<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 23, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NATIONAL TECHTEAM, INC.
(EXACT NAME OF REGISTRANT, SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7379 38-3774613
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
22000 GARRISON AVENUE
DEARBORN, MICHIGAN 48124
(313) 277-2277
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ROBERT A. HUDSON, ESQUIRE
BERRY, MOORMAN, KING & HUDSON, P.C.
600 WOODBRIDGE PLACE
DETROIT, MICHIGAN 48226
(313) 567-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
Copies to:
ROBERT F. WALL, ESQUIRE
WINSTON & STRAWN
35 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60601-9703
(312) 558-5600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this
Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering / /
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED PROPOSED AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SHARE(2) OFFERING PRICE(2) FEE(3)
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<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share............................... 3,450,000 $11.78 $40,645,313 $14,015.63
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</TABLE>
(1) Includes 450,000 shares issuable upon exercise of an option to be granted to
underwriters solely to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) promulgated under the Securities Act of 1933.
------------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
AUGUST 23, 1996
PROSPECTUS
3,000,000 SHARES
[TECHTEAM LOGO]
NATIONAL TECHTEAM, INC.
COMMON STOCK
($.01 PAR VALUE)
Of the 3,000,000 shares of Common Stock, par value $.01 per share (the "Common
Stock"), being offered hereby, all are being sold by National TechTeam, Inc., a
Delaware corporation (the "Company" and "TechTeam").
The Common Stock is quoted on the Nasdaq National Market under the symbol
"TEAM." On August 22, 1996, the last reported sale price for the Common Stock on
the Nasdaq National Market was $13.00 per share. See "Price Range of Common
Stock."
PROSPECTIVE PURCHASERS OF SHARES SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH
ON PAGE 6 UNDER THE CAPTION, "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT COMPANY(1)
<S> <C> <C> <C>
Per Share....................................... $ $ $
Total (2)....................................... $ $ $
</TABLE>
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(1) Before deducting expenses payable by the Company, estimated to be
approximately $ .
(2) The Company and certain stockholders of the Company (the "Selling
Stockholders") have granted to the Underwriters an option, exercisable
within 30 days of the date of this Prospectus, to purchase up to 450,000
additional shares of Common Stock at the Price to Public, less the
Underwriting Discount, solely to cover over-allotments, if any. If the
Underwriters exercise such option in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
The shares of Common Stock are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the shares of Common Stock will be made at the
office of Salomon Brothers Inc, Seven World Trade Center, New York, New York, or
through the facilities of The Depository Trust Company, on or about ,
1996.
SALOMON BROTHERS INC ROBERT W. BAIRD & CO.
INCORPORATED
The date of this Prospectus is , 1996.
<PAGE> 3
[PHOTOGRAPH OF THE INTERIOR OF THE COMPANY'S SOUTHFIELD, MICHIGAN CALL CENTER]
National TechTeam's Southfield, Michigan Facility
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON SHARES OF THE COMPANY ON THE NASDAQ NATIONAL
MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934.
SEE "UNDERWRITING."
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) contained
elsewhere in this Prospectus. Unless otherwise indicated, all information in
this Prospectus assumes no exercise of the Underwriters' over-allotment option.
Investors should carefully consider the information set forth under the caption
"Risk Factors."
THE COMPANY
National TechTeam, Inc. (the "Company" or "TechTeam") is a leading provider
of information technology ("IT") outsourcing support services to large national
and multi-national corporations, government agencies and service organizations.
The Company offers its services through two global business units: (i) Call
Center Services, which provides its clients principally with inbound telephone
support for their computer product end-users and (ii) Corporate Computer
Services, which provides corporations with technical staffing (principally
on-site help desk support), systems integration and instructor-led,
computer-based training. TechTeam's client base includes Hewlett-Packard, Ford,
Chrysler, First Chicago NBD, United Parcel Service, Owens-Corning, Novell and
Sun Microsystems. Many of TechTeam's clients utilize services offered by both of
TechTeam's business units. The Company has experienced rapid growth as the trend
toward outsourcing has increased. Between 1991 and 1995, revenues increased from
$7.9 million to $41.8 million and net income increased from $100,000 to $2.4
million. This represents compound annual growth rates of 52% and 121% in
revenues and net income, respectively.
The IT services market is large and growing rapidly due to the
proliferation of complex information technology systems, the number of IT
systems end-users and an increase in the desire of companies to outsource
technical support to third party providers. Dataquest estimates that from 1995
to 1999 technical support services provided in-house and by third parties, such
as those provided by call centers and on-site help desks, are expected to
increase from $20.6 billion to $31.5 billion; and technical support services
outsourced to third-party vendors are expected to increase from $2.6 billion to
$7.2 billion. This represents compound annual growth rates of 11.2% and 29.0%,
respectively. TechTeam's objective is to maintain its position as a leading
provider of IT outsourcing support services and to continue the profitable
growth of its two global business units.
Call Center Services. As one of the largest and fastest growing operators
of call centers, TechTeam operates as an extension of its clients' customer
support function providing technical assistance to end-users of computer
hardware and software. As part of its growth strategy, the Company has recently
opened two additional call centers and doubled the capacity of its worldwide
call center headquarters. TechTeam now operates a total of five U.S.-based call
centers and one Pan-European call center in Brussels, Belgium. Call Center
Services principally provides TechTeam's clients with computer product
post-sales support and off-site help desk services to corporate IT users. The
Company has also recently expanded its service offerings to include other
services throughout its clients' sales cycle, such as new product launch,
pre-sales support and order fulfillment. Call center operations began in June
1993 and have increased from $2.3 million in revenues in 1993 to $15.1 million
in revenues in 1995, a compound annual growth rate in excess of 150.0%. In
addition, revenues for the first six months of 1996 increased 179.8% over the
first six months of 1995, from $5.1 million to $14.4 million.
Corporate Computer Services. TechTeam provides its clients with a wide
range of IT services on an outsourced basis. These services are customized to
provide cost-effective solutions for the challenges facing information services
departments that are asked to support an increasing number of IT platforms and
end-users. TechTeam is able to develop customized solutions for its clients' IT
requirements by providing one or more of the following services: (i) Technical
Staffing(1995 revenues of $14.7 million), which is comprised principally of
on-site help desks and other IT staffing services, (ii) Systems Integration
(1995 revenues of $7.9 million), which provides design, installation, and
support of computer networks, sales of new hardware and software, installation
and maintenance services, and World Wide Web development together with complete
Internet and Intranet services; and (iii) Training (1995
3
<PAGE> 5
revenues of $4.0 million), which provides instructor-led, computer-based
training for a wide array of office automation, application development,
operating system and proprietary client software products. Corporate Computer
Services revenues increased from $18.1 million in 1993 to $26.7 million in 1995,
a compound annual growth rate of 21.3%. In addition, revenues for the first six
months of 1996 increased 22.6% over the first six months of 1995, from $12.9
million to $15.9 million.
TechTeam possesses several key competitive strengths that it believes will
enable it to continue to expand its business by further penetrating existing
client relationships and by attracting new clients. These strengths, which have
contributed to TechTeam's rapid growth, are as follows:
- Internationally Recognized Client Base affording significant growth
potential and highly respected references. For example, TechTeam began
its relationship with Ford over ten years ago and currently provides
services to 22 Ford divisions and two finance subsidiaries worldwide;
- Multiple Service Offerings which provide expanded business opportunities
with existing clients for new services. Most of TechTeam's revenues are
derived from clients who purchase more than one of its services;
- Technically Proficient Employee Base which enables it to compete
effectively for sophisticated IT support services. The Company emphasizes
advancement opportunities for its employees by actively managing their
career paths and invests substantial time in training its employees. As a
result, the Company has increased the number of employees from 136 in
January 1992 to 1,238 in June 1996 and has achieved this growth with what
it believes is a lower turnover rate than many of its competitors;
- Recognition for Delivery of Quality Services in the form of ISO 9001
certification, an international standard for quality assurance and
operating consistency; and
- Advanced Technology Infrastructure featuring state-of-the-art call
centers enabling the Company to maintain a leading position as a provider
of IT support services. TechTeam has built five new call centers in the
past year, investing substantial capital to build a technology
infrastructure incorporating sophisticated telephony, efficient networks,
call distribution software and productivity management tools which aid in
increasing efficiency and utilization.
The Company intends to increase revenues and to continue to grow its
operations through the following growth strategy: (i) further penetrate existing
clients, attract new clients and extend service lines; (ii) leverage technology
and training for higher margins; (iii) expand globally; (iv) pursue selective
acquisitions, joint ventures and alliances; and (v) continue a strong commitment
to quality service.
National TechTeam, Inc., a Delaware corporation, was incorporated in 1987.
TechTeam's executive offices are located at 22000 Garrison Avenue, Dearborn,
Michigan 48124 and its telephone number is (313) 277-2277.
THE OFFERING
Common Stock Offered by the
Company............................. 3,000,000
Common Stock to be Outstanding after
the Offering........................ 14,384,078(1)
Use of Proceeds..................... For general corporate purposes,
including domestic and international
call center expansion, capital
expenditures, working capital and
acquisitions. See "Use of Proceeds."
Nasdaq National Market symbol....... TEAM
- -------------------------
(1) Does not include (i) 1,140,025 shares of Common Stock issuable upon the
exercise of outstanding options under the Company's stock option plans and
(ii) 2,534,500 shares reserved for issuance upon exercise of options that
may be granted in the future under the Company's stock option plans as of
the date of this Prospectus. See "Management -- Executive Compensation."
4
<PAGE> 6
SUMMARY FINANCIAL AND OPERATING DATA
The following table sets forth certain summary consolidated financial and
operating data and is qualified by the more detailed Consolidated Financial
Statements and notes thereto included elsewhere in this Prospectus. The
Statement of Operations Data for each of the five years in the period ended
December 31, 1995 have been derived from the Company's consolidated financial
statements for such years, which have been audited by Ernst & Young LLP,
independent auditors, and are included elsewhere in this Prospectus. This data
should be read in conjunction with the Consolidated Financial Statements and
notes thereto included in this Prospectus. The financial data for the six months
ended June 30, 1995 and June 30, 1996 are unaudited but, in the opinion of the
Company's management, reflect all adjustments necessary for a fair presentation
of such information. Operating results for the six months ended June 30, 1996
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30
--------------------------------------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
------ ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues
Call Center Services............ $ -- $ -- $ 2,326 $ 7,173 $15,123 $ 5,141 $14,387
------ ------- ------- ------- ------- ------- -------
Corporate Computer Services
Technical staffing............ $3,478 $ 6,052 $10,085 $12,837 $14,732 $ 7,288 $ 7,702
Systems integration........... 1,452 1,079 2,647 5,601 7,914 3,590 5,009
Training programs............. 2,975 3,771 5,386 4,613 4,018 2,052 3,141
------ ------- ------- ------- ------- ------- -------
Total Corporate Computer
Services...................... 7,905 10,902 18,118 23,051 26,664 12,930 15,852
------ ------- ------- ------- ------- ------- -------
Total revenues.................... $7,905 $10,902 $20,444 $30,224 $41,787 $18,071 $30,239
====== ======= ======= ======= ======= ======= =======
Gross profit...................... 1,489 2,443 4,673 7,125 9,450 4,625 7,001
Income before tax provisions...... 57 1,031 2,769 3,371 4,077 2,174 3,264
Net income........................ 57 766 1,672 1,971 2,399 1,314 1,910
Earnings per share................ $ 0.01 $ 0.09 $ 0.18 $ 0.18 $ 0.21 $ 0.11 $ 0.17
Weighted average number of fully
diluted shares outstanding...... 8,047 8,733 9,523 11,079 11,361 11,676 11,542
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
--------------------------
REPORTED AS ADJUSTED(1)
-------- --------------
(IN THOUSANDS)
<S> <C>
STATEMENT OF FINANCIAL POSITION DATA:
Current assets............................................................. $18,481
Current liabilities........................................................ 5,117
Total assets............................................................... 26,388
Long-term liabilities...................................................... 871
Total shareholders' equity................................................. 20,399
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30
------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
----- ----- ------- ------- --------- ------- ---------
(AT END OF PERIOD, EXCEPT CALLS ANSWERED)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Call Center Services
Call centers...................... -- -- 1 1 3 1 6
Equipped workstations............. -- -- 104 114 386 193 609
Calls answered.................... -- -- 183,585 484,861 1,226,028 461,685 1,298,546
Number of employees
Call Center Services............ -- -- 104 138 489 264 685
Corporate Computer Services
Technical staffing............ 75 126 204 211 232 213 265
Systems integration........... 5 21 46 75 129 119 130
Training programs............. 45 66 70 55 67 59 76
Sales, general and
administrative................ 11 15 17 30 63 59 82
--- --- ------- ------- --------- ------- ---------
Total employees................. 136 228 441 509 980 714 1,238
=== === ======= ======= ========= ======= =========
</TABLE>
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(1) Adjusted to reflect the sale of 3,000,000 shares of Common Stock being
offered by the Company hereby and the application of the net proceeds
therefrom. See "Use of Proceeds" and "Capitalization."
5
<PAGE> 7
RISK FACTORS
In addition to the other information set forth in this Prospectus,
investors should consider carefully the following factors in connection with an
investment in the shares of Common Stock offered hereby.
CONCENTRATION OF REVENUES
The Company derives a high portion of its revenue from a limited number of
clients. During 1995, 71.3% of the Company's revenues were attributable to four
clients, Ford, Hewlett-Packard, Chrysler and Corel. For the first six months of
1996, 69.1% of its revenues were from three clients, Hewlett-Packard, Ford and
Chrysler. Historically, the Company has been heavily dependent upon Ford for a
major portion of its revenues (37.3% in 1995, 47.0% in 1994 and 67.0% in 1993),
although Hewlett-Packard became the Company's largest client in the first half
of 1996 at 32.0% of total revenues. Clients can generally terminate or reduce
the level of services on short notice without penalty. For example, revenues
from Corel declined from 12.2% in 1994 to negligible in 1996 because of Corel's
decision to insource its call center services. The loss of any significant
customer could have a material adverse effect on the Company's business,
operating results and financial condition. Management has recognized the need to
diversify its client base and is continuing its efforts to that end. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Impact of Business With Major Clients" and "Business -- Marketing,
Sales and Clients."
MANAGEMENT OF GROWTH
The Company's revenues have grown from $7.9 million in 1991 to $41.8
million in 1995, a compound annual growth rate of approximately 50.0%. In
addition, the number of the Company's employees has increased from 136 in
January 1992 to a present level of 1,238. Continuing significant growth could
place a strain on the Company's managerial and other resources. The Company's
future performance and profitability will depend, in large part, on its ability
to manage this growth, particularly with respect to its decentralized workforce
which will require the Company to continue to improve its operational, financial
and other internal systems and the recruitment, training, motivation and
management of its employees. A failure to manage growth effectively or to
deliver its services at acceptable levels could adversely impact the Company's
business and results of operations.
COMPETITION
The Company faces intense competition in both the call center and corporate
computer services markets. In the call center market, the Company competes with
other call center companies, some of which have substantially greater resources
including more call center locations, greater financial resources, a larger
client base and more name recognition. In the corporate computer services
market, the Company competes with many entities including systems implementation
firms, application software firms, staffing firms, "Big Six" accounting firms,
facilities management firms and computer consulting firms. Many of these firms
have more experience, resources, clients and name recognition than the Company.
The Company also faces significant competition in both markets from its own
clients and potential clients whose internal resources represent a fixed cost to
the client. Such competition may impose additional pricing pressures on the
Company. There can be no assurance that the Company will compete successfully
with its existing competitors or with any new competitors. See "Business --
Competition."
RELIANCE ON KEY EXECUTIVES
The success of the Company is highly dependent upon the efforts and
abilities of its executive officers, particularly William F. Coyro, Jr., the
Company's founder, Chairman and Chief Executive Officer. None of the Company's
key executives are subject to employment contracts, and the Company does not
maintain key-man insurance on its executives. The loss of the services of any of
these key executives for any reason could have a material adverse effect on the
Company's business, operating results and financial condition.
6
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ATTRACTION AND RETENTION OF EMPLOYEES
The Company's business involves the delivery of professional services and
is labor-intensive. The Company's growth and success depends in large part upon
its ability to attract, develop, motivate and retain highly skilled technical
employees. Qualified technical employees are in great demand and are likely to
remain a limited resource for the foreseeable future. There can be no assurance
that the Company will be able to attract and retain sufficient numbers of highly
skilled technical employees in the future. The loss of technical personnel could
have a material adverse effect on the Company's business, operating results and
financial condition, including its ability to secure and complete engagements.
See "Business -- Human Resources."
PROJECT RISKS
Many of the Company's engagements involve projects that are critical to the
operations of its clients' businesses and provide benefits that may be difficult
to quantify. The Company's failure or inability to meet a client's expectations
in the performance of its services could result in a material adverse change to
the client's operations and therefore could give rise to claims against the
Company or damage the Company's reputation, adversely affecting its relationship
with its client, its business, operating results and financial condition.
VARIABILITY OF QUARTERLY OPERATING RESULTS
Variations in the Company's revenue and operating results occur from time
to time as a result of a number of factors, such as the significance of client
engagements commenced and completed during a quarter, the number of business
days in a quarter and employee hiring and utilization rates. Under the terms of
certain call center contracts, clients are required to pay certain amounts at
the commencement of the contract, which are non-refundable and to which the
Company has no further service obligation. The Company has recognized these
amounts as revenues when they were billed. Absent unusual circumstances, in the
future the Company expects to negotiate these contracts so that the revenues are
recognized over the life of the contract. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The timing of
revenues is difficult to forecast because the Company's sales cycle can be
relatively long and may depend on factors such as the size and scope of
assignments and general economic conditions. Because a high percentage of the
Company's expenses are relatively fixed, a variation in the number of clients,
assignments or the timing of the initiation or the completion of client
assignments can cause significant variations in operating results from quarter
to quarter and could result in losses to the Company. In addition, the Company's
engagements generally are terminable by the client without penalty.
CYCLICALITY
Certain of the Company's clients and potential clients are in industries,
such as the automobile (which accounts for a major portion of the Company's
revenues) and financial services industries, that experience cyclical variations
in profitability, which may in turn affect their willingness or ability to fund
systems projects such as those for which the Company may be engaged. The
Company's experience indicates, however, that competitive pressures in cyclical
industries could compel businesses to undertake projects even during periods of
losses or reduced profitability.
INTERRUPTION OF TELECOMMUNICATIONS SERVICES
The Company's operations are dependent on its ability to protect its call
centers against damage from fire, power loss, telecommunications failure or
similar event. The Company has taken precautions to protect itself from events
that could interrupt its operations, including off-site storage of back-up data
and back-up power generators. No assurance can be given that such precautions
will be adequate, and operations may still be interrupted, even for extended
periods. In addition, the call center services provided by the Company are
dependent on telecommunications services provided by the regional Bell
7
<PAGE> 9
operating companies. Although the Company has taken certain precautions
consisting of diversified routing services and redundant fiber optic cables, any
damage to call centers or any failure of the Company's telecommunication links
that cause interruptions in the Company's operations could have a material
adverse effect on the Company's business, operating results or financial
condition. The Company's property and business interruption insurance with
current limits of $2 million may not be adequate to compensate the Company for
all losses that may occur. See "Business -- Technology."
CERTAIN ANTI-TAKEOVER EFFECTS
The Company's Bylaws and the Delaware General Corporation Law include
provisions that may be deemed to have anti-takeover effects and may delay, defer
or prevent a takeover attempt that stockholders might consider in their best
interests. These include Bylaw provisions under which only the Chairman of the
Board or the President and holders of 30% of the outstanding Common Stock may
call special meetings of stockholders and the ability of the Board of Directors
of the Company to issue up to 5,000,000 shares of preferred stock and to
determine the price, rights, preferences and privileges of such shares, without
any further stockholder action. The existence of this "blank-check" preferred
stock could render more difficult or discourage an attempt to obtain control of
the Company by means of a tender offer, merger, proxy contest or otherwise.
These provisions may have an adverse effect on the market price of the Company's
Common Stock. See "Description of Capital Stock -- Certain Delaware Law and
Bylaw Provisions; Anti-Takeover Effects."
SIGNIFICANT UNALLOCATED NET PROCEEDS
The anticipated net proceeds of this offering have been designated for
general corporate purposes, including domestic and international call center
expansion, capital expenditures, working capital and acquisitions. The Board of
Directors of the Company will have broad discretion with respect to the use of
the net proceeds of this offering. Accordingly, there has been no specific
allocation of net proceeds. See "Use of Proceeds."
GROWTH THROUGH ACQUISITIONS AND NEW PRODUCTS
The Company's business strategy includes growth through acquisitions of
businesses and technology sources complementary to the Company's business. The
Company has acquired three significantly smaller companies in the past and
believes that it has been successful in integrating the acquired assets and
businesses into the Company's operations. There can be no assurance, however,
that future acquisitions will be consummated on acceptable terms or that any
acquired assets or business will be successfully integrated into the Company's
operations. Further, acquisitions may involve special risks such as diversion of
management's attention, unanticipated events, legal liabilities and amortization
of intangibles, any of which could have an adverse effect on the Company's
operations and earnings. The Company may use Common Stock or preferred stock
(which could result in dilution to the purchasers of Common Stock in the
Offering) or may incur indebtedness or use a combination of stock and
indebtedness for all or a portion of the consideration to be paid in future
acquisitions. While the Company continuously evaluates acquisition
opportunities, it has no current commitments or agreements with respect to any
material acquisitions.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
Certain risks are inherent in the Company's business strategy which
includes plans for the global expansion of its operations. Among other things,
the Company may encounter difficulties in marketing, selling and delivering its
services due to differences in cultures, languages, labor and employment
policies and differing political and social systems. In addition, the Company
may encounter significant effects on its operations and financial condition as a
result of currency fluctuations and differing tax laws.
8
<PAGE> 10
RAPID TECHNOLOGY CHANGES; DEPENDENCE ON NEW SOLUTIONS
The Company's success will depend in part on its ability to develop IT
systems infrastructure that can keep pace with continuing changes in technology.
These changes in computing and communications will be rapid as new industry
standards emerge. There can be no assurance that the Company will be successful
in adequately addressing these developments on a timely basis or that, if these
developments are addressed, the Company will be successful in the marketplace.
In addition, there can be no assurance that products or technologies developed
by others will not render the Company's services uncompetitive or obsolete. The
Company's failure to address these developments could have a material adverse
effect on the Company's business, operating results and financial condition.
INTELLECTUAL PROPERTY RIGHTS
The Company's success is dependent upon certain methodologies it develops
and utilizes in designing and delivering IT corporate computer and call center
services. The Company's business includes the development of custom software in
connection with specific client engagements. Ownership of such software is
generally assigned to the client. The Company also develops certain foundation
and application software products, or software "tools," which remain the
property of the Company.
The Company relies upon a combination of nondisclosure and other
contractual arrangements and trade secret, copyright and trademark laws to
protect its proprietary rights and the proprietary rights of third parties from
whom the Company licenses intellectual property. The Company enters into
confidentiality agreements with its employees and limits distribution of
proprietary information. There can be no assurance that the steps taken by the
Company in this regard will be adequate to deter misappropriation of proprietary
information or that the Company will be able to detect unauthorized use and take
appropriate steps to enforce its intellectual property rights.
Although the Company believes that its services do not infringe on the
intellectual property rights of others and that it has all rights necessary to
utilize the intellectual property employed in its business, the Company is
subject to the risk of litigation alleging infringement of third-party
intellectual property rights. Any such claims could require the Company to spend
significant sums in litigation, pay damages, develop non-infringing intellectual
property or acquire licenses of the intellectual property which is the subject
of asserted infringement. See "Business -- Intellectual Property Rights."
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Prospectus contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. When used in this
document, the words "anticipate", "believe" "estimate", and "expect" and similar
expressions are generally intended to identify forward-looking statements.
Prospective investors are cautioned that any forward-looking statements,
including statements regarding the intent, belief, or current expectations of
the Company or its management, are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those in the forward-looking statements as a result of various factors
including but not limited to (i) general economic conditions in the markets in
which the Company operates, (ii) fluctuations in worldwide or regional demands
for IT and computer related services and products, and (iii) those items
identified under "Risk Factors." Should one or more of those risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated or expected. The Company does not intend to update these
forward-looking statements.
9
<PAGE> 11
USE OF PROCEEDS
The net proceeds to the Company from the sale of 3,000,000 shares of Common
Stock offered hereby, after deducting the estimated underwriting discounts and
commissions and offering expenses payable by the Company, are estimated to be
approximately $ million ($ million if the Underwriters'
over-allotment option is exercised in full). In the event the Underwriters
exercise their over-allotment option, the Company will not receive any proceeds
from the sale of shares of Common Stock by the Selling Stockholders. See
"Principal and Selling Stockholders."
The net proceeds of this offering will be used for general corporate
purposes, including domestic and international call center expansion, capital
expenditures, working capital and acquisitions. Currently, the Company has no
arrangements or understandings with respect to any acquisitions, although it
continually monitors acquisition opportunities. Pending any such use, the
Company plans to invest the net proceeds from this offering in short-term,
investment grade securities or money market instruments.
DIVIDEND POLICY
The Company has never paid any dividends on its Common Stock and expects
for the foreseeable future to retain all of its earnings from operations for use
in expanding and developing its business. Any future decision as to payment of
dividends will be at the discretion of the Company's Board of Directors and will
depend upon the Company's earnings, financial position, capital requirements and
such other factors as the Board of Directors deems relevant.
PRICE RANGE OF COMMON STOCK
The following table sets forth the reported high and low sales prices of
the Common Stock for the quarters indicated as reported on the Nasdaq National
Market. The Common Stock is traded on the Nasdaq National Market under the
symbol "TEAM."
<TABLE>
<CAPTION>
HIGH LOW
------- ------
<S> <C> <C>
1994
First Quarter............................................ $ 9.625 $4.625
Second Quarter........................................... $ 8.250 $5.750
Third Quarter............................................ $ 7.500 $5.125
Fourth Quarter........................................... $ 7.625 $4.625
1995
First Quarter............................................ $ 5.250 $3.500
Second Quarter........................................... $ 6.875 $3.875
Third Quarter............................................ $ 7.500 $5.250
Fourth Quarter........................................... $ 6.125 $4.875
1996
First Quarter............................................ $ 6.250 $4.750
Second Quarter........................................... $17.875 $5.063
Third Quarter (through 8/22/96).......................... $13.250 $7.500
</TABLE>
On August 22, 1996, the last reported sales price of the Common Stock on
the Nasdaq National Market was $13.00 per share. As of August 19, 1996, there
were 973 holders of record of the Company's Common Stock.
10
<PAGE> 12
CAPITALIZATION
The following table sets forth, as of June 30, 1996, the actual
capitalization of the Company and the capitalization of the Company as adjusted
to reflect the application of the net proceeds from this offering. This table
should be read in conjunction with the Consolidated Financial Statements and the
related notes thereto elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1996
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash.................................................................. $ 1,661 $
======= =======
Current installments of long-term debt(1)............................. $ 181 $ 181
======= =======
Long-term debt, less current installments(1).......................... $ 755 $ 755
------- -------
Shareholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized; no
shares issued and outstanding....................................
Common Stock, $0.01 par value, 45,000,000 shares authorized;
11,561,141 shares issued; 14,561,141 issued shares as
adjusted(2)...................................................... $ 116 $
Additional paid-in capital.......................................... 13,096
Retained earnings................................................... 7,993 7,993
------- -------
Total................................................................. 21,205
Less -- Treasury stock (177,063 shares)............................... 805 805
------- -------
Total shareholders' equity............................................ $20,400 $
------- -------
Total capitalization............................................. $21,155 $
======= =======
</TABLE>
- -------------------------
(1) See Note D of Notes to Consolidated Financial Statements.
(2) Excludes 680,150 shares of Common Stock issuable as of June 30, 1996 upon
the exercise of outstanding stock options under the Company's stock option
plans and 3,029,500 shares reserved as of that date for issuance upon
exercise of options that may be granted in the future under the Company's
stock option plans.
