network installed, procedures for
service calls, and equipment configurations.
MSI will supply resumes for proposed Project Manager. SWBT reserves the right to
interview and accept or decline any proposed Project Manager.
Licenses
MSI shall be licensed for residential and business installations in SWBT's
territory. MSI shall have all required federal, state, county and city licenses
to complete the ADSL installations successfully.
MSI shall meet all building codes as required by city and counties.
MSI shall comply with all applicable laws, rules and regulations.
Customer Satisfaction
End Customer satisfaction is of key concern to SWBT. SWBT welcomes innovations
where methods to increase customer satisfaction are addressed.
MSI shall provide how MSI intends to provide a safe installation to the end
customer without risk of personal safety or risk of loss of the end customers
personal property (i.e. hiring and screening programs for new employees, safety
training, etc.).
<PAGE> 27
Tracking and Reporting
MSI shall provide a tracking and reporting format to track installations
activity by day, week, and month, showing force to load, and actual schedule
performance. Performance management reporting for volume of installations and
maintenance activities is a mandatory requirement.
MSI shall provide monthly performance reports that identify, among other items;
number and trend of calls, missed installations, second installations, equipment
failure rates and customer satisfaction levels.
MSI shall provide sample reports, and the methods used to gather the data upon
which these reports are base.
MSI shall specify how each piece of serialized equipment will be tracked and
identified, and reported to SWBT for provisioning and warranty tracking
purposes.
Timelines
MSI shall provide an overall program implementation timeline.
Subcontracting
MSI shall provide a list of potential major sub-contractors that MSI may use to
implement this project with their qualifications.
SWBT reserves the right to decline the use of any proposed sub-contractor.
<PAGE> 28
Attachment 1
Installation Services
ADSL Modem and Splitter
MSI shall perform the following services in the installation, configuration and
testing of the ADSL Modem and passive splitter. Installation shall include;
physical installation of ADSL modem, connecting to power, attaching modem to the
ADSL network, configuration of ADSL Modem, installation of operating software,
checkout of operation, and demonstration to customer of connection.
Installation crew will call the business customer the day before the
installation is to commence to remind the customer that the installation is to
take place the following day either in the morning or afternoon.
Configuration
Configuration parameters will be set at the manufacturer's recommended defaults,
or as defined by SWBT. Specific customer requirements will be accommodated
during the configuration and installation process. MSI will confirm the use of
web service to ensure ADSL connectivity with the ISP or corporate location. Full
operational testing of all the parameters of the local software and it's inter-
operation with the ADSL network may be at an additional fee.
Protocol Addressing
Protocol addressing for the customers PC or Mac (NIC) to allow the ADSL Modems
to communicate with the host or Internet shall be defined by SWBT and will be
provided for in the configuration of the unit. Although the ADSL modem will
support one Internet connection, the installer shall be able to support
interconnecting to one of 20 different Internet Service providers script, to be
provided by SWBT.
Other specific addressing or configuration requested (i.e. other Group Address,
SNMP, etc.) is the responsibility of customer to provide.
Physical Placement of Unit
The ADSL modem will be placed as instructed by customer and may be either wall
or desktop mounted. Typical installation is expected to be desktop mounting. The
appropriate hardware for each instance will be provided by SWBT. Cables from
unit to the "telco" jack, and ADSL Modem to terminating equipment (for example
PC or Mac) will be connected. Appropriate cable lengths should
<PAGE> 29
be ordered and supplied with the unit to be installed. Power outlets to be
provided by customer and shall be within 5 feet of the ADSL modem.
ADSL Modem Network Testing
Step 1, Configuration Process
1. Ensure PC and ADSL modem powers on
2. Ensure configuration is taken by PC and ADSL modem
3. Ensure ports can be seen by software and are configurable
Step 2, Test Connection to ADSL WAN Network
1. LAN and phone circuits are active and working properly
2. Network protocol is active
3. Addressing is not causing errors
4. Protocol is up
5. Review for network errors (lost packets, short frames, CRC, etc.)
Step 3, Test Other Connections
1. LAN or Serial port is active
2. Protocol is up
3. Addressing is not causing errors
Installation Compete
Installation is complete when:
1. ADSL Modem and PC is configured per manufacturer specifications or other
customer required configuration.
2. ADSL Modem and PC is connected to SWBT network.
3. ADSL Modem and PC has been tested with network service provided by SWBT (or
other carrier as appropriate and available) and connection with CO end
established.
4. ADSL Modem and PC operates as per manufacturer specifications
Installer (s) shall I leave behind a customer satisfaction survey for customer
to fill out and mail to SWBT.
<PAGE> 30
Attachment 2
Installation Services
Ethernet or ATM 25 Mbps IBM PC Compatible
Network Interface Card (NIC) Installation
MSI will install and configure either a 10BaseT Ethernet Network Interface Card
(NIC) or a 25 Meg ATM NIC card as a connecting product to the ADSL Network
modem. The NIC may be either ISA or PCI form factors. The installation includes
opening of the PC or Mac, inserting the NIC and adding the driver software
provided with the NIC. Configuration of the NIC software is based on a specific
PC class with specific software provided by SWBT to run on a IBM class PC
operating Windows 95 or Mac running System 7. Other optional configurations may
be defined as part of this RFP in further attachments. MSI will develop a
specific installation script on the installation process to be approved by SWBT.
Customer must have a minimum configuration as defined by SWBT to operate with
the ADSL network.
Configuration
Configuration parameters will be set at the manufacturer's recommended defaults
for software selectable interrupts and jumper settings. Specific customer
requirements shall be accommodated during the configuration and installation
process when made available to the onsite MSI technician or Project Coordinator,
as approved by SWBT, prior to installation. MSI shall load the software in a
separate directory and called up by the software command specified by the
software.
Physical Placement of Unit
The NIC will be installed in the desired PC where slots are available. An
appropriate cable for connecting the NIC to the ADSL modem will be supplied with
the unit to be installed. Additional cables or longer cables, if appropriate,
but not to exceed 20 feet in length, shall be provided by the installer
technician.
Connecting Device Testing
Level 1 Testing:
During configuration process:
1. Ensure PC and NIC powers on properly,
2. Ensure configuration is taken by device
3. Ensure NIC can be seen by software and is configurable
4. Ensure that the NIC can transfer data from the PC to the ADSL modem and
network.
<PAGE> 31
Installation Complete
NIC Installation Complete
1. NIC is configured per manufacturer specifications or ADSL specific required
configuration.
2. NIC is connected to ADSL modem.
3. NIC accepts software drivers and operates as per manufacturer specifications
to the ADSL modem.
4. PC is able to browse the desired web site successfully on the ADSL network.
Installer(s) shall leave behind a customer satisfaction survey for customer to
fill out mail to SWBT.
Attachment 3
Inside Wiring
(TW)
Residential
MSI shall provide, at its expense, new residential wiring from the ADSL Modem
connection to the SWBT network interface device (NID) at the residence.
The MSI shall perform the following: audit the (NID), determine which pair is in
use for the ADSL connection, install the ADSL splitter in the NID, or other
adjacent SWBT approved enclosure, per SWBT provided instructions, ensure
conditioning on the pairs, install new telco grade Cat 3 wire (24 gauge) up to
150 feet of telephone cable to the ADSL modem, provide termination in wall for
ADSL network connection via modular termination jack, place ADSL modem in
properly vented location, and connect the appropriate cables to the ADSL modem
and PC or Mac.
<PAGE> 32
If wiring is performed separately than at time of installation of ADSL modem or
NIC, Installer(s) shall leave behind a customer satisfaction survey for customer
to fill out and mail to SWBT.
Business Wiring
Wiring for ADSL in a business environment will follow SWBT/MSI standard business
practices. Before a Proposal is proposed, MSI shall perform a walk through for
estimating costs to accurately estimate the costs of the installation.
RESTRICTED-PROPRIETARY INFORMATION
Attachment 4
ADSL Installation Packs
Option 1
MSI will sent Installation Pack to customers who perform their own ADSL modem
installation ADSL Modem. ADSL Splitter (Outdoor environment ready, with outdoor
boots for wiring connections provided if required.) (A separate splitter
enclosure may also be included.) ISP browser software, as required. Windows '95,
Windows for Workgroups 3.11, Windows NT 3.51, Windows NT 4.0 or Mac client
software driver stack for the NIC being used. ADSL RJ11 OR modular termination
jack. ADSL network line interconnection cable to the modem, 6 foot length.
10BaseT cable, 6 foot length. `How to' instructions guide. Modem Manual, or
other manufacturer's instructions. Misc. screws and plastic parts. 100 foot of
telco interconnection cable. Box marked with PB and SWBT logo.
Option 2
MSI will sent Installation Pack to customers who perform their own ADSL modem
and NIC card installation
<PAGE> 33
ADSL Modem. ADSL Splitter (Outdoor environment ready, with outdoor boots for
wiring connections provided if required.) (A separate splitter enclosure may
also be included.) Ethernet NIC with software drivers. ISP browser software, as
required. Windows '95, Windows for Workgroups 3.11, Windows NT 3.51, Windows NT
4.0 or Mac client software driver stack for the NIC being used. ADSL RJ11 OR
RJ14 modular termination jack. ADSL network line interconnection cable to the
modem, 6 foot length. 10BaseT cable, 6 foot length. `How to' instructions guide.
Modem Manual, or other manufacturer's instructions. Misc. screws and plastic
parts. 100 foot of telco interconnection cable. Box marked with PB and SWBT
logo.
Option 3
MSI will sent Installation Pack to installers to perform the ADSL modem
installation for customers ADSL Modem. ADSL Splitter (Outdoor environment ready,
with outdoor boots for wiring connections provided if required.) (A separate
splitter enclosure may also be included.) ISP browser software, as required.
Windows '95, Windows for Workgroups 3.11, Windows NT 3.51, Windows NT 4.0 or Mac
client software driver stack for the NIC being used.ADSL RJ11 OR RJ14 modular
termination jack. ADSL network line interconnection cable to the modem, 6 foot
length. 10BaseT cable, 6 foot length. Modem Manual, or other manufacturer's
instructions, for customer.
Option 4
MSI will sent Installation Pack to installers who perform the ADSL modem and NIC
card installation for customers
ADSL Modem
ADSL Splitter (Outdoor environment ready, with outdoor boots for wiring
connections provided if required.) A separate splitter enclosure may also be
included.) Ethernet NIC with software drivers. ISP browser software, as
required.Windows'95, Windows for Workgroups 3.11, Windows NT 3.51, Windows NT
4.0 or Mac client software driver stack for the NIC being used.ADSL RJ11 or RJ14
modular termination jack.ADSL network line interconnection cable to the modem, 6
foot length.10BaseT cable, 6 foot length. Modem Manual, or other manufacturer's
instructions, for customer.
<PAGE> 34
Attachment 5
FULLFILLMENT CENTER
MSI's Fulfillment Center
1. The fulfillment Center will have all selected ADSL CPE and installation
components readily available for sale to SWBT customers (i.e. Self-Installers),
within 5 business days of receipt of an order from SWBT.
2. MSI Fulfillment Center will provide weekly reports to SWBT which track the
delivery and servicing of CPE.
3. MSI Fulfillment Center will deliver CPE directly to SWBT customers or
designated installation partners within intervals determined by SWBT; currently
SWBT's expectation is that 5 business days would be the maximum delivery time
anywhere in anywhere in SWBT territory, and delivery volumes may eventually be
greater than 75 ADSL kits per day.
4. MSI Fulfillment Center will support all warranties, exchange policies and
discount structures offered by the manufacturer (s) defined by SWBT.
5. MSI Fulfillment Center employees will provide manufacturer instructions
and/or any other provided collateral for CPE use to customers, as required.
6. MSI Fulfillment Center will provide a toll free number for customer support.
The number will be included in the CPE packaging.
7. MSI will be required to have and/or implement a program to perform
pre-employment screening, bonding, and safety training prior to having it's
employees perform services on behalf of SWBT.
Installation and Maintenance
8. MSI will have the necessary tools, equipment, and transportation to install
ADSL CPE components.
9. MSI will have a logistics system in place to efficiently receive and
distribute CPE to the installer responsible for the installation within the
intervals determined by SWBT.
10. MSI will have a process to adequately handle force to load issues and
scheduling for timely installation of CPE that customers have selected.
<PAGE> 35
11. MSI's Installation and Maintenance function will support all warranties, and
exchange policies offered by the manufacturer(s) selected by SWBT.
12. MSI will provide weekly reports to SWBT which track the receiving time from
the Fulfillment center, the interval from receipt of equipment, to the time the
customer order is completed; and tracking of orders not completed on the first
visit.
13. MSI will provide customers with instructions on how to use the ADSL service,
and demonstrate to the customer that the service is in working order before
leaving the premises.
14. MSI will hand the customer satisfaction survey to allow the customer to
provide feedback to SWBT concerning the quality of services provided.
15. MSI shall provide all CPE components with backup supplies to each
installer.MSI shall provide respond to CPE trouble calls within the interval
period determined by SWBT. (Currently expected to be 4 hours or less from
receipt of trouble call based on a rolling clock. A rolling clock is defined as
any hourly increment being rounded to the next hour i.e. a call received at 1:05
P.M. will be counted as received at 2:00 P.M.)
17. MSI shall provide trained personnel to successfully install multiple ADSL
configurations, and to be able to handle a multitude of installation variable.
18. MSI will be required to have and/or implement a program to perform pre-
employment screening, bonding, and safety training prior to having its employees
perform services on behalf of SWBT.
19. MSI will work with SWBT to implement a process to accommodate language
dependent customers.
20. At SWBT's request, the MSI installation and Maintenance force will make all
necessary arrangements to accommodate hearing impaired customers. This includes,
but is not limited to, the ability to interact with a Telecommunications Device
for the Deaf (TTY).
21. MSI is required to handle all SWBT geographic regions, by zip code
(preferred) or by County, for the full range of installation and maintenance
services.
<PAGE> 1
EXHIBIT 10.10
City of Austin
Estimated Value of Contract: $960,000
Scope of Contract: Exclusive Hewlett Packard reseller agreement. Renewable for
up to 3 additional years.
Agreement #C970185
City Wide Contract for Personal Computers
City of Austin, Texas and Micro-Media Solutions, Inc.
This agreement is made and entered into by and between the City of Austin,
Texas, a Texas Municipal corporation (hereinafter referred to as the City), and
Micro-Media Solutions Inc., a corporation of Texas (hereinafter referred to as
the Contractor), to provide for the purchase of Hewlett-Packard notebook
computers, personal computers, servers and warranty services. SECTION I
CITY WIDE CONTRACT FOR PERSONAL COMPUTERS
1.0 SCOPE OF WORK AND SPECIAL CONTRACT PROVISIONS The contractor shall sell
Hewlett-Packard notebook computers, personal computers and servers to include
warranty services for products purchased under the provisions of this agreement.
The contractor agrees to:
a. Provide a cost effective, flexible, competitive and comprehensive procurement
process for PCs, notebooks and servers.
b. Provide a choice to City Departments of different computers and
configurations from Hewlett-Packard.
c. Provide acceptable delivery times for stock and non-stock items and the
ability for Department staff to query on-hand stock availability in real time.
d. Provide acceptable levels of service warranties as well as a level of
standardization which will allow the City's technical support staff to maintain
the equipment after warranty period.
e. Provide reliable network compatibility to existing Local Area Networks (LANS)
and Wide Area Networks (WANS).
f. Provide Hewlett-Packard's Support PAC three (3) year on-site warranty for
parts and labor for all desktops and servers purchased under this agreement.
Warranty for Hewlett-Packard Omnibook notebooks purchased under this agreement
shall be Hewlett-Packard's Express Exchange warranty. Notebooks will be picked
up by Contractor service staff and replacement returned
<PAGE> 2
within twenty-four (24) hours.
g. Provide access to a 24 hour help desk with one (1) hour call-back, four (4)
hour response and twenty-four (24) hour repair timeframes.
2.0 TERMS OF AGREEMENT
2.1 This agreement shall be in effect for a period of twelve (12) months from
its date of execution with three (3) twelve (12) month options contingent upon
the approval of the City Manger or his representative and the Contractor.
2.2 Upon expiration of the initial term period of extension, the Contractor
agrees to hold over under the terms and conditions of this agreement for such a
period of time as is reasonably necessary to complete the project outlined
herein.
3.0 FEES AND PAYMENTS
3.1 Fees
The Contractor's fee and pricing for system purchased under this agreement shall
be based upon the Contractor's percentage discount from Hewlett-Packard's HP
First list price referenced in his proposal as follows: Servers: 16% below list.
Desktops: 15% below list. Notebooks: 14% below list. The percentage discount
stated herein shall remain constant throughout the term of the initial contract
period and subsequent extension periods. Contractor shall notify the City of any
revisions to the above referenced list and shall transmit to the City a revised
list within five (5) calendar days. This pricing structure includes
Hewlett-Packard's Support PAC three (3) year on-site warranty for parts and
labor for all systems purchased under this agreement.
3.2 Payments
The City shall make payments against invoices, within thirty (30) days upon
receipt, which are presented to City Departments referencing the contract number
and City PG reference number. Should the City receive partial or incorrect
shipments, payments shall be made only against accepted items and the invoice
shall be marked paid only for accepted items. A separate invoice shall be
submitted to
<PAGE> 3
the City upon fulfillment of partial or incorrect shipments.
4.0 CONTRACT VALUE
This agreement shall not exceed six hundred thousand dollars ($600,000).
5.0 ORDERING
Orders shall be placed by City Department FAX to the Contractor. Prior to the
placement of orders, Departments shall contact the Contractor for current
pricing and configuration information. This information can be obtained from the
Company's web site (www.msaustin.com/hp4coa/) or by phone request. The
Contractor will FAX back to the requesting Department a confirming quotation
with a reference number. Contractor will accept only those orders submitted on a
valid City of Austin supply/service release document (PG) containing, at a
minimum, the following information:
a. PG Number.
b. Agreement Number #C970185.
c. Contractor's quotation/reference number if applicable.
d. Signature of authorized department representative.
6.0 INQUIRIES
Department representatives will contact the following Contractor representatives
for the following:
Order Status: Patricia Fraga, 476-6925
Warranty Issues: Cindy Stapp, 476-6925
7.0 DELIVERY
Delivery times under this agreement shall be: seventy-two (72) hour delivery on
in- stock, in-warehouse items and two (2) week delivery on all other items. This
does not apply to back ordered items.
8.0 QUANTITIES
The City makes no guarantee to purchase any specific numbers of computer systems
under this agreement. Quantities purchased will be dependent upon each City
Department's requirements.
9.0 INSURANCE AND BONDING
Insurance Certificates and Performance Bonds must be
<PAGE> 4
submitted ten (10) days prior to start work. A new Insurance Certificate shall
be submitted to the City for all policies that are renewed during the term of
the contract.
SECTION II
CITY OF AUSTIN
STANDARD PURCHASE
TERMS AND CONDITIONS
Seller and Buyer agree as follows:
1. SELLER TO PACKAGE GOODS: Seller will package goods in accordance with good
commercial practice. Each shipping container shall be clearly and permanently
marked as follows:
(a) Seller's name and address,
(b) Consignee's name, address and purchase order or purchase release number and
the price agreement number if applicable,
(c) Container number and total number of containers, e.g. box 1 or 4 boxes, and
(d) the number of the container bearing the packing slip. Seller shall bear cost
of packaging unless otherwise provided. Goods shall be suitably packed to secure
lowest transportation costs and to conform with requirements of common carriers
and any applicable specifications. Buyer's count or weight shall be final and
conclusive on shipments not accompanied by packing lists.
2. SHIPMENT UNDER RESERVATION PROHIBITED: Seller is not authorized to ship the
goods under reservation and no tender of a bill of lading will operate as a
tender of goods.
3. TITLE & RISK OF LOSS: The title and risk of loss of the goods shall not pass
to the Buyer until the Buyer actually receives and takes possession of the goods
at the points of delivery.
4. DELIVERY TERMS AND TRANSPORTATION CHARGES. F.O.B. Destination unless delivery
terms are specified otherwise in bid. Buyer agrees to reimburse Seller for
transportation costs in the amount specified in Seller's bid, or actual costs,
whichever is lower, if the quoted delivery terms do not include transportation
costs, provided Buyer shall have the right to designate what method of
transportation shall be used to ship the goods.
5. NO REPLACEMENT OF DEFECTIVE TENDER. Every tender or delivery of goods must
fully comply with all provisions of this contract as to time of delivery,
quality, and the like. If a tender is made which does not fully conform, this
shall constitute a breach and Seller shall not have the right to substitute a
conforming tender provided, where the time for performance has not yet expired,
the Seller may
<PAGE> 5
seasonable notify Buyer of his intention to cure and may then make a conforming
tender within the contract time but not afterward.
6. PLACE OF DELIVERY.
The place of delivery shall be that set forth in the block of the purchase order
or purchase release entitled "receiving Agency". Any charge thereto shall be
affected by modification as provided for in Clause 20 "Modifications" hereof.
The terms of this agreement are "no arrival, no sale."
7. INVOICES & PAYMENT.
A. Seller shall submit separate invoices in duplicate on each purchase order or
purchase release after each delivery. Invoices shall indicate the purchase order
or purchase release number and the supply agreement number if applicable.
Invoices shall be itemized and transportation charges, if any, shall be listed
separately. A copy of the bill of lading and the freight waybill when applicable
should be attached to the invoice. Mail to: Named Receiving Department, P.O. Box
1088, Austin, TX 78767. Supplier should keep the Finance Department advised of
any changes in their remittance address.
B. The City's obligation is payable only and solely from funds available for the
purpose of this purchase. Lack of funds shall render this contract null and void
to the extent funds are not available and any delivered but unpaid for goods
will be returned to the Seller by Buyer.
8. GRATUITIES. The Buyer may, by written notice to the Seller, cancel this
contract without liability if it is determined by Buyer that gratuities, in the
form of entertainment, gifts, or otherwise, were offered or given by the Seller
or any agent or representative of the Seller to any officer or employee of the
City of Austin with a view toward securing a contract or securing favorable
treatment with respect to the awarding or amending or the making of nay
determinations provisions, Buyer shall be entitled, in additional to any other
rights and remedies, to recover or withhold the amount of the cost incurred by
the Seller in providing such gratuities.
9. SPECIAL TOOLS & TEST EQUIPMENT. If the price stated on the face hereof,
includes the cost of any special tooling or special test equipment fabricated or
required by the Seller for purpose of filling this order, such special tooling
equipment and any process sheets thereto shall be come the property of the Buyer
and to the extent feasible shall be identified by the Seller as such..
<PAGE> 6
10. WARRANTY-PRICE. a. The price to be paid by the Buyer shall be that contained
in Seller's current prices on orders by others for products of the kind and
specification covered by this agreement for similar quantities under similar or
like conditions and methods of purchase. In the event Seller breaches this
warranty, the prices of the items shall be reduced to the Seller's actual
expense.b. The Seller warrants that no person or selling agency has been
employed or retained to solicit or secure this contract upon an agreement or
understanding for commission, percentage, brokerage, or contingent fee,
excepting bona fide employees of bona fide established commercial or selling
agencies maintained by the Seller for the purpose of securing business. For
breach or violation of this warranty, the Buyer shall have the right in addition
to any other right or rights to cancel this contract without liability and to
deduct from the contract price, or otherwise recover, the full amount of such
commission, percentage, brokerage or contingent fee.