11
<PAGE> 13
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected consolidated financial data
and is qualified by the more detailed Consolidated Financial Statements and
notes thereto included elsewhere in this Prospectus. The Statement of Financial
Position Data as of December 31, 1991, 1992, 1993, 1994 and 1995, and the
Statement of Operations Data for each of the five years in the period ended
December 31, 1995 have been derived from the Company's consolidated financial
statements for such years, which have been audited by Ernst & Young LLP,
independent auditors, and are included elsewhere in this Prospectus. The
financial data for the six months ended June 30, 1995 and June 30, 1996 are
unaudited but, in the opinion of the Company's management, reflect all
adjustments necessary for a fair presentation of such information. Operating
results for the six months ended June 30, 1996 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1996.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30
---------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
------ ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues
Call Center Services.......... $ -- $ -- $ 2,326 $ 7,173 $15,123 $ 5,141 $14,387
------ ------- ------- ------- ------- ------- -------
Corporate Computer Services
Technical staffing.......... 3,478 6,052 10,085 12,837 14,732 7,288 7,702
Systems integration......... 1,452 1,079 2,647 5,601 7,914 3,590 5,009
Training programs........... 2,975 3,771 5,386 4,613 4,018 2,052 3,141
------ ------- ------- ------- ------- ------- -------
Total Corporate Computer
Services.................... 7,905 10,902 18,118 23,051 26,664 12,930 15,852
------ ------- ------- ------- ------- ------- -------
Total revenues.................. 7,905 10,902 20,444 30,224 41,787 18,071 30,239
Cost of services delivered...... 6,416 8,459 15,821 23,099 32,337 13,446 23,238
------ ------- ------- ------- ------- ------- -------
Gross profit.................... 1,489 2,443 4,623 7,125 9,450 4,625 7,001
------ ------- ------- ------- ------- ------- -------
Other expenses/(income)
Selling, general and
administrative.............. 1,331 1,359 1,787 3,872 5,349 2,448 3,700
Interest...................... 101 53 67 34 24 3 37
Gain on sale of investment.... -- -- -- (152) -- -- --
------ ------- ------- ------- ------- ------- -------
1,432 1,412 1,854 3,754 5,373 2,451 3,737
------ ------- ------- ------- ------- ------- -------
Income before tax provisions.... 57 1,031 2,769 3,371 4,077 2,174 3,264
Tax provisions.................. -- 265 1,097 1,400 1,678 860 1,354
------ ------- ------- ------- ------- ------- -------
Net income...................... $ 57 $ 766 $ 1,672 $ 1,971 $ 2,399 $ 1,314 $ 1,910
====== ======= ======= ======= ======= ======= =======
Primary and fully diluted
earnings per share............ $0.01 $0.09 $0.18 $0.18 $0.21 $0.11 $0.17
====== ======= ======= ======= ======= ======= =======
Weighted average number of
common shares and common share
equivalents outstanding
Primary....................... 7,618 8,422 9,306 10,981 11,361 11,540 11,531
Fully diluted................. 8,047 8,733 9,523 11,079 11,361 11,676 11,542
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------------------- JUNE 30
1991 1992 1993 1994 1995 1996
------ ------ ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF FINANCIAL POSITION
DATA:
Current assets.................. $2,023 $3,085 $ 6,173 $12,890 $16,191 $18,481
Current liabilities............. 1,478 2,037 2,006 1,173 3,839 5,117
Total assets.................... 2,650 4,130 10,300 17,149 22,286 26,388
Long-term liabilities........... 40 104 214 146 555 871
Total shareholders' equity...... 1,133 1,989 8,080 15,829 17,892 20,399
</TABLE>
12
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview
The Company originally commenced operations as a computer hardware reseller
and evolved into a provider of instructor-led, computer-based training for its
computer hardware clients. During the late 1980's the Company added IT staffing
and systems integration services as a complement to its existing training
business. In 1993, as a result of the Company's growing expertise in providing
IT staffing of on-site help desks, TechTeam entered the call center industry.
Today, the Company's IT outsourcing services cover a broad range of IT,
including planning, design, implementation and support. Although the Company's
services are complementary, TechTeam has divided its service offerings into two
divisions, Call Center Services and Corporate Computer Services (technical
staffing, systems integration and training programs). Revenues from all service
offerings are recognized as services are performed.
Call Center Services consist of international telephone support for
end-users of computer hardware and software products. Call Center Services are
billed on a fee per call, fee per time spent on calls or per agent basis, each
as negotiated with clients. Under the terms of certain Call Center Services
contracts, clients are required to pay certain amounts at the commencement of
the contract, which are non-refundable and to which the Company has no further
service obligation. Amounts billed under this provision of such contracts
aggregated $19,600 in 1994; $1,655,700 in 1995; and $430,000 and $618,100 for
the six months ended June 30, 1995 and 1996, respectively. The Company has
recognized these amounts as revenues when they were billed. Absent unusual
circumstances, in the future the Company expects to negotiate these contracts so
that the revenues are recognized over the life of the contract.
Technical staffing includes a variety of technical services, including the
placement of computer personnel at client sites to support end-user applications
through on-site help desks, as well as selected programming and consulting
services. Systems integration consists of database design, computer product
sales and networking services. Contracts for technical staffing and systems
integration are generally negotiated on an hourly rate basis or are priced on a
project basis. Training programs consist of instructor-led, computer-based
training for word processing, spreadsheets, graphics, data bases, desktop
publishing, operating systems, and systems administration for NetWare, JAVA, NT,
Windows, OS/2 and UNIX and mainframe operating systems. For training programs,
clients pay a fee per student trained or a fee for classes offered, in some
cases with an advance payment for the cost of the necessary training materials.
Cost of services delivered consists of direct personnel compensation,
statutory and other benefits associated with such personnel, facility and
computer equipment costs, and other direct costs associated with providing
services to clients. Selling, general and administrative costs consist of sales,
marketing and administrative compensation, statutory and other benefits
associated with such personnel, facility and equipment costs and other indirect
costs associated with the sales and administrative functions of the Company.
13
<PAGE> 15
The following table sets forth the percentage relationship to revenues of
certain items in the Company's Consolidated Statements of Operations:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31 JUNE 30
------------------------- ---------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues
Call Center Services......................... 11.4% 23.7% 36.2% 28.4% 47.6%
----- ----- ----- ----- -----
Corporate Computer Services
Technical staffing........................ 49.3 42.5 35.3 40.3 25.5
Systems integration....................... 12.9 18.5 18.9 19.9 16.5
Training programs......................... 26.4 15.3 9.6 11.4 10.4
----- ----- ----- ----- -----
Total Corporate Computer Services............ 88.6 76.3 63.8 71.6 52.4
----- ----- ----- ----- -----
Total revenues................................. 100.0 100.0 100.0 100.0 100.0
Cost of services delivered..................... 77.4 76.4 77.4 74.4 76.8
----- ----- ----- ----- -----
Gross profit................................... 22.6 23.6 22.6 25.6 23.2
----- ----- ----- ----- -----
Other expenses/(income)
Selling, general and administrative.......... 8.7 12.8 12.8 13.6 12.3
Interest..................................... 0.4 0.1 0.1 0.0 0.1
Gain on sale of investment................... -- (0.5) -- -- --
----- ----- ----- ----- -----
9.1 12.4 12.9 13.6 12.4
----- ----- ----- ----- -----
Income before tax provisions................... 13.5 11.2 9.7 12.0 10.8
Tax provisions................................. 5.3 4.7 4.0 4.7 4.5
----- ----- ----- ----- -----
Net income..................................... 8.2% 6.5% 5.7% 7.3% 6.3%
===== ===== ===== ===== =====
</TABLE>
Between 1993 and 1995, the Company's revenues increased at a compound
annual growth rate of 43.0%. The Company believes that its growth has benefited
from the trend among large corporations to outsource much of their information
technology needs and the Company's ability to provide services that address a
broad range of those needs. The Company believes that the outsourcing trend will
continue and will provide continuing opportunities for both of its service
lines. The Company further believes that its service offerings are influenced
substantially by its clients' desires to focus on their core businesses and to
leave information technology needs to the Company for which information
technology is its core business. The Company's training programs have
encountered cyclical enrollment trends, influenced by the timing and extent to
which clients are upgrading desk top software. See "Risk Factors -- Management
of Growth" and "-- Growth Through Acquisitions and New Products."
The Company's business is based on client relationships with major
corporations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Impact of Business with Major Clients."
COMPARATIVE PERFORMANCE -- FIRST SIX MONTHS OF 1996 VERSUS FIRST SIX MONTHS OF
1995
TechTeam earned net income of $1,909,887, or $0.17 per share, for the first
six months of 1996 as compared to a net income of $1,314,340 or $0.11 per share,
for the first six months of 1995.
Revenues -- TechTeam's total revenues increased by $12,167,715 in the first
six months of 1996 to $30,238,838, a 67.3% increase over revenues in the first
six months of 1995. Changes in revenues resulted from the following:
Call Center Services -- Revenues from Call Center Services increased
by $9,246,408 in the first six months of 1996. This was a 179.9% increase
over Call Center Services revenues in the first six months of 1995. The
increase was due to an increase to 20 contracts in place at June 30, 1996
compared to the 14 contracts at June 30, 1995 and increased business with
existing customers, primarily Hewlett-Packard.
14
<PAGE> 16
Technical staffing -- Revenues from technical staffing increased by
$413,418 in the first six months of 1996. This was a 5.7% increase over
technical staffing revenues in the first six months of 1995. The increase
was due to continued client demand for TechTeam's help desk and computer
services personnel at Ford and other major accounts.
Systems integration -- Revenues from systems integration increased by
$1,419,082 in the first six months of 1996. This was a 39.5% increase over
systems integration revenues in the first six months of 1995. The increase
was due principally to a growing demand by existing clients for TechTeam's
networking services.
Training programs -- Revenues from training programs increased by
$1,088,807 in the first six months of 1996. This was a 53.1% increase over
training revenues in the first six months of 1995. The increase was due to
increased enrollments in the Company's training programs and the sale of
$350,000 of computer-based training materials to a new client.
Cost of services delivered -- The cost of services delivered increased by
$9,791,423 in the first six months of 1996. This was a 72.8% increase over the
cost of services delivered in the first six months of 1995. The increase was due
principally to compensation costs for an increased number of technical
personnel, statutory and other benefits associated with such personnel, facility
and computer equipment costs, and other direct costs associated with providing
an increased volume of services to clients. These costs were 76.8% and 74.4% of
revenues for the six months ended June 30, 1996 and 1995, respectively.
Selling, general and administrative -- Selling, general and administrative
expenses increased by $1,252,487 in the first six months of 1996. This was a
51.2% increase over selling, general and administrative expenses in the first
six months of 1995. The increase was due principally to compensation costs for
an increased number of sales and administrative personnel, statutory and other
benefits associated with such personnel, facility and equipment costs, and other
indirect costs needed to support the growth of the Company. These expenses were
12.3% of revenues in the first six months of 1996 compared with 13.6% of
revenues in the first six months of 1995. This decline was due to TechTeam's
ability to increase significantly revenues without a corresponding increase in
general and administrative expenses.
Tax provisions -- TechTeam recognized $1,031,000 of Federal income tax in
the first six months of 1996, resulting in an effective tax rate of 35.1%
compared to an effective tax rate of 33.6% for the first six months of 1995. In
1995, TechTeam reversed $25,000 of Federal income tax reserve, resulting in the
reduced effective tax rate. The Michigan Single Business Tax in the first six
months of 1996 was $323,000, with an effective tax rate of 9.9% compared to an
effective tax rate of 8.9% in the first six months of 1995.
COMPARATIVE PERFORMANCE -- 1995 VERSUS 1994
National TechTeam established new records for revenues and earnings in
1995. TechTeam earned net income of $2,399,067, or $.21 per share, for 1995 as
compared to a net income of $1,971,049, or $.18 per share, for 1994.
Revenues -- The Company's total revenues increased by $11,563,024 in 1995
to $41,787,462, a 38.3% increase over 1994 revenues. Changes in revenues
resulted from the following:
Call Center Services -- Revenues from Call Center Services increased
by $7,950,297 in 1995. This was a 110.8% increase over Call Center Services
revenues in 1994. The increase was due to an increase to 18 contracts in
place at December 31, 1995 compared to the seven contracts at December 31,
1994.
Technical staffing -- Revenues from technical staffing increased by
$1,895,098 in 1995. This was a 14.8% increase over technical staffing
revenues in 1994. The increase was due to continued client demand for
TechTeam's help desk and computer services personnel at Ford and other
major accounts.
15
<PAGE> 17
Systems integration -- Revenues from systems integration increased by
$2,313,190 in 1995. This was a 41.3% increase over systems integration
revenues in 1994. The increase was due principally to a growing demand by
existing clients for TechTeam's networking and applications development
services.
Training programs -- Revenues from training programs decreased by
$595,561 in 1995. This was a 12.9% decrease from training revenues in 1994.
The decrease was due to a reduced scope of training services for a major
client.
Cost of services delivered -- The cost of services delivered increased by
$9,238,101 in 1995. This was a 40.0% increase over the cost of services
delivered in 1994. The increase was due principally to compensation costs for an
increased number of technical personnel, statutory and other benefits associated
with such personnel, facility and computer equipment costs, and other direct
costs associated with providing an increased volume of services to clients.
These costs were 77.4% and 76.4% of revenues in 1995 and 1994, respectively.
Selling, general and administrative -- Selling, general and administrative
expenses increased by $1,476,875 in 1995. This was a 38.1% increase over
selling, general and administrative expenses in 1994. The increase was due
principally to compensation costs for an increased number of sales and
administrative personnel, statutory and other benefits associated with such
personnel, facility and equipment costs, and other indirect costs needed to
support the growth of the Company. These expenses were 12.8% of revenues in both
1995 and 1994.
Tax provisions -- TechTeam recognized $1,268,236 of Federal income tax in
1995, resulting in an effective tax rate of 34.6% for 1995 compared to an
effective tax rate of 35.7% for 1994. In 1995, TechTeam reversed $25,000 of
Federal income tax reserve, resulting in the reduced effective tax rate. The
Michigan Single Business Tax in 1995 was $410,000, with an effective tax rate of
10.1% compared to an effective tax rate of 9.1% for 1994.
COMPARATIVE PERFORMANCE -- 1994 VERSUS 1993
1994 was TechTeam's previous record year in terms of both revenues and
earnings. TechTeam earned net income of $1,971,049, or $.18 per share, for 1994
as compared to a net income of $1,672,413, or $.18 per share, for 1993.
Revenues -- TechTeam's total revenues increased by $9,780,491 in 1994 to
$30,224,438, a 47.8% increase over 1993 revenues. Changes in revenues resulted
from the following.
Call Center Services -- Revenues from Call Center Services increased
by $4,847,666 in 1994. This was a 208.5% increase over Call Center Services
revenues in 1993. The increase was due to the fact that this service line
commenced in the second quarter of 1993, and that the Company had seven
contracts in place at December 31, 1994 compared to four contracts at
December 31, 1993.
Technical staffing -- Revenues from technical staffing increased by
$2,751,788 in 1994. This was a 27.3% increase over technical staffing
revenues in 1993. The increase was due to continued client demand for
TechTeam's help desk and computer services personnel at Ford and other
major accounts.
Systems integration -- Revenues from systems integration increased by
$2,954,178 in 1994. This was a 111.6% increase over systems integration
revenues in 1993. The increase was primarily attributable to $1,710,299
additional revenue generated by National TechTeam of Illinois, Inc.
(formerly Micro Systems Group, Inc.) in 1994 versus 1993; this company was
acquired by the Company on September 30, 1993. The increased revenues also
reflect a growing demand for TechTeam's networking and applications
development services.
Training programs -- Revenues from training programs decreased by
$773,141 in 1994. This was a 14.4% decrease from training revenues in 1993.
The decrease was due to a reduced scope of training services for a major
client.
16
<PAGE> 18
Cost of services delivered -- The cost of services delivered increased by
$7,277,663 in 1994. This was a 46.0% increase over the cost of services
delivered in 1993. The increase was due principally to compensation costs for an
increased number of technical personnel, statutory and other benefits associated
with such personnel, facility and computer equipment costs, and other direct
costs associated with providing an increased volume of services to clients.
These costs were 76.4% and 77.4% of revenues in 1994 and 1993, respectively.
Selling, general and administrative -- Selling, general and administrative
expenses increased by $2,085,259 in 1994. This was a 116.7% increase over
selling, general and administrative expenses in 1993. The increase was due
principally to compensation costs for an increased number of sales and
administrative personnel, statutory and other benefits associated with such
personnel, facility and equipment costs, and other indirect costs needed to
support the growth of the Company. These expenses were 12.8% of revenues in 1994
compared with 8.7% of revenues in 1993. These costs increased in response to
increased business activity and to support the Company's expansion in Europe.
Gain on sale of investment -- In 1994 TechTeam sold a portion of its
investment in Action Trac, a privately held domestic provider of computer
support services.
Tax provisions -- TechTeam recognized $1,095,000 of Federal income tax in
1994, resulting in an effective tax rate of 35.7% for 1994 compared to an
effective tax rate of 34.7% for 1993. The Michigan Single Business Tax in 1994
was $305,875, with an effective rate of 9.1% compared to an effective tax rate
of 7.5% for 1993.
17
<PAGE> 19
IMPACT OF BUSINESS WITH MAJOR CLIENTS
While the large concentration of business with Ford contributes
significantly to TechTeam's revenues, management is aware of, and has acted
upon, the need to diversify its client base from both a client and industry
perspective. TechTeam's services are not specific to any single industry and can
be beneficial to most large corporations. TechTeam's technical staffing and
training programs cover most of the popular software applications and can be
customized to improve the productivity of microcomputer users in most companies.
Continuing efforts to increase sales outside of Ford have produced positive
results, as total revenues from non-Ford clients were $6,740,635 in 1993,
$16,028,585 in 1994, and $26,202,498 in 1995, a compound annual growth rate of
97.2%.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 SIX MONTHS ENDED JUNE 30
----------------------------------------- ------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Hewlett-Packard Company
Revenues for the period....... $ -- $ -- $ 7,269,445 $1,609,375 $9,672,846
Percentage increase from prior
period...................... --% --% --%* --%* 501.1%
Percentage of total
revenues.................... --% --% 17.4% 8.9% 32.0%
Ford Motor Company
Revenues for the period....... $13,703,312 $14,195,853 $15,584,964 $7,877,077 $8,573,511
Percentage increase from prior
period...................... 54.0% 3.6% 9.8% 6.0% 8.8%
Percentage of total
revenues.................... 67.0% 47.0% 37.3% 43.6% 28.4%
Chrysler Corporation
Revenues for the period....... $ 1,266,320 $ 3,294,788 $ 4,162,419 $2,031,761 $2,624,788
Percentage increase from prior
period...................... 72.9% 160.2% 26.3% 101.8% 29.2%
Percentage of total
revenues.................... 6.2% 10.9% 10.0% 11.2% 8.7%
Corel Corporation
Revenues for the period....... $ 414,604 $ 3,294,788 $ 2,737,601 $1,600,447 $ 268,459
Percentage increase/(decrease)
from prior period........... --%* 789.4% (25.8)% (10.6)% (83.2)%
Percentage of total
revenues.................... 2.0% 12.2% 6.6% 8.9% 0.9%
Novell, Inc.
Revenues for the period....... $ 1,717,417 $ 2,260,203 $ 522,973 $ 285,356 $ 20,020
Percentage increase/(decrease)
from prior period........... --%* 31.6% (76.7)% (75.9)% (93.0)%
Percentage of total
revenues.................... 8.4% 7.5% 1.3% 1.6% 0.1%
</TABLE>
- -------------------------
* First year of business relationship
Services provided to Ford and Chrysler consist of contract computer
end-user support including on-site help desks and call center services,
programming services, documentation services, and classroom training programs.
TechTeam provides these services to virtually all Ford divisions and two
finance-related Ford subsidiaries. Services provided to Hewlett-Packard, Corel
and Novell consist of technical product post-sales support provided from
TechTeam call center sites.
Revenues from Hewlett-Packard first commenced in mid-1995 with the award of
the first contract for call center services. 1996 was the first full year of
services under that contract. Additional contracts have been awarded in 1996.
Revenues from Corel first commenced in late 1993 and continued into early
1996 at which time Corel made a strategic decision to bring its call center
outsourcing service back in-house. The Company believes Corel's decision is
unrelated to the Company's performance.
Revenues from Novell (product support related to WordPerfect application
software) first commenced in mid-1993 and continued until late 1995 at which
time Novell discontinued outsourced
18
<PAGE> 20
telephone support for its customers. The Company believes Novell's decision is
unrelated to the Company's performance and, shortly after discontinuation of
service, the WordPerfect business unit was sold to Corel Corporation.
LIQUIDITY AND CAPITAL RESOURCES
Over the three and one-half year period commencing January 1, 1993, the
Company's business has been financed by cash provided by operations and the
issuance of common stock, primarily $5,000,000 of private placements in 1994 and
shares issued throughout the period under stock option plans. Indicators of the
Company's financial strength are summarized below:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------ JUNE 30
1993 1994 1995 1996
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Working capital.................... $4,167,181 $11,716,501 $12,352,915 $13,363,797
Current ratio...................... 3.1 11.0 4.2 3.6
Debt as a percentage of total
capitalization................... 6.6% 0.1% 2.9% 4.4%
Shareholders' equity............... $8,079,552 $15,829,026 $17,891,966 $20,398,767
</TABLE>
The Company's working capital was $13,363,797 at June 30, 1996, an increase
of 8.2% from December 31, 1995. This increase was due primarily to 1996
operating results (reflected primarily in higher accounts receivable balances
due to increased sales).
TechTeam has a line-of-credit agreement with NBD Bank which provides for
short-terms borrowings of up to $6,000,000; the credit is unsecured. The
line-of-credit is at the prime rate. There were no borrowings under the credit
agreement at June 30, 1996.
TechTeam invested $680,000 in new computer equipment for its training
classrooms in 1993, which was financed through existing working capital and
through two year bank term notes. In 1995, TechTeam invested $1,057,000 in
telecommunications hardware and software which was financed through a five year
bank term note. Management believes sufficient cash resources exist to support
its current growth strategies through currently available cash, cash provided
from the proceeds of this offering and future operations, and the Company's
existing bank credit arrangement.
RECENT PRONOUNCEMENTS OF THE FINANCIAL ACCOUNTING STANDARDS BOARD
In 1996, the Company will adopt SFAS No. 123, "Accounting for Stock-Based
Compensation." This standard establishes a fair value method for accounting for
stock-based compensation plans, either through recognition or disclosure. The
Company intends to adopt this standard by disclosing the pro forma net income
and earnings per share amounts assuming the fair value method was adopted on
January 1, 1995. The adoption of this standard will have no impact on reported
results of operations, financial position or cash flows.
19
<PAGE> 21
BUSINESS
GENERAL
TechTeam is a leading provider of information technology outsourcing
support services to large national and multi-national corporations, government
agencies and service organizations. The Company offers its services through two
global business units: (i) Call Center Services, which provides its clients
principally with inbound telephone support for their computer product end-users
and (ii) Corporate Computer Services, which provides corporations with technical
staffing (principally on-site help desk support), systems integration and
instructor-led, computer-based training. TechTeam's client base includes
Hewlett-Packard, Ford, Chrysler, First Chicago NBD, United Parcel Service,
Owens-Corning, Novell and Sun Microsystems. Many of TechTeam's clients utilize
services offered by both of TechTeam's business units. The Company has
experienced rapid growth as the trend toward outsourcing has increased. Between
1991 and 1995, revenues increased from $7.9 million to $41.8 million and net
income increased from $100,000 to $2.4 million. This represents compounded
annual growth rates of 52% and 121% in revenues and net income, respectively.
INDUSTRY BACKGROUND
The IT services market is large and growing rapidly as corporations
continue to focus on their core business and seek to outsource technical support
to third party providers. In addition, the availability, complexity and number
of end-users of computer processing systems have increased, further spurring the
demand for IT support services. Dataquest estimates that from 1995 to 1999, the
overall IT services market will grow from $50.7 billion to $79.0 billion;
technical support services provided in-house and by third parties, such as those
provided by call centers and on-site help desks, are expected to increase from
$20.6 billion to $31.5 billion; and technical support services outsourced to
third-party vendors are expected to increase from $2.6 billion to $7.2 billion.
This represents compound annual growth rates of 11.7%, 11.2% and 29.0%,
respectively. In addition, the Gartner Group estimates that by 1998 over 40% of
companies will outsource corporate help desk services, a subsegment of technical
support services, compared to only 15% today.
TechTeam's growth has been driven by several major business trends
affecting the IT services market. Continued rapid technological change, more
frequent upgrade cycles, the increased need for specialized knowledge to plan
and implement IT strategies, the large capital expenditures necessary to
maintain an IT infrastructure and the desire to convert fixed employee costs to
variable costs are all factors which have led businesses to outsource an
increasing portion of their computer and IT functions. The Company anticipates
the outsourcing trend to continue as corporations reduce resources dedicated to
non-core activities.
SERVICES
The Company originally commenced operations as a computer hardware reseller
and evolved into a provider of computer-based training for its computer hardware
customers. During the late 1980's the Company added IT staffing and systems
integration services as a complement to its existing training business. In 1993,
as a result of the Company's growing expertise in providing IT staffing of
on-site help desks, TechTeam entered the call center industry. Today, the
Company's IT outsourcing services are intended to cover a broad range of IT,
including planning, design, implementation and support. Although the Company's
services are complementary, TechTeam has divided its service offerings into two
divisions (i) Call Center Services and (ii) Corporate Computer Services
(technical staffing, systems integration and training), which are described in
more detail as follows:
20
<PAGE> 22
CALL CENTER SERVICES
The Company is currently one of the largest international suppliers of call
center services. TechTeam focuses on two types of customers: (i) manufacturers
of hardware and software products, such as Hewlett-Packard, contract TechTeam to
resolve their customers' inbound technical support calls regarding use of
features, troubleshooting, problem diagnosis, and operating assistance; and (ii)
major corporations, such as Chrysler, have selected TechTeam to provide off-site
telephone-based support for their employees and/or customers on a national and
international basis. TechTeam has also recently begun to provide services to
support its clients throughout their sales cycle, including such services as
market research, lead generation, new product launch, pre-sales support,
fulfillment and entitlement. The following chart illustrates a representative
sales cycle for a typical computer hardware or software vendor:
[CHART SHOWING A REPRESENTATIVE SALES CYCLE FOR A TYPICAL COMPUTER HARDWARE OR
SOFTWARE VENDOR]
TechTeam's five domestic call centers located in the metropolitan areas of
Detroit (2), Chicago, Dallas and Seattle, and its Pan-European center in
Brussels, Belgium, provide live agent and interactive voice response services.
Currently, TechTeam has over 680 workstations available for three shifts, 24
hours a day, 7 days a week, 365 days per year and is able to provide services in
18 different languages. Call Center Services is staffed by 685 trained and
experienced technical professionals who support over 500 software applications,
hardware components, Internet sites and proprietary systems. The Company's
state-of-the-art call centers are equipped with sophisticated telephony
infrastructure, efficient networks, call distribution software, and productivity
management tools which aid in increasing efficiency and utilization.
21
<PAGE> 23
CORPORATE COMPUTER SERVICES
Technical Staffing. This largest component of TechTeam's Corporate Computer
Services unit consists principally of on-site help desk personnel which are
provided to clients almost exclusively on long-term assignments. For
multi-national clients such as Ford and Chrysler, TechTeam establishes full
service multi-product, multi-platform help desks that are resident on the
clients' sites and are fully integrated with their operations. Clients'
employees contact the help desks for assistance with product usage, network
administration, product acquisition, and corporate computing standards. These
productivity centers provide over-the-phone and over-the-shoulder deskside
assistance for employees at all levels. Because of TechTeam's proximity to the
client's technology and business practices, the Company is often asked to
provide peripheral staffing services for contract programming, database design,
graphics development and network management. Through its on-site help desk
services, TechTeam develops a proprietary awareness of its clients' technology
requirements and can provide creative solutions through the implementation of
customized training programs.