11. WARRANTY-PRODUCT. Seller shall not limit or exclude any implied warranties
any attempt to do so shall render this contract voidable at the option of the
Buyer. Seller warrants that the goods furnished will conform to the
specifications, drawings and descriptions listed in the bid invitation, and to
the sample(s) furnished by Seller, if any. In the event of a conflict between
the specifications, drawings, and descriptions, the specifications shall govern.
12. SAFETY WARRANTY. Seller warrants that the product sold to Buyer shall
conform to the standards promulgated by the U.S. Department of Labor under the
Occupational Safety and Health Act 1970. In the event the product does not
conform to OSHA standards, Buyer may return the product for correction or
replacement at the Seller's expense. In the event Seller fails to make the
appropriate correction within a reasonable time, correction made by Buyer will
be at Seller's expense.
13. NO WARRANTY BY BUYER AGAINST INFINGEMENTS. As a part of this contract for
sale, Seller agrees to ascertain whether goods manufactured in accordance with
the specifications attached to this agreement will give rise to the rightful
claim of any third person by way of infringement of the like. Buyer makes no
warranty that the production of goods according to the specification will not
give rise to such a claim, and in no event shall Buyer be liable to Seller for
indemnification in the event that Seller is sued on the grounds of infringement
or the like. If Seller is of the opinion that an
<PAGE> 7
infringement or the like will result, he will notify Buyer to this effect in
writing within two weeks after the signing of this agreement. If Buyer does not
receive notice and its subsequently held liable for the infringement or the
like, Seller will save Buyer harmless. If Seller in good faith ascertains that
production of the goods in accordance with the specifications will result in
infringement or the like, this contract shall be null and void, except that
Buyer will pay Seller the reasonable cost of his search as to infringements.
14. RIGHT OF INSPECTION. Buyer shall have the right to inspect goods at delivery
before accepting them.
15. CANCELLATION. Buyer shall have the right to cancel for default all or any
part of the undelivered portion of this order if Seller breaches any terms
hereof including warranties of Seller or if the Seller becomes insolvent or
commits acts of bankruptcy. Such right of cancellation is in addition to and not
in lieu of any other remedies which Buyer may have in Law or equity. The City
may cancel for convenience this Agreement upon 30 calendar days written notice
to the Contractor. Effective date of such notice shall begin three (3) days
after date of posting with the United States Postal Service with said notice
being sent to last known address of Contractor.
16. TERMINATION. The performance of work under this order may be terminated in
whole in part by the Buyer in accordance with the provision. Termination of work
hereunder shall be affected by the delivery order is terminated and the date
upon which such termination becomes effective. Such right of termination is in
addition to and not in lieu of rights of Buyer set forth in Clause 15 herein.
17. FORCE MAJEURE. If, by reason of Force Majeure, either party hereto shall be
rendered unable wholly or in part to carry out its obligations under this
Agreement, then such party shall give notice and full particulars of such Force
Majeure in writing to the other party within a reasonable time after occurrence
of the event or cause relied upon, and the obligation of the party giving such
notice, so far as it is affected by such Force Majeure, shall be suspended
during the continuance of the inability then claimed, except as hereinafter
provided, but for no longer period, and such party shall endeavor to remove or
overcome such inability with all reasonable dispatch.
<PAGE> 8
18. ASSIGNMENT-DELEGATION. No right or interest in this contract shall be
assigned or delegation of any obligation made by Seller without the written
permission of the Buyer. Any attempted assignment or delegation by Seller shall
be wholly void and totally ineffective for all purposes unless made in
conformity with this paragraph.
19. WAIVER. No claim or right arising out of a breach of this contract can be
discharged in whole or in part by a waiver or renunciation of the claim or right
unless the waiver or renunciation is supported by consideration and is in
writing signed by the aggrieved party.
20. MODIFICATION. This contract can be modified or rescinded only by a writing
signed by both of the parties or their duly authorized agents.
21. INTERPRETATION-PAROLE EVIDENCE. This writing is intended by the parties as a
final expression of their agreement and is intended also as a complete and
exclusive statement of the terms of their agreement. No course of prior dealing
between the parties and no usage of the trade shall be relevant to supplement or
explain any term used in this agreement. Acceptance or acquiescence in a course
of performance rendered under this agreement shall not be relevant to determine
the meaning of this agreement even though the accepting or acquiescing party has
knowledge of the performance and opportunity for objection. Whenever a term
defined by the Uniform Commercial Code is used in the agreement, the definition
contain in the Code is to control.
22. APPLICABLE LAW. This agreement shall be governed by Federal, State and local
laws.
23. ADVERTISING. Seller shall not advertise or publish, without Buyer's prior
consent, the fact that Buyer had entered into this contract, except to the
extent necessary to comply with proper requests for information from an
authorized representative of the federal, state or local government.
24. RIGHT OF ASSURANCE. Whenever one party to this contract in good faith has
reason to question the party's intent to perform, he may demand that the other
party give written assurance of his intent to perform. In the event that a
demand is made and no assurance is given within five (5) days, the demanding
party may treat this failure as an anticipatory repudiation of the contract.
<PAGE> 9
25. VENUE. Both parties agree that venue for any litigation arising from this
contract shall lie in Austin, Travis County, Texas.
26. PROHIBITION AGAINST PERSONAL INTEREST IN CONTRACTS. SEE SUPPLEMENTAL TERMS
AND CONDITIONS.
27. TRAVEL EXPENSES. All travel and lodging expenses in connection with this
contract for which reimbursement is claimed by the Contractor will be reviewed
against the Runzheimer Meal-Lodging Index by the City of Austin Budget Office.
All invoices must be accompanied by copies of receipts (hotel bills, airline
tickets, etc.). No reimbursement will be made for expenses not actually
incurred.
28. INDEMNITY. Contractor undertakes to indemnify the City from any and all
liability loss or damages the City may suffer as a result of claims, demands,
costs, or judgements against it arising out of the negligent performance of the
Contractor of the terms of this contract.
29. INSURANCE. SEE SUPPLEMENTAL TERMS AND CONDITIONS.
30. CONTRACTOR CERTIFICATION. The Contractor certifies that the fees or prices
submitted have been arrived at independently without consultation,
communication, or agreement for the purpose of restricting competition, as to
any matter relating to such fees with any other firm or with any competitor.
31. CALIMS. In the event that any claim, demand, suit, or other action is made
or brought by any person, firm, corporation, or other entity against the
Contractor, the Contractor shall give written notice thereof, to the City
(within two (2) working days after being notified) of such claim, demand, suit,
or action. Such notice shall state the date and hour of notification of any such
claim, demand, suit, or other action; the names and addresses of the person,
firm, corporation, other entity making such claim or that instituted or
threatened to institute any type of action or proceeding, the basis of such
claim, action, or proceeding; and the name of any person against whom such claim
is being made or threatened. Such written notice shall be delivered either
personally or by mail and shall be directed to the Legal Department and the
affected City Department, PO Box 1088, Austin, Texas 78767.
32. AUDITING REQUIREMENTS. It is agreed that Contractor shall maintain and make
available for inspection, audit and/or reproduction by any authorized
representative of the City or any other governmental agency, books, documents,
and other evidence pertinent to the costs and expenses of this contract. This
includes, to the extent such detail will properly reflect all cost: direct and
indirect costs of labor,
<PAGE> 10
material, equipment, supplies, and services and all other costs and expenses of
whatever nature for which reimbursement is claimed under provisions of this
contract.
33. NOTICES. All notices under this contract shall be registered mail. Effective
date of such notice shall begin three (3) days after the date of posting with
the United Postal Service with said notice being sent to last known address of
recipient.
CONTRACT ADMINISTRATOR. Unless otherwise specified, the Purchasing Office will
act as the contract point between the City and the Contractor and its designated
the Contract Administrator
35. RIGHTS TO BID, PROPOSAL AND CONTRACTUAL MATERIAL. All reports, charts,
schedules, or other appended documentation to any bid, content to basic bid, or
contracts and any responses, inquiries, correspondence, and related material
submitted by Contractor shall become property of the City upon receipt.
36. Delays. THE City reserves the right to delay scheduled due dates if it is to
the advantage of all concerned participating and at no extra cost to the
Contractor.
37. COPYRIGHTS AND RIGHTS IN DATA. Where activities supported by this project
produce original computer programs, writings, sound recordings, pictorial
reproduction, drawings, or other graphical representation and works of any
similar nature (the term computer program includes executable computer programs
and supporting data in any form), the City of Austin has the right to use,
duplicate, and disclose, in whole or in part, in any manner, for any purpose
whatsoever and have others do so. If the material is copyrightable, the
subgrantee may copyright such, and the City of Austin reserves a royalty-free,
non-exclusive, and irrevocable license to reproduce, publish and use such
materials, in whole or in part and to authorize others to do so. Seller assumes
no liability for the City of Austin's use of any material developed by Seller
for any purpose other than the purpose intended under this agreement.
38. PATENT/DISCOVERY. If any discovery or invention arises or is developed in
the course of or as a result of work performed under this project, the
Contractor shall refer the discovery or invention to the City. The Contractor
hereby agrees that determination of rights to inventions made under this project
shall be made by the City, who shall have sole and exclusive powers to determine
whether or not and where a patent applications or patent which may issue
thereon. The determination of the City shall be accepted as final. In addition,
the Contractor hereby agrees and otherwise recognizes that the City shall
acquire at least an irrevocable, non-exclusive, royalty-free license to practice
and have practiced throughout the world for City purposes, any invention made in
the course
<PAGE> 11
of or under this project. The Contractor shall include provisions appropriate to
effectuate the purpose of this condition in all contracts of employment,
consultant's agreements or contracts.
39. MAINTENANCE OF RECORD. All required records shall be maintained until an
audit is completed and all questions arising therefrom are resolved, or three
years after completion of a project, whichever occurs first; except that records
will be retained beyond the third year if an audit is in progress and/or the
findings of a completed audit have not been resolved satisfactorily.
40. PUBLICATIONS. All published materials and written reports submitted under
this project must be originally developed material unless otherwise specifically
provided in the contract document. When material, not originally developed, is
included in a report, it shall have the source identified. This identification
may be in the body of the report or by footnote. This provision is applicable
when the material is in verbatim or extensive paraphrase format.
41. PLACE AND CONDITIONS OF WORK. For the work to be perform principally at the
City of Austin offices, the City shall provide conference areas and other work
space for Contractor employees, and shall provide data entry assistance, and
special supplies, in reasonable quantities for use by Contractor personnel.
Contractor personnel shall adhere to the City's established procedure relating
to the use of facilities and equipment. The aforementioned project manager shall
be responsible to obtain information for the Contractor, and shall arrange all
appointments, meetings, and conferences between Contractor's staff and City
personnel, and shall make available to Contractor personnel those items as are
needed to acquaint Contractor's personnel with the City's established
procedures.
42. PRIME CONTRACTOR RESPONSIBILITIES The Contractor will be required to accept
responsibility for all services offered in his proposal. The City of Austin will
consider the selected Contractor's named representative to be the point of
contact with regard to contractual matters. The contractor will be provided
consultation time with management and operational personnel of each
participating City department.
43. RIGHT TO PROTEST. SEE SUPPLEMENTAL TERMS AND CONDITIONS.
44. FRAUD. Fraudulent statements on any response will result in disqualification
and may result in legal action.
<PAGE> 12
SECTION III
SUPPLEMENTAL PURCHASE TERMS AND CONDITIONS
A. The following changes are hereby made to the Standard Terms and Conditions:
1. Paragraph 26, entitled "Prohibition Against Personal Interest in Contracts"
is deleted in its entirety and replaced with the following paragraph:26.
PROHIBITION AGAINST PERSONAL INTEREST IN CONTRACTS: No officer or employee of
the City who is involved in the development, evaluation, or decision making
process of this solicitation shall have a financial interest, direct or
indirect, in this Contract. Any willful violation of this section shall
constitute impropriety in office, and any officer or employee guilty thereof
shall be subject to disciplinary action up to and including dismissal. Any
violation of this provision, with the knowledge, expressed or implied, of the
Seller shall render this Contract voidable by the City.
2. Paragraph 29, entitled "Insurance" is deleted in its entirety and replaced
with the following paragraph:
29. INSURANCE. (Applicable to Contracts for services that are performed at the
City facilities or for supplies that are delivered to the City facilities by
vendor personnel).
A. General Requirements.
1. Insurance is required on all City Contracts as stated above unless otherwise
specified.
2. The Seller shall at a minimum carry insurance in the types and amounts
indicated below for the duration of the Contract and during any warranty period.
Buyer shall be listed as an additional insured on all policies (except Workers
compensation).
3. The Seller's shall forward Certificates of Insurance to the Buyer as
verification of coverage and endorsements required below.
4. Seller shall not commence work until the required insurance is obtained and
has been reviewed by Buyer. Approval of insurance by Buyer shall not relieve or
decrease the liability of Seller hereunder and shall not be construed to be a
limitation of liability on the part of Seller.
5. Seller's insurance coverage shall be written by companies licensed to do
business in the State of Texas at the time the policies are issued and shall be
written by companies with A.M. Best ratings of B+VII or better.
6. All endorsements naming the Buyer as additional insured, waivers, and notices
of cancellation endorsements as well as the Certificate of Insurance shall
contain the Contract number and indicate: City of Austin, Purchasing Office,
P.O. Box 1088, Austin, Texas 78767.
7. The "other" insurance clause shall not apply to the Buyer where the Buyer is
an additional insured on any policy. It is intended that policies required in
the Contract, covering both Buyer and Seller, shall be considered primary
coverage as applicable.
8. If insurance policies are not written for amounts
<PAGE> 13
specified below, Seller shall carry Umbrella or Excess Liability Insurance for
any differences in amounts specified. If Excess Liability Insurance is provided,
it shall follow the form of the primary coverage.
9. Buyer shall be entitled, upon request and without expense, to receive
certified copies of policies and endorsements thereto and may make any
reasonable requests for deletion or revision or modification of particular
policy terms, conditions, limitations, or exclusions except where policy
provisions are established by law or regulations binding upon either of the
parties hereto or the underwriter on any such policies.
10. Buyer reserves the right to review the insurance requirements set forth
during the effective period of this Contract and to make reasonable adjustments
to insurance coverage, limits, and exclusions when deemed necessary and prudent
by Buyer based upon changes in statutory law, court decisions, the claims
history of the industry or financial condition of the insurance company as well
as Seller.
11. Seller shall not cause any insurance to be cancelled nor permit any
insurance to lapse during the term of the Contract or as required in the
Contract.
12. Seller shall be responsible for premiums, deductibles and self-insured
retentions, if any, stated in policies. All deductibles or self-insured
retentions shall be disclosed on the Certificate of Insurance.
13. Seller shall provide Buyer thirty (30) calendar days written notice of
erosion of the aggregate limits below occurrence limits for all applicable
coverages indicated in the Contract.
14. If Buyer owned property is being transported or stored off-site by Seller,
then the appropriate property policy will be endorsed for transit and storage in
an amount sufficient to protect Buyer's property.
B. Specific Requirements:
1. Worker's Compensation and Employer's Liability Insurance.Coverage Shall be
consistent with statutory benefits outlined in the Texas Worker's Compensation
Act (Art. 8308-1.01 at seq Tex. Rev. Civ. Stat.). Seller shall assure compliance
with this statute by submitting a standard certificate of coverage to Buyer for
every vendor providing services under the Contract as acceptable proof of
coverage. Worker's Compensation Insurance coverage written by the Texas Workers
Compensation Fund is acceptable to Buyer. Seller's policy shall apply to the
State of Texas and include:
a. A Waiver of Subrogation Endorsement in favor of Buyer.
b. Thirty (30) calendar days Notice of Cancellation in favor of Buyer.
c. Minimum policy limits for Employer's Liability Insurance coverage shall be
$100,000 bodily injury by disease each employee.
2. Commercial General Liability Insurance. The policy shall include:
a. Blanket contractual liability coverage for
<PAGE> 14
liability assumed under this Contract and all Contracts related to this project.
b. Completed Operations/Products Liability for the duration of the warranty
period.
c. Thirty (30) calendar days Notice of Cancellation in favor of Buyer.
d. A Waiver of Transfer of Recovery Against Others in favor of Buyer.
e. A minimum combined bodily injury and property damage limit of $600,000 per
occurrence.
3. Business Automobile Liability Insurance. Seller shall provide coverage for
all owned, non-owned and hired vehicles. The policy shall include:
a. A waiver of Subrogation Endorsement in favor of Buyer.
b. Thirty (30) calendar days Notice of Cancellation in favor of Buyer.
c. A minimum combined single limit of $600,000 per occurrence for bodily injury
and property damage. Alternate acceptable limits are $250,000 bodily injury per
person, $500,000 bodily injury per occurrence and at least $100,000 property
damage liability each accident.
3. Paragraph 43, entitled "Right to Protest" is deleted in its entirety and
replaced with the following paragraph:
43. PROTEST PROCEDURES. The purchasing Officer has the authority to settle or
resolve any claim of an alleged deficiency or protest. The procedure for
notifying the City of Austin of an alleged deficiency or filing a protest are
listed below. If you fail to comply with any of these requirements, the
Purchasing Officer may dismiss your complaint or protest.
A. Prior to bid opening or proposal closing date: If you are a prospective
bidder or proposer and you become aware of the facts regarding what you believe
is deficiency in the solicitation process before the bid is opened or before
closing date for receipt of proposals, you must notify the City in writing of
the alleged deficiency before those dates, giving the City an opportunity to
resolve the situation prior to the bid opening or proposal closing date.
B. After bid opening or proposal closing date: If you submit a bid or a
proposal to the City and you believe that there has been a deficiency in the
solicitation process or the award, you have the opportunity to protest the
solicitation process or the recommended award as follows:
1. You must file written notice of your intent to protest within three (3)
calendar days of the date that you know or should have known of the facts
relating to the protest. If you do not file a written notice of intent within
this time, you have waived all rights to protest the
<PAGE> 15
solicitation process or the award.
2. You must file your written protest within 14 (14) calendar days of the date
that you know or should have known of the facts relating to the protest unless
you know of the facts before the bid has opened or before closing date for
receipt of proposals. If you know of the facts before those dates, you must
notify the City as stated above.
3. You must submit your protest in writing and must include the following
information:
a. your name, address, telephone, and fax number;
b. the solicitation number and CIP number, if applicable;
c. a detailed statement of the factual grounds for the protest, including copies
of any relevant documents.
4. Your protest must be concise and presented logically and factually to help
the City's review.
5. When the City receives a timely written protest, the Purchasing Officer will
determine whether the grounds for your protest are sufficient. If the Purchasing
Officer decides that the grounds are sufficient, the Purchasing Officer will
schedule a protest hearing, usually within five (5) working days. If the
Purchasing Officer determines that your grounds are insufficient, the City will
notify you of that decision in writing.
6. The protest hearing is informal and is not subject to the Open Meetings Act.
The purpose of the hearing is to give you a chance to present your case, it is
not an adversarial proceeding. Those who may attend from the City are:
representatives from the department that requested the purchase, the Department
of Law, the Purchasing Office, and other appropriate City staff. You may bring a
representative or anyone else that will present information to support the
factual grounds for your protest with you to the hearing.
7. A decision will usually be made within fifteen (15) calendar days after the
hearing.
8. The City will send you a copy of the hearing decision after the appropriate
City staff had reviewed the decision.
9. When a protest is filed, the City usually will not make an award until a
decision on the protest is made. However, the City will not delay an award if
the City Manager or the Purchasing Officer determines that:
a. the City urgently requires the supplies or services to be purchased, or
b. failure to make an award promptly will unduly delay delivery or performance.
In those instances, the City will notify you and make every effort to resolve
your protest before the award.
B. The following Terms and Conditions are hereby incorporated and shall apply to
this procurement:
1. Performance
Failure of the City to insist in any one or more
<PAGE> 16
instances upon performance of any of the terms and conditions of this contract
shall not be construed as a waiver or relinquishment of the future performance
of any terms and conditions, but the Contractor's obligation with respect to
such performance shall continue in full force and effect.
2. Contingent Fees
The Contractor warrants that no person or selling agency has been employed or
retained to solicit or secure this contract upon an agreement or understanding
for commission, percentage, brokerage, or contingent fee expecting bona fide
Employees of bona fide established commercial or selling agencies maintained by
the Contractor for the purpose of securing business. For breach or violation of
this warranty, the City shall have the right, in addition to any other right or
rights to cancel this contract without liability and to deduct from the contract
price, or otherwise recover the full amount of such commission, percentage,
brokerage or contingent fee.3. Performance Bond Within fourteen (14) days after
notification of award of contract and prior to execution of contract, the
contractor shall submit a Performance Bond in the amount of 50% of the total
amount of the contract. The Performance Bond shall remain in effect throughout
the initial contract period. A new Performance Bond in the amount of 50% of the
total contract amount of any extension periods shall be provided for each
respective extension period.
SECTION IV
CITY WIDE CONTRACT FOR PERSONAL COMPUTERS
City of Austin, Texas and Micro-Media Solutions, Inc.
SIGNATURE PAGE
1.0 ENTIRE CONTRACT
The above constitutes the entire contract and is not subject to modification by
parol or course of dealing or practice and shall be modified only in accordance
with Section II, Paragraph 20.0, MODIFICATIONS.
BY THE SIGNATURES affixed below, the above contract, which includes the
Contractor's proposal, hereby incorporated by reference as part of the terms of
this document, is hereby accepted as to all the terms and conditions.
VENDOR/SUPPLIER: CITY OF AUSTIN:
BY: BY:
- ---------------------------- ------------------------------
Jose Chavez, President Eddie Futcher Clark
Micro-Media Solutions Deputy
501 Waller St. Purchasing
Officer
<PAGE> 17
Purchasing
Office
Austin, TX 78702
Finance and Administrative
Services Department
Date: 5/23/97 Date:
5/30/97
Finance and Administrative Services
Approve amendment #1 to increase the twelve month contract with the following
vendors: MICRO-MEDIA SOLUTIONS, INC., (MBE/MH), Austin. Texas; COMPUTER
SOLUTIONS, (WBE/FR), Austin, Texas; DELL COMPUTERS, Round Rock, Texas; INACOM
INFORMATION SYSTEMS, Austin, Texas for the purchase of notebook computers,
desktops computers, servers and three year on site warranty and service, in the
amount of $3,334,642, for a total amount to all contractors not to exceed
$6,334,642 with three twelve month extensions options in an amount not to exceed
$3,000,000 per extension, for total contract amounts not to exceed $15,334,642.
Funding in the amount of $2,594,160 was included in the 1997-98 approved Capital
budget of the Electric Utility Department. Funding for the extension options is
contingent upon available funding in future budgets. Best proposal of three. No
M/WBE Subcontracting opportunities identified. City of Austin
April 21, 1997
Jose Chavez, President
Micro-Media Solutions, Inc.
501 Waller St.
Austin, TX 78702
RE: Request for Proposal No. LB97300002
Personal Computer Procurement
Dear Mr. Chavez:
The City Of Austin would like to thank you for your response to the above
referenced solicitation and to advise you that the evaluation process is now
completed. We are recommending to City Council that awards be made to the
following proposers for the manufacturers indicated.