Systems Integration. Through systems integration services, TechTeam works
closely with its clients in the design and integration of advanced technology
systems. These systems, which are the IT foundation for many corporations today,
require significant planning to assure that the various hardware and software
components are compatible and will work together to achieve fast and reliable
communications. Key services provided by TechTeam include: LAN/WAN design,
installation, administration and support; World Wide Web development and a
complete package of Internet services; Novell, NT Server and Lotus Notes
implementation; QS 9000 and ISO 9000 software; hardware and software sales,
installation, troubleshooting and maintenance; and centralized purchasing to
avoid duplication of effort and eliminate purchases of incompatible products.
Training. Over the past several years, TechTeam has grown into a leading
provider of customized corporate computer training in North America with
training offerings ranging from general end-user modules to complex technical
courses for IT professionals. The Company is a manufacturer-authorized training
provider for many products produced by Novell, Microsoft, IBM, Lotus, SABRE and
Sun Microsystems and is a Drake Testing Center to provide clients with
certification access. Offerings include a wide array of applications within the
office automation, network and client server marketplace. Although most training
is delivered on client sites, TechTeam operates five training facilities in the
Midwest, located in Michigan (3), Indiana and Illinois. Clients are offered a
full range of delivery capabilities including course catalogs, registration,
equipment, networks, course materials, certified trainers, evaluation options,
desk-side tutorials, testing, feedback to help desks and reporting. TechTeam's
documentation department works with clients to provide professional, customized
reference materials including comprehensive systems manuals, newsletters,
training materials, translation services, quick reference cards and product
information flyers.
COMPETITIVE STRENGTHS
TechTeam possesses several key competitive strengths that it believes will
enable it to continue to expand its business by further penetrating existing
client relationships and by attracting new clients. These strengths, which have
contributed to TechTeam's rapid growth, are as follows:
Internationally Recognized Client Base. The Company provides its services
to large national and multi-national clients who have a reputation for
excellence in their market segments. These industry leaders impose high
standards of performance on the Company, often requiring it to adopt
best-in-class business practices. TechTeam has gained expertise in such
best-in-class practices as customer service, end-user productivity, client
server technology, computer integration, project management, Intranet (internal
Internets utilized by large companies) and World Wide Web sites across
automotive, financial, manufacturing, computer, health care and consumer service
industries. As TechTeam has met these standards of performance, it has received
additional opportunities to expand its service offerings with clients such as
Ford, Chrysler, First Chicago NBD, Hewlett-Packard, Novell, Sun Microsystems and
22
<PAGE> 24
others. The Company believes its established relationships and performance
record with its demanding clients provide TechTeam with significant credibility
and referral potential with new clients.
Multiple Service Offerings. The demand for IT outsourcing support services
is accelerating as more businesses seek outside expertise as a cost effective
alternative to managing their increasingly complex technological requirements.
TechTeam's broad array of service offerings evolved by reacting to its clients'
needs and developing outsourcing support services designed to improve their
productivity. The Company's largest clients utilize multiple elements of
TechTeam's call center, technical staffing, systems integration and training
service offerings. Rather than purchase services from a variety of vendors who
specialize in a single offering, many clients seek to reduce their purchasing
costs and create greater vendor accountability by using a select group of
business partners for a broad range of IT needs. As TechTeam penetrates each
account and becomes an integral long-term partner, it is able to reduce sales
cost per customer, and is well positioned to retain its incumbent role as
preferred IT services provider.
Technically Proficient Employee Base. As an established growth
organization, TechTeam has been successful in recruiting and retaining a
technically proficient employee base who seek both advancement opportunities and
stability through a managed career path. TechTeam has a rigorous and continuing
in-house training program that is designed to keep its professionals proficient
with respect to the latest technologies and business methods. As the Company has
grown, it has increased the number of employees from 136 in January 1992 to
1,238 in June 1996 and has achieved this growth with what it believes is a lower
turnover rate than many of its competitors. While service-based companies are
supported by technology, they are ultimately defined by the quality of their
professional staff. In order to develop and retain high quality professionals,
the Company applies comprehensive employee care practices, which include
stringent recruiting requirements, ongoing training for improved performance and
career advancement, periodic individual expectation and goal setting, employee
recognition programs and competitive benefits and compensation.
Recognition for Delivery of Quality Services. TechTeam is firmly committed
to providing its clients with the highest quality of call center and corporate
computer services, and has tailored its quality programs to address directly
individual client requirements. TechTeam believes that consistent, high quality,
cost-effective service delivery is the product of standardized business
practices coupled with advanced technology and performance tracking. The
Company's aggressive focus since mid-1993 on quality certification is the result
of two key drivers: (i) rapid growth with strong profit margins is sustainable
only through high client satisfaction, and (ii) many major corporations are now
requiring, or will soon require, formal third-party quality certification of
their business partners. TechTeam has been recognized for its delivery of
quality services by being awarded ISO 9001 certification, an international
standard for quality assurance and operating consistency. Within its call
centers, TechTeam employs a comprehensive performance tracking system that
measures objective and subjective attributes of service delivery. These quality
criteria are customized for each project to reflect accurately the service
delivery as perceived by the caller and with respect to the broader goals of the
client. The Company believes that its delivery of high quality services results
from close supervision and management. When combined with its clients'
performance evaluations, these operational practices provide a strategic
advantage in competing for additional business. TechTeam encourages and assists
clients with direct connections to TechTeam's systems from their site for real
time access to operational statistics and performance. This sharing of key
management information is intended to position TechTeam as a business partner
rather than a discrete third party service provider.
Advanced Technology Infrastructure. The Company believes that its
technology enables it to maintain a leading position as a provider of IT support
services, particularly in call center services. As such, TechTeam's relationship
with some of the world's leading companies has meant that TechTeam often
receives challenging assignments requiring the use of advanced technology and
methodologies. To meet these challenges, TechTeam continually trains its
employees and clients in the latest product and service innovations. In
addition, TechTeam has built five new call centers in the last year, investing
substantial capital to build a technology infrastructure that features
state-of-the-art call centers with sophisticated telephony, efficient networks,
call distribution software and productivity management tools.
23
<PAGE> 25
GROWTH STRATEGY
The Company intends to increase revenues and to continue to grow its
operations through the following growth strategy:
Further Penetrate Existing Clients, Attract New Clients and Extend Service
Lines. TechTeam intends to market its call center and corporate support services
aggressively through further penetration within existing accounts, pursuing new
clients and through the addition of new service offerings. Historically, many of
TechTeam's clients initially have engaged the Company to provide a specific
service to a single division or business unit. The Company believes that the
provision of additional services to its existing client base represents a
significant growth opportunity and that the access, contacts and goodwill
provided by its existing client relationships afford it significant advantages
in marketing additional services. The Company also intends to target new clients
by continuing to leverage the credibility of its blue chip client list, its
outstanding service delivery record and broad service offerings. In addition,
TechTeam plans to extend its service line to meet its client's needs. Offerings
have recently been added throughout a client's sales cycle such as pre-launch
support, pre-sales support and order fulfillment, among others to complement the
Company's strong post-sales support service.
Leverage Technology and Training for Higher Margins. As part of the
Company's expansion program, it built five state-of-the-art call centers and
made other enhancements to its technological infrastructure. The investment for
high-capacity advanced-function PBX phone switches, interactive voice response
technology, automated call distributors, disaster recovery, back-up generators,
technician training programs and facilities are fixed costs that can be spread
across a larger revenue base. TechTeam's call centers operate 7 days a week, 24
hours a day, 365 days per year. TechTeam also attempts to improve its margins by
generating off-peak call center traffic to create a balance at each call center
to supplement peak utilization between 7 a.m. and 9 p.m. EST. The Company is
able to maintain activity at its call centers during off-peak hours by providing
its services to Internet end users and by providing international support, such
as direct T1 access to service contracts from Australia, Europe, and the Pacific
Rim.
TechTeam's roots in corporate training have greatly impacted the
development of all of the Company's service lines and continue to play a key
role in service evolution. With a professional staff of over 50 certified
trainers and a large team of degreed instructional designers, TechTeam is
afforded a unique opportunity to make use of extensive training resources,
course materials, infrastructure, equipment, labs, and facilities across all
aspects of the business. The Company believes that these training assets provide
three distinct benefits to the Company, each of which improve employee
productivity and reduce operating costs: (i) staff retention is improved by
continuing to challenge employees and preparing them for advancement; (ii)
cross-trained employees can be moved between projects to meet customer needs and
to increase utilization; and (iii) professional training is an affordable way to
keep employees current on emerging technologies and business practices.
TechTeam has added five new call centers and two new training facilities in
the 18 months between January 1, 1995 and June 30, 1996. The Company has the
capacity to nearly double both its present call volumes and training volumes
without incurring additional material facility and operating infrastructure
expenses.
Expand Globally. TechTeam's business development and expansion strategy is
based on a combination of anticipating and responding to client needs and
selective acquisitions. As major corporations redefine themselves to compete in
the global marketplace, TechTeam is responding by delivering services on a
multi-national basis to many of its largest clients. In particular, the Company
opened its 75%-owned, joint-venture operated call center in Brussels, Belgium in
May 1996 in order to provide its U.S.-based clients with Pan-European call
center services. During 1996, TechTeam has also opened facilities in Seattle,
Washington; Troy, Michigan; Harper Woods, Michigan; and Indianapolis, Indiana.
TechTeam services many of its clients' international requirements by operating
its domestic call centers on a 24-hour basis and offering its services in 18
foreign languages. The Company believes that its record of responding to its
clients' geographic demands has greatly strengthened its relationship and
24
<PAGE> 26
opportunities with its clients. TechTeam continually monitors and evaluates
additional expansion opportunities and is prepared to act when justified by
client demand.
Pursue Selective Acquisitions, Joint Ventures and Alliances. Many industry
analysts believe that the IT industry, which has been proliferating, is likely
to enter a consolidation phase within the next several years. The Company
continually monitors the marketplace for appropriate opportunities and intends
to maintain flexibility in finding ways to increase the Company's resources and
capabilities. The Company also seeks joint venture partners when it determines
that a partnership arrangement will be beneficial when offering a new line of
business or entering a new marketplace. In opening its Brussels call center,
TechTeam entered into a joint venture with Paratel N.V., a Pan-European provider
of call center services.
TechTeam believes that its services are enhanced by establishing mutually
beneficial partnerships with computer industry leaders, niche players, and other
key suppliers of software, hardware and services. Alliances have resulted in
contracts directly with manufacturers such as Sun Microsystems, Novell,
Palindrome, Shiva and Hewlett-Packard for product training, network
implementation and technical support.
Continue a Strong Commitment to Quality Service. TechTeam's commitment to
quality service and its continued efforts to obtain additional certification and
recognition for its quality methodologies forms the basis of the Company's
ongoing strategy. This strategy is essential to TechTeam's ability to generate
new business because many companies already require their suppliers to adopt the
QS and ISO quality systems and the Company believes many more will require
compliance in the near future. TechTeam has already received ISO 9001
certification and the Michigan Quality Council's Award for Quality Achievement
and is in the process of applying for the Ford Q1 quality award. As a remarketer
of System 9000 software and a training provider for this enterprise-wide quality
management tool, TechTeam assists other companies in obtaining QS and ISO
certification and in implementing quality control systems. Other elements of the
Company's quality program which are key to its overall strategy are the
recruitment, training and retention of a highly qualified and dedicated work
force.
TECHNOLOGY
As an IT outsourcing company, TechTeam relies upon technology to offer its
clients efficient and high quality call center services by meeting client
mandated metrics and achieving maximum utilization of call center resources.
TechTeam maintains state-of-the-art call centers by utilizing high connectivity
switches, advanced telephony services and interactive Web pages to provide
inbound, outbound, Internet and fax back capabilities. Call center work stations
are PC-based and utilize computer telephony integration (CTI), which connects
the computer to the telephone switch allowing calls and computer data to be
transferred simultaneously with the arrival of the call. CTI enables TechTeam's
agents to more efficiently assist its clients by accessing end-user information
using significantly fewer key strokes.
TechTeam's strategy is to use technology to create a competitive advantage
through continued development of state-of-the-art and innovative applications.
In addition to extensive interactive voice response capabilities, the Company
utilizes network technology which routes incoming calls to the next available
call center agent located at any of the Company's domestic call centers. This
technology permits the Company to improve answer times and affords the
opportunity to develop virtual call centers, thus gaining improved operating
efficiencies, access to additional staffing resources and higher utilization.
MARKETING, SALES AND CLIENTS
The Company's sales and marketing strategy is to generate new business
opportunities and to develop stronger relationship with existing customers. To
implement this strategy, TechTeam currently employs 30 sales professionals, a
three-fold increase in sales professionals since 1995. In addition, the Company
has put in place an organizational structure consisting of three focused teams:
(i) Central Support Services, dedicated specifically to call center outsourcing
opportunities; (ii) Corporate Computer Services, which is divided into a major
accounts group and national accounts group and
25
<PAGE> 27
(iii) European Operations. The principal objective of this structure is to
assign marketing representatives with a thorough knowledge of the clients' needs
and the requisite sales experience to afford the maximum opportunity for
cross-selling TechTeam's services and leveraging the Company's experience with
major clients into new client relationships. Marketing efforts include direct
solicitations, attendance at industry and trade shows, and invitations for
clients to visit the Company's business offices and three types of delivery
venues: TechTeam's call centers, help desks located on client facilities, and
in-progress training sessions.
The Company's client base is comprised principally of large national and
multi-national corporations, service organizations and governmental units. The
automobile industry accounts for a major portion of the Company's revenues,
although the percentage of revenues represented by clients in other industries
has been steadily increasing. Combined sales to the Company's four largest
clients in fiscal 1995 accounted for 71.3% of total revenues. In fiscal 1995,
the combined revenues from Ford Motor Company and Chrysler Corporation totaled
47.3% of the Company's revenues. Although TechTeam has historically been and
continues to be dependent upon Ford for a significant portion of its total
revenues, the percentage of total revenues derived from Ford declined to 37.3%
in fiscal 1995 from 47.0% in 1994 and from 67.0% in 1993 even while revenues
from Ford increased 13.7% during that same period. Total revenues from non-Ford
clients increased at a 97.2% compound annual growth rate from 1993 to 1995.
TechTeam does not have exclusive arrangements with any clients, and most
contracts are cancelable by either party on short notice. In addition, most
clients may reduce the use of the Company's services unilaterally without
penalty or with the payment of certain start up costs if canceled early. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Impact of Business With Major Clients."
The following is a selected list of TechTeam's clients:
Ameritech
Automobile Club of Michigan
Blue Cross/Blue Shield of Michigan
Chrysler
Concentric Network
First Chicago NBD
Ford
Hewlett-Packard
Meijers
Micrografx
Novell
Owens-Corning
Price Waterhouse*
Sun Microsystems
United Parcel Service*
Visio
Wall Data*
Wayne County Government*
- -------------------------
* In the first half of 1996, the Company obtained significant contracts from
United Parcel Service, Price Waterhouse, Wayne County and Wall Data.
INTELLECTUAL PROPERTY RIGHTS
The Company's success is dependent upon certain methodologies it utilizes
in designing and delivering Corporate Computer Services and Call Center
Services. The Company's business includes the development of custom software in
connection with specific client engagements. Ownership of such software is
generally assigned to the client. The Company also develops certain foundation
and application software products, or software "tools," which remain the
property of the Company.
The Company relies upon a combination of nondisclosure and other
contractual arrangements and trade secret, copyright and trademark laws to
protect its proprietary rights and the proprietary rights of third parties from
whom the Company licenses intellectual property. The Company enters into
confidentiality agreements with its employees and limits distribution of
proprietary information. There can be no assurance that the steps taken by the
Company in this regard will be adequate to deter misappropriation of proprietary
information or that the Company will be able to detect unauthorized use and take
appropriate steps to enforce its intellectual property rights.
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<PAGE> 28
Although the Company believes that its services do not infringe on the
intellectual property rights of others and that it has all rights necessary to
utilize the intellectual property employed in its business, the Company is
subject to the risk of litigation alleging infringement of third-party
intellectual property rights. Any such claims could require the Company to spend
significant sums in litigation, pay damages, develop non-infringing intellectual
property or acquire licenses of the intellectual property which is the subject
of asserted infringement.
TechTeam(R) is a servicemark that is registered with the United States
Patent and Trademark Office. Federal servicemark registrations may be renewed
indefinitely as long as the underlying servicemark remains in use. Aside from
the foregoing, the Company holds no other trademarks, servicemarks or patents.
COMPETITION
The Company faces intense competition in the markets served by both its
Call Center and Corporate Computer Services divisions. In the call center
market, the Company competes with other call center companies, some of which
have substantially greater resources including more call center locations,
greater financial resources, a larger client base and more name recognition. In
the corporate computer services markets, the Company competes with many entities
including systems integration firms, application software firms, staffing firms,
"Big Six" accounting firms, facilities management firms and computer consulting
firms. Many of these firms have far greater resources, clients and name
recognition than the Company. The Company also faces significant competition in
both markets from its own clients and potential clients whose internal resources
represent a fixed cost to the client. Such competition may impose additional
pricing pressures on the Company. TechTeam competes principally on the basis of
quality of customer service, being able to provide a broad range of IT services,
price, experience and reputation in the industry, technological capabilities,
quality practices, rapid response to client needs and referrals from existing
clients.
HUMAN RESOURCES
At June 30, 1996, TechTeam had a total of 1,238 employees of which 183 were
part-time. The functional responsibilities of these employees are as follows:
685 customer support agents and related employees in Call Center Services; 265
professionals in technical staffing; 130 professionals in systems integration;
76 instructors and related employees in training; 30 employees in sales and
marketing; and 52 employees in management and administration. TechTeam believes
its relationship with its employees is excellent.
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<PAGE> 29
PROPERTIES
The following table sets forth the primary real properties that TechTeam
leases and occupies:
<TABLE>
<CAPTION>
LEASE TERM BEGINNING APPROXIMATE
LOCATION FUNCTION AND EXPIRING SQUARE FOOTAGE
- ---------------------------- ------------------------- -------------------- --------------
<S> <C> <C> <C>
Dearborn, MI................ World Headquarters 11/16/87 - 04/01/97 15,290
North American Training
Center Headquarters 10/01/88 - 04/01/97 19,468
Southfield, MI.............. World Call Center
Headquarters and Training
Center 11/01/93 - 12/31/00 57,403
Dallas, TX.................. Regional Office and Call
Center 10/01/95 - 09/30/00 32,666
Harper Woods, MI............ Call Center 06/15/96 - 06/14/97 17,775
Chicago, IL................. Regional Office, Call
Center and Training
Center 03/01/94 - 02/28/97 13,195
Seattle, WA................. Call Center 04/01/96 - 03/31/97 3,175
Troy, MI.................... Training Center 01/01/96 - 12/31/98 2,345
Indianapolis, IN............ Training Center 01/01/96 - 12/31/00 1,881
Brussels, Belgium........... Call Center * 1,356
</TABLE>
- -------------------------
* As part of its joint-venture with Paratel N.V., TechTeam has the right to
occupy space which is cancellable on 180 days notice. Although the Company
does not foresee the loss of this right in the near future, the Company
believes that suitable replacement facilities are readily available.
TechTeam believes that the facilities it occupies are well maintained and
in good operating condition. These facilities include general office space and
20 well-equipped computer training classrooms. Because some TechTeam services
are performed at client sites, the cost of maintaining multiple offices is
minimized. In addition to the properties listed in the above table, TechTeam
employs personnel and performs ongoing business in California, New Jersey and
the United Kingdom. The Company expects to relocate its world headquarters to
another location in metropolitan Detroit in 1997 due to increased demand for
space.
28
<PAGE> 30
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the Company's
directors and executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------- --- -----------------------------------------------------
<S> <C> <C>
William F. Coyro, Jr............. 52 Chairman and Chief Executive Officer and Director
Jonathan D. Ahlbrand............. 34 Senior Vice President
Lawrence A. Mills................ 51 Senior Vice President, Chief Financial Officer and
Treasurer
Thomas R. Smith.................. 53 Senior Vice President
Louis K. Dohrmann................ 37 Vice President of Operations and Chief Technology
Officer
Kim A. Cooper.................... 37 Director
Valerie J. Niemiec............... 35 Director
Wallace D. Riley................. 68 Director
Richard G. Somerlott............. 54 Director
LeRoy H. Wulfmeier, III.......... 50 Director
</TABLE>
WILLIAM F. COYRO, JR. was the founder, President and Chief Executive
Officer of Computer Trade Development ("CTD"), a predecessor of the Company from
1979 until 1987. Dr. Coyro has been the Chief Executive Officer and Chairman of
the Board of the Company from the Company's inception in 1987 through the date
hereof. From 1974 to 1979, Dr. Coyro practiced full time as a dentist.
JONATHAN D. AHLBRAND joined the Company in December 1995 as its Vice
President responsible for call center sales. In March 1996, he was appointed
Senior Vice President of Call Center Services. Previously, Mr. Ahlbrand was
President of World Data Delivery Systems, a provider of electronic information
processing from 1991 through mid-1994. From mid-1994 to November 1995, he was
employed by West Interactive Corporation as a Vice President responsible for the
sale of interactive and live agent customer services.
LAWRENCE A. MILLS joined the Company in December 1993 as its Chief
Financial Officer. In June 1994, he was appointed Treasurer. In February 1995,
he was appointed Chief Operating Officer, a position which he held until the
appointment of Messrs. Ahlbrand and Smith to their current positions. In March
1996, he was appointed Senior Vice President. Previously, Mr. Mills was employed
by the Michigan Gas Utilities Division of Utilicorp United Inc. as its Vice
President of Administration and Strategic Development from 1989 through 1993.
THOMAS R. SMITH joined the Company in September 1994 as its Vice President
of Sales. In March 1996, he was appointed Senior Vice President of Sales.
Between 1986 and 1994, Mr. Smith was employed by Digital Equipment Corporation
where he held the position of Global Account Manager for the Ford Motor Company
account.
LOUIS K. DOHRMANN joined TechTeam in April 1996 and is the Company's Vice
President of Operations and Chief Technology Officer. Between 1987 and 1996, Mr.
Dohrmann was employed by Inacom Corporation as a support engineer and from 1993
until early 1996, as Vice President and Chief Technology Officer.
KIM A. COOPER became a director in March 1996. Between 1984 and 1994, Mr.
Cooper was employed by WordPerfect Corporation in sales and as its Vice
President, Worldwide Customer Services. Between 1994 and 1996, he was employed
by Novell, Inc. as its Vice President, Worldwide Marketing and Business
Development. In January 1996, he founded and became the Chairman and Chief
Executive Officer of Digital Harbor, L.C., a component software company
developing Internet applications. Mr. Cooper is a member of the Board's Audit
Committee.
29
<PAGE> 31
VALERIE J. NIEMIEC became a director in December 1995. Between April 1993
and November 1995, Ms. Niemiec served as a Senior Vice President of the Company.
Between 1990 and 1993, Ms. Niemiec was employed by the Company as a Vice
President of Sales.
WALLACE D. RILEY is an attorney at law and since 1968 has been a partner
with the firm of Riley & Roumell. Mr. Riley previously served as a director of
the Company from 1987 to 1988 and was reelected as a director at the Company's
1993 Annual Meeting. He is the past president of the State Bar of Michigan as
well as past president of the American Bar Association. He was a member of the
Board of Governors of the American Bar Association from 1977-80, and trustee of
the Federal Bar Foundation since 1968. He has been a Special Attorney General
for the State of Michigan since 1969. Mr. Riley is a member of the Board's
Compensation Committee.
RICHARD G. SOMERLOTT is a dentist and a managing partner of Endodontics
Associates Professional Corporation. Dr. Somerlott has been a director and
shareholder of the Company since its inception. Dr. Somerlott is a member of the
Board's Audit Committee.
LEROY H. WULFMEIER, III is an attorney at law and since 1970 has been a
partner with the firm of Schureman, Frakes, Glass & Wulfmeier. Mr. Wulfmeier has
been a director and shareholder of the Company since its inception. Mr.
Wulfmeier is a member of the Board's Compensation Committee.
All directors hold office until the next annual meeting or until their
successors have been elected and qualified.
The Company's Bylaws provide that until the Board of Directors shall
otherwise determine, the number of director positions on the Board shall be
seven. The Board currently consists of six directors. The Board intends to seek
qualified persons to appoint to the Board to expand the size of the Board to
seven persons but has not yet identified any additional person to be added to
the Board.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established two standing committees, Audit and
Compensation, the current members of which are identified above. These
committees act in an advisory capacity to the full Board of Directors. All
committees report to the full Board of Directors with respect to matters
considered at each committee meeting held.
The principal functions of the Audit Committee are to review the scope of
the annual audit and the annual audit report of the independent accountants,
recommend the firm of independent accountants to perform such audits, consider
non-audit functions proposed to be performed by the independent accountants,
ascertain whether the recommendations of auditors are satisfactorily implemented
and recommend such special studies or actions which the Committee deems
desirable.
The Compensation Committee reviews the compensation practices followed,
makes all decisions involving the compensation of executive officers of the
Company and reviews management's salary recommendations for each other person at
or above the level of Vice President. In addition, the Committee reviews stock
option grant recommendations pursuant to the Company's 1990 Nonqualified
Employee Stock Option Plan.
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no compensation as such
for services as members of the Board of Directors or committees thereof. Under
the Company's 1996 Non-Employee Directors Stock Plan, each nonemployee director
receives 100 shares of the Company's Common Stock for attendance at each meeting
of the Board of Directors. The plan also provides for an automatic grant to each
nonemployee director on the last business day of each February of an option to
purchase 10,000 shares of the Company's Common Stock at an exercise price of one
hundred percent (100%) of the fair market value of the Common Stock on the date
of the grant. Stock options were awarded on March 26, 1996 subject to
ratification of the Plan by shareholders and were declined by all affected
directors except Mr. Cooper.
During 1995, nonemployee directors were compensated at the rate of $500 for
attendance at each meeting of the Board of Directors.
30
<PAGE> 32
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the cash and
non-cash compensation awarded to, earned by, or paid to, the Chief Executive
Officer of the Company and each of the executive officers of the Company whose
individual remuneration exceeded $100,000 for the year ended December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS CURRENT
NAME AND ------------------- ------------ ANNUAL
PRINCIPAL POSITION SALARY BONUS OTHER(2) OPTIONS(1) SALARY
- ----------------------------------- -------- ------- -------- ------------ --------
<S> <C> <C> <C> <C> <C>
William F. Coyro, Jr. ............. $177,547 $ 6,300 $4,620(3) 25,000 $225,000
Chairman and
Chief Executive Officer
Jonathan D. Ahlbrand............... $ 4,808(4) -0- -0-(5) 25,000 $140,000
Senior Vice President
Lawrence A. Mills.................. $107,909 $ 3,600 $3,345(6) 25,000 $125,000
Senior Vice President,
Chief Financial Officer
and Treasurer
Brian G. Niemiec................... $120,336 $ 8,875 $3,155(3) 25,000 --(7)
Senior Vice President
Valerie J. Niemiec................. $112,643 $ 8,875 $3,155(3) 25,000 --(7)
Senior Vice President
Thomas R. Smith.................... $110,191 $27,500 -0- 25,000 $140,000
Senior Vice President
Louis K. Dohrmann.................. --(8) --(8) --(8) --(8) $125,000
Vice President
</TABLE>
- -------------------------
(1) Includes stock options granted under the Company's 1990 Nonqualified Stock
Option Plan.
(2) Amounts disclosed in this column consist of the Company's matching
contribution under the Company's 401(k) Retirement Savings Plan.
(3) In 1995 the Company advanced $126,800 to William F. Coyro, Jr., $70,100 to
Brian G. Niemiec, and $46,900 to Valerie J. Niemiec. The advances
represented Federal, State and Social Security taxes due by each of them on
taxable income resulting from the exercise of stock options. The amounts
were remitted to the appropriate taxing authority. The advances were repaid
to the Company prior to December 31, 1995.
(4) Mr. Ahlbrand joined the Company in December 1995 as a Vice President. He
became a Senior Vice President in March 1996.
(5) During 1995, the Company loaned $160,000 to Mr. Ahlbrand. The loan matures
in 1998 and is payable in monthly installments of principal and interest at
2% over the prime rate. The loan is evidenced by a note and is secured by an
assignment of a land contract and of rentals on a building owned by an
affiliate of Mr. Ahlbrand, a portion of which is leased by the Company. See
"Management -- Certain Transactions."