Dell Dell Computer Corporation,
Round Rock, TX
IBM Inacom Information Systems,
Austin, TX
Hewlett-Packard Micro-Media Solutions,
Austin, TX
<PAGE> 18
Compaq Computer Solutions,
San Antonio, TX
NEC Computer Solutions,
San Antonio, TX
This item is scheduled for action by Council on April 24, 1997. A composite
evaluation matrix is attached to this notification.
Thank you for your continued interest in doing business with the City of Austin.
Sincerely,
Loren Breland, Buyer
Purchasing Office
Financial and Administrative
Services Department
Ordering Process - Hewlett Packard
1. Departmental contact person will request quote from Micro-Media Solutions'
website. Standard configurations will be bundled.
2. Departmental contact person enters purchase order (PG transaction).
3. Reference Micro-Media Solutions' quotation number on PG.
4. Fax signed/dated PG to Micro-Media Solutions. Do not sent a hard copy.
5. Delivery date within two weeks, usually less time. Equipment will be
delivered to the shipping address.
Servicing Process
1. Service is available only on equipment purchased through this contract. To
determine if the equipment is under warranty through this contract, call Cindy
Stap at 512/476-6952, Ext. 122.
2. If the defective equipment is not under warranty, contact the City's help
desk at 512/499-2393.
<PAGE> 1
EXHIBIT 10.11
Texas Migrant Council
Estimated Value of Contract: $1,000,000
Scope of Contract: 4 state, 80 city Wide Area Network
via the Internet.
<PAGE> 1
EXHIBIT 10.12
Transactive
Estimated Value of Contract: $240,000
Scope of Contract: Installation and service of Parks &
Wildlife machines and Lone Star Card machines statewide.
<PAGE> 1
EXHIBIT 10.13
TEXAS DEPARTMENT of TRANSPORTATION
Estimated Value of Contract: $400.000
Scope of Contract: Provide computer Hardware,
Software and networking equipment.
<PAGE> 1
EXHIBIT 10.14
Texas Department of Health
Estimated Value of Contract: $200,000
Scope of Contract: Provider of computer Hardware and Software. Texas Department
of Health
No formal contracts
Competitive Bids
Sample Purchase order issued upon award
APPENDIX A
RJ 45 connector- UIP (must be capable of operating with Grade 5 UTP/ STP wiring)
DMA BUS Master All hardware has two year Next Business Day on site warranty
Recommended Products: Allied Telesis AT- I 500T Ethernet NIC Card
ITEM 15- Standard Workstation Wiring 256 UNITS
In projecting this price, vendor should use an average length of one hundred and
fifty ( 150) feet of plenum rated, Category 5 UTP cable per drop. All cable and
work must
<PAGE> 2
meet or exceed specifications outlined in TERMS AND CONDITIONS, Section 27 -
Ethernet Cable Installation
ITEM 16 - Backup/Archival System 34 UNITS
MINIMUM SPECIFICATIONS
External drive, self powered 2 GB Capacity without using Data Compression SCSI
controller SCSI cable to connect controller to drive Backup software (must be
Cheyenne .NLM based) All hardware and software must be 100% NOVELL NetWare 4.1
compatible All hardware has two year Next Business Day on site warranty
Recommended Products: EXABY1E FS4000 tape drive with ADAPTEC 1510 SCSI interface
card and Cheyenne. NLM based backup software.
ITEM 17 - SP LaserJet 4+ Network 39 UNITS
MINIMUM SPECIFICATIONS
HP LaserJet 4+ network laser printer with: 600 x 600 DPI resolution 45 Internal
scaleable fonts (10 Truetype Fonts) Ability to add Post Script (Adobe Type 1)
SIMM 8 pages per minute or greater HP JetDirect Ethernet Interface Card 8
Megabytes installed memory Two (2) additional toner cartridges All hardware has
two year Next Business Day on site warranty (excludes toner cartridges)
Recommended Products: HP LaserJet 4+ laser printer with 8 Mb installed memory,
an HP JetDirect Ethernet Interface Card and three (3) toner cartridges.
APPENDIX B
up to 90 percent (non-condensing)
Standalone, external modem with LED indicators for receive data, transmit data,
carrier detect Cable to connect modem to microcomputer included
CCI1T Group 3/EL4~ TR29 Class 2 fax capability All hardware has two year Next
Business Day on site warranty
Recommended Products: Multitech MultiModem II 1932ZDX and six foot serial cable.
<PAGE> 3
ITEM 20 - POWERCHUTE UPS Software
32 UNITS
ITEM 21 - NOVELL NetWare 4.1 (25 User)
32 UNITS
ITEM 22 - WordPerfect 5.1+ (or greater) for DOS
35 UNITS
ITEM 23 - REACHOUT Remote Communications Software
34 UNITS
Version 4.02 or greater
Host and Remote
ITEM 24 - LANTASTIC Network Operating System
1 UNIT
Version 6.0 or greater
APPENDIX C
Inventory Considerations
New equipment: The Vendor shall affix a "Property of Texas Department of Health
Tag" on all equipment purchased by the State Agency as appropriate within the
general operating constraints of the equipment. The State Agency will provide
these tags to the Vendor along with any pertinent instructions on their proper
use. The State Agency contact for TDH Property tags is: Petra Moher MAMD Texas
Department of Health 1100 West 49th Street Austin TX 787S6
Inventory update listing: An inventory listing of all new equipment being
supplied to the public heal h clinic by the Vendor shall be provided to the
State Agency Designate before payment to the Vendor can occur. This listing must
contain the following: TDH Tag Number (if applicable) Serial Number Description
Brand Name Model Number Location Delivered (Address of Location) Date of
Deployment Invoice Number Invoice Item Number
The State Agency Designate is:
Dick Young
ICES Project
Texas Department of Health
1100 West 49th Street
Austin TX 787S6
NOTE: If the Item being delivered is to be installed within another piece of TDH
property the Vendor will be expected to identify the TDH tag number of the
equipment containing the new item(s). For example, network interface cards
installed inside TDH workstations - the serial number
<PAGE> 4
of the NIC card must be linked with the TDH number of the existing workstation.
Movement of TDH property under warranty: During the course of the warranty
period it is anticipated that equipment may be replaced or removed from the
public health clinic site for repair. The vendor is expected to provide the
State Agency updated inventory information as it becomes available on a timely
basis to be agreed upon by mutual consent
The Vendor must provide a point of contact, local to the Austin area, for
questions pertaining to inventory issues.
Texas Department of Health
February 7, 1995
Re: Request For Pricing (RFP) Contract Catalog Procedures Integrated Client
Encounter System Procurement Reqn. No.: 501-5-11547 Return Deadline: 1:00 PM,
January 11, 1995
Dear Mr. Chavez,
The Texas Department of Health (70H) Materials Acquisition and Management
Division (MAMD) has developed this Request For Pricing (RFP) for the referenced
procurement. The enclosed specifications, terms and conditions are provided in
order to allow submittal of a more complete, accurate response to TDH-MAMD's
requirements for the expansion of a project being undertaken by The
Associateship of Information Resources Management (IRM).
The detailed description of this project can be summarized as follows. First,
the IRM will be automating local health clinics in four counties with the
Integrated Client Encounter System (ICES) software. Second, the IRM will install
approximately 33 public health clinic networks with Ethernet topology (see
Appendix B for clinic locations). Third, the public health clinic networks will
be installed with LAN Network Operating Systems and equipment. Fourth, the IRM
will purchase a two year on site maintenance contract for specified equipment
(see Appendix A, Item Descriptions, for specifications). Fifth, the entire
project may be repeated at approximately thirty (30) additional sites in the
Texas Rio Grande Valley area. A supplemental Itemized Price Evaluation Sheet and
revised Appendix detailing the equipment each site is to receive will be
provided for the additional sites. The specifications, negotiated points, terms
and conditions resulting from the award of the initial project will be applied
for the additional sites.
Given the magnitude of this project and the implementation
<PAGE> 5
and support issues it creates, the Department has determined it advantageous to
attempt to find one Qualified Information Services Vendor capable of handling
this project. The detailed specifications and general considerations are
outlined in the accompanying documents. TDH may issue addenda based on any
questions you may have. The primary contact for technical questions about this
Request for Pricing is Mr. Roger Haney at (512) 836- 0828 or fax (512) 836-1540.
Texas Department of Health
David R. Smith, M.D.
1100 West 49th Street
Carol S. Daniels
Commissioner
Austin, Texas, 78756-3199
Deputy Commissioner for Programs
(512) 458-7111
Roy L. Hogan
Deputy Commissioner for Administration
February 8, 1995
Re: ICES Project Catalog Contract Purchase, Requisition
Number 501-5-11547
Dear Mr. Chavez,
The Texas Department of Health ICES Project will accept the following equipment
at this time
(RFP), Requisition Number 501-5-11547:
ITEM 1: ALR Evolution V STe 90 File server with two (2) Adaptec AHA2940 PCI-
SCSI controller cards
ITEM 2: ALR Evolution V STe 90 File server with two (2) Adaptec AHA2940 PCI-
SCSI controller cards
ITEM 3: Two (2) Fujitsu Model M2694 SCSI Hard Drives in two (2) CRU four bay
drive enclosures
ITEM 4: Four (4) Fujitsu Model M2694 SCSI Hard Drives in
<PAGE> 6
two (2) CRU four bay drive enclosures
ITEM 7: ALR Evolution X workstations
ITEM 8: ALR Evolution X workstations
ITEM 11: Allied Telesen CenterCOM 3612T-A9 Concentrator
ITEM 12: Allied Telesen AT1700+ Ethernet 10BaseT Network Interface Card
ITEM 13: Allied Telesen AT1500+ Ethernet 10BaseT Network Interface Card
ITEM 15: Exabyte FS4000 Tape drive with AHA1510 SCSI interface card and Cheyenne
.NLM software
ITEM 16: HP Laserjet 4+ printer
ITEM 17: APC Smart-UPS 1250
ITEM 18: Multitech MultiModem II 1932ZDX with six (6) foot serial cable
Any items not listed above are covered under Appendix A of the Request for
Pricing (RFP) without need for additional clarification.
Sincerely,
- --------------------------------
Dick Young
Program Specialist, ICES Project
HISTORICALLY UNDERUTILIZED BUSINESS
Good Faith Effort compliance:
Per Texas Civil Statutes Art. 60 lb 3 10 and S.36, State agencies are required
to make a good faith effort to assist HUBs in receiving at least 30% of the
total value of ail contract awards issued by the State. " Historically
Underutilized Business" is defined in Texas Civil Statutes Art. 601b 1.02(3).
"Total value of all contract awards" includes the value of subcontracts.
Therefore, any business. (Prime Contractor) that contracts with the State is
expected to make a good faith effort to assist HUBs in receiving at least 30% of
the total value of subcontracts that the Prime Contractor awards on State
contracts. A subcontractor is an entity that enters into a contract with a Prime
Contractor to provide a portion of the goods or services for which the Prime
Contractor is responsible under the terms of its contract with the State. To
make such a good faith effort, the Prime Contractor should comply with the
Governor's Executive Order criteria set forth below
1. To the extent consistent with prudent industry practice, divide the contract
work into the smallest feasible portions.
<PAGE> 7
2. Notify HURs of the work that the Prime Contractor intends to subcontract. The
notice shall include a copy of the specifications, adequate information about
the plans, scope of work, and requirements of the work: to be subcontracted, in
order to allow all interested parties the opportunity to participate
effectively. The Prime Contractor should provide written notice with sufficient
time to allow all interested parties the opportunity to participate effectively.
The Prime Contractor should send notice to at least 5 businesses in the current
General Services Commission (GSC) HUB directory that perform the type of work
required. If the GSC HUB directory does not have at least 5 businesses, then the
Prime Contractor should send the required notice to HUBs on other government
agency listings or other organizations' listings that provide assistance in
identifying minority and women-owned enterprises. If a Prime Contractor uses
sources other than the GSC HUB directory, subcontractors selected will have to
be certified by GSC or provide proof of certification from the Federal
Government SBA 8a Program defined in Federal Regulation IS USC 637(a) and
636(j).
3. In certain instances the Prime Contractor will be requested to explain why a
HIJB was not hired for specific work This shall include: a) instances where the
Prime Contractor selects a subcontractor through means other than accepting
quotes; and b.) instances where, after accepting quotes, the low responsive
vendor was a HUB and was not the awarded subcontractor.
4. Maintain records of all the foregoing activity and the report quarterly to
the Texas Department of Health (TDH) in the format required by TDH.
S. Contracting Parties that lease space to the State should follow the foregoing
steps with regard to all goods and services provided for the leased space after
commencement date of the lease.
Historically Underutilized Business (HUB)
TDH Guidelines for Achieving (HUB-GUIDE)
GOOD FAITH EFFORT
In making a determination that a good faith effort has been made (for contracts
over $ 100,000), the check list below shall be completed, with documentation
attached explaining
<PAGE> 8
in what ways the Prime Contractor has made a Good Faith Effort according to each
minimum requirement. This list is not exclusive or exhaustive and in an
appropriate case Texas Department of Health (TDH) shall consider other relevant
factors or tapes of efforts. The TDH shall consider not only the different kinds
of efforts the Prime Contractor has made, but also the quantity and intensity of
those efforts. The Prime Contractor is requested to complete this form.
(1) Did the Prime Contractor provide notices to at least five HUBs with the
skills and ability to perform the type of work required?
(2) Did the Prime Contractor advertise in general circulation trade association
and/or minority/woman focus media concerning subcontracting opportunities?
(3) Did the Prime Contractor provide written notice to a reasonable number of
HUBs allowing sufficient time for HUBs to participate effectively?
(4) Did the Prime Contractor divide the contract work into the smallest feasible
portions in order to increase HIJB participation?
(5) Did the Prime Contractor document reasons for rejection? (5a) Was a written
rejection notice including the reason for rejection sent to the rejected HUB?
(5b) Was a meeting held between the Prime Contractor and the price rejected HUB
to discuss the rejection?
(6) Did the Prime Contractor follow up initial solicitations of Interest by
continuing certified HUBs to determine with certainty whether the HUBs were
interested?
(7) Did the Prime Contractor provide HUBs with adequate information about
bonding, insurance, the plans, specifications, scope of work and requirements of
the contract?
(8) Did the Prime Contractor negotiate in good faith with interested HUBs, not
rejecting HUBs who qualify as lowest and responsive vendors?
(9) Did the Prime Contractor effectively use the services of available minority
and women; community organizations contractor groups; local, State, and federal
business assistance offices, and other organizations that provide assistance in
the identification of HUBs?
<PAGE> 9
Micro-Media Solutions, Inc.
List of References
1. Sema
Mike Candelas, President
701 8razos, Suite 300
Austin, Texas 78701
512-320-5701
54 Nodes
2. IMS Media
Jay Juba, Vice-President
1120 Capitol of Texas Highway South
Building 3, Suite 300
Austin, Texas 78746
512-329-7264
51 Nodes
3. CompuAdd Corp
Thomas Hardt
12303 Technology Blvd
Austin, Texas 78727
512-3454585 (BCM, Thomas Hardt)
150 Node Network
4. HQ Air Intelligence Agency
Communications- Computer Engineering and Installation Services
Ms. Doris Brown
(210) 977-2821
(F41621 49-1D-7003)
(Teaming Partner- Optech)
240 Nodes
5. Kelly AFB
Systems Engineering Support
Ms. Brenda Dillard
(210) 536-5292
(F41624-93-CZ024)
(Teaming Partner- Optech)
60 Nodes
13. Canutillo Health Center
300 Farm Road
El Paso, Texas 79853 8 Node Network
14. Northeast Clinic
5587 Transmountain
El Paso, Texas 79924
12 Node Network
15. San Juan Clinic
6292 Trowbridge Street
El Paso, Texas 79905
5 Node Network
<PAGE> 10
16. Tigua Health Center
7869 San Jose Road
El Paso, Texas 79915
8 Node Network
17. Williamson County Health Clinic
100 West 3rd Street
Georgetown, Texas
17 Node Network
18. La Porte Health Center
911 South 8th Street
La Porte, Texas 77571
9 Node Network
19. Antoine Health Center
7020 Antoine
Houston, Texas 77088
15 Node Network
20. Humble Health Center
1730 Humble Place
Humble, Texas 77338
17 Node Network
21. Westside Clinic
5195 Mace Street
El Paso Texas 79932
5 Node Network
Texas Department of Health
The Texas Department of Health (TDH) Materials Acquisition and Management (MAMD)
has requested information, pricing and clarifications for the Integrated Client
Encounter System (ICES) hardware, software and installation procurement. The
enclosed Request For Pricing (RFP) # 501-5-11547, specifications, terms and
conditions (T & C's) dated February 7, 1995, constitute the specifications, T &
C's under which this contract shall be performed. The prices incorporated herein
are in accordance with the fore mentioned documents. By signature hereof, Micro
Media Solutions (hereafter referred to as Contractor) certifies full obligation
to comply with all conditions attached and stipulated in the aforementioned
documents (except as superseded by the attached T&Cs). The State will not be
bound by any oral statement or representation, contrary to the written
specifications or conditions attached and stipulated in the aforementioned
documents (except as superseded by the attached T&C's).
<PAGE> 1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
BETWEEN
MICRO-MEDIA SOLUTIONS, INC.
AND
JOSE CHAVEZ
THIS AGREEMENT dated June 15, 1997 (hereinafter called the ("Agreement") by and
among MICRO-MEDIA SOLUTIONS, INC., a Utah corporation and Jose Chavez (the
"Executive")
WITNESSED THAT:
WHEREAS, Jose Chavez has this date acquired 7,125,000 shares of the capital
stock of MSI and
WHEREAS, the Executive founded Micro-Media Solutions, Inc. of Texas (MSI) and
has served as an executive officer of MSI for the past five (5) years and is
familiar with the operations and business of MSI, and has over 20 years of
related experience.
WHEREAS, MSI desires to secure the services of the Executive in the continued
conduct of the operations and business of MSI, and
WHEREAS, the Executive desires to be employed in the continued conduct of the
operations and businesses of MSI and
WHEREAS, MSI is a public traded company based in Austin, Texas and a wholly
owned subsidiary of MSI Utah. The corporation was formed to provide computer
hardware, software programming, system support, maintenance, media duplication,
kitting, and related services to the public and private sectors. MSI is a
minority owned business that is HUB certified to du business with state and
corporate clients. The principals in the firm have significant computer related
experience and it is imperative that the MBE/HUB status be maintained as long as
possible.
At the date of the public company transaction the Hispanic makeup working in the
company controlled 71% of the company ownership with the Executive owning 66%.
Now, therefore the Executive will receive a matching stock % of new stock. To
remain in control of MSI (51.5%) until MSI's graduation from HUB status.
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE 1
EMPLOYMENT
Section 1.01. Employment. MSI shall employ the Executive, and the Executive
shall serve MSI, in an executive capacity in accordance with the terms and
conditions hereof.
Section 1.02. Employment Period. The Executive shall be employed from June 23,
1997 hereof through March 31, 2001 inclusive, subject, however, to prior
termination as hereinafter provided in Article II hereof (such period of
employment being hereinafter called the "Employment Period"). In addition, the
employment period will cover two (2) one year employment extension options to be
mutually agreed between:
Section 1.03. Duties. Commencing with the beginning of the Employment Period,
the Executive shall perform the duties of President/CEO of MSI, as such duties
are set forth in the By-Laws of MSI subject always to the direction and control
of the Board of Directors of MSI Texas and Utah. The Executive shall devote his
entire working time and attention to and will use his best energies and
abilities in the performance of such duties to the reasonable satisfaction of
MSI. Such duties shall be performed at 501 Waller Street, Austin, Texas subject
to travel to such place or places as the interest, needs, business, or
opportunities of MSI shall require.
Section 1.04 Conflicting Activities. During the Employment Period the Executive
shall not engage in any other business activity which might interfere with the
devotion of his entire working time to serving MSI and performing his assigned
duties.
Section 1.06. Compensation. During the Employment Period, the Executive shall
receive as compensation for his services an annual salary of not less than
$100,000.00 per annum. MSI shall reimburse the Executive for all reasonable
out-of pocket expenses incurred in the lawful ordinary course of his employment
which are properly reported to MSI in accordance with its accounting procedures.
At the end of fiscal year, the Executive will be granted a five year option to
purchase up to 100,000 shares of common stock at a price of $1.50 per share
exerciseable for a period of 5 years commencing July 1 of each year.
Section 1.07. Employee Benefits. During the Employment
<PAGE> 3
Period, the Executive shall be eligible to participate in all of MSI employee
welfare, benefit and vacation plans and arrangements in accordance with their
terms as in effect from time to time which are applicable to employees of MSI
similarly situated. The Executive will be required to take at least 3 weeks of
vacation each calendar year.
Section 1.08. Bonus. During the Employment Period, the Executive shall have the
right to a Bonus, at the discretion of the Board of Directors. The Bonus will
consist of cash and common stock and will be based upon performance, revenues,
and common stock value. The base for the calculation of the bonus at the end of
each fiscal year will be as follows:
Revenue $10,000,000
Common Stock Value $3.00
For each ten percent increase in revenues from year to year (base year revenue
1998), the Executive will be issued 100,000 shares of common stock at 50% the
then current market value, not to exceed $1.70 per share.
For each $1.00 increase in the common stock value above the base common stock
value (highest previous level), calculated on the last 90 day average, the
Executive will be paid a cash bonus of $100,000 due no later than June 30, of
each fiscal year.
Section 1.09. Automobile. During the Employment Period the Executive shall be
provided an automobile allowance up to $650.00 per month for an automobile to be
used in business use.
ARTICLE II
TERMINATION
Section 2.01. Death and Incapacity. If the Executive dies during the Employment
Period, his employment hereunder shall immediately terminate. If during the
Employment Period the Executive shall become unable to continue to perform his
duties hereunder because of physical or mental incapacity or disability of a
nature reasonably expected to continue for more than three years, then MSI may
terminate his employment hereunder by delivery of written notice to the
Executive, which notice shall specify the date of termination, which date shall
be not sooner than 30 days after the date of such notice. Any such physical or
mental incapacity or disability shall be conclusively established by a
certificate to such effect by a medical doctor, as selected by MSI. Executive
shall make himself reasonably available for an examination by such medical
doctor; provided that if Executive is not so available, then MSI's reasonable
determination of such a physical or mental incapacity or disability shall be
conclusive.
<PAGE> 4
Section 2.02. For Cause. If during the Employment Period the Executive shall in
a material respect (a) continue to fail to perform his duties hereunder or under
law or (b) continue to violate any agreement, covenant, term or condition
hereunder after delivery of written notice from MSI of such failure or violation
providing 30 days to correct such failure or violation (if correctable), or if
during the Employment Period, MSI acting in good faith and upon reasonable
grounds, determines that the Executive has engaged in gross misconduct which has
severely injured the business or reputation of MSI or otherwise materially and
adversely affected either of its interests or which might so injure either of
its business or reputation or so affect either of its interests if the Executive
were retained then, and in any such event MSI may, by delivery of written notice
to the Executive, terminate his employment hereunder at any date specified in
such notice. Section 2.03. Effect. Upon termination hereunder together with the
payment of any salary accrued under Section 1.06 hereof, Executive's employment
and all obligations of MSI under Sections 1.01, 1.06, 1.07 and 1.08 hereof shall
forthwith terminate. The obligations of the Executive and MSI set forth in
Article III hereof shall continue notwithstanding the termination of the
Executive's employment pursuant to Article II hereof.