(6) The Company advanced $107,000 to an insurance company that carries an
insurance policy on the life of Mr. Mills. The advance is collateralized by
the cash value of the underlying life insurance policy. The advance is to be
repaid by Mr. Mills in future years.
(7) As of August 1, 1996, Brian J. Niemiec was no longer an employee of
TechTeam. Valerie J. Niemiec was appointed a Director of TechTeam by its
Board of Directors on December 1, 1995 when Ms. Niemiec resigned from her
position as a Senior Vice President of the Company. Brian Niemiec and
Valerie Niemiec are husband and wife.
(8) Mr. Dohrmann joined the Company in April 1996.
31
<PAGE> 33
The following tables set forth information with respect to options granted
in 1995, the value realized upon the exercise in 1995 of previously granted
options and the value of unexercised options.
OPTION GRANTS IN 1995(1)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
PERCENT OF FOR OPTION TERM
OPTIONS TOTAL OPTIONS EXERCISE -------------------
NAME GRANTED GRANTED IN YEAR PRICE 5% 10%
- --------------------------------------- ------- --------------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
William F. Coyro, Jr................... 25,000 7.4% $ 4.50 $38,300 $ 86,800
Jonathan D. Ahlbrand................... 25,000 7.4 5.31 45,200 102,500
Lawrence A. Mills...................... 25,000 7.4 4.50 38,300 86,800
Brian G. Niemiec....................... 25,000 7.4 4.50 38,300 86,800
Valerie J. Niemiec..................... 25,000 7.4 4.50 38,300 86,800
Thomas R. Smith........................ 25,000 7.4 4.50 38,300 86,800
</TABLE>
- -------------------------
(1) All stock options were granted under the Company's 1990 Nonqualified Stock
Option Plan. Option exercise prices are at or above the market price on the
date of grant. Options have a five-year term and vest over five years. The
exercise price and Federal tax withholdings may be paid in cash or with
shares of Common Stock.
OPTION EXERCISES IN 1995 AND DECEMBER 31, 1995 VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES ACQUIRED VALUE UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
NAME ON EXERCISE REALIZED DECEMBER 31, 1995 DECEMBER 31, 1995(1)
- ------------------------ --------------- -------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
William F. Coyro, Jr.... 100,000 $366,000 65,000(2) $20,115
Jonathan D. Ahlbrand.... -0- N/A 25,000(3) -0-
Lawrence A. Mills....... -0- N/A 45,000(2) 5,625
Brian G. Niemiec........ 60,000 204,600 45,000(2) 12,065
Valerie J. Niemiec...... 40,000 136,400 45,000(2) 12,065
Thomas R. Smith......... -0- N/A 25,000(4) 5,625
</TABLE>
- -------------------------
(1) Represents the difference between the exercise price of in-the-money
exercisable options and the closing price of the Company's Common Stock on
December 29, 1995 multiplied by the number of exercisable options.
(2) Of this amount, 32,000 options are not exercisable until November 1996 or
later.
(3) These options are not exercisable until November 1996 or later.
(4) Of this amount, 20,000 options are not exercisable until February 1997 or
later.
STOCK OPTION PLANS
The Company maintains two stock option plans to attract, motivate and
retain key employees and nonemployee members of the Board of Directors.
1990 Nonqualified Stock Option Plan. The Company's 1990 Nonqualified Stock
Option Plan (the "1990 Plan") permits option grants to employees, directors,
consultants and advisors of the Company in order to attract and retain persons
of ability and to provide incentives for them to exert their best efforts on
behalf of the Company. The Company has reserved 2,000,000 shares of Common Stock
for issuance upon the exercise of stock options granted under the 1990 Plan. The
1990 Plan is administered by the Board of Directors of the Company. The Board
has discretion to determine which eligible individuals are to receive option
grants, the number of shares subject to each such grant, and the vesting
schedule to be
32
<PAGE> 34
in effect for the option grant. The maximum term of options granted under the
1990 Plan is ten years, subject to earlier termination following an optionee's
cessation of service with the Company. Options granted under the 1990 Plan are
nontransferable and generally terminate upon termination of an optionee's
employment with the Company. If a holder of an option is permanently disabled or
dies during his or her service to the Company, such option generally may be
exercised up to one year following such disability or death. The Board of
Directors may amend or modify the 1990 Plan at any time. The 1990 Plan will
terminate on June 3, 2010 unless sooner terminated by the Board.
On August 20, 1996, the Company granted options for a total of 495,000
shares of Common Stock under the Company's 1990 Nonqualified Stock Option Plan
to 46 officers, directors and employees. The exercise price of these options
will be equal to the public offering price of the Common Stock offered by this
Prospectus. Except for options granted to the Company's nonemployee directors,
these options will vest in five equal annual installments beginning August 20,
1997 and will expire on August 20, 2002. The options that were granted to the
nonemployee directors will be immediately exercisable during the five-year
period that begins upon completion of the sale of the Common Stock offered by
this Prospectus. The following executive officers received options for the
following number of shares: William F. Coyro, Jr. -- 90,000; Jonathan D.
Ahlbrand -- 55,000; Louis K. Dohrmann -- 25,000; Lawrence A. Mills -- 25,000;
and Thomas R. Smith -- 15,000. The following nonemployee directors received
options for the following number of shares: Valerie J. Niemiec -- 10,000;
Wallace D. Riley -- 10,000; Richard G. Somerlott -- 10,000; and LeRoy H.
Wulfmeier III -- 10,000. See "Principal and Selling Stockholders."
1996 Nonemployee Directors Stock Plan. The 1996 Nonemployee Directors Stock
Plan ("1996 Plan") provides that each nonemployee director (a "Participant")
will receive 100 shares of Common Stock for attendance at each meeting of the
Board of Directors. The shares will be issued as of the fifth business day
following each quarterly release of the Company's earnings. The 1996 Plan also
provides for an automatic grant to each Participant on the last business day of
each February (except for 1996 when the options were granted on March 26, 1996,
the date of the adoption of the 1996 Plan -- See "Executive Compensation") of an
option to purchase 10,000 shares of Common Stock at an exercise price of one
hundred percent (100%) of the fair market value of the Common Stock on the date
of grant. The stock options have a term of ten years and are exercisable
effective on the date of grant. The option price may be paid in cash or by
surrendering to the Company outstanding Common Stock to be valued at its fair
market on the date of exercise or a combination thereof. No certificates may be
delivered to a Participant until six months from the date of grant or the date
of issuance of the shares. If a Participant ceases to be a director while
holding unexercised stock options, such stock options shall become void as of
the date of that termination except that in the case of termination as a result
of death, disability or retirement after attainment of the age of 65, or
resignation from the Board of Directors for reasons of anti-trust laws or
conflicts of interest or continued service policies, the options will terminate
on the 90th day following termination. The Board of Directors may amend the 1996
Plan no more than once every six months. The Board may amend or terminate the
1996 Plan without approval of the stockholders; provided, however, that
stockholders' approval is required for any amendment which increases the annual
aggregate number of shares subject to the 1996 Plan or alters the persons
eligible to participate in the 1996 Plan.
CERTAIN TRANSACTIONS
The Company leases office space in a building in Harper Woods, Michigan
that is owned by an affiliate of Jonathan D. Ahlbrand, Senior Vice President of
the Company. The lease is for a one year term with the right to renew at the
Company's option for five (5) years and provides for annual rental payments of
$102,200, or $5.75 per square foot. The Company believes the terms of the lease
are no less favorable to the Company than would be obtained from an unaffiliated
third party.
During 1995, the Company loaned $160,000 to Mr. Ahlbrand. The loan matures
in 1998 and is payable in monthly installments of principal and interest at 2%
over the prime rate. The loan is evidenced
33
<PAGE> 35
by a note and is secured by an assignment of a land contract and of rentals on
the building identified in the preceding paragraph.
In 1995 the Company advanced $126,800 to William F. Coyro, Jr., the
Company's Chairman and Chief Executive Officer, $70,000 to Brian Niemiec, then a
Senior Vice President, and $46,900 to Valerie Niemiec, a Director and formerly a
Senior Vice President of the Company. The advances represented Federal, State
and Social Security taxes due by each of them on taxable income resulting from
the exercise of stock options. The amounts were remitted to the appropriate
taxing entity. The advances were repaid to the Company prior to December 31,
1995.
The Company advanced $107,000 in 1995 to an insurance company that carries
an insurance policy on the life of Lawrence A. Mills, a Senior Vice President
and Chief Financial Officer and Treasurer. The advance is collateralized by the
cash value of the underlying life insurance policy. The advance is to be repaid
by Mr. Mills in future years.
The Company utilizes the services of Riley & Roumell, a law firm of which
Wallace D. Riley, a director of the Company, is a partner. The Company paid
$88,100 to that firm in 1995 for legal services and expenses.
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of July 31, 1996 and as adjusted to
reflect the sale by the Company and the Selling Stockholders of the shares of
Common Stock being offered hereby by: (i) each person (or group or affiliated
persons) who is known by the Company to own beneficially more than 5% of the
Company's Common Stock; (ii) each of the Company's directors; (iii) the
Company's Chief Executive Officer and each of the other named executive
officers; and (iv) the Company's directors and executive officers as a group.
Except as indicated in the footnotes to this table, the persons named in the
table, based on information provided by such persons, have sole voting and sole
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where applicable.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP SHARES BENEFICIAL OWNERSHIP
PRIOR TO THE OFFERING(1) SUBJECT TO AFTER THE OFFERING(1)
---------------------------- OVER ALLOTMENT ----------------------
NAME SHARES PERCENTAGE OPTION(2) SHARES PERCENTAGE
- ------------------------------- --------- ---------- -------------- --------- ----------
<S> <C> <C> <C> <C> <C>
William F. Coyro, Jr.(3)*...... 517,819(4)(5) 4.53% 75,000 442,819 3.07%
LeRoy H. Wulfmeier, III(3)*.... 272,199(6)(7) 2.38 5,000 267,199 1.85
Richard G. Somerlott(3)*....... 252,419(6) 2.21 60,000 192,419 1.33
Valerie J. Niemiec(3)*......... 125,600(8) 1.10 50,000 75,600 **
Wallace D. Riley(3)*........... 120,600(9) 1.06 30,000 90,600 **
Kim A. Cooper(3)*.............. 35,425(10) ** -0- 35,425 **
Lawrence A. Mills(3)........... 15,000(11) ** -0- 15,000 **
Thomas R. Smith(3)............. 6,000(12) ** -0- 6,000 **
Jonathan D. Ahlbrand(3)........ -0-(13) -- -0- -0- -0-
Louis K. Dohrmann(3)........... -0-(14) -- -0- -0- -0-
Current Directors and Executive
Officers as a Group (ten
persons)..................... 1,345,062(15) 11.77% 220,000 1,125,062 7.80%
</TABLE>
- -------------------------
* A director of the Company.
** Less than 1%.
(1) For purposes of this table, shares indicated as being owned beneficially
include shares not presently outstanding but which are subject to exercise
within 60 days through options, warrants, rights or conversion privileges.
For the purpose of computing the percentage of the outstanding
34
<PAGE> 36
shares owned by a shareholder, shares subject to such exercise are deemed
to be outstanding securities of the class owned by that stockholder but are
not deemed to be outstanding for the purpose of computing the percentage by
any other person.
(2) Represents the maximum number of shares of Common Stock that will be sold
by Selling Stockholders if the Underwriters' over-allotment is exercised in
full. See "Underwriting."
(3) A director and/or executive officer of the Company. The address of all
directors and executive officers of the Company is c/o the Company, 22000
Garrison Avenue, Dearborn, Michigan 48124.
(4) Includes 7,000 shares of Common Stock owned by certain members of the
family of William F. Coyro, Jr., the beneficial ownership of which he
disclaims.
(5) Includes options to purchase 18,000 shares of Common Stock at $4.82 per
share, 5,000 shares of Common Stock at $4.50 per share, and 10,000 shares
of Common Stock at $7.00 per share. Does not include options to purchase
12,000 shares of Common Stock at $4.82 and 20,000 shares of Common Stock at
$4.50 per share which are not exercisable until November 1996 or later and
options to purchase 90,000 shares of Common Stock at the public offering
price which are not exercisable until August 1997 or later.
(6) Includes options to purchase 10,000 shares of Common Stock at $4.82 per
share, 10,000 shares of Common Stock at $7.00 per share and 10,000 shares
of Common Stock at the public offering price.
(7) Includes 18,700 shares of Common Stock owned by LeRoy H. Wulfmeier, III, as
custodian for his minor child, the beneficial ownership of which he
disclaims.
(8) Includes options to purchase 8,000 shares of Common Stock at $4.82 per
share, 5,000 shares of Common Stock at $4.50 per share and 10,000 shares of
Common Stock at the public offering price. Does not include options to
purchase 12,000 shares of Common Stock at $4.82 per share and 20,000 shares
of Common Stock at $4.50 per share which are not exercisable until November
1996 or later.
(9) Includes options to purchase 10,000 shares of Common Stock at $4.82 per
share, 60,000 shares of Common Stock at $7.00 per share and 10,000 shares
of Common Stock at the public offering price.
(10) Includes options to purchase 35,000 shares of Common Stock at $5.00 per
share.
(11) Includes options to purchase 8,000 shares of Common Stock at $5.69 per
share and 5,000 shares of Common Stock at $4.50 per share. Does not include
options to purchase 12,000 shares of Common Stock at $5.69 per share and
20,000 shares of Common Stock at $4.50 which are not exercisable until
January 1997 or later and options to purchase 25,000 shares of Common Stock
at the public offering price which are not exercisable until August 1997 or
later.
(12) Includes options to purchase 5,000 shares of Common Stock at $4.50 per
share. Does not include options to purchase 20,000 shares of Common Stock
at $4.50 per share which are not exercisable until February 1997 or later
and options to purchase 15,000 shares of Common Stock at the public
offering price which are not exercisable until August 1997 or later.
(13) Does not include options to purchase 25,000 shares of Common Stock at $5.31
per share which are not exercisable until November 1996 or later and
options to purchase 55,000 shares of Common Stock at the public offering
price which are not exercisable until August 1997 or later.
(14) Does not include options to purchase 25,000 shares of Common Stock at $5.00
per share which are not exercisable until March 1997 or later and options
to purchase 25,000 shares of Common Stock at the public offering price
which are not exercisable until August 1997 or later.
(15) Includes the shares and options in footnotes (4) through (14) above.
35
<PAGE> 37
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company's Articles of Incorporation authorize the issuance of
45,000,000 shares of Common Stock, par value $.01 per share and 5,000,000 shares
of preferred stock, par value $.01 per share. The Common Stock is registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934. As of June 30,
1996, the Company had 11,384,078 shares of Common Stock and no shares of
preferred stock outstanding.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share on all
matters to be voted on by the stockholders and have no cumulative voting rights.
Subject to the rights of the holders of any preferred stock then outstanding,
holders of shares of Common Stock are entitled to share ratably in dividends, if
any, as may be declared from time to time by the Board of Directors at its
discretion, from funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, the holders of shares of
Common Stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities and provisions for the liquidation of any shares of
preferred stock then outstanding. Holders of Common Stock have no preemptive or
other subscription rights, and there are no conversion rights or redemption or
sinking fund provisions with respect to the Common Stock. All outstanding shares
of Common Stock are fully paid and non-assessable.
PREFERRED STOCK
The Company's preferred stock may be issued from time to time in one or
more series, without stockholder approval. Subject to limitations prescribed by
law, the Board of Directors is authorized to determine the voting powers (if
any), designation, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, for
each series of preferred stock that may be issued and to fix the number of
shares of each series. Thus, the Company's Board of Directors, without
stockholder approval, could authorize the issuance of preferred stock with
voting power and other rights that could adversely affect the voting power and
other rights of holders of Common Stock or that could make it more difficult for
another company to effect certain business combinations with the Company.
CERTAIN DELAWARE LAW AND BY-LAWS PROVISIONS; ANTI-TAKEOVER EFFECTS
Section 203 of the Delaware Law prevents an "interested stockholder"
(defined in Section 203, generally, as a person owning 15% or more of a
corporation's outstanding voting stock) from engaging in a "business
combination" (as defined in Section 203) with a publicly held Delaware
corporation for three years following the date such person became an interested
stockholder unless: (i) before such person became an interested stockholder, the
board of directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved the business
combination; (ii) upon consummation of the transaction that resulted in the
interested stockholder becoming an interested stockholder, the interested
stockholder owns at least 85% of the voting stock of the corporation outstanding
at the time the transaction commenced (excluding stock held by directors who are
also officers of the corporation and by employee stock plans that do not provide
employees with the right to determine confidentiality whether shares held
subject to the plan will be tendered in a tender or exchange offer); or (iii)
following the date on which such person became an interested stockholder, the
business combination is approved by the board of directors of the corporation
and authorized at a meeting of stockholders by the affirmative vote of the
holders of 66 2/3% of the outstanding voting stock of the corporation not owned
by the interested stockholder.
Section 2 of the Company's Amended and Restated By-Laws provides that
special meetings of stockholders of the Company may be called only by the
Chairperson of the Board of Directors or by the
36
<PAGE> 38
President or at the request in writing of stockholders owning at least 30% of
the issued and outstanding shares of the Company. That provision will make it
more difficult for stockholders to take action opposed by management.
In addition, the Board of Directors is empowered to issue up to 5,000,000
shares of preferred stock and to determine the price, rights, preferences and
privileges of such shares without further stockholder action.
These statutory and By-Laws provisions together with the existence of
"blank check" preferred stock may be deemed to have an anti-takeover effect and
may delay or prevent a tender offer that a stockholder may consider to be in its
best interest, including those that might result in a premium over the market
price for the shares held by the stockholders. These provisions may have a
depressive effect on the market price of the Common Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar of the Company is U.S. Stock Transfer
Corporation.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 14,384,078 shares of
Common Stock outstanding (assuming no exercise of the Underwriters'
over-allotment option to purchase up to an additional 450,000 shares). The
3,000,000 shares sold in this Offering (3,450,000 shares if the Underwriters'
over-allotment option is exercised in full) will be freely tradable without
restriction under the Securities Act, except for any such shares held at any
time by an "affiliate" of the Company, as such term is defined under Rule 144
promulgated under the Securities Act.
The Company has agreed with the Underwriters not to sell or otherwise
dispose of any shares of Common Stock for a period of 180 days from the date of
this Prospectus without the prior written consent of Salomon Brothers Inc and
Robert W. Baird & Co. Incorporated. In addition, the directors and executive
officers of the Company, beneficially holding (upon completion of this Offering)
an aggregate of approximately 1,345,062 shares (1,125,062 shares if the
Underwriters' over-allotment option is exercised in full), have agreed not to
sell or otherwise dispose of any such shares for a period of 180 days from the
date of this Prospectus without the prior written consent of Salomon Brothers
Inc and Robert W. Baird & Co. Incorporated.
The Company is unable to estimate the number of shares that may be sold in
the future by its existing stockholders or the effect, if any, that sales of
shares by such stockholders will have on the market price of the Common Stock
prevailing from time to time. Sales of substantial amounts of Common Stock by
existing stockholders could adversely affect prevailing market prices.
UNDERWRITING
Subject to the terms and the conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters, for whom Salomon Brothers Inc and Robert W.
Baird & Co. Incorporated are acting as representatives (the
37
<PAGE> 39
"Representatives"), has severally agreed to purchase from the Company the
respective number of shares of Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------------------------------------------------------------ ---------
<S> <C>
Salomon Brothers Inc..............................................
Robert W. Baird & Co. Incorporated................................
---------
Total............................................................. 3,000,000
=========
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all 3,000,000
shares of Common Stock offered hereby if any such shares are purchased. In the
event of a default by any Underwriter, the Underwriting Agreement provides that,
in certain circumstances, purchase commitments of the non-defaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
The Company and Selling Stockholders have been advised by the Representatives
that the several Underwriters propose to offer such stock to the public at the
public offering price set forth on the cover page of this Prospectus, and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow and such dealers may reallow a concession not
in excess of $ per share to other dealers. After the initial offering, the
public offering price and such concessions may be changed.
The Company and the Selling Stockholders have granted to the Underwriters
an option to purchase up to an additional 450,000 shares of Common Stock at the
initial offering price less the aggregate underwriting discounts and
commissions, solely to cover over-allotments. The option may be exercised at any
time up to 30 days after the date of this Prospectus. To the extent that the
Underwriters exercise such option, each of the Underwriters will be committed,
subject to certain conditions, to purchase a number of option shares
proportionate to such Underwriter's initial commitment.
The Company, the Selling Stockholders and the Company's directors and
executive officers have agreed that they will not offer, sell, contract to sell
or otherwise dispose of any shares of Common Stock, for a period of 180 days
after the effective date of the Registration Statement of which this Prospectus
is a part, without the prior written consent of the Representatives, except that
the Company may issue shares pursuant to the over-allotment option or upon the
exercise of currently outstanding stock options and the Selling Stockholders may
sell shares pursuant to the over-allotment option.
Certain of the Underwriters currently act as market makers for the
Company's Common Stock and may engage in "passive market making" in such
securities on the Nasdaq National Market in accordance with Rule 10b-6A under
the Securities Exchange Act of 1934 (the "Exchange Act"). Rule 10b-6A permits,
upon the satisfaction of certain conditions, underwriters participating in a
distribution that are also Nasdaq market makers in the security being
distributed to engage in limited market making transactions during the period
when Rule 10b-6A under the Exchange Act would otherwise prohibit such activity.
Rule 10b-6A prohibits underwriters engaged in passive market making generally
from entering a bid or effecting a purchase at a price that exceeds the highest
bid for those securities displayed on
38
<PAGE> 40
Nasdaq National Market by a market maker that is not participating in the
distribution. Under Rule 10b-6A each underwriter engaged in passive market
making is subject to a daily net purchase limitation equal to 30% of such
entity's average daily trading volume during the two full consecutive calendar
months immediately preceding the date of the filing of the registration
statement under the Securities Act pertaining to the security to be distributed.
The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act, or contribute to
payments the Underwriters may be required to make in respect thereof.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company and the Selling Stockholders by Berry,
Moorman, King & Hudson, P.C., Detroit, Michigan. Robert A. Hudson, a stockholder
of Berry, Moorman, King & Hudson, P.C., is the Secretary of the Company and
beneficially owns 23,100 shares of Common Stock. Certain legal matters in
connection with the issuance of the Common Stock will be passed upon for the
Underwriters by Winston & Strawn, Chicago, Illinois.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1994 and 1995 and for each of the three years in the period ended December 31,
1995 appearing in, and incorporated by reference into, this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Seven World Trade Center, 13th Floor, New York, NY 10048; and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material may also be obtained at prescribed rates from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a web site (http://www.sec.gov)
that contains reports, proxy statements and other information regarding
registrants that file electronically with the Commission.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement. For further information with respect to the Company and
the Common Stock offered hereby, reference is made to the Registration
Statement. Statements contained herein concerning any document are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference. Copies of all or any
part of the Registration Statement, including exhibits thereto, may be obtained,
upon payment of the prescribed fees, at the offices of the Commission.
39
<PAGE> 41
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1995;
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996 and June 30, 1996; and
3. The descriptions of the Company's Common Stock that are contained
in the Registration Statement on Form 8-A filed by TechTeam to register
such securities under Section 12 of the Exchange Act, File No. 0-16284,
including any amendment or report filed for the purpose of updating such
descriptions.
All documents filed by TechTeam pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering described herein shall be deemed to be
incorporated by reference in the Registration Statement and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes hereof to the extent that a statement
contained herein or any subsequently filed document which is deemed to be
incorporated by reference herein modifies or supersedes such document. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part hereof.
TechTeam will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon written or oral request, a copy of any document
incorporated herein by reference (other than exhibits to such document which are
not specifically incorporated by reference in such document). Requests for such
documents should be directed to: National TechTeam, Inc., Attn: G.K. DeSantis,
22000 Garrison Avenue, Dearborn, Michigan 48124, telephone (313) 277-2277.
40
<PAGE> 42
NATIONAL TECHTEAM, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors.................................... F-2
Consolidated Statements of Operations -- Years Ended December 31, 1993, 1994 and 1995
and Six Months Ended June 30, 1995 and 1996........................................ F-3
Consolidated Statements of Financial Position -- December 31, 1994, December 31, 1995
and June 30, 1996.................................................................. F-4
Consolidated Statements of Shareholders' Equity -- Years Ended December 31, 1993,
1994 and 1995 and Six Months Ended June 30, 1996................................... F-6
Consolidated Statements of Cash Flows -- Years Ended December 31, 1993, 1994 and 1995
and Six Months Ended June 30, 1995 and 1996........................................ F-7
Notes to the Consolidated Financial Statements....................................... F-8
</TABLE>
F-1
<PAGE> 43
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
BOARD OF DIRECTORS
NATIONAL TECHTEAM, INC.
We have audited the accompanying consolidated statements of financial
position of National TechTeam, Inc. and subsidiaries as of December 31, 1994 and
1995 and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on those financial
statements based on our audits.
We conducted our audits in accordance with general 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
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of National
TechTeam, Inc. and subsidiaries at December 31, 1994 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
February 23, 1996
Detroit, Michigan
F-2
<PAGE> 44
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 SIX MONTHS ENDED JUNE 30
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES -- NOTE B
Call Center Services.......... $ 2,325,331 $ 7,172,997 $15,123,294 $ 5,140,511 $14,386,919
----------- ----------- ----------- ----------- -----------
Corporate Computer Services
Technical staffing.......... 10,085,164 12,836,952 14,732,050 7,288,603 7,702,021
Systems integration......... 2,647,046 5,601,224 7,914,414 3,590,259 5,009,341
Training programs........... 5,386,406 4,613,265 4,017,704 2,051,750 3,140,557
----------- ----------- ----------- ----------- -----------
Total Corporate Computer
Services.................... 18,118,616 23,051,441 26,664,168 12,930,612 15,851,919
----------- ----------- ----------- ----------- -----------
TOTAL REVENUES.................. 20,443,947 30,224,438 41,787,462 18,071,123 30,238,838
COST OF SERVICES DELIVERED...... 15,821,252 23,098,915 32,337,016 13,446,426 23,237,849
----------- ----------- ----------- ----------- -----------
GROSS PROFIT.................... 4,622,695 7,125,523 9,450,446 4,624,697 7,000,989
----------- ----------- ----------- ----------- -----------
OTHER EXPENSES/(INCOME)
Selling, general and
administrative.............. 1,786,900 3,872,159 5,349,034 2,447,887 3,700,374
Interest...................... 66,697 33,911 24,109 3,250 36,728
Gain on sale of investment.... -- (152,471) -- -- --
----------- ----------- ----------- ----------- -----------
1,853,597 3,753,599 5,373,143 2,451,137 3,737,102
----------- ----------- ----------- ----------- -----------
INCOME BEFORE TAX PROVISIONS.... 2,769,098 3,371,924 4,077,303 2,173,560 3,263,887
TAX PROVISIONS -- NOTE F........ 1,096,685 1,400,875 1,678,236 859,220 1,354,000
----------- ----------- ----------- ----------- -----------
NET INCOME...................... $ 1,672,413 $ 1,971,049 $ 2,399,067 $ 1,314,340 $ 1,909,887
=========== =========== =========== =========== ===========
PRIMARY AND FULLY DILUTED
EARNINGS PER SHARE............ $0.18 $0.18 $0.21 $0.11 $0.17
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES AND COMMON SHARE
EQUIVALENTS OUTSTANDING
Primary....................... 9,306,255 10,981,183 11,360,768 11,539,650 11,531,069
Fully diluted................. 9,522,940 11,079,136 11,360,768 11,676,154 11,541,861
</TABLE>
See accompanying notes.
F-3
<PAGE> 45
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------- JUNE 30
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents....................... $ 412,559 $ 1,717,543 $ 1,661,461
Temporary investments........................... 3,500,000 -- --
Accounts receivable -- Note B................... 7,751,801 13,269,272 15,590,622
Note receivable -- current portion.............. -- 53,333 66,666
Inventories..................................... 499,748 769,545 694,145
Refundable income tax........................... 384,258 -- --
Other........................................... 341,331 381,751 468,194
----------- ----------- -----------
12,889,697 16,191,444 18,481,088
----------- ----------- -----------
PROPERTY AND EQUIPMENT -- NOTE D
Office furniture and equipment.................. 4,017,641 6,622,953 8,880,107
Leasehold improvements.......................... 345,701 681,223 976,242
Transportation equipment........................ 138,572 154,395 154,395
----------- ----------- -----------
4,501,914 7,458,571 10,010,744
Less -- Accumulated depreciation and
amortization................................. 1,861,876 2,898,257 3,846,974
----------- ----------- -----------
2,640,038 4,560,314 6,163,770
----------- ----------- -----------
OTHER ASSETS
Goodwill (less accumulated amortization of
$193,306 at December 31, 1994, $354,512 at
December 31, 1995, and $444,370 at June 30,
1996) --
Note H....................................... 1,413,791 1,252,585 1,440,408
Note receivable -- long-term.................... -- 102,222 75,556
Other........................................... 205,156 178,958 226,714
----------- ----------- -----------
1,618,947 1,533,765 1,742,678
----------- ----------- -----------
TOTAL ASSETS...................................... $17,148,682 $22,285,523 $26,387,536
=========== =========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 46
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------- JUNE 30
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt............... $ 140,100 $ 96,884 $ 181,104
Accounts payable................................ 287,403 893,965 1,547,745
Accrued payroll, related taxes and
withholdings................................. 494,181 2,037,446 2,328,584
Deferred income tax -- Note F................... 65,850 89,839 89,839
Federal income tax payable...................... -- 160,116 51,116
Deferred revenues and unapplied receipts........ 47,540 431,967 692,305
Other........................................... 138,122 128,312 226,598
----------- ----------- -----------
1,173,196 3,838,529 5,117,291
----------- ----------- -----------
LONG-TERM LIABILITIES
Deferred income tax -- Note F................... 146,460 116,066 116,066
Long-term debt, less current portion -- Note
D............................................ -- 438,962 755,412
----------- ----------- -----------
146,460 555,028 871,478
----------- ----------- -----------
SHAREHOLDERS' EQUITY -- NOTES E, G, J AND K
Preferred stock, par value $.01
Authorized -- 5,000,000 shares
None issued
Common stock, par value $.01
Authorized -- 45,000,000 shares
Issued:
10,989,166 shares at December 31, 1994..... 109,892
11,407,666 shares at December 31, 1995..... 114,077
11,561,141 shares at June 30, 1996......... 115,611
Additional paid-in capital...................... 12,035,229 12,601,925 13,095,691
Retained earnings............................... 3,683,905 6,082,972 7,992,859
----------- ----------- -----------
Total........................................... 15,829,026 18,798,974 21,204,161
Less -- Treasury stock (200,000 shares at
December 31, 1995 and 177,063 shares at June
30, 1996).................................... -- 907,008 805,394
----------- ----------- -----------
Total shareholders' equity...................... 15,829,026 17,891,966 20,398,767
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $17,148,682 $22,285,523 $26,387,536
=========== =========== ===========
</TABLE>
See accompanying notes.
F-5
<PAGE> 47
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Balance at January 1, 1993................. $ 72,288 $ 1,876,556 $ 40,443 $ --
Proceeds from issuance of 475,150 shares
of common stock -- Note G............. 4,752 320,726 -- --
Proceeds from issuance of 1,291,750
shares under stock option plans --
Note J................................ 12,917 1,977,783 -- --
Shares issued to acquire Micro Systems
Group, Inc. -- Note H................. 6,241 2,072,025 -- --
Tax benefit from exercise of employee
stock options and other............... -- 23,408 -- --
Net income for 1993...................... -- -- 1,672,413 --
-------- ----------- ---------- ---------
Balance at December 31, 1993............... 96,198 6,270,498 1,712,856 --
Proceeds from issuance of 1,060,731
shares of common stock -- Note G...... 10,607 5,010,227 -- --
Proceeds from issuance of 308,625 shares
under stock option plans -- Note J.... 3,087 574,123 -- --
Tax benefit from exercise of employee
stock options and other............... -- 180,381 -- --
Net income for 1994...................... -- -- 1,971,049 --
-------- ----------- ---------- ---------
Balance at December 31, 1994............... 109,892 12,035,229 3,683,905 --
Proceeds from issuance of 418,500 shares
under stock option plans -- Note J.... 4,185 256,475 -- --
Tax benefit from exercise of employee
stock options and other............... -- 310,221 -- --
Purchase of common stock -- Note K....... -- -- -- (907,008)
Net income for 1995...................... -- -- 2,399,067 --
-------- ----------- ---------- ---------
Balance at December 31, 1995............... 114,077 12,601,925 6,082,972 (907,008)
Proceeds from issuance of 73,475 shares
under stock option plans -- Note J.... 734 234,566 -- --
Shares issued to acquire Coup, Inc. ..... 800 259,200 -- --
Contributions to 401(k) plan............. -- -- -- 101,614
Net income for six months ended June 30,
1996 (Unaudited)...................... -- -- 1,909,887 --
-------- ----------- ---------- ---------
Balance at June 30, 1996 (Unaudited)....... $115,611 $13,095,691 $7,992,859 $(805,394)
======== =========== ========== =========
</TABLE>
See accompanying notes.
F-6
<PAGE> 48
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30
---------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ------------ ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................... $ 1,672,413 $ 1,971,049 $ 2,399,067 $ 1,314,340 $ 1,909,887
Adjustments to reconcile net income to net
cash provided by/(used in) operating
activities:
Depreciation and amortization............... 572,927 1,037,279 1,594,250 523,548 1,111,358
Provision for uncollectible accounts
receivable................................ 15,549 30,308 123,143 13,143 79,569
Treasury stock contributed to 401(k)
plan...................................... -- -- -- -- 101,614
Provision for deferred income tax........... 128,000 138,310 (89,631) -- --
(Gain) on sales of investment............... -- (152,471) -- -- --
(Gain)/loss on sales of equipment and
other..................................... (27,180) (3,878) 55,209 -- --
Changes in current assets and liabilities:
Accounts receivable....................... (2,240,166) (2,725,807) (5,640,614) (4,122,731) (2,400,919)
Inventories............................... 14,582 (130,574) (269,797) (23,624) 75,400
Advances to officers and employees........ -- -- -- (270,081) --
Other current assets...................... (15,956) (168,268) (40,420) (137,736) (86,443)
Accounts payable.......................... 156,174 (173,373) 606,562 (26,306) 653,780
Accrued payroll, related taxes
and withholdings........................ 309,144 128,159 1,543,265 307,206 291,138
Federal income tax........................ 399,795 (892,231) 544,374 392,970 (109,000)
Deferred revenues and unapplied
receipts................................ 65,239 (99,091) 384,427 340,628 260,338
Other current liabilities................. (214,133) (182,233) (9,810) 110,075 98,286
----------- ------------ ----------- ----------- -----------
Net cash provided by/(used in) operating
activities................................ 836,388 (1,222,821) 1,200,025 (1,578,568) 1,985,008
----------- ------------ ----------- ----------- -----------
INVESTING ACTIVITIES
Purchases of property and equipment........... (2,145,003) (864,798) (3,187,027) (694,184) (2,552,167)
Development of training manuals............... (82,132) (116,722) (117,970) (17,196) (49,001)
Purchases of temporary investments............ -- (12,388,000) (100,000) (450,000) --
Proceeds from sales of temporary
investments................................. -- 8,888,000 3,600,000 3,950,000 --
Proceeds from sales of investment............. -- 160,000 -- -- --
Issuance of note receivable................... -- -- (160,000) -- --
Proceeds from sales of property and equipment
and other assets............................ 53,256 23,227 22,630 -- --
Net cash of Micro Systems Group, Inc. at
acquisition date............................ 3,005 -- -- -- --
Other assets -- net........................... (18,902) 13,082 (12,293) -- (63,211)
----------- ------------ ----------- ----------- -----------
Net cash provided by/(used in) investing
activities................................ (2,189,776) (4,285,211) 45,340 2,788,620 (2,664,379)
----------- ------------ ----------- ----------- -----------
FINANCING ACTIVITIES
Proceeds from long-term borrowings............ 680,000 -- 565,998 -- 480,212
Proceeds from issuance of common stock........ 2,339,586 5,778,425 570,881 249,900 222,619
Purchase of Company common stock.............. -- -- (907,008) (907,008) --
Payments on short-term borrowings............. (1,126,830) -- -- -- --
Payments on long-term borrowings.............. (372,514) (432,471) (170,252) (122,700) (79,542)
----------- ------------ ----------- ----------- -----------
Net cash provided by/(used in) financing
activities................................ 1,520,242 5,345,954 59,619 (779,808) 623,289
----------- ------------ ----------- ----------- -----------
Increase/(decrease) in cash and
cash equivalents.......................... 166,854 (162,078) 1,304,984 430,244 (56,082)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD........................................ 407,783 574,637 412,559 412,559 1,717,543
----------- ------------ ----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD...... $ 574,637 $ 412,559 $ 1,717,543 $ 842,803 $ 1,661,461
=========== ============ =========== =========== ===========
</TABLE>
See accompanying notes.
F-7
<PAGE> 49
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation: The consolidated financial statements include the
accounts of National TechTeam, Inc. and its wholly-owned subsidiaries TechTeam
Europe, Ltd. and National TechTeam of Illinois, Inc., formerly Micro Systems
Group, Inc. ("MSG"). Collectively, these companies are referred to as the
"Company" or "TechTeam." Intercompany accounts and transactions have been
eliminated as appropriate. The financial statements at June 30, 1996 and for the
six months ended June 30, 1995 and 1996 are unaudited. In the opinion of the
Company's management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the six months ended June
30, 1996 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996.
Cash and cash equivalents: Cash includes both interest bearing and
non-interest bearing deposits which are available on demand. Cash equivalents
include all liquid investments with a maturity of three months or less when
purchased, including money market funds held at banks.
Temporary investments: The December 31, 1994, temporary investments
consisted of tax free municipal obligations, stated at cost, which equals market
value. Repayment of the principal amount of these investments was guaranteed by
letters of credit issued by a bank. The Company classified the debt securities
held at December 31, 1994, as temporary investments as they were available for
sale.
Inventories: Inventories are stated at the lower of cost (determined by the
first-in, first-out method) or market and consist principally of computer
equipment and software.
Property and equipment: Property and equipment are stated at cost. Property
and equipment are depreciated on the straight-line method over their estimated
useful lives, ranging from 3 to 10 years. Leasehold improvements are amortized
on a straight-line basis over the lesser of the lease term or the estimated
useful lives of the improvements.
Goodwill: Represents the excess cost over the fair value of net assets
acquired in the acquisition of MSG, Coup, Inc. and others and is amortized on a
straight-line basis over 10 years. The carrying value of goodwill will be
reviewed if the facts and circumstances suggest that it may be impaired.
Revenue recognition: Revenues from Call Center Services and Corporate
Computer Services are recognized as services are performed. Revenues from
product sales are recognized when title is transferred to the client. Under the
terms of certain Call Center Services contracts, clients are required to pay
certain amounts at the commencement of the contract, which are non-refundable
and to which the Company has no further service obligation. Amounts billed under
this provision of such contracts aggregated $19,600 in 1994; $1,655,700 in 1995;
and $430,000 and $618,100 for the six months ended June 30, 1995 and 1996,
respectively. All such amounts were recognized as revenues when billed.
Deferred revenue: TechTeam receives advance payments from clients under
certain lease and maintenance agreements. These payments are recognized as
revenues when earned. All deferred revenue recorded at December 31 is expected
to be earned in the subsequent year.
Deferred income taxes: Deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
Stock options: TechTeam accounts for employee stock options under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related Interpretations.
Earnings per share: Earnings per share is computed using the weighted
average number of common shares and common share equivalents outstanding during
each year presented. Common share equivalents consist of stock options and
warrants and are calculated using the treasury stock method.
F-8
<PAGE> 50
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
Use of estimates: Preparation of financial statements in conformity with
generally accepted accounting principles requires the Company's management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from the
estimates and assumptions made.
NOTE B -- DESCRIPTION OF THE BUSINESS
The Company provides Call Center Services and Corporate Computer Services
for major companies on an international scale. Revenues and accounts receivable
from major clients are summarized as follows.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31 30
--------------------------------------- -----------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Hewlett-Packard Company
Revenues for the
period................ $ -- $ -- $ 7,269,445 $1,609,375 $9,672,846
Accounts receivable at
end of period......... -- -- 2,923,934 514,309 3,424,116
Ford Motor Company
Revenues for the
period................ 13,703,312 14,195,853 15,584,964 7,877,077 8,573,511
Accounts receivable at
end of period......... 2,192,175 2,487,263 4,863,948 2,702,492 4,513,100
Chrysler Corporation
Revenues for the
period................ 1,266,320 3,294,788 4,162,419 2,031,761 2,624,788
Accounts receivable at
end of period......... 356,075 1,457,273 1,221,121 1,325,844 1,317,340
Corel Corporation
Revenues for the
period................ 414,604 3,687,298 2,737,601 1,600,447 268,459
Accounts receivable at
end of period......... 414,604 537,972 268,550 520,544 127,266
Novell, Inc.
Revenues for the
period................ 1,717,417 2,260,203 522,973 285,356 20,020
Accounts receivable at
end of period......... 436,385 508,736 193,682 149,708 20,020
</TABLE>
Allowances for potentially uncollectible accounts receivable were as
follows: December 31, 1994 -- $76,857; December 31, 1995 -- $200,000; June 30,
1996 -- $279,569. The Company generally does not require collateral from its
clients. Credit losses experienced have been consistent with the Company's
management's expectations.
NOTE C -- LEASES
The Company leases its call center facilities, corporate and other offices
and certain office equipment under noncancelable operating leases expiring over
the next five years. These leases are renewable with various options and terms.
Total rental expense was $595,366 in 1993, $1,000,992 in 1994, $1,344,574 in
1995, and $653,787 and $856,332 for the six months ended June 30, 1995 and 1996,
respectively.
F-9
<PAGE> 51
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE C -- LEASES -- CONTINUED
Minimum future payments under noncancelable operating leases with initial
terms of one year or more were:
<TABLE>
<CAPTION>
JUNE 30, 1996
YEAR DECEMBER 31, 1995 -------------
----------------------------------------------- ----------------- (UNAUDITED)
<S> <C> <C>
1996........................................... $ 1,556,786 $ 984,242
1997........................................... 1,042,704 1,394,813
1998........................................... 660,992 1,193,401
1999........................................... 406,446 1,189,198
2000........................................... 288,455 1,168,900
----------- -----------
Total minimum lease payments................... $ 3,955,383 $ 5,930,554
=========== ===========
</TABLE>
NOTE D -- FINANCING ARRANGEMENTS AND LONG-TERM DEBT
TechTeam has an agreement with NBD Bank which provides for short-term
borrowings of up to $6,000,000; the credit is unsecured. Borrowings are at the
prime rate. There were no borrowings under the agreement at June 30, 1996.
The following amounts relate to short-term borrowings:
<TABLE>
<CAPTION>
AVERAGE AVERAGE
MAXIMUM AMOUNT DAILY AMOUNT COST OF
PERIOD BORROWED BORROWED BORROWINGS
-------------------------------------- -------------- ------------ ----------
<S> <C> <C> <C>
Year ended December 31
1993................................ $1,199,830 $3,287 5.80%
1994................................ 1,220,000 3,242 5.30
1995................................ -0- -0- 0.00
Six months ended June 30 (Unaudited)
1995................................ -0- -0- 0.00
1996................................ 200,000 1,099 8.25
</TABLE>
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------- JUNE 30
1994 1995 1996
-------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Total amounts due under term notes...... $140,100 $535,846 $936,516
Less -- current portion................. 140,100 96,884 181,104
--------- --------- ---------
$ -- $438,962 $755,412
========= ========= =========
</TABLE>
Term notes at June 30, 1996 consist of notes payable with interest of 8.25%
and 8.9% held by NBD Bank with maturities as follows: 1996 -- $91,553; 1997 --
$193,135; 1998 -- $210,429; 1999 -- $229,274; 2000 -- $202,398; and 2001 --
$9,727. These notes require monthly payments of principal and interest and are
collateralized by specific telecommunications hardware and software used for
call center operations.
Interest paid was $66,697 in 1993, $33,911 in 1994, $24,109 in 1995, and
$3,250 and $45,661 for the six months ended June 30, 1995 and 1996,
respectively.
F-10
<PAGE> 52
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE E -- EMPLOYEE RETIREMENT PLAN
The Company has a 401(k) Retirement Savings Plan which covers substantially
all employees. Under the provisions of the Plan, the Company will match employee
contributions in amounts up to 3% of gross compensation; contributions were
$88,392 in 1993, $163,087 in 1994, $247,181 in 1995, and $108,938 and $101,614
for the six months ended June 30, 1995 and 1996, respectively. The Company's
policy is to fund employee contributions and the Company's matching
contributions each pay period. Contributions are deposited with the trustee, NBD
Bank, and then invested in six funds at the direction of the participants.
Effective in 1996, the Company's matching contributions are credited only to the
National TechTeam Stock Fund for the benefit of each participant.
NOTE F -- TAX PROVISIONS
Tax provisions are as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30
-------------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Federal income tax:
Currently payable....... $ 760,000 $ 956,690 $1,357,867 $666,220 $1,031,000
Deferred (credit)....... 128,000 138,310 (89,631) -- --
---------- ---------- ---------- -------- ----------
Total................... 888,000 1,095,000 1,268,236 666,220 1,031,000
Michigan single business
tax..................... 208,685 305,875 410,000 193,000 323,000
---------- ---------- ---------- -------- ----------
$1,096,685 $1,400,875 $1,678,236 $859,220 $1,354,000
========== ========== ========== ======== ==========
Tax payments.............. $ 535,500 $2,022,000 $ 905,000 $370,000 $1,340,000
========== ========== ========== ======== ==========
</TABLE>
A reconciliation of the Federal income tax provision and the amount
computed by applying the Federal statutory income tax rate to earnings before
Federal income tax follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30
------------------------------------ ----------------------
1993 1994 1995 1995 1996
-------- ---------- ---------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income tax at Federal
statutory rate of 34%.... $870,540 $1,042,457 $1,246,883 $673,390 $ 999,902
Goodwill, intangibles and
other permanent
differences.............. 17,460 52,543 46,353 17,830 31,098
Tax reserve reversed....... -- -- (25,000) (25,000) --
-------- ---------- ---------- -------- ----------
$888,000 $1,095,000 $1,268,236 $666,220 $1,031,000
======== ========== ========== ======== ==========
</TABLE>
F-11
<PAGE> 53
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE F -- TAX PROVISIONS -- CONTINUED
The principal components of the deferred Federal income tax
provision/(credit) are as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31 JUNE 30
---------------------------------- ----------------
1993 1994 1995 1995 1996
-------- -------- -------- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Prepaid expenses................. $ 418 $ 80,056 $ (2,143) $ -- $ --
Accelerated tax depreciation..... 39,858 10,672 28,909 -- --
Inventory valuation.............. 33,320 -- -- -- --
Allowance for uncollectible
accounts receivable............ (5,287) (10,305) (41,868) -- --
Conversion of MSG to accrual
basis of tax accounting........ -- 76,078 (76,078) -- --
Other............................ 59,691 (18,191) 1,549 -- --
-------- -------- -------- ---- ----
$128,000 $138,310 $(89,631) $ -- $ --
======== ======== ======== ==== ====
</TABLE>
The principal components of deferred Federal income tax balances, and the
classification thereof in the Consolidated Statement of Financial Position, are
as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------------
1994 1995 JUNE 30, 1996
---------------------- ---------------------- ----------------------
ASSETS LIABILITIES ASSETS LIABILITIES ASSETS LIABILITIES
------- ----------- ------- ----------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Allowance for
uncollectible accounts
receivable............. $26,132 $ -- $68,000 $ -- $68,000 $ --
Sale of other assets..... 15,823 -- 15,226 -- 15,226 --
Prepaid expenses......... -- 91,982 -- 89,839 -- 89,839
Accelerated tax
depreciation........... -- 87,157 -- 116,066 -- 116,066
Conversion of MSG to
accrual basis of tax
accounting............. -- 76,078 -- -- -- --
Other.................... 952 -- -- -- -- --
------- -------- ------- -------- ------- --------
$42,907 $ 255,217 $83,226 $ 205,905 $83,226 $ 205,905
======= ======== ======= ======== ======= ========
</TABLE>
Included in income before tax provisions are losses from foreign operations
of $83,683 in 1993, $520,753 in 1994, $320,641 in 1995, $89,891 for the six
months ended June 30, 1995 and a profit of $15,635 for the six months ended June
30, 1996.
F-12
<PAGE> 54
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE G -- STOCK TRANSACTIONS
A summary of stock transactions other than those discussed in Notes H and J
for the three years ended December 31, 1995 and the six months ended June 30,
1996 is as follows:
<TABLE>
<CAPTION>
SHARES PROCEEDS
--------- ----------
<S> <C> <C>
1993
Warrants issued in 1990 and 1991 and exercised in 1993.............. 475,150 $ 325,478
========= ==========
1994
Warrants issued in 1990 and 1991 and exercised in 1994.............. 41,667 $ 45,834
Private placement of common shares at
$5.00 per share................................................... 618,000 3,090,000
$4.70 per share................................................... 401,064 1,885,000
--------- ----------
1,060,731 $5,020,834
========= ==========
1995
None................................................................
1996 (Unaudited)
None................................................................
</TABLE>
NOTE H -- ACQUISITION
TechTeam acquired all of the outstanding shares of MSG in September 1993.
The transaction was structured as a stock-for-stock exchange and 624,104 shares
(valued at $2,078,266) of TechTeam's restricted common stock were issued. The
purchase method of accounting was used to record the acquisition and $1,607,097
was recorded as goodwill. The following pro-forma financial information includes
the operations of MSG and an adjustment for amortization of goodwill.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
1993
------------
<S> <C>
Revenues...................................................................... $ 22,366,778
Cost of services delivered.................................................... 19,917,557
Income before tax provisions.................................................. 2,449,221
Net income.................................................................... 1,562,813
Earnings per share............................................................ $ .17
</TABLE>
NOTE I -- RELATED PARTY TRANSACTIONS
TechTeam was involved in the following related party transactions:
a) Paid legal fees of $117,128 in 1993, $73,591 in 1994, $119,876 in
1995, and $48,738 and $47,998 for the six months ended June 30,
1995 and 1996, respectively, to law firms whose members included
directors, officers or shareholders of TechTeam.
b) Paid $47,275 in 1993, $42,444 in 1994, $39,587 in 1995, and $17,893
and $84,375 for the six months ended June 30, 1995 and 1996,
respectively, for employee travel expenses to a travel agency which
is 50%-owned by a TechTeam director.
c) Advanced $243,800 to Executive Officers in 1995, which was repaid
in 1995.
d) Advanced $107,000 to an insurance company in 1995 that carries an
insurance policy on the life of an Executive Officer.
F-13
<PAGE> 55
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE I -- RELATED PARTY TRANSACTIONS -- CONTINUED
e) Loaned $160,000 to an Executive Officer in 1995.
f) Paid $8,518 for the six months ended June 30, 1996 for rental
expense for an office building leased from an Executive Officer.
NOTE J -- STOCK OPTIONS
<TABLE>
<CAPTION>
EMPLOYEES DIRECTORS OTHERS
TOTAL ------------------------- --------------------- -----------------------
SHARES SHARES PRICE SHARES PRICE SHARES PRICE
---------- -------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Outstanding
January 1,
1993.......... 2,275,000 617,000 $0.59-2.32 185,000 $ 0.59 1,473,000 $0.52-3.00
Granted....... 190,000 140,000 2.88-4.82 50,000 4.82 --
Exercised..... (1,291,750) (188,750) 0.59-2.00 -- (1,103,000) 0.52-2.78
Cancelled..... (220,000) (5,000) 1.20 -- (215,000) 0.57-2.32
---------- -------- -------- ----------
Outstanding
December 31,
1993.......... 953,250 563,250 0.59-4.82 235,000 0.59-4.82 155,000 0.59-3.00
Granted....... 335,500 235,500 5.00-6.38 100,000 7.00 --
Exercised..... (308,625) (153,625) 0.59-2.88 -- (155,000) 0.59-3.00
Cancelled..... (22,500) (22,500) 3.81-6.38 -- --
---------- -------- -------- ----------
Outstanding
December 31,
1994.......... 957,625 622,625 0.59-6.38 335,000 0.59-7.00 -- --
Granted....... 338,000 338,000(1) 4.50-5.31 -- -- -- --
Exercised..... (418,500) (233,500) 0.59-2.88 (185,000) 0.59 -- --
Cancelled..... (208,000) (208,000)(1) 4.50-6.38 -- -- -- --
---------- -------- -------- ----------
Outstanding
December 31,
1995.......... 669,125 519,125 1.20-6.38 150,000 4.82-7.00 -- --
Granted....... 162,000 67,000 5.00 95,000 5.00 -- --
Exercised..... (73,475) (73,475) 1.20-6.38 -- -- -- --
Cancelled..... (77,500) (17,500) 4.50-5.00 (60,000) 5.00 -- --
---------- -------- -------- ----------
Outstanding June
30, 1996
(Unaudited)... 680,150(2) 495,150 $1.20-6.38 185,000 $4.82-7.00 -- --
========== ======== ========
</TABLE>
- -------------------------
(1) In February 1995, the Company cancelled 183,000 options at prices ranging
from $5.00 to $6.38 and regranted them at $4.50.
(2) Of the 680,150 options outstanding at June 30, 1996
a) 132,750 are currently exercisable through the fourth quarter 1998;
b) 120,000 are currently exercisable through the fourth quarter 1999;
c) 84,000 are currently exercisable through the fourth quarter 2006; and
d) 343,400 will be exercisable in the third quarter 1996 through the fourth
quarter 2002.
Exercise prices for all options granted by TechTeam equaled or exceeded
fair market value at date of grant and, therefore, no compensation expense
related to these options was recorded.
F-14
<PAGE> 56
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE K -- STOCK BUY-BACK PROGRAM
In February, 1995, the Board of Directors of the Company authorized a stock
buy-back program. The program provided for the open market purchase of up to
$4,000,000 of the Company's common stock. The repurchase program terminated July
31, 1995 with 200,000 shares repurchased at a total cost of $907,008.
NOTE L -- SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly consolidated results of operations are summarized as follows:
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
1993
Revenues............................. $ 3,817,267 $ 4,507,827 $ 5,419,685 $ 6,699,168
Income before tax provisions......... 548,132 733,387 889,866 597,713
Net income........................... 331,157 449,387 544,498 347,371
Earnings per share................... .04 .05 .06 .03
1994
Revenues............................. $ 6,827,299 $ 7,640,227 $ 8,050,161 $ 7,706,751
Income before tax provisions......... 462,465 1,199,772 1,099,303 610,384
Net income........................... 273,599 720,606 621,538 355,306
Earnings per share................... .03 .07 .06 .03
1995
Revenues............................. $ 8,460,857 $ 9,610,262 $ 10,562,202 $13,154,141
Income before tax provisions......... 908,662 1,264,894 676,675 1,227,072
Net income........................... 539,227 775,109 346,540 738,191
Earnings per share................... .05 .07 .03 .07
1996
Revenues............................. $14,407,611 $15,831,227
Income before tax provisions......... 1,491,731 1,772,156
Net income........................... 865,731 1,044,156
Earnings per share................... .08 .09
</TABLE>
Quarterly earnings per share may not add to annual earnings per share
because of rounding and new shares issued during the year.
F-15
<PAGE> 57
[PHOTOGRAPH OF THE EXTERIOR OF THE COMPANY'S DALLAS, TEXAS CALL CENTER]
National TechTeam's Dallas Office
<PAGE> 58
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN DULY AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDERS OR ANY OF THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH QUALIFIED SOLICITATION.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 6
Use of Proceeds...................... 10
Dividend Policy...................... 10
Price Range of Common Stock.......... 10
Capitalization....................... 11
Selected Consolidated Financial
Data............................... 12
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 13
Business............................. 20
Management........................... 29
Principal and Selling Stockholders... 34
Description of Capital Stock......... 36
Shares Eligible for Future Sale...... 37
Underwriting......................... 37
Legal Matters........................ 39
Experts.............................. 39
Available Information................ 39
Incorporation of Certain Information
by Reference....................... 40
Index to Financial Statements........ F-1
</TABLE>
3,000,000 SHARES
[TECHTEAM LOGO]
COMMON STOCK
($.01 PAR VALUE)
SALOMON BROTHERS INC
ROBERT W. BAIRD & CO.
INCORPORATED
PROSPECTUS
DATED , 1996
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale of
Common Stock being registered. All amounts are estimates except the registration
fee and the NASD filing fee.
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
BY
COMPANY
---------
<S> <C>
Registration Fee................................................................ $14,016
NASD Filing Fee................................................................. 4,565
Printing Expenses............................................................... *
Legal Fees and Expenses......................................................... *
Accounting Fees and Expenses.................................................... *
Blue Sky Fees and Expenses...................................................... *
Transfer Agent and Registrar Fees............................................... *
Miscellaneous................................................................... *
----------
Total......................................................................... $ *
==========
</TABLE>
- -------------------------
* to be filed by amendment
The Company also intends to pay all expenses of registration, issuance and
distribution, excluding underwriters' discounts and commissions, with respect to
the shares being sold by the Selling Stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Delaware law, a corporation may indemnify any person who was or is a
party or is threatened to be made a party to an action (other than an action by
or in the right of the corporation) by reason of such person's service, at the
corporation's request, as a director, officer, employee or agent of another
corporation or other enterprise, against expenses (including attorneys' fees)
that are actually and reasonably incurred by such person ("Expenses"), and
judgments, fines and amounts paid in settlement that are actually and reasonably
incurred by such person, in connection with the defense or settlement of such
action; provided that such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the corporation's best
interests and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that such person's conduct was unlawful. Although
Delaware law permits a corporation to indemnify any person referred to above
against Expenses in connection with the defense or settlement of an action by or
in the right of the corporation, provided that such person acted in good faith
and in a manner such person reasonably believed to be in or not opposed to the
corporation's best interests, if such person has been judged liable to the
corporation, indemnification is only permitted to the extent that the
adjudicating court (or the court in which the action was brought) determines
that, despite the adjudication of liability, such person is entitled to
indemnity for such Expenses as the court deems proper. The determination as to
whether a person seeking indemnification has met the required standard of
conduct is to be made (1) by a majority vote of a quorum of disinterested
members of the board of directors, or (2) by independent legal counsel in a
written opinion, if such a quorum does not exist or if the disinterested
directors so direct, or (3) by the stockholders. The General Corporation Law of
Delaware also provides for mandatory indemnification of any director, officer,
employee or agent against Expenses to the extent such person has been successful
in any proceeding covered by the statute. In addition, the General Corporation
Law of Delaware provides for the general authorization of advancement of a
director's or officer's litigation expenses in lieu of requiring the
authorization of such advancement by the board of directors in specific
II-1
<PAGE> 60
cases, and that indemnification and advancement of expenses provided by the
statute shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement or otherwise.
The Company's Bylaws provide that the Company shall indemnify its
directors, officers, employees and agents to the extent permitted by Delaware
law.
The Company maintains a policy of directors and officers liability
insurance.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
in the opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is therefore unenforceable.
II-2
<PAGE> 61
ITEM 16. EXHIBITS
All Exhibits listed above that include a * indicate exhibits that are
incorporated by reference. See the footnotes following the list of exhibits to
locate those exhibits. All other exhibits are filed as part of this Registration
Statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ ------------------------------------------------------------------------------
<C> <S> <C>
1.1 Form of Underwriting Agreement to be entered into between the Company and
Salomon Brothers Inc and Robert W. Baird & Co. Incorporated as underwriters
4.4 Specimen Common Stock certificate
5. Opinion of Berry, Moorman, King & Hudson, P.C., as to the legality of the
securities being registered **
10.1 Lease for office space in Dearborn, Michigan, between the Company and
Salisbury Properties Limited Partnership *2
10.2 Lease Amendment for office space in Dearborn, Michigan, between the Company
and Salisbury Properties Limited Partnership dated January 29, 1992 *5
10.3 Lease for office space in Dearborn, Michigan, between the Company and Dearborn
Atrium Associates Limited Partnership dated August 17, 1988 *3
10.4 Lease Amendment for office space in Dearborn, Michigan, between the Company
and Dearborn Atrium Associates Limited Partnership dated January 19, 1992 *5
10.5 Lease Amendment for office space in Dearborn, Michigan known as Suite 295
between the Company and Dearborn Atrium Associates Limited Partnership dated
April 19, 1993 *7
10.6 Lease Amendment for office space in Dearborn, Michigan known as Suite 145
between the Company and Dearborn Atrium Associates Limited Partnership dated
May 5, 1993 *7
10.7 Purchase Order dated August 4, 1988 by and between the Company as Vendor and
Ford Motor Company as Vendee for End User Computer Training Classes and User
Assistance Services *3
10.8 Purchase Order dated January 1, 1992 by and between the Company as Vendor and
Ford Motor Company as Vendee for Agency Programmer Services *6
10.9 Lease Agreement for office space in Southfield, Michigan known as Suite 171,
17197 N. Laurel Park Drive between the Company and Eleven Inkster Associates
dated September 29, 1993 *8
10.10 Lease Amendment for office space in Southfield, Michigan known as Suite 171,
17197 N. Laurel Park Drive between the Company and Eleven Inkster Associates
dated December 7, 1993 *8
10.11 Purchase Order dated November 6, 1986 by and between the Company as Vendor and
Ford Motor Company as Vendee for Support Services, together with currently
effective Amendment dated August 23, 1993 *9
10.12 Sublease Agreement affecting office space leased in Dearborn, Michigan from
Dearborn Atrium Associates Limited Partnership known as Suites 185 and 195
between the Company and Ford Motor Company dated December 21, 1994 *9
10.13 Lease Amendment for office space in Southfield, Michigan known as Suite 171,
17197 N. Laurel Park Drive between the Company and Eleven Inkster Associates
dated January 23, 1995 *9
</TABLE>
II-3
<PAGE> 62
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ ------------------------------------------------------------------------------
<C> <S> <C>
10.14 Supplier Contract dated July 1, 1994 by and between the Company as Vendor and
Geometric Results Incorporated (doing business as "PeopleNet") as Vendee for
Personnel Services, together with currently effective Amendment dated February
6, 1995 *9
10.15 Purchase Order dated March 23, 1995 by and between the Company as Vendor and
Ford Motor Company as Vendee for Support for Ford 2000, together with
currently effective amendment dated February 23, 1996 *10
10.16 Agreement dated June 21, 1995 between the Company and Hewlett-Packard Company
for Technical Support Assistance *10
10.17 Lease for office space in Dallas, Texas known as Lyndon Plaza between the
Company and Dallas Lyndon Corporation dated August 17, 1995 *10
10.18 Installment Business Loan Note in the principal amount of $565,998 and related
Continuing Security Agreement between the Company and NBD Bank dated
August 28, 1995 *10
10.19 Agreement dated September 15, 1995 between the Company and NBD Bank for End
User Computer Training *10
10.20 Lease for office space in Troy, Michigan known as Troy Officenter B between
the Company and WRC Properties, Inc. dated November 16, 1995 *10
10.21 Office Space Lease for office space in Indianapolis, Indiana known as Market
Square Center Building between the Company and MET Life International Real
Estate Partners Limited Partnership dated November 27, 1995 *10
10.22 Currently effective Purchase Order Amendment dated January 6, 1996 by and
between the Company as Vendor and Ford Motor Company as Vendee for End User
Computer Training Classes and User Assistance Services *10
10.23 Installment Business Loan Note in the principal amount of $480,212 and related
Continuing Security Agreement between the Company and NBD Bank dated
January 17, 1996 *10
10.24 Lease for office space in Seattle, Washington between the Company and Sixth &
Pike Associates, L.P. dated February 14, 1996 *10
10.25 Currently effective Purchase Order Amendment dated February 21, 1996 by and
between the Company as Vendor and Ford Motor Company as Vendee for Programming
Services *10
10.26 1990 Nonqualified Stock Option Plan *4
10.27 Form of Stock Option Agreement used for grant of options to employees under
the
1990 Nonqualified Stock Option Plan *7
10.28 1996 Nonemployee Directors Stock Plan
10.29 Third Amendment Lease Agreement dated March 29, 1996 for office space in
Southfield, Michigan between Eleven Inkster Associates and the Company
10.30 Agreement dated May 30, 1996 between the Company and Hewlett-Packard Company
for technical phone support for H-P Advantage Center
10.31 Purchase Order dated April 4, 1996 from Chrysler Corporation to the Company
for dealer support in France, Germany and Italy
10.32 Agreement dated May 9, 1996 between United Parcel Service and the Company for
technical help desk support
10.33 Agreement dated December 15, 1995 between Owens-Corning Fiberglas Corporation
and the Company for technical support
</TABLE>
II-4
<PAGE> 63
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ ------------------------------------------------------------------------------
<C> <S> <C>
10.34 Agreement dated March 5, 1996 between Price Waterhouse LLP and the Company for
help desk support
10.35 Joint Venture Agreement dated July 26, 1996 between Paratel N.V. and the
Company
10.36 Master Demand Business Loan Note in the principal amount of $6,000,000 between
the Company and NBD Bank dated June 17, 1996
11. Statement re: Computation of per share earnings
23.1 Consent of Berry, Moorman, King & Hudson, P.C. to the inclusion of the
reference to their opinion in the Prospectus (contained in Exhibit 5). **
23.2 Consent of Ernst & Young LLP to the inclusion of their report in the
Prospectus
24. Powers of Attorney (contained in Part II of this Registration Statement)
</TABLE>
- -------------------------
** To be filed by Amendment
*2 Incorporated by reference to the Company's Current Report on Form 8-K dated
December 5, 1987.
*3 Incorporated by reference to the Company's Registration Statement on Form
S-4 (Registration No. 33-26689).
*4 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1990.
*5 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1991.
*6 Incorporated by reference to the Company's Annual Report on Form 10KSB for
the year ended December 31, 1992.
*7 Incorporated by reference to the Company's Registration Statement on Form
S-2 (Registration No. 33-67904).
*8 Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1993.
*9 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
*10 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
II-5
<PAGE> 64
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) For purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-6
<PAGE> 65
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Dearborn, State of Michigan, on the 23rd day of
August, 1996.
NATIONAL TECHTEAM, INC.,
a Delaware corporation
By: /s/ WILLIAM F. COYRO, JR.
--------------------------------------
William F. Coyro, Jr., Chairman
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below hereby constitutes and appoints William F. Coyro, Jr. and Lawrence A.
Mills, or either of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or would do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.
IN WITNESS WHEREOF each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------------------------------------- ------------------------- -------------------
<C> <S> <C>
Principal Executive Officer:
/s/ WILLIAM F. COYRO, JR. Chairman, August 23, 1996
------------------------------------------- Chief Executive Officer
William F. Coyro, Jr.
Principal Financial and Accounting Officer:
/s/ LAWRENCE A. MILLS Senior Vice President, August 23, 1996
------------------------------------------- Chief Financial Officer
Lawrence A. Mills and Treasurer
</TABLE>
II-7
<PAGE> 66
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------------------------------------- ------------------------- -------------------
<C> <S> <C>
Director
-------------------------------------------
Kim A. Cooper
/s/ VALERIE J. NIEMIEC Director August 23, 1996
-------------------------------------------
Valerie J. Niemiec
/s/ WALLACE D. RILEY Director August 23, 1996
-------------------------------------------
Wallace D. Riley
Director
-------------------------------------------
Richard G. Somerlott
/s/ LEROY H. WULFMEIER, III Director August 23, 1996
-------------------------------------------
Leroy H. Wulfmeier, III
</TABLE>
II-8
<PAGE> 67
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ ------------------------------------------------------------------------------
<C> <S> <C>
1.1 Form of Underwriting Agreement to be entered into between the Company and
Salomon Brothers Inc and Robert W. Baird & Co. Incorporated as underwriters
4.4 Specimen Common Stock certificate
5. Opinion of Berry, Moorman, King & Hudson, P.C., as to the legality of the
securities being registered **
10.1 Lease for office space in Dearborn, Michigan, between the Company and
Salisbury Properties Limited Partnership *2
10.2 Lease Amendment for office space in Dearborn, Michigan, between the Company
and Salisbury Properties Limited Partnership dated January 29, 1992 *5
10.3 Lease for office space in Dearborn, Michigan, between the Company and Dearborn
Atrium Associates Limited Partnership dated August 17, 1988 *3
10.4 Lease Amendment for office space in Dearborn, Michigan, between the Company
and Dearborn Atrium Associates Limited Partnership dated January 19, 1992 *5
10.5 Lease Amendment for office space in Dearborn, Michigan known as Suite 295
between the Company and Dearborn Atrium Associates Limited Partnership dated
April 19, 1993 *7
10.6 Lease Amendment for office space in Dearborn, Michigan known as Suite 145
between the Company and Dearborn Atrium Associates Limited Partnership dated
May 5, 1993 *7
10.7 Purchase Order dated August 4, 1988 by and between the Company as Vendor and
Ford Motor Company as Vendee for End User Computer Training Classes and User
Assistance Services *3
10.8 Purchase Order dated January 1, 1992 by and between the Company as Vendor and
Ford Motor Company as Vendee for Agency Programmer Services *6
10.9 Lease Agreement for office space in Southfield, Michigan known as Suite 171,
17197 N. Laurel Park Drive between the Company and Eleven Inkster Associates
dated September 29, 1993 *8
10.10 Lease Amendment for office space in Southfield, Michigan known as Suite 171,
17197 N. Laurel Park Drive between the Company and Eleven Inkster Associates
dated December 7, 1993 *8
10.11 Purchase Order dated November 6, 1986 by and between the Company as Vendor and
Ford Motor Company as Vendee for Support Services, together with currently
effective Amendment dated August 23, 1993 *9
10.12 Sublease Agreement affecting office space leased in Dearborn, Michigan from
Dearborn Atrium Associates Limited Partnership known as Suites 185 and 195
between the Company and Ford Motor Company dated December 21, 1994 *9
10.13 Lease Amendment for office space in Southfield, Michigan known as Suite 171,
17197 N. Laurel Park Drive between the Company and Eleven Inkster Associates
dated January 23, 1995 *9
10.14 Supplier Contract dated July 1, 1994 by and between the Company as Vendor and
Geometric Results Incorporated (doing business as "PeopleNet") as Vendee for
Personnel Services, together with currently effective Amendment dated February
6, 1995 *9
</TABLE>
<PAGE> 68
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ ------------------------------------------------------------------------------
<C> <S> <C>
10.15 Purchase Order dated March 23, 1995 by and between the Company as Vendor and
Ford Motor Company as Vendee for Support for Ford 2000, together with
currently effective amendment dated February 23, 1996 *10
10.16 Agreement dated June 21, 1995 between the Company and Hewlett-Packard Company
for Technical Support Assistance *10
10.17 Lease for office space in Dallas, Texas known as Lyndon Plaza between the
Company and Dallas Lyndon Corporation dated August 17, 1995 *10
10.18 Installment Business Loan Note in the principal amount of $565,998 and related
Continuing Security Agreement between the Company and NBD Bank dated
August 28, 1995 *10
10.19 Agreement dated September 15, 1995 between the Company and NBD Bank for End
User Computer Training *10
10.20 Lease for office space in Troy, Michigan known as Troy Officenter B between
the Company and WRC Properties, Inc. dated November 16, 1995 *10
10.21 Office Space Lease for office space in Indianapolis, Indiana known as Market
Square Center Building between the Company and MET Life International Real
Estate Partners Limited Partnership dated November 27, 1995 *10
10.22 Currently effective Purchase Order Amendment dated January 6, 1996 by and
between the Company as Vendor and Ford Motor Company as Vendee for End User
Computer Training Classes and User Assistance Services *10
10.23 Installment Business Loan Note in the principal amount of $480,212 and related
Continuing Security Agreement between the Company and NBD Bank dated
January 17, 1996 *10
10.24 Lease for office space in Seattle, Washington between the Company and Sixth &
Pike Associates, L.P. dated February 14, 1996 *10
10.25 Currently effective Purchase Order Amendment dated February 21, 1996 by and
between the Company as Vendor and Ford Motor Company as Vendee for Programming
Services *10
10.26 1990 Nonqualified Stock Option Plan *4
10.27 Form of Stock Option Agreement used for grant of options to employees under
the
1990 Nonqualified Stock Option Plan *7
10.28 1996 Nonemployee Directors Stock Plan
10.29 Third Amendment Lease Agreement dated March 29, 1996 for office space in
Southfield, Michigan between Eleven Inkster Associates and the Company
10.30 Agreement dated May 30, 1996 between the Company and Hewlett-Packard Company
for technical phone support for H-P Advantage Center
10.31 Purchase Order dated April 4, 1996 from Chrysler Corporation to the Company
for dealer support in France, Germany and Italy
10.32 Agreement dated May 9, 1996 between United Parcel Service and the Company for
technical help desk support
10.33 Agreement dated December 15, 1995 between Owens-Corning Fiberglas Corporation
and the Company for technical support
10.34 Agreement dated March 5, 1996 between Price Waterhouse LLP and the Company for
help desk support
10.35 Joint Venture Agreement dated July 26, 1996 between Paratel N.V. and the
Company
</TABLE>
<PAGE> 69
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ ------------------------------------------------------------------------------
<C> <S> <C>
10.36 Master Demand Business Loan Note in the principal amount of $6,000,000 between
the Company and NBD Bank dated June 17, 1996
11. Statement re: Computation of per share earnings
23.1 Consent of Berry, Moorman, King & Hudson, P.C. to the inclusion of the
reference to their opinion in the Prospectus (contained in Exhibit 5). **
23.2 Consent of Ernst & Young LLP to the inclusion of their report in the
Prospectus
24. Powers of Attorney (contained in Part II of this Registration Statement)
</TABLE>
- -------------------------
** To be filed by Amendment
*2 Incorporated by reference to the Company's Current Report on Form 8-K dated
December 5, 1987.
*3 Incorporated by reference to the Company's Registration Statement on Form
S-4 (Registration No. 33-26689).
*4 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1990.
*5 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1991.
*6 Incorporated by reference to the Company's Annual Report on Form 10KSB for
the year ended December 31, 1992.
*7 Incorporated by reference to the Company's Registration Statement on Form
S-2 (Registration No. 33-67904).
*8 Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1993.
*9 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
*10 Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
<PAGE> 1
EXHIBIT 1.1
W&S DRAFT
FORM OF
UNDERWRITING AGREEMENT
8/21/96
National TechTeam, Inc.
3,000,000 Shares*
Common Stock
($.01 par value)
Underwriting Agreement
New York, New York
August [__], 1996
Salomon Brothers Inc
Robert W. Baird & Co. Incorporated
As Representatives of the several Underwriters,
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
National TechTeam, Inc. (the "Company"), a Delaware
corporation, proposes to sell to the underwriters named in Schedule I hereto
(the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), 3,000,000 shares of Common Stock, $.01 par value ("Common
Stock"), of the Company (said shares to be issued and sold by the Company being
hereinafter called the "Underwritten Securities"). Upon the terms and
conditions more fully set forth herein, the Company and the certain
stockholders of the Company named in Schedule II hereto (the "Selling
Stockholders") also propose to grant to the Underwriters an option to purchase
up to 450,000 additional shares of Common Stock (the "Option Securities"; the
Option Securities, together with the Underwritten Securities, being hereinafter
called the "Securities").
1. Representations and Warranties.
(a) The Company represents and warrants to, and agrees
with, each Underwriter that:
- ---------------
* Plus an option to purchase up to 230,000 additional shares from the
Company and up to 220,000 additional shares from Selling Stockholders
to cover over-allotments.
<PAGE> 2
(i) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration
statement (file number 333-_____) on Form S-3, including
related preliminary prospectuses, for the registration under
the Securities Act of 1933 (the "Act") of the offering and
sale of the Securities. The Company may have filed one or
more amendments thereto, including the related preliminary
prospectuses, each of which has previously been furnished to
you. The Company will next file with the Commission either,
(A) prior to effectiveness of such registration statement, a
further amendment thereto (including the form of final
prospectus) or, (B) after effectiveness of such registration
statement, a final prospectus in accordance with Rules 430A
and 424(b)(1) or (4). In the case of clause (B), the Company
has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A
Information) required by the Act and the rules thereunder to
be included in the Prospectus with respect to the Securities
and the offering thereof. As filed, such amendment and form
of final prospectus, or such final prospectus, shall include
all Rule 430A Information and, except to the extent the
Representatives shall agree in writing to a modification
(which agreement shall not be unreasonably withheld), shall be
in all substantive respects in the form furnished to you prior
to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you,
prior to the Execution Time, will be included or made therein.
The terms which follow, when used in this
Agreement, shall have the meanings indicated. The term "the
Effective Date" shall mean each date that the Registration
Statement and any post-effective amendment or amendments
thereto became or become effective. "Execution Time" shall
mean the date and time that this Agreement is executed and
delivered by the parties hereto. "Preliminary Prospectus"
shall mean any preliminary prospectus referred to in the
preceding paragraph and any preliminary prospectus included
in the Registration Statement at the Effective Date that omits
Rule 430A Information. "Prospectus" shall mean the prospectus
relating to the Securities that is first filed pursuant to
Rule 424(b) after the Execution Time or, if no filing pursuant
to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the
Registration Statement at the Effective Date. "Registration
Statement" shall mean the registration statement referred to
in the preceding
-2-
<PAGE> 3
paragraph, including exhibits and financial statements, in the
form in which it has or shall become effective and, in the
event any post-effective amendment thereto becomes effective
prior to the Closing Date (as hereinafter defined) or
settlement date pursuant to Section 3 hereof, shall also mean
such registration statement as so amended on such date. Such
term shall include a registration statement, if any, filed
pursuant to Rule 462(b) under the Act increasing the size of
the offering registered under the Act and Rule 430A
Information deemed to be included therein at the Effective
Date as provided by Rule 430A. "Rule 424", "Rule 430A" and
"Rule 462(b)" refer to such rules under the Act. "Rule 430A
Information" means information with respect to the Securities
and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to
Rule 430A. The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder are
hereinafter collectively referred to as the "Exchange Act."
Any reference herein to any preliminary prospectus or the
Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein (including the
documents listed as exhibits to such documents) pursuant to
Form S-3 under the 1933 Act ("Incorporated Documents"), as of
the date of such preliminary prospectus or Prospectus, as the
case may be. Any document filed by the Company under the
Exchange Act after the Effective Date or the date of the
Prospectus and incorporated by reference in the Prospectus
shall be deemed to be included in that Registration Statement
and the Prospectus as of the date of such filing.
The Incorporated Documents, when filed with the
Commission, conformed or will conform in all material respects
to the requirements for the Exchange Act and none of such
documents, as of the date of such Incorporated Documents,
contained or will contain an untrue statement of a material
fact or omitted or will omit to state a material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(ii) No order preventing or suspending the use of
any Preliminary Prospectus has been issued by the Commission,
and each Preliminary Prospectus, at the time of filing
thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations
thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements
-3-
<PAGE> 4
therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company
makes no representations or warranties as to the information
contained in or omitted from any Preliminary Prospectus in
reliance upon and in conformity with information forwarded in
writing to the Company by or on behalf of any Underwriter
through the Representatives specifically for use therein.
(iii) On the Effective Date, the Registration
Statement did or will, and when the Prospectus is first filed
(if required) in accordance with Rule 424(b), on the Closing
Date and on any settlement date pursuant to Section 3 hereof,
the Prospectus (and any supplements thereto) will, comply in
all material respects with the applicable requirements of the
Act and the rules thereunder; on the Effective Date, the
Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to
make the statements therein not misleading; and, on the
Effective Date, the Prospectus, if not filed pursuant to Rule
424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b), on the Closing Date and on any
settlement date pursuant to Section 3 hereof, the Prospectus
(together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that no
representations or warranties are made as to the information
contained in or omitted from the Registration Statement or the
Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the
Representatives specifically for use therein.
(iv) The performance of this Agreement and the
consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any
indenture, mortgage, deed of trust, credit agreement or other
agreement or instrument to which the Company is a party or by
which it is bound or to which any of the property of the
Company is subject, the Company's certificate of incorporation
or by-laws, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Company or any of its properties; no consent, approval,
authorization or order of, or filing with, any court or
-4-
<PAGE> 5
governmental agency or body is required for the consummation
of the transactions contemplated by this Agreement in
connection with the issuance or sale of the Securities except
such as may be required by the National Association of
Securities Dealers, Inc. or under the Act or state securities
laws.
(v) Except as described in the Prospectus, the
Company is not in violation of any term of its charter or
by-laws, and the Company is not in violation of any term of
any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to it which
violation or violations might or could be expected to
individually or in the aggregate result in a materially
adverse effect on the financial condition, assets, operations,
or prospects of the Company or the offering of the Securities
contemplated by the Prospectus (the "Offering").
(vi) Except as described in the Prospectus, the
Company is operating in compliance in all material respects
with all material franchises, grants, authorizations,
licenses, permits, easements, consents, certificates and
orders of any governmental or regulatory body required for the
conduct of its businesses, and it owns or possesses all the
patents, trademarks, service marks, trade names, copyrights
and licenses, and rights with respect to the foregoing,
necessary for the conduct of its businesses as now conducted
and as proposed to be conducted, without any known conflict
with the rights of others.
(vii) All contracts, agreements, instruments,
leases and licenses required to be described in the
Registration Statement or the Prospectus and/or to be filed as
an exhibit to the Registration Statement have been so
described in all material respects and/or filed.
(viii) Subsequent to the respective dates as of
which information is given in the Registration Statement and
Prospectus, and except as set forth or contemplated in the
Prospectus, (i) the Company has not incurred any material
liabilities or obligations, direct or contingent, nor entered
into any material transactions not in the ordinary course of
business, and (ii) there has not been any material adverse
change in the condition (financial or otherwise), business,
prospects or results of operations of the Company or any
change in the capital stock or long-term debt of the Company.
(ix) The financial statements, together with the
related notes and schedules, included or incorporated by
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<PAGE> 6
reference in the Registration Statement, fairly present, on
the basis stated in the Registration Statement, the financial
position and the results of operations and cash flows of the
entities covered thereby at the respective dates or for the
respective periods therein specified. Such financial
statements and related notes and schedules have been prepared
in accordance with generally accepted accounting principles
applied on a consistent basis throughout the respective
periods involved, and are in accordance with the books and
records of the entities covered thereby. The selected
financial data set forth in the Prospectus under the captions
"Summary Financial and Operating Data," "Risk Factors,"
"Capitalization," "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business," and "Management" taken
together with the other information in the Prospectus fairly
presents, on the basis stated in the Registration Statement,
the information set forth therein. No other financial
statements are required by Form S-3 or otherwise to be
involved in the Registration Statement or the Prospectus.
(x) The Company is insured by insurers of
recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which it is engaged; the Company has not been
refused any insurance coverage sought or applied for; and the
Company has no reason to believe that it will not be able to
renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a
cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business
or operations of the Company, except as described in or
contemplated by the Prospectus.
(xi) Ernst & Young LLP, who have certified the
consolidated financial statements of the Company and the
related schedules included or incorporated by reference in the
Registration Statement, are, and during the periods
covered by their reports included in the Registration
Statement were, independent public accountants as required by
the Act and the applicable rules and regulations thereunder.
(xii) The Company has been duly organized and is
validly existing as a corporation in good standing under the
laws of Delaware. The Company is duly qualified and in good
standing as a foreign corporation in each jurisdiction in
which the character or location of its
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<PAGE> 7
properties (owned, leased or licensed) or the nature or
conduct of its business makes such qualification necessary,
except for those failures to be so qualified or in good
standing that will not in the aggregate have a material
adverse effect on the financial condition, assets, operations
or prospects of the Company. The Company has all requisite
power and authority, and all necessary consents, approvals,
authorizations, orders, registrations, qualifications,
licenses and permits of and from all public, regulatory or
governmental agencies and bodies, to own, lease and operate
its properties and conduct its business as now being conducted
and as described in the Registration Statement and the
Prospectus, and no such consent, approval, authorization,
order, registration, qualification, license or permit contains
a materially burdensome restriction not adequately disclosed
in the Registration Statement and the Prospectus.
(xiii) As of the date of this Agreement, the Company
has an authorized and outstanding capitalization as set forth
under the heading "Actual" beneath the caption
"Capitalization" in the Prospectus and immediately following
the purchase of the Underwritten Securities hereunder, the
Company will have an authorized and outstanding capitalization
as set forth under the heading "As Adjusted" beneath the
caption "Capitalization" in the Prospectus; the issued shares
of Common Stock of the Company conform to the description
thereof in the Prospectus and have been duly authorized and
validly issued and are fully paid and nonassessable and were
not issued in violation of or subject to any preemptive
rights; on the Closing Date, the stockholders of the Company
will have no preemptive rights with respect to any shares of
capital stock of the Company. There is no commitment, plan or
arrangement to issue, and no outstanding option, warrant, or
other right calling for the issuance of, any share of capital
stock of the Company, or any security or other instrument
which by its terms is convertible into or exchangeable for
capital stock of the Company, except as described in the
Prospectus. Except as described in the Prospectus, there is
outstanding no security or other instrument which by its terms
is convertible into or exchangeable for capital stock of the
Company. The Securities to be sold by the Company and the
Selling Stockholders to the Underwriters hereunder, when
delivered and sold in accordance with this Agreement, will be
duly and validly issued and outstanding, fully paid and
nonassessable, and will not have been issued in violation of
or subject to any preemptive rights.
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<PAGE> 8
(xiv) Except as described in the Prospectus, there
are no legal or governmental proceedings or other actions,
suits, proceedings or investigations pending before any court
or before or by any public, regulatory or governmental agency
or body (including, without limitation, any state regulatory
agency, board or department) to which the Company is a party
or of which any property of the Company is the subject, which,
if determined adversely to the Company, would individually or
in the aggregate result in a material adverse change in the
financial condition, assets, operations, or prospects of the
Company or the Offering; and to the best of the Company's
knowledge no such proceedings are threatened or contemplated
by governmental authorities or threatened by others.
(xv) The Company has the full corporate power and
authority to enter into this Agreement and to perform the
obligations to be performed by it hereunder and this Agreement
has been duly and validly authorized, executed and delivered
by the Company.
(xvi) The Company has good and marketable title in
fee simple absolute to all real properties and good title to
all other properties and assets that the Prospectus indicates
are owned by it, free and clear of all liens, security
interests, pledges, charges, encumbrances and mortgages
(except as described in the Prospectus or such as in the
aggregate do not now have and will not in the future have a
material adverse effect upon the financial condition, assets,
operations, or prospects of the Company or the Offering).
(xvii) The Company has filed all necessary federal
and state income and franchise tax returns and has paid all
taxes shown as due thereon, and there is no tax deficiency
that has been, or to the knowledge of the Company might be,
asserted against the Company or any of its properties or
assets that would or could be expected to adversely affect the
financial condition, assets, operations or prospects of the
Company or the Offering.
(xviii) No person or entity has the right to require
registration of shares of Common Stock or other securities of
the Company because of the filing or effectiveness of the
Registration Statement or otherwise, except as described in
the Prospectus.
(xix) The Securities have been approved for trading
on the Nasdaq National Market.
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<PAGE> 9
(xx) To the best of the Company's knowledge and
except as would not, individually or in the aggregate, have a
material adverse effect upon the financial conditions, assets,
business or operations of the Company (a) the Company is not
in violation of any federal, state or local laws and
regulations relating to pollution (including regulations
relating to noise) or protection of human health or the
environmental (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface
strata), including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened
releases of toxic or hazardous substances, materials or
wastes, or petroleum and petroleum products ("Materials of
Environmental Concern"), or otherwise relating to the storage,
disposal, transport or handling of Materials of Environmental
Concern (collectively, "Environmental Laws"), which violation
includes, but is not limited to, noncompliance with any
permits or other governmental authorizations; (b) the Company
has not received any communication (written or oral), whether
from a governmental authority or otherwise, alleging any such
violation or noncompliance; and (c) there is no pending or
threatened claim, action, investigation or notice (written or
oral) by any person or entity alleging potential liability for
investigatory, cleanup, or governmental response costs, or
natural resources or property damages, or personal injuries,
attorney's fees or penalties relating to (x) the presence, or
release into the environment, of any Material of Environmental
Concern at any location owned or operated by the Company, now
or in the past, or (y) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
(xxi) The Company is not involved in any labor
dispute nor, to the best knowledge of the Company, is any
labor dispute imminent, other than routine disciplinary and
grievance matters, that would have a material adverse effect
upon the financial condition, assets, business or operations
of the Company.
(xxii) Neither the Company nor any of its officers,
directors or affiliates (as defined in the Act and the rules
and regulations thereunder), has taken or will take, directly
or indirectly, any action designed to or that has constituted
or that might reasonably be expected to cause or result, under
the Exchange Act, or otherwise in stabilization or
manipulation of the price of any security of the Company, to
facilitate the sale or resale of the Securities.
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<PAGE> 10
(xxiii) The Company is not, nor does it
intend to conduct its business in a manner in which it would become,
an "investment company" as defined in Section 3(a) of the Investment
Company Act of 1940, as amended.
(xxiv) The Company is in compliance with Florida
blue sky law relating to disclosure of issuers doing business with
Cuba. The Company is not presently doing business with the government
of Cuba or with any person or affiliate located in Cuba and the
Company will notify the Florida Department of Banking and Finance,
Division of Securities and Investor Protection, if the Company
commences doing business with the government of Cuba or any person or
affiliate located in Cuba.
(xxv) [ADDITIONAL REPRESENTATIONS AND WARRANTIES
REGARDING AND ANY OTHER MATTERS THAT ARISE AS A RESULT OF OUR DUE
DILIGENCE INVESTIGATION]
(b) Each Selling Stockholder severally represents and warrants to,
and agrees with, each Underwriter that:
(i) Such Selling Stockholder, on the Closing Date
or the settlement date for the Option Securities otherwise
contemplated in Section 3 hereof, as the case may be, will
have good title to the number of Securities set forth opposite
such Selling Stockholder's name on Schedule II hereto and upon
sale and delivery of, and payment for, such Securities, as
provided herein, such Selling Stockholder will convey good and
marketable title to such Securities, free and clear of all
liens, encumbrances, pledges, equities and claims whatsoever.
(ii) (A) To the knowledge of such Selling
Stockholder, each of the Registration Statement and Prospectus
does not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and
the preliminary prospectus does not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading and (B) such parts of the Registration Statement
under the captions "Management" and "Principal and Selling
Stockholders" which specifically relate to such Selling
Stockholder do not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light
of circumstances under which they were made, not misleading.
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<PAGE> 11
(iii) Such Selling Stockholder has not taken and
will not take, directly or indirectly, any action designed to
or which has constituted or which might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities
and has not effected any sales of shares of Common Stock
which, if effected by the issuer, would be required to be
disclosed in response to Item 701 of Regulation S-K.
(iv) Such Selling Stockholder has duly executed
and delivered a Power of Attorney in the form heretofore
furnished to you (the "Power of Attorney"), appointing William
F. Coyro, Jr. and Lawrence A. Mills, or either one of them, as
such Selling Stockholder's attorney-in-fact with authority to
execute or deliver this Agreement on behalf of such Selling
Stockholder, to determine the purchase price to be paid by the
Underwriters to the Selling Stockholders as provided in
Section ______ thereof, to authorize the delivery of the
Securities to be sold by such Selling Stockholders hereunder
and otherwise to act on behalf of such Selling Stockholder in
connection with the transactions contemplated by this
Agreement and the Custody Agreement (as hereafter described).
(v) Certificates in negotiable form for such
Selling Stockholder's Securities have been placed in
custody, for delivery pursuant to the terms of this Agreement,
under a Custody Agreement duly authorized, executed and
delivered by such Selling Stockholder, in the form heretofore
furnished to you (the "Custody Agreement") with
_________________________, as Custodian (the "Custodian"); the
Securities represented by the certificates so held in custody
for each Selling Stockholder are subject to the interests
hereunder of the Underwriters, the Company and the other
Selling Stockholders; the arrangements for custody and
delivery of such certificates, made by such Selling
Stockholder hereunder and under the Custody Agreement, are
not subject to termination by any acts of such Selling
Stockholder, or by operation of law, whether by the
dissolution, death or incapacity of such Selling Stockholder
or the occurrence of any other event; and if any such
dissolution, death, incapacity or any other such event shall
occur before the delivery of such Securities hereunder,
certificates for the Securities will be delivered by the
Custodian in accordance with the terms and conditions of this
Agreement and the Custody Agreement as if such dissolution,
death, incapacity or other event had not occurred, regardless
of whether or
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<PAGE> 12
not the Custodian shall have received notice of such death,
incapacity or other event.
(vi) The execution and delivery by such Selling
Stockholder of this Agreement, the Power of Attorney and the
Custody Agreement and the consummation by such Selling
Stockholder of the transactions contemplated herein and
therein, will not require any consent, approval, authorization
or order of any court or governmental agency or body (except
such as may have been obtained under the Act, the Exchange Act
and such as may be required by the National Association of
Securities Dealers, Inc. or under the blue sky laws of any
jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters and such other approvals
as have been obtained), and will not conflict with or
constitute a breach of any of the terms or provisions of, or a
default under, any agreement, indenture or other instrument to
which such Selling Stockholder is a party or by which such
Selling Stockholder or property of such Selling Stockholder is
bound, or violate or conflict with any laws, administrative
regulation or ruling or court decree applicable to such
Selling Stockholder or property of such Selling Stockholder.
2. Purchase and Sale.(a) Subject to the terms and
conditions and in reliance upon the representations and warranties
herein set forth, the Company agrees to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from
the Company, at a purchase price of $[__________] per share, the
amount of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, (i)
the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to 230,000 shares of the
Option Securities and (ii) the Selling Stockholders, as and to the
extent indicated in Schedule II hereto, hereby grant an option to the
several Underwriters to purchase, severally and not jointly, up to an
aggregate of 220,000 shares of the Option Securities, all at the same
purchase price per share as the Underwriters shall pay for the
Underwritten Securities. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Securities by the
Underwriters. Said option may be exercised in whole or in part at any
time (but not more than once) on or before the 30th day after the date
of the Prospectus upon written or facsimile notice by the
Representatives to the Company and the Selling Stockholders setting
forth the number
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<PAGE> 13
of shares of the Option Securities as to which the several
Underwriters are exercising the option and the settlement date.
Delivery of certificates for the shares of Option Securities by the
Company and the Selling Stockholders, and payment therefor to the
Company and the Selling Stockholders, shall be made as provided in
Section 3 hereof. The maximum number of shares of the Option
Securities to be sold by each Selling Stockholder is set forth on
Schedule II hereto. In the event that the Underwriters exercise less
than their full over-allotment option, the number of shares of the
Option Securities to be sold by the Company and each Selling
Stockholder shall be, as nearly as practicable, in the same proportion
to each other as are the maximum number of shares of the Option
Securities to be sold by each of the Company and the Selling
Stockholders. The number of shares of the Option Securities to be
purchased by each Underwriter shall be the same percentage of the
total number of shares of the Option Securities to be purchased by the
several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your
absolute discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment
for the Underwritten Securities and the Option Securities (if the option
provided for in Section 2(b) hereof shall have been exercised on or before the
third business day prior to the Closing Date) shall be made at 10:00 AM, New
York City time, on [_________] [__], 1996, or such later date (not later than
[__________] [__], 1996) as the Representatives shall designate, which date and
time may be postponed by agreement among the Representatives, the Company and
the Selling Stockholders or as provided in Section 9 hereof (such date and time
of delivery and payment for the Securities being herein called the "Closing
Date"). Delivery of the Securities shall be made to the Representatives for
the respective accounts of the several Underwriters against payment by the
several Underwriters through the Representatives of the aggregate purchase
price of the Securities being sold by the Company and each of the Selling
Stockholders to or upon the order of the Company and the Custodian for the
benefit of the Selling Stockholders as their interests may appear,
respectively, by wire transfer of immediately available funds. Delivery of the
Underwritten Securities and the Option Securities shall be made at such
location as the Representatives shall reasonably designate at least one
business day in advance of the Closing Date and payment for such Securities
shall be made at the office of Berry, Moorman, King & Hudson, 600 Woodbridge
Place, Detroit, Michigan. Certificates for the Securities shall be registered
in such names and in such denominations as the Representatives may request not
less than two full business days in advance of the Closing Date.
The Company and the Selling Stockholders agree to have the
Securities available for inspection, checking and packaging by
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<PAGE> 14
the Representatives in New York, New York, not later than 1:00 PM on the
business day prior to the Closing Date.
Each Selling Stockholder will pay all applicable state
transfer taxes, if any, involved in the transfer to the several Underwriters of
the Securities to be purchased by them from such Selling Stockholder and the
respective Underwriters will pay any additional stock transfer taxes involved
in further transfers.
If the option provided for in Section 2(b) hereof is exercised
after the third business day prior to the Closing Date, the Company and the
Selling Stockholders will deliver (at the expense of the Company and the
Selling Stockholders) to the Representatives, at such location as the
Representatives shall reasonably designate, on the date specified by the
Representatives (which shall be within three business days after exercise of
said option), certificates for the Option Securities in such names and
denominations as the Representatives shall have requested against payment of
the purchase price thereof to or upon the order of the Custodian for the
benefit of the Selling Stockholders identified in Schedule II as their
interests may appear by wire transfer of immediately available funds. If
settlement for the Option Securities occurs after the Closing Date, the Company
and such Selling Stockholders will deliver to the Representatives on the
settlement date for the Option Securities, and the obligation of the
Underwriters to purchase the Option Securities shall be conditioned upon
receipt of, supplemental opinions, certificates and letters confirming as of
such date the opinions, certificates and letters delivered on the Closing Date
pursuant to Section 6 hereof and all references in this Agreement to "Closing
Date" shall be deemed to be a reference to such settlement date.
4. Offering by Underwriters. It is understood that
the several Underwriters propose to offer the Securities for sale to the public
as set forth in the Prospectus.
5. Agreements.
(a) The Company agrees with the several Underwriters
that:
(i) The Company will use its best
efforts to cause the Registration Statement, and any amendment
thereof, if not effective at the Execution Time, to become
effective. Prior to the termination of the Offering, the
Company will not file any amendment of the Registration
Statement or supplement to the Prospectus without your prior
consent. Subject to the foregoing sentence, if the
Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is
otherwise required under Rule 424(b), the Company will file
the Prospectus, properly completed,
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<PAGE> 15
pursuant to Rule 424(b) within the time period prescribed and
will provide evidence satisfactory to the Representatives of
such timely filing. The Company will promptly advise the
Representatives (A) when the Registration Statement shall have
become effective, (B) when the Prospectus, and any supplement
thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b), (C) when, prior to the
termination of the Offering, any amendment to the Registration
Statement shall have been filed or become effective, (D) of
any request by the Commission for any amendment of the
Registration Statement or supplement to the Prospectus or for
any additional information, (E) of the issuance by the
Commission of any stop order suspending the effectiveness of
the Registration Statement or the institution or threatening
of any proceeding for that purpose and (F) of the receipt by
the Company of any notification with respect to the suspension
of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus
relating to the Securities is required to be delivered under
the Act, any event occurs as a result of which the Prospectus
as then supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be
necessary to supplement the Prospectus to comply with the Act
or the rules thereunder, the Company promptly will prepare and
file with the Commission, subject to paragraph (a) of this
Section 5, an amendment or supplement which will correct such
statement or omission or effect such compliance.
(iii) As soon as practicable, the Company
will make generally available to its security holders and to
the Representatives an earnings statement or statements of the
Company and its subsidiaries which will satisfy the provisions
of Section 11(a) of the Act and Rule 158 under the Act.
(iv) The Company will furnish to the
Representatives and counsel for the Underwriters, without
charge, three (3) signed copies of the Registration Statement
(including exhibits thereto) and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto)
and, so long as delivery of a
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<PAGE> 16
prospectus by an Underwriter or dealer may be required by the
Act, as many copies of the Prospectus, each Preliminary
Prospectus, the Incorporated Documents and all amendments and
supplements thereto as the Representatives may reasonably
request.
(v) The Company will arrange for the
qualification of the Securities for sale under the laws of
such jurisdictions as the Representatives may designate, will
maintain such qualifications in effect so long as required for
the distribution of the Securities and will pay the fee of the
National Association of Securities Dealers, Inc., in
connection with its review of the Offering.
(vi) The Company will not, for a period
of 180 days following the Execution Time, without the prior
written consent of Salomon Brothers Inc, offer, sell or
contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any other shares of
Common Stock or any securities convertible into, or
exchangeable for, shares of Common Stock; provided, however,
that the Company may issue and sell Common Stock pursuant to
any employee stock option plan, stock ownership plan or
dividend reinvestment plan of the Company in effect at the
Execution Time and the Company may issue Common Stock issuable
upon the conversion of securities or the exercise of warrants
outstanding on the date of this Agreement.
(vii) The Company will furnish to its
stockholders annual reports containing financial statements
certified by independent public accountants and with quarterly
summary financial information in reasonable detail which may
be unaudited. During the period of five years from the date
hereof, the Company will promptly deliver to the
Representatives and, upon request, to each of the other
Underwriters, (A) copies of each annual report of the Company
containing financial statements certified by independent
public accountants and each other report furnished by the
Company to its stockholders, (B) as soon as they are
available, copies of any other reports (financial or other)
that the Company shall publish or otherwise make available to
any of its security holders as such, and (C) as soon as they
are available, copies of any reports and financial statements
furnished to or filed with the Commission or any national
securities exchange. So long as the Company shall have active
subsidiaries, such financial statements will be on a
consolidated basis to the extent the accounts of the Company
and its subsidiaries are consolidated in reports furnished to
its stockholders
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<PAGE> 17
generally. Separate financial statements shall be furnished
for all subsidiaries whose accounts are not consolidated but
which at the time are significant subsidiaries as defined in
the Act and the rules and regulations thereunder.
(viii) The Company will use its best
efforts to maintain the listing of the Securities to be sold
hereunder on the Nasdaq National Market, unless the Company's
Board of Directors determines otherwise.
(ix) The Company will promptly deliver to
the Representatives copies of all correspondence to and from,
and all documents issued to and by, the Commission in
connection with the registration of the Securities under the
Act.
(x) The Company will not become an
"investment company" within the meaning of the Investment
Company Act.
(xi) Prior to the Closing Date, the
Company will issue no press release or other communication
directly or indirectly and hold no press conference with
respect to the Company or with respect to the financial
condition, results of operations, business, properties, assets
or liabilities of the Company, or the Offering, without your
prior written consent, which consent shall not be unreasonably
withheld.
(b) Other than pursuant to this Agreement, each
Selling Stockholder agrees with the several Underwriters that it will
not for a period of 180 days following the Execution Time, without the
prior written consent of Salomon Brothers Inc, offer, sell or contract
to sell, or otherwise dispose of, directly or indirectly, or announce
the offering of, any shares of Common Stock beneficially owned by such
person, or any securities convertible into, or exchangeable for,
shares of Common Stock, other than (i) shares of Common Stock disposed
of as bona fide gifts and (ii) shares of Common Stock sold or
otherwise transferred to a family member of a Selling Stockholder or
pursuant to will or laws of descent, provided, however, that prior to
any such transfer permitted by the immediately preceding clauses (i)
and (ii), the transferee shall execute and deliver to the
Representatives a letter agreeing to be bound by the terms of the
foregoing "lock-up" agreement as if a signatory thereto. To document
the Underwriters compliance with the reporting and withholding
provisions of the Tax Equity and Fiscal Responsibility Act of 1982
with respect to the transactions herein contemplated, each of the
Selling Stockholders agrees to deliver to you prior to or at the
Closing Date a properly completed and
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<PAGE> 18
executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department
regulations in lieu thereof).
6. Conditions to the Obligations of the
Underwriters. The obligations of the Underwriters to purchase the Underwritten
Securities and the Option Securities, as the case may be, shall be subject to
the accuracy of the representations and warranties on the part of the Company
and the Selling Stockholders contained herein as of the Execution Time, the
Closing Date and any settlement date pursuant to Section 3 hereof, to the
accuracy of the statements of the Company and the Selling Stockholders made in
any certificates pursuant to the provisions hereof, to the performance by the
Company and the Selling Stockholders of their respective obligations hereunder
and to the following additional conditions:
(a) If the Registration Statement has not become
effective prior to the Execution Time, unless the Representatives
agree in writing to a later time, the Registration Statement shall
have become effective not later than (i) 6:00 PM New York City time on
the date of determination of the public offering price, if such
determination occurred at or prior to 3:00 PM New York City time on
such date or (ii) 9:30 AM New York City time on the business day
following the day on which the public offering price was determined,
if such determination occurred after 3:00 PM New York City time on
such date; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus shall have been filed
in the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose
shall have been instituted or threatened.
(b) The Company and the Selling Stockholders shall
have furnished to the Representatives the opinion of Berry, Moorman,
King & Hudson, counsel for the Company and the Selling Stockholders,
dated the Closing Date, to the effect that:
(i) the Company has been duly organized
and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with full corporate
power and authority to own its properties and conduct its
business as described in the Registration Statement and
Prospectus, to execute and deliver the Agreement and to
perform the obligations to be performed by it thereunder;
(ii) the Company is duly qualified or
licensed to do business as a foreign corporation by, and is in
good standing in, each jurisdiction in which its
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<PAGE> 19
ownership, leasing, licensing or use of property and assets or
the conduct of its business makes such qualification
necessary, except in those jurisdictions where the failure,
individually or in the aggregate, to be so licensed or
qualified or in good standing would not have a material
adverse effect on the financial condition, assets, operations
or prospects of the Company;
(iii) to the best of such counsel's
knowledge and except as described in the Prospectus, the
Company has no interest in a joint venture or partnership
which interest requires disclosure in the Registration
Statement and which has not been so disclosed;
(iv) this Agreement has been duly
authorized, executed and delivered by the Company;
(v) the Company has an authorized
capitalization as set forth in the Prospectus under the
heading "Capitalization"; the outstanding shares of capital
stock of the Company have been duly and validly authorized and
issued and are fully paid, non-assessable and free of
preemptive rights;
(vi) (A) the Securities being sold by the
Company have been duly and validly authorized and issued and
are fully paid and non-assessable and have been approved for
trading on the Nasdaq National Market, (B) the Securities
being sold by the Company, when delivered to and paid for by
the Underwriters, will be free of any pledge, lien,
encumbrance, claim or preemptive rights, and (C) except as
described in the Prospectus and to the best of such counsel's
knowledge, there are no outstanding rights, subscriptions,
warrants, calls, preemptive rights, options or other
arrangements of any kind with respect to the capital stock of
the Company;
(vii) the capital stock of the Company,
including the Securities, conforms in all material respects to
the description thereof contained in the Registration
Statement and the Prospectus; and the certificates for the
Securities are in due and proper form;
(viii) all consents, approvals, authorizations
or orders of or filings with any court or governmental agency
or body required in connection with consummation by the
Company of the transactions contemplated in this Agreement
have been obtained in all jurisdictions, except such counsel
need express no opinion as to any necessary qualification in
connection with the purchase and
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<PAGE> 20
distribution of the Securities by the Underwriters (A) under
the securities or blue sky laws of any jurisdiction; or (B)
with the National Association of Securities Dealers, Inc.;
(ix) to the best of such counsel's
knowledge after due inquiry, the Company is not in breach of,
or in default under (nor has any event occurred which with
notice, lapse of time, or both would constitute a breach of,
or default under), any indenture, mortgage, deed of trust,
credit agreement or other agreement or instrument to which the
Company is a party or by which it or its properties may be
bound or affected where such breach or default could have a
material adverse effect on the financial condition assets,
operations or prospects of the Company;
(x) neither the execution, delivery and
performance of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated
hereby and thereby, will conflict with or result in any breach
of, or constitute a default under (or constitute any event
which with notice, lapse of time, or both, would constitute a
breach of or default under), any provisions of the charter or
by-laws of the Company or under any provision of any
indenture, mortgage, deed of trust, credit agreement or other
agreement or instrument known to such counsel and to which the
Company is a party or by which it or its properties may be
bound or affected, or under any federal, state, local or
foreign law, rule, regulation, judgment, order or decree
applicable to the Company;
(xi) except as described in the
Prospectus, there are no proceedings or other actions, suits
or investigations pending before any court or before or by any
public, regulatory or government agency or body, including
without limitation any state regulatory agency, board or
department or, to the best of such counsel's knowledge after
due inquiry, threatened against the Company or any of its
properties, of a character that are required to be described
in the Registration Statement and the Prospectus but are not
so described or which, if determined adversely to the Company,
could have a material adverse effect on the financial
condition, assets, operations or prospects of the Company;
(xii) except as described in the
Prospectus, the Company has all necessary licenses,
authorizations, consents and approvals and has made all
necessary filings required under any federal, state, local and
foreign law, regulation or rule and has obtained all necessary
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<PAGE> 21
authorizations, consents and approvals from other persons in
order to conduct its businesses as described in the
Prospectus, the absence of which could have a material adverse
effect on the financial condition, assets, operations or
prospects of the Company, and to the best of such counsel's
knowledge the Company is not in violation of, or in default
under, any license, authorization, consent or approval of any
law, regulation or rule or any decree, order or judgment
applicable to the Company where such default could have a
material adverse effect on the financial condition, assets,
operations or prospects of the Company;
(xiii) the descriptions in the Registration
Statement of laws, regulations and rules, of legal and
governmental proceedings and of contracts, agreements, leases
and other documents [INCLUDING, WITHOUT LIMITATION, UNDER THE
HEADINGS __________________________________] have been
reviewed by such counsel and are accurate in all material
respects, and comply as to form in all material respects with
the applicable requirements of the Act and the rules and
regulations thereunder;
(xiv) the Registration Statement has
become effective under the Act; any required filing of the
Prospectus, and any supplements thereto, pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424(b); to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for
that purpose have been instituted or threatened and the
Registration Statement and the Prospectus (and any supplements
thereto) (other than the financial statements and other
financial and statistical information included or incorporated
by reference therein as to which such counsel need express no
opinion) comply as to form in all material respects with the
applicable requirements of the Act and the rules thereunder;
and such counsel has no reason to believe that at the
Effective Date the Registration Statement contained any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus
include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading;
(xv) all documents incorporated by
reference in the Prospectus, when they were filed with the
Commission, complied as to form in all material respects with
the
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<PAGE> 22
requirements of the Exchange Act; and such counsel has no
reason to believe that any of such documents, when they were
so filed, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made when such documents were so filed,
not misleading; such counsel need express no opinion as to the
financial statements or other financial or statistical data
contained in any such document;
(xvi) to the best of such counsel's
knowledge after due inquiry, there are no contracts, licenses,
agreements, leases or documents of a character that are
required to be filed as exhibits to the Registration Statement
or to be summarized or described in the Prospectus which have
not been so filed, summarized or described;
(xvii) except as disclosed in the
Prospectus, no person has the right, contractual or otherwise,
to cause the Company to issue, or register pursuant to the
Act, any shares of capital stock of the Company, upon the
issue and sale of the Securities to be sold by the Company and
the Selling Stockholders to the Underwriters;
(xviii) the Company is not an "investment
company" or a person "controlled by" an "investment company"
within the meaning of the Investment Company Act;
(xix) each of this Agreement, the Custody
Agreement and the Power of Attorney has been duly executed and
delivered by each of the Selling Stockholders, each of the
Custody Agreement and the Power of Attorney is valid and
binding on the Selling Stockholders and each Selling
Stockholder has full legal right and authority to sell,
transfer and deliver in the manner provided in this Agreement
and the Custody Agreement the Securities being sold by each
Selling Stockholder hereunder;
(xx) the delivery by each Selling
Stockholder to the several Underwriters of certificates for
the Securities being sold hereunder by such Selling
Stockholder against payment therefor as provided herein, will
pass good and marketable title to such Securities to the
several Underwriters, free and clear of all liens,
encumbrances, equities and claims whatsoever; and
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<PAGE> 23
(xxi) all consents, approvals,
authorizations or orders of or filings with any court or
government agency or body required in connection with the
consummation by any Selling Stockholder of the transactions
contemplated in this Agreement have been obtained in all
jurisdictions, except such counsel need express no opinion as
to the necessity of receiving any qualification under the
securities or blue sky laws of any jurisdiction in connection
with the purchase and distribution of the securities by the
Underwriters or from the National Association of Securities
Dealers, Inc.
(xxii) none of the execution, performance
and delivery of this Agreement by any Selling Stockholder, the
sale of the Securities being sold by any Selling Stockholder
nor the consummation of any other of the transactions
contemplated in this Agreement by any Selling Stockholder or
the fulfillment of the terms hereof by any Selling Stockholder
will conflict with, result in a breach of, or constitute a
default under the terms of any indenture or other agreement or
instrument known to such counsel and to which any Selling
Stockholder is a party or bound, or any order or regulation
known to such counsel to be applicable to any Selling
Stockholder of any court, regulatory body, administrative
agent, governmental body or arbitrator having jurisdiction
over any Selling Stockholder.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of Michigan, the United States or the Delaware General
Corporation Law, to the extent they deem proper and specified in such
opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the
Underwriters, and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and
public officials.
(d) The Representatives shall have received from
Winston & Strawn, counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, with respect to the issuance and
sale of the Securities, the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably require,
and the Company and each Selling Stockholder shall have furnished to
such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(e) The Company shall have furnished to the
Representatives a certificate of the Company, signed by the Chief
Executive Officer and the Chief Financial Officer of the
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<PAGE> 24
Company, dated the Closing Date, to the effect that the signers of
such certificate have carefully examined the Registration Statement,
the Prospectus, any supplement to the Prospectus and this Agreement
and that:
(i) the representations and warranties
of the Company in this Agreement are true and correct on and
as of the Closing Date with the same effect as if made on the
Closing Date and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or,
to the Company's knowledge, threatened; and
(iii) subsequent to the date of the most
recent financial statements included in the Registration
Statement and the Prospectus (exclusive of any supplement
thereto), and except as set forth or contemplated in the
Prospectus (exclusive of any supplement thereto), (A) the
Company has not incurred any material liabilities or
obligations, direct or contingent, nor entered into any
material transactions not in the ordinary course of business,
and (B) there has not been any material adverse change in the
financial condition, assets, operations or prospects of the
Company, or any change in the capital stock or long-term debt
of the Company.
(f) Each Selling Stockholder shall have furnished to
the Representatives a certificate, signed by such Selling Stockholder,
and dated the Closing Date, to the effect that the signer(s) of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplement to the Prospectus and this Agreement and
that the representations and warranties of such Selling Stockholder in
this Agreement are true and correct on and as of the Closing Date to
the same effect as if made on the Closing Date.
(g) At the Execution Time and at the Closing Date,
Ernst & Young LLP shall have furnished to the Representatives a letter
or letters, dated respectively as of the date of this Agreement and as
of the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Act and the applicable published rules and
regulations thereunder and stating in effect that:
(i) in their opinion the audited
financial statements and financial statement schedules
included in
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<PAGE> 25
the Registration Statement and the Prospectus and reported on
by them comply in form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations;
(ii) on the basis of a reading of the
latest unaudited financial statements made available by the
Company; their limited review in accordance with standards
established by the American Institute of Certified Public
Accountants of the unaudited interim financial information for
the six-month period ended June 30, 1996, and as at June 30,
1996; carrying out certain specified procedures (but not an
audit in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the
stockholders, directors and executive and audit committees of
the Company; and inquiries of certain officials of the Company
who have responsibility for financial and accounting matters
of the Company, as to transactions and events subsequent to
December 31, 1995, nothing came to their attention which
caused them to believe that:
(1) the unaudited financial statements
included in the Registration Statement and the
Prospectus do not comply in form in all material
respects with applicable accounting requirements
of the Act and with the published rules and
regulations of the Commission with respect to
registration statements on Form S-3; and said
unaudited financial statements are not in
conformity with generally accepted accounting
principles applied on a basis substantially
consistent with that of the audited financial
statements included in the Registration
Statement and the Prospectus;
(2) with respect to the period
subsequent to June 30, 1996, there were any
changes, at a specified date not more than five
business days prior to the date of the letter,
in the long-term debt of the Company or
preferred or common stock of the Company or
decreases in the shareholders' investment of the
Company as compared with the amounts shown on
the June 30, 1996 consolidated balance sheet
included in the Registration Statement and the
Prospectus, or for the period from July 1, 1996
to such specified date there were any decreases,
as compared with the corresponding period in the
preceding year; in net sales or income (loss)
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<PAGE> 26
from operations or in total or per share amounts
of net income (loss)(for both primary earnings
and fully diluted earnings) of the Company,
except in all instances for changes or decreases
set forth in such letter, in which case the
letter shall be accompanied by an explanation by
the Company as to the significance thereof
unless said explanation is not deemed necessary
by the Representatives;
(iii) they have performed certain other
specified procedures as a result of which they determined that
certain information specified by the Representatives of an
accounting, financial or statistical nature (which is limited
to accounting, financial or statistical information derived
from the general accounting records of the Company) set forth
in the Registration Statement and the Prospectus agrees with
the accounting records of the Company, excluding any questions
of legal interpretation.
References to the Prospectus in this paragraph (g) include any
supplements thereto at the date of the letter.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there shall not have been (i) any change or decrease specified in the
letter or letters referred to in paragraph (g) of this Section 6 or
(ii) any change, or any development involving a prospective change, in
or affecting the business or properties of the Company the effect of
which, in any case referred to in clause (i) or (ii) above, is, in the
judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the public offering or
delivery of the Securities as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto).
(i) At the Execution Time, the Company shall have
furnished to the Representatives a letter from each officer and
director of the Company that is not a Selling Stockholder, addressed
to the Representatives, in which each such person agrees not to offer,
sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce an offering of, any shares of Common Stock
beneficially owned by such person or any securities convertible into,
or exchangeable for, shares of Common Stock for a period of 180 days
following the Execution Time without the prior written consent of
Salomon Brothers Inc, other than (i) shares of Common Stock disposed
of as bona fide gifts and (ii) shares of Common Stock sold or
otherwise transferred to a family member or pursuant
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<PAGE> 27
to will or laws of descent, provided, however, that prior to any such
transfer permitted by the immediately preceding clauses (i) and (ii),
the transferee shall execute and deliver to the Representatives a
letter agreeing to be bound by the terms of the foregoing "lock-up"
agreement as if a signatory thereto.
(j) Prior to the Closing Date, the Company and the
Selling Stockholders shall have furnished to the Representatives such
further information, certificates and documents as the Representatives
may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and its counsel, this
Agreement and all obligation of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
7. Expenses; Reimbursement of Underwriters'
Expenses.
(a) The Company and each of the Selling Stockholders
covenant and agree with one another and with the several Underwriters
that the Company will be liable for the payment of and will pay or
cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants and the Selling
Stockholders' counsel in connection with the registration of the
Securities under the Act and the sale of the Securities and all other
expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the
Prospectus, the Incorporated Documents and any amendments and
supplements to any of such documents and the mailing and delivering of
copies thereof to the Underwriters and dealers; (ii) the cost of
printing, producing or distributing this Agreement, the Blue Sky
Memorandum and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in
connection with the qualification of the Securities for offering and
sale under state securities laws as provided in Section 5(a)(v)
hereof, including the fees and disbursements
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<PAGE> 28
of counsel for the Underwriters in connection with such qualification;
(iv) all expenses in connection with authorizing the Securities for
trading on the Nasdaq National Market; (v) the filing fees incident to
securing any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Securities, including
the fees and disbursements of counsel for the Underwriters in
connection therewith; (vi) the cost of preparing stock certificates;
(vii) the cost and charges of any transfer agent or registrar; (viii)
the fees and expenses of the Attorneys-in-Fact and the Custodian; and
(ix) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided
for in this Section. It is understood, however, that, except as
provided in this Section, Section 8 and Section 11 hereof, the Selling
Stockholders will pay, severally in proportion to the number of
Securities to be sold by them hereunder, all expenses and taxes
incident to the sale and delivery of the Securities to the
Underwriters hereunder, including commissions.
(b) If the sale of the Securities provided for
herein is not consummated because any condition to the obligations of
the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of
any refusal, inability or failure on the part of the Company or any
Selling Stockholder to perform any agreement herein or comply with any
provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally
upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities. If
the Company is required to make any payments to the Underwriters under
this Section 7(b) because of any Selling Stockholder's refusal,
inability or failure to satisfy any condition to the obligations of
the Underwriters set forth in Section 6, such Selling Stockholder
shall reimburse the Company on demand for all amounts so paid.
8. Indemnification and Contribution.
(a) The Company and each of the Selling Stockholders, jointly
and severally, agree to indemnify and hold harmless each Underwriter
and each person who controls any Underwriter within the meaning of the
Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the
Act, the Securities Exchange Act of 1934 or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement for the registration of the Securities as
originally filed or in any amendment thereof, or in any Preliminary
Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
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<PAGE> 29
stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim,
damage, liability or action or reasonably incurred by them in
connection with pursuing its rights to indemnification provided by
this Section 8; provided, however, that (i) neither the Company nor
any Selling Stockholder will be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any Underwriter through the Representatives specifically for
use therein, and (ii) such indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) from whom the person asserting
any such loss, claim, damage or liability purchased the Securities
which are the subject thereof if such person did not receive a copy of
the Prospectus (or the Prospectus as supplemented) at or prior to the
confirmation of the sale of such Securities to such person in any case
where such delivery is required by the Act and the untrue statement or
omission of a material fact contained in such Preliminary Prospectus
was corrected in the Prospectus (or the Prospectus as supplemented).
This indemnity agreement will be in addition to any liability which
the Company and the Selling Stockholders may otherwise have.
Without limiting the full extent of the Company's agreement to
indemnify each Underwriter, as herein provided, each Selling
Stockholder shall be liable under the indemnity agreements contained
in paragraph (a) of this Section 8 only for an amount not exceeding
the proceeds received by such Selling Stockholder from the sale of
Shares hereunder.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the
Company within the meaning of the Act, and the Selling Stockholders,
to the same extent as the foregoing indemnity from the Company and the
Selling Stockholders to each Underwriter, but only with reference to
written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the
Representatives specifically for use in the preparation of the
documents referred to in the foregoing indemnity. This indemnity
agreement will be in addition to any liability which any Underwriter
may otherwise have. The Company and each Selling Stockholder
acknowledges that the statements set forth in the last paragraph of
the cover page and under the heading
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<PAGE> 30
"Underwriting" in the Prospectus and in any Preliminary Prospectus
constitute the only information furnished in writing by or on behalf
of the several Underwriters for inclusion in the Prospectus or in any
Preliminary Prospectus, and you, as the Representatives, confirm that
such statements are correct.
(c) Promptly after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise
than under this Section 8. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
appoint counsel satisfactory to such indemnified party to represent
the indemnified party in such action; provided, however , that if the
defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnified party or
parties shall have the right to defend such action on behalf of such
indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to
appoint counsel to defend such action and approval by the indemnified
party of such counsel, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have
employed separate counsel in accordance with the proviso to the next
preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than
one separate counsel (plus any local counsel), approved by the
Representatives in the case of paragraph (a) of this Section 8,
representing the indemnified parties under such paragraph (a) who are
parties to such action), (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice
of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party; and except that, if clause (i) or
(iii) is applicable, such liability shall be only in respect of the
counsel referred to in such clause (i) or (iii). If at any time an
indemnified
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<PAGE> 31
party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by
the second sentence of this Section paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered
into more than 10 business days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided
for in paragraph (a) or (b), as the case may be, of this Section 8 is
due in accordance with its terms but is for any reason held by a court
to be unavailable from the Company or the Selling Stockholders, as the
case may be, on grounds of policy or otherwise, the Company or the
Selling Stockholders, as the case may be, and the Underwriters shall
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection
with investigating or defending same) to which the Company or the
Selling Stockholder, as the case may be, and one or more of the
Underwriters may be subject in such proportion so that the
Underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page
of the Prospectus bears to the public offering price appearing thereon
and the Company or the Selling Stockholders, as the case may be, are
responsible for the balance; provided, however, that (y) in no case
shall any Underwriter (except as may be provided in the agreement
among underwriters relating to the offering of the Securities) be
responsible for any amount in excess of the underwriting discount
applicable to the Securities purchased by such Underwriter hereunder
and (z) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of the Act shall have the
same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of the Act, each officer of
the Company who shall have signed the Registration Statement and each
director of the
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<PAGE> 32
Company shall have the same rights to contribution as the Company,
subject in each case to clauses (y) and (z) of this paragraph (e).
Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or preceding against such
party in respect of which a claim for contribution may be made against
another party or parties under this paragraph (e), notify such party
or parties from whom contribution may be sought, but the omission so
to notify such party or parties shall not relieve the party or parties
from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under this paragraph (e).
9. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the Securities agreed to
be purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of Securities set forth opposite their names in Schedule I hereto bears
to the aggregate amount of Securities set forth opposite the names of all the
remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the
event that the aggregate amount of Securities which the defaulting Underwriter
or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Securities set forth in Schedule I hereto, the remaining Underwriters
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such nondefaulting Underwriters do not
purchase all the Securities, this Agreement will terminate without liability to
any nondefaulting Underwriter, the Selling Stockholders or the Company. In the
event of a default by any Underwriter as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the Representatives shall determine in order that the required changes in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Company,
the Selling Stockholders and any nondefaulting Underwriter for damages
occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if prior to
such time (i) trading in the Company's Common Stock shall have been suspended
by the Commission or the Nasdaq National Market or trading in securities
generally on the New York Stock Exchange or the Nasdaq National Market shall
have been suspended or limited or minimum prices shall have been established on
either of such Exchange or Market System, (ii) a
-32-
<PAGE> 33
banking moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the judgment of the Representatives, impracticable to market the
Securities.
11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers, of each Selling Stockholder and of
the Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter, any Selling Stockholder or the Company or any of the officers,
directors or controlling persons referred to in Section 8 hereof, and will
survive delivery of and payment for the Securities. The provisions of Sections
7 and 8 hereof shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be
in writing and effective only on receipt, and, (a) if sent to the
Representatives, will be mailed, delivered or telegraphed and confirmed to
them, care of Salomon Brothers Inc, at Seven World Trade Center, New York, New
York, 10048, Fax (212) 783-7000, with a copy to Robert W. Baird & Co.
Incorporated at 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, Fax
(414) 765-3912, and Robert F. Wall, Esq., Winston & Strawn, 35 West Wacker
Drive, Chicago, Illinois 60601, Fax (312) 558-5700; or (b) if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at
National TechTeam, Inc., 22000 Garrison Avenue, Dearborn, Michigan 48124, Fax
(313) 277-6409, or if sent to the Selling Stockholders, will be mailed,
delivered or telegraphed and confirmed to the Attorneys-in-Fact at the
addresses set forth in Schedule II hereto, with a copy in each instance to
Robert A. Hudson, Berry, Moorman, King & Hudson, 600 Woodbridge Place, Detroit,
Michigan 48226-4302, Fax (313) 567-1001.
13. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons referred to
in Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Agreement will be governed
by and construed in accordance with the laws of the State of New York.
-33-
<PAGE> 34
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
NATIONAL TECHTEAM, INC.
By:_______________________________
Its:
Those Selling Stockholders Named in
Schedule II to this Agreement
By:_______________________________
As Attorney-in-Fact acting on
behalf of each of the Selling
Stockholders named in Schedule
II to this Agreement
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
Robert W. Baird & Co. Incorporated
By: Salomon Brothers Inc
By:_________________________________
Vice President
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
-34-
<PAGE> 35
SCHEDULE I
<TABLE>
<CAPTION>
Number of Shares of
Underwritten Securities
Underwriters To Be Purchased
------------ -----------------------
<S> <C>
Salomon Brothers Inc . . . . . . . . . . . . . . . . . . . .
Robert W. Baird & Co. Incorporated . . . . . . . . . . . . .
___________
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
===========
</TABLE>
<PAGE> 36
SCHEDULE II
<TABLE>
<CAPTION>
Maximum Number of
Shares of Option
Securities to Be
Selling Stockholders Sold
- -------------------- ------------------
<S> <C>
William F. Coyro, Jr. 75,000
Valerie J. Niemiec 50,000
Wallace D. Riley 30,000
Richard G. Somerlott 60,000
LeRoy H. Wulfmeier, III 5,000
----------
Total 220,000
==========
</TABLE>
Notices to Attorneys-in-Fact:
<PAGE> 1
EXHIBIT 4.4
COMMON STOCK
NUMBER SHARES
LU
TECHTEAM(R) NATIONAL TECHTEAM, INC.
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 638108 10 0
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT
SPECIMEN
IS THE RECORD HOLDER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $.01
PER SHARE OF
-----------------------------NATIONAL TECHTEAM, INC.--------------------------
transferable on the books of the Company by the holder hereof in person or by
duly authorized attorney, upon surrender of this Certificate duly endorsed.
This Certificate is not valid until countersigned by the Transfer Agent and
Registrar.
IN WITNESS WHEREOF the Corporation has caused this Certificate to be
signed in facsimile by its duly authorized officers and a facsimile of its
corporate seal.
Dated:
[SEAL]
Robert A. Hudson William F. Coyro Jr.
Secretary Chairman
COUNTERSIGNED AND REGISTERED:
U.S. STOCK TRANSFER CORPORATION
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE> 2
<TABLE>
<S><C>
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though
they were written out in full according to applicable laws or regulations:
TEN COM-as tenants in common UNIF GIFT MIN ACT-...............Custodian.................
TEN ENT-as tenants by the entireties (Cust) (Minor)
JT TEN -as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act......................................
in common (State)
UNIF TRF MIN ACT-...........Custodian (until age..........)
(Cust)
.............under Uniform Transfers
(Minor)
to Minors Act ...........................
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ___________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________________
| |
|_____________________________________|
___________________________________________________________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________Shares
of the common stock represented by the within Certificate, and do hereby irrevocably constitue and appoint
___________________________________________________________________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.
Dated_______________________________________________
X _______________________________________________________
X _______________________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By ___________________________________________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION, PURSUANT TO S.E.C.
RULE 17Ad-15.
</TABLE>
<PAGE> 1
EXHIBIT 10.28
NATIONAL TECHTEAM 1996 NON-EMPLOYEE DIRECTORS'
STOCK PLAN
ARTICLE A - PURPOSE.
The purpose of The National TechTeam 1996 Non-Employee Directors'
Stock Plan (hereinafter referred to as the "Plan") is to strengthen the
alignment of interests between non-employee Directors (hereinafter referred to
as "Participants") and the shareholders of National TechTeam, Inc. (hereinafter
referred to as the "Company") through the increased ownership of shares of the
Company's Common Stock. This will be accomplished by providing Participants
with shares of Common Stock as compensation for services as a Director and by
granting Participants non-qualified options to purchase shares of Common Stock
(hereinafter referred to as "Stock Options").
ARTICLE B - ADMINISTRATION.
1. The Plan shall be administered by the Board of Directors of the
Company (hereinafter referred to as the "Board") or a committee to which the
Board has delegated that authority.
2. It shall be the duty of the Board to administer this Plan in
accordance with its provisions and to make such recommendations of amendments or
otherwise as it deem necessary or appropriate. The Board's interpretations of
the Plan, and all determinations made by the Board pursuant to the powers vested
in it hereunder, shall be conclusive and binding on all persons having any
interest in the Plan.
3. The Board may establish from time to time such regulations,
provisions, and procedures within the terms of this Plan as, in its opinion, may
be advisable in the administration of this Plan.
4. The Board may designate the Secretary of the Company or other
employees of the Company to assist the Board in the administration of this Plan
and may grant authority to such persons to execute documents on behalf of the
Board.
ARTICLE C - PARTICIPATION.
Participation in the Plan shall be limited to all non-employee
Directors of the Company.
ARTICLE D - LIMITATION ON NUMBER OF SHARES FOR THE PLAN.
The total number of shares of Common Stock of the Company that may be
awarded each year shall not exceed 150,000 shares.
ARTICLE E - SHARES SUBJECT TO USE UNDER THE PLAN.
Shares of Common Stock to be awarded under the terms off this Plan
shall be treasury shares.
ARTICLE F - SHARES FOR ATTENDANCE AT BOARD OF DIRECTORS MEETINGS.
Each Participant shall, on the fifth business day following each
quarterly release of the Company's earnings, automatically be
<PAGE> 2
entitled to receive 100 shares of Common Stock for each meeting of the Company's
Board of Directors attended by such Participant during the preceding fiscal
quarter.
ARTICLE G - STOCK OPTIONS.
1. Each Participant shall, on the last business day in each February
during such Participant's term as a director of the Company, automatically be
granted a Stock Option to purchase 10,000 shares of Common Stock (with such
amount subject to adjustment as set forth in Article I) having an exercise price
of one hundred percent (100%) of the fair market value of the Common Stock on
the date of grant.
2. The Stock Options shall have a term of ten (10) years from the
date of grant, subject to earlier termination as provided herein, and shall be
exercisable immediately from the date of grant.
3. Stock Options are not transferable other than by will or by the
laws of descent and distribution. Legatees, distributees and duly appointed
executors and administrators of the estate of a deceased Participant shall have
the right to exercise such Stock Options at any time prior to the expiration
date of the Stock Options.
4. If a Participant ceases to be a Director while holding
unexercised Stock Options, such stock options shall become void as of the date
of that termination, except in the case of termination as the result of (i)
death, (ii) disability, (iii) retirement after attaining the age of sixty-five
(65) or (iv) resignation from the Board for reasons of the antitrust laws or
conflict of interest or continued service policies in which cases they shall
terminate on the 90th day following termination.
5. Upon the exercise of a Stock Option, payment in full of the
exercise price shall be made by the Participant. The exercise price may be
paid for by the Participant either in cash, shares of the Common Stock of the
Company to be valued at their fair market value on the date of exercise, or a
combination thereof.
ARTICLE H - RESTRICTED PERIOD.
Certificates representing any shares of Common Stock to which the
Participant is entitled under this Plan shall be registered in the
Participant's name but shall be held in custody by the Company for the
Participant's account for a period (the "Restricted Period") ending six months
from the date of grant of the Stock Option or the date of issuance of the
shares, at which time those certificates shall be delivered to the Participant.
During the Restricted Period, the Participant shall have all rights and
privileges of a shareholder as to such shares, including the right to vote and
receive dividends, except that the shares of Common Stock may not be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of.
ARTICLE I - ADJUSTMENTS.
The amount of shares authorized to be issued annually under this Plan
will be subject to appropriate adjustment in the event of future stock
splits, stock dividends, or other changes in capitalization of the Company to
prevent the dilution or enlargement of rights under this Plan; following any
such change, the term "Common Stock" shall be deemed to refer to such class of
shares or other securities as may be
<PAGE> 3
applicable. The number of shares and exercise prices covered by outstanding
Stock Options and the number of shares to be granted as Stock Options pursuant
to Article G, paragraph 1 shall be adjusted to give effect to any such stock
splits, stock dividends, or other changes in the capitalization.
ARTICLE J - VALUATION OF SHARES.
The shares awarded shall be valued at the closing quotation for
Common Stock of the Company on the NASDAQ National Market System on the day of
the transfer to a Participant. All shares awarded shall be full shares, rounded
up to the nearest whole share.
ARTICLE K - ADDITIONAL PROVISIONS.
1. The Board may, at any time, repeal this Plan or may amend it from
time to time except that no such amendment may amend this paragraph, increase
the annual aggregate number of shares subject to this Plan, or alter the persons
eligible to participate in this Plan unless such amendment is approved by the
shareholders. The Participants and the Company shall be bound by any such
amendments as of their effective dates, but if any outstanding awards are
affected, notice thereof shall be given to the holders of such awards and such
amendments shall not be applicable to such holder without his or her written
consent. If this Plan is repealed in its entirety, all theretofore awarded
shares subject to conditions or restrictions transferred pursuant to this Plan
shall continue to be subject to such conditions or restrictions.
2. Article G, paragraph 1 shall not be amended more than once every
six (6) months, other than to comport with changes in the Internal Revenue Code,
the Employee Retirement Income Security Act, or the rules thereunder.
3. Every recipient of shares pursuant to this Plan shall be bound
by the terms and provisions of this Plan and of the transfer of shares
provisions referable thereto, and the acceptance of any transfer of shares
pursuant to this Plan shall constitute a binding agreement between the recipient
and the Company.
ARTICLE L - DURATION OF PLAN.
This Plan shall be effective as of January 1, 1996. The Plan is
subject to ratification before December 31, 1996 by the affirmative vote of the
holders of a majority of the Common Stock of the Company present, or
represented, and entitled to vote at a meeting duly held. Any shares of Common
Stock and Stock Options awarded prior to approval of the Plan by the
shareholders are contingent until such approval is obtained and shall be subject
to immediate forfeiture in the event such approval is not obtained. This Plan
will terminate on December 31, 2005 unless a different termination date is fixed
by the shareholders or by action of the Board but no such termination shall
affect the prior rights under this Plan of the Company or of anyone to whom
shares have been transferred prior to such termination.
<PAGE> 1
EXHIBIT 10.29
THIRD AMENDMENT TO LEASE AGREEMENT
Dated: March 29, 1996
LANDLORD: ELEVEN INKSTER ASSOCIATES
TENANT: NATIONAL TECHTEAM, INC.
PREMISES: SPACE IN BUILDING D, CUMBERLAND TECH CENTER, 11 MILE AND INKSTER
ROADS, SOUTHFIELD, MICHIGAN
LEASE: DATED SEPTEMBER 27, 1993, AS AMENDED BY FIRST AMENDMENT TO LEASE
DATED DECEMBER 7, 1993, AND SECOND AMENDMENT TO LEASE DATED JANUARY
23, 1995
Landlord and Tenant are parties to the above referenced Lease for the above
described Premises. Tenant desires to further extend the term of the Lease and
expand the area of the leased Premises to add and include Building C of
Cumberland Tech Center upon the terms and conditions of this Third Amendment to
Lease.
THE PARTIES THEREFORE AGREE AS FOLLOWS:
1. The term of the Lease is extended to end on December 31, 2000.
2. Effective on April 1, 1996:
a. The leased Premises will be increased by the addition of all of
Building C in the Cumberland Tech Center consisting of 26,586 square feet
of Floor Area as shown on Exhibit A attached hereto (the "Additional
Premises").
b. The leased Premises are increased to 57,403 square feet of
Rentable Floor Area which includes 53.40% of the Rentable Floor Area of the
Buildings at the Cumberland Tech Center.
3. Tenant will accept the Additional Premises "as is" in their condition
on the execution of this Third Amendment to Lease, except that prior to May 1,
1996, Landlord will construct a demising wall at the north of the Additional
Premises as shown on Exhibit A.
<PAGE> 2
4. Effective May 1, 1996, Basic Monthly Rent will be increased as
follows:
May 1, 1996 to June 30, 1996 $43,191.04 ($11.75/sq. ft./year)*
July 1, 1996 to December 31, 1996 $56,207.10 ($11.75/sq. ft./year)
January 1, 1997 to December 31, 1997 $62,186.58 ($13.00/sq. ft.)
January 1, 1998 to December 31, 1998 $64,578.38 ($13.50/sq. ft.)
January 1, 1999 to December 31, 1999 $66,970.17 ($14.00/sq. ft.)
January 1, 2000 to December 31, 2000 $69,361.96 ($14.50/sq. ft.)
*Basic Monthly Rent for May and June of 1996 is calculated at one-half
(1/2) of $11.75/sq. ft./year for the Additional Premises only.
5. The obligations of Landlord under this Third Amendment to Lease are
subject to termination of the existing lease for the Additional Premises by the
prior Tenant. Landlord will have no liability to Tenant if Landlord is unable
to deliver possession of the Additional Premises on the date specified above,
but in such event, except in the event of delays caused by Tenant, the increased
Rent under Paragraph 4 above will not commence until 30 days after possession of
the Additional Premises is tendered to Tenant.
6. Landlord will provide an allowance to Tenant in the amount of
$150,000 for recarpeting of the entire leased Premises including the Additional
Premises as well as miscellaneous architectural and electrical improvements in
the Additional Premises. Upon completion of such recarpeting and improvements,
occupancy of the Additional Premises for business by Tenant, and delivery to
Landlord of sworn contractor's statements, waivers of lien and paid receipts for
all work and materials performed and furnished for the Premises as well as a
Certificate of Occupancy for the