ARTICLE III
THE EXECUTIVE'S COVENANTS
Section 3.01. Confidentiality. Recognizing (1) that unpublished patentable or
unpatentable data and technical or nontechnical information in any way related
to the business of MSI or its affiliates (the term "affiliates" as used in this
Article III and Section 4.03 hereof, shall include all parties controlling,
controlled by or under common control with MSI, such as, but not limited to:
designs, procedures, processes, formulae, trademarks, patents, copyrights,
software, projects, project costs, financial or pricing data, marketing plans,
customer and supplier lists or business projections (including but not limited
to such of the foregoing used in the business of MSI constitute valuable trade
secrets or confidential information (such data and information being hereinafter
collectively called "Confidential Information") and (2) that such Confidential
Information is the property of MSI or its affiliates, in consideration of the
Executive's access to and use of Confidential Information, the Executive
covenants to hold such Confidential Information in trust for MSI and its
affiliates, and covenants not disclose or use the same other than in the
business of MSI. Without limitation on the foregoing the Executive shall:
(a) not directly or indirectly, disclose or make available to anyone or use
outside of his employment with MSI any Confidential Information
<PAGE> 5
without the prior written consent of MSI.
(b) safeguard all Confidential Information in his possession at all times so
that access to it is not allowed to any unauthorized person, corporation or
entity (including unauthorized employees and agents of MSI or its affiliates):
(c) promptly disclose to MSI and its affiliates all matters coming to his
attention during his employment pertaining to the business or interests of MSI
and its affiliates and all ideas which he may conceive and all inventions,
improvements or discoveries which he may make and which may relate to the
business or interests of MSI and its affiliates, whether conceived or made
during working hours or otherwise and whether alone or jointly with others, and
disclaim all rights, title and interest in and to all such ideas, inventions,
improvements or discoveries recognizing them to be the sole property of MSI and
its affiliates; and
(d) deliver to MSI and its affiliates, promptly upon termination of his
employment, papers, photographs, photo reproductions, computer tapes, tape
recordings and other documents and materials containing any Confidential
Information, and all personal notes, reports, plans, drawings and copies,
extracts and reproductions thereof, relating to the business of MSI and its
affiliates in his possession or control.
Section 3.02. Noncompetition. For the period commencing with the beginning of
the Employment Period and ending on the earlier to occur of (i) December 31,2000
or (ii) one year from the date of termination under Article II hereof
(hereinafter called the "Noncompetition Period"), the Executive shall not,
directly or indirectly, whether as principal or as agent, officer, director,
employee, consultant, or otherwise, alone or in association with any person,
corporation or other entity, own, carry on, be engaged, be concerned, take part
in, use or permit his name to be used, render services to, share in the earnings
of, or invest in the stock, bonds, or other securities of any person corporation
or other entity engaged in a business competitive to any business carried on by
MSI on the date hereof or at any time within the Employment Period in any
location serviced by MSI. Notwithstanding the preceding sentence the Executive
may invest in stock, bonds, or other securities of any corporation engaged in a
business similar to MSI (hereinafter called a "Similar Business"), without
otherwise participating in a Similar Business, if (1) such stock, bonds, or
other securities are listed on any national or regional securities exchange or
have been registered under Section 12 (g) of the Securities Exchange Act of
1934, (2) his investment does not exceed, in the case of any class of the
capital stock of any one issuer, 1% of the issued and outstanding shares, or, in
the case of other securities, 1% of the aggregate principal amount
<PAGE> 6
thereof issued and outstanding, and (3) such investment would not prevent,
directly or indirectly, the transaction of business by MSI with any prospective
customer or any state, district, territory, or possession of the United States,
or any governmental subdivision, agency or instrumentality thereof, by virtue of
any statute, law, regulation, or administrative practice.
Section 3.03. Goodwill. During the Noncompetition Period the Executive shall not
(1) take away or interfere or attempt to interfere, with any customer, trade,
business or patronage of MSI or its affiliates, or (2) interfere, or attempt to
interfere, with any officer, employee, representative or agent of MSI or its
affiliates, or induce, or attempt to induce, any of them to leave the employ of
MSI or its affiliates shareholders, whether or not initiated prior to the date
of termination of his employment.
Section 3.04. Extension of Noncompetition Period. The Noncompetition Period
referred to in Section 3.02 hereof shall be extended by the length of time
during which the Executive shall have admitted or been found by the court of
competent jurisdiction to have been in breach of the terms of the such Section.
Section 3.05. Covenants of the Essence. The covenant of the Executive set forth
in this Article III are of the essence of this Agreement; they shall be
construed as independent of any other provision in this Agreement, and the
existence of any claim cause of action of the Executive against MSI or any
affiliate whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by MSI of these covenants.
Section 3.06. Enforceability of Article III Covenants. The Executive understands
the nature of, and the burdens imposed by, the covenants contained in this
Article III and has consulted with his attorney in respect thereof. The
Executive agrees that such covenants are reasonable, enforceable and proper in
duration, scope and effect.
Section 3.07. Compensation for Article III Covenants. In consideration of the
Executive's covenants contained in this Article III, MSI shall pay to the
Executive on the date hereof, and the Executive by executing the Agreement
acknowledges receipt of, Five Hundred Dollars ($500.00).
ARTICLE IV
MISCELLANEOUS TERMS
Section 4.01. Integration and Modification. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, oral or
<PAGE> 7
written, between the parties hereto with respect to the subject matter hereof..
This Agreement may not be waived, changed, amended, modified or discharged
except by a written instrument signed by the party against whom enforcement of
any such waiver, change, amendment, modification or discharge is asserted.
Section 4.02. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
Section 4.03. Enforcement. The relationship contemplated by this Agreement is
unique and personal, and the covenants of the Executive made in Article III
hereof are integral to that relationship. Without limiting the remedies
available to MSI or its affiliates, the Executive acknowledges that damages at
law will be an insufficient remedy to MSI or its affiliates in the event that
the Executive violates the terms of such covenants and that MSI or its
affiliates may apply for and have injunctive relief in a court of competent
jurisdiction to restrain the breach or threatened breach of, or otherwise to
specifically enforce, such covenants. Such specific enforcement shall be
available to MSI or its affiliates in lieu of, or prior to or pending
determination in, any other proceeding.
Section 4.04. Waiver. A waiver by MSI, or the Executive of a breach of, or the
failure to enforce, any provision of this Agreement shall not operate or be
construed as a waiver of excuse of any subsequent breach.
Section 4.05. Severability. The invalidity of all or any part of any section of
this Agreement shall not render invalid the remainder of this Agreement or the
remainder of such section. If any provision of this Agreement is so broad as to
be unenforceable, it is expressly intended by the parties hereto that such
provision shall be interpreted to be as broad as is enforceable.
Section 4.06. Assignment. This Agreement, and the rights and obligations
hereunder, shall inure to the benefit of, and shall be binding upon, the parties
hereto and their respective successors, assigns and affiliates, except that
neither party hereto shall assign the rights or obligations hereunder without
the prior written consent of the other party. Notwithstanding the proceeding
sentence, subject to Section 2.03 hereof MSI may assign its rights and
obligations hereunder to any partnership or other business organization with
which MSI may merge or consolidate or to which it may transfer substantially all
its assets or with which it may otherwise enter into an acquisition or
reorganization transaction, and MSI may assign its rights and obligations
hereunder to any corporation which is a general or limited partner of MSI or is
a direct or indirect subsidiary of any such partner or any other related entity.
No such assignment shall relieve MSI of its obligations hereunder.
<PAGE> 8
Section 4.07. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to be received when delivered to the addressee or
when deposited in the mail, postage prepaid, or in the case of telegraphic
notice, when delivered to the telegraph office, charges prepaid, and addressed
as follows: '
(a) if to the Executive
Jose Chavez
11035 Crossland
Austin, Texas 78726
(b) Micro-Media Solutions, Inc.
501 Waller Street
Austin, Texas 78702
or to such other address as the addressee party may have previously furnished to
the other party.
Section 4.08. Counterparts, Section Headings. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument. The section
headings of this Agreement are for convenience of reference only and shall not
affect the construction or interpretation of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.
Micro-Media Solutions, Inc. Jose Chavez
/s/ Mitchell Kettrick /s/ Jose Chavez
- ----------------------------------- --------------------------------
Mitchell Kettrick, Vice President "Executive"
/s/ George Villalva
- -----------------------------------
George Villalva, Vice President
<PAGE> 1
EXHIBIT 10.16
EMPLOYMENT AGREEMENT
BETWEEN
MICRO-MEDIA SOLUTIONS, INC.
AND
MITCHELL KETTRICK
THIS AGREEMENT dated June 15, 1997 (hereinafter called the ("Agreement") by and
among MICRO-MEDIA SOLUTIONS, INC., a Utah corporation (MSI) and Mitchell
Kettrick (the "Executive")
WITNESSED THAT:
WHEREAS, Mitchell Kettrick has this date acquired shares of the capital stock of
MSI and
WHEREAS, the Executive founded MSI and has served as an executive officer of MSI
for the past five (5) years and is familiar with the operations and business of
MSI, and has over 20 years of related experience.
WHEREAS, MSI desires to secure the services of the Executive in the continued
conduct of the operations and business of MSI, and
WHEREAS, the Executive desires to be employed in the continued conduct of the
operations and businesses of MSI and
WHEREAS, MSI is a public based in Austin, Texas public technology corporation
formed to provide computer hardware, software programming, system support,
maintenance, media duplication, kitting, and related services to the public and
private sectors. MSI is a minority owned business that is HUB certified to du
business with state and corporate clients. The principals in the firm have
significant computer related experience and it is imperative that the MBE/HUB
status be maintained as long as possible.
At the date of the public company transaction the Hispanic American's working in
the company controlled 71% of the company ownership with the executive owning
66%.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
<PAGE> 2
ARTICLE 1
EMPLOYMENT
Section 1.01. Employment. MSI shall employ the Executive, and the Executive
shall serve MSI, in an executive capacity in accordance with the terms and
conditions hereof.
Section 1.02. Employment Period. The Executive shall be employed from June 15,
1997 hereof through March 31, 2001, inclusive, subject, however, to prior
termination as hereinafter provided in Article II hereof (such period of
employment being hereinafter called the "Employment Period"). In addition, the
employment period will cover 2 one year options to be mutually agreed between:
Section 1.03. Duties. Commencing with the beginning of the Employment Period,
the Executive shall perform the duties of MSI, as such duties are set forth in
the By-Laws of MSI subject always to the direction and control of the Board of
Directors of MSI. The Executive shall devote his entire working time and
attention to and will use his best energies and abilities in the performance of
such duties to the reasonable satisfaction of MSI. Such duties shall be
performed at 501 Waller Street, Austin, Texas subject to travel to such place or
places as the interest, needs, business, or opportunities of MSI shall require.
Section 1.04 Conflicting Activities. During the Employment Period the Executive
shall not engage in any other business activity which might interfere with the
devotion of his entire working time to serving MSI and performing his assigned
duties.
Section 1.06. Compensation. During the Employment Period, the Executive shall
receive as compensation for his services an annual salary of not less than
$100,000.00 per annum. MSI shall reimburse the Executive for all reasonable
out-of pocket expenses incurred in the lawful ordinary course of his employment
which are properly reported to MSI in accordance with its accounting procedures.
At the end of fiscal year, the Executive will be granted a five year option to
purchase up to 100,000 shares of common stock at a price of $1.50 per share
exerciseable for a period of 5 years commencing July 1 of each year.
Section 1.07. Employee Benefits. During the Employment Period, the Executive
shall be eligible to participate in all of MSI employee welfare, benefit and
vacation plans and arrangements in accordance with their terms as in effect from
time to time which are applicable to employees of MSI similarly situated. The
Executive will be required to take at least 3 weeks of vacation each calendar
year.
<PAGE> 3
Section 1.08. Bonus. During the Employment Period, the Executive shall have the
right to a Bonus, at the discretion of the Board of Directors. The Bonus will
consist of cash and common stock and will be based upon performance, revenues,
and common stock value. The base for the calculation of the bonus at the end of
each fiscal year will be as follows:
Revenue $10,000,000
Common Stock Value $3.00
For each ten percent increase in revenues from year to year, the Executive will
be issued 100,000 shares of common stock at the then current market value.
For each $1.00 increase in the common stock value above the base common stock
value, calculated on the last 90 day average. The Executive will be paid a cash
bonus of $100,000 due no later than June 30, of each fiscal year.
Section 1.09. Automobile. During the Employment Period the Executive shall be
provided an automobile allowance up to $600.00 per month for an automobile to be
used in business use.
ARTICLE II
TERMINATION
Section 2.01. Death and Incapacity. If the Executive dies during the Employment
Period, his employment hereunder shall immediately terminate. If during the
Employment Period the Executive shall become unable to continue to perform his
duties hereunder because of physical or mental incapacity or disability of a
nature reasonably expected to continue for more than three years, then MSI may
terminate his employment hereunder by delivery of written notice to the
Executive, which notice shall specify the date of termination, which date shall
be not sooner than 30 days after the date of such notice. Any such physical or
mental incapacity or disability shall be conclusively established by a
certificate to such effect by a medical doctor, as selected by MSI. Executive
shall make himself reasonably available for an examination by such medical
doctor; provided that if Executive is not so available, then MSI's reasonable
determination of such a physical or mental incapacity or disability shall be
conclusive.
Section 2.02. For Cause. If during the Employment Period the Executive shall in
a material respect (a) continue to fail to perform his duties hereunder or under
law or (b) continue to violate any agreement, covenant, term or condition
hereunder after delivery of written notice from
<PAGE> 4
MSI of such failure or violation providing 30 days to correct such failure or
violation (if correctable), or if during the Employment Period, MSI acting in
good faith and upon reasonable grounds, determines that the Executive has
engaged in gross misconduct which has severely injured the business or
reputation of MSI or otherwise materially and adversely affected either of its
interests or which might so injure either of its business or reputation or so
affect either of its interests if the Executive were retained then, and in any
such event MSI may, by delivery of written notice to the Executive, terminate
his employment hereunder at any date specified in such notice.
Section 2.03. Effect. Upon termination hereunder together with the payment of
any salary accrued under Section 1.06 hereof, Executive's employment and all
obligations of MSI under Sections 1.01, 1.06, 1.07 and 1.08 hereof shall
forthwith terminate. The obligations of the Executive and MSI set forth in
Article III hereof shall continue notwithstanding the termination of the
Executive's employment pursuant to Article II hereof.
ARTICLE III
THE EXECUTIVE'S COVENANTS
Section 3.01. Confidentiality. Recognizing (1) that unpublished patentable or
unpatentable data and technical or nontechnical information in any way related
to the business of MSI or its affiliates (the term "affiliates" as used in this
Article III and Section 4.03 hereof, shall include all parties controlling,
controlled by or under common control with MSI, such as, but not limited to:
designs, procedures, processes, formulae, trademarks, patents, copyrights,
software, projects, project costs, financial or pricing data, marketing plans,
customer and supplier lists or business projections (including but not limited
to such of the foregoing used in the business of MSI constitute valuable trade
secrets or confidential information (such data and information being hereinafter
collectively called "Confidential Information") and (2) that such Confidential
Information is the property of MSI or its affiliates, in consideration of the
Executive's access to and use of Confidential Information, the Executive
covenants to hold such Confidential Information in trust for MSI and its
affiliates, and covenants not disclose or use the same other than in the
business of MSI. Without limitation on the foregoing the Executive shall:
(a) not directly or indirectly, disclose or make available to anyone or use
outside of his employment with MSI any Confidential Information without the
prior written consent of MSI.
<PAGE> 5
(b) safeguard all Confidential Information in his possession at all times so
that access to it is not allowed to any unauthorized person, corporation or
entity (including unauthorized employees and agents of MSI or its affiliates):
(c) promptly disclose to MSI and its affiliates all matters coming to his
attention during his employment pertaining to the business or interests of MSI
and its affiliates and all ideas which he may conceive and all inventions,
improvements or discoveries which he may make and which may relate to the
business or interests of MSI and its affiliates, whether conceived or made
during working hours or otherwise and whether alone or jointly with others, and
disclaim all rights, title and interest in and to all such ideas, inventions,
improvements or discoveries recognizing them to be the sole property of MSI and
its affiliates; and
(d) deliver to MSI and its affiliates, promptly upon termination of his
employment, papers, photographs, photo reproductions, computer tapes, tape
recordings and other documents and materials containing any Confidential
Information, and all personal notes, reports, plans, drawings and copies,
extracts and reproductions thereof, relating to the business of MSI and its
affiliates in his possession or control.
Section 3.02. Noncompetition. For the period commencing with the beginning of
the Employment Period and ending on the earlier to occur of (i) December 31,2000
or (ii) one year from the date of termination under Article II hereof
(hereinafter called the "Noncompetition Period"), the Executive shall not,
directly or indirectly, whether as principal or as agent, officer, director,
employee, consultant, or otherwise, alone or in association with any person,
corporation or other entity, own, carry on, be engaged, be concerned, take part
in, use or permit his name to be used, render services to, share in the earnings
of, or invest in the stock, bonds, or other securities of any person corporation
or other entity engaged in a business competitive to any business carried on by
MSI on the date hereof or at any time within the Employment Period in any
location serviced by MSI. Notwithstanding the preceding sentence the Executive
may invest in stock, bonds, or other securities of any corporation engaged in a
business similar to MSI (hereinafter called a "Similar Business"), without
otherwise participating in a Similar Business, if (1) such stock, bonds, or
other securities are listed on any national or regional securities exchange or
have been registered under Section 12 (g) of the Securities Exchange Act of
1934, (2) his investment does not exceed, in the case of any class of the
capital stock of any one issuer, 1% of the issued and outstanding shares, or, in
the case of other securities, 1% of the aggregate principal amount
<PAGE> 6
thereof issued and outstanding, and (3) such investment would not prevent,
directly or indirectly, the transaction of business by MSI with any prospective
customer or any state, district, territory, or possession of the United States,
or any governmental subdivision, agency or instrumentality thereof, by virtue of
any statute, law, regulation, or administrative practice.
Section 3.03. Goodwill. During the Noncompetition Period the Executive shall not
(1) take away or interfere or attempt to interfere, with any customer, trade,
business or patronage of MSI or its affiliates, or (2) interfere, or attempt to
interfere, with any officer, employee, representative or agent of MSI or its
affiliates, or induce, or attempt to induce, any of them to leave the employ of
MSI or its affiliates shareholders, whether or not initiated prior to the date
of termination of his employment.
Section 3.04. Extension of Noncompetition Period. The Noncompetition Period
referred to in Section 3.02 hereof shall be extended by the length of time
during which the Executive shall have admitted or been found by the court of
competent jurisdiction to have been in breach of the terms of the such Section.
Section 3.05. Covenants of the Essence. The covenant of the Executive set forth
in this Article III are of the essence of this Agreement; they shall be
construed as independent of any other provision in this Agreement, and the
existence of any claim cause of action of the Executive against MSI or any
affiliate whether predicated on this Agreement or otherwise, shall not
constitute a defense to enforcement by MSI of these covenants.
Section 3.06. Enforceability of Article III Covenants. The Executive understands
the nature of, and the burdens imposed by, the covenants contained in this
Article III and has consulted with his attorney in respect thereof. The
Executive agrees that such covenants are reasonable, enforceable and proper in
duration, scope and effect.
Section 3.07. Compensation for Article III Covenants. In consideration of the
Executive's covenants contained in this Article III, MSI shall pay to the
Executive on the date hereof, and the Executive by executing the Agreement
acknowledges receipt of, Five Hundred Dollars ($500.00).
ARTICLE IV
MISCELLANEOUS TERMS
Section 4.01. Integration and Modification. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and
<PAGE> 7
supersedes all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof.. This Agreement may
not be waived, changed, amended, modified or discharged except by a written
instrument signed by the party against whom enforcement of any such waiver,
change, amendment, modification or discharge is asserted.
Section 4.02. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
Section 4.03. Enforcement. The relationship contemplated by this Agreement is
unique and personal, and the covenants of the Executive made in Article III
hereof are integral to that relationship. Without limiting the remedies
available to MSI or its affiliates, the Executive acknowledges that damages at
law will be an insufficient remedy to MSI or its affiliates in the event that
the Executive violates the terms of such covenants and that MSI or its
affiliates may apply for and have injunctive relief in a court of competent
jurisdiction to restrain the breach or threatened breach of, or otherwise to
specifically enforce, such covenants. Such specific enforcement shall be
available to MSI or its affiliates in lieu of, or prior to or pending
determination in, any other proceeding.
Section 4.04. Waiver. A waiver by MSI, or the Executive of a breach of, or the
failure to enforce, any provision of this Agreement shall not operate or be
construed as a waiver of excuse of any subsequent breach.
Section 4.05. Severability. The invalidity of all or any part of any section of
this Agreement shall not render invalid the remainder of this Agreement or the
remainder of such section. If any provision of this Agreement is so broad as to
be unenforceable, it is expressly intended by the parties hereto that such
provision shall be interpreted to be as broad as is enforceable.
Section 4.06. Assignment. This Agreement, and the rights and obligations
hereunder, shall inure to the benefit of , and shall be binding upon, the
parties hereto and their respective successors, assigns and affiliates, except
that neither party hereto shall assign the rights or obligations hereunder
without the prior written consent of the other party. Notwithstanding the
proceeding sentence, subject to Section 2.03 hereof MSI may assign its rights
and obligations hereunder to any partnership or other business organization with
which MSI may merge or consolidate or to which it may transfer substantially all
its assets or with which it may otherwise enter into an acquisition or
reorganization transaction, and MSI may assign its rights and obligations
hereunder to any corporation which is a general or limited partner of MSI or is
a direct or indirect subsidiary of any such partner or any other
<PAGE> 8
related entity. No such assignment shall relieve MSI of its obligations
hereunder.
Section 4.07. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to be received when delivered to the addressee or
when deposited in the mail, postage prepaid, or in the case of telegraphic
notice, when delivered to the telegraph office, charges prepaid, and addressed
as follows:
'
(a) if to the Executive
Mitchell Kettrick
11035 Crossland
Austin, Texas 78726
(b) Micro-Media Solutions, Inc.
501 Waller Street
Austin, Texas 78702
or to such other address as the addressee party may have previously furnished to
the other party.
Section 4.08. Counterparts, Section Headings. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument. The section
headings of this Agreement are for convenience of reference only and shall not
affect the construction or interpretation of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.
Micro-Media Solutions, Inc. Mitchell Kettrick
/s/ Jose Chavez /s/ Mitchell Kettrick
- ------------------------------- -----------------------------------
Jose Chavez, President/CEO "Executive"
/s/ George Villalva
- -------------------------------
George Villalva, Vice President
The Registrant filed no Reports on form 8-K during the last quarter of the
fiscal year covered by this Report on Form 10-KSB.
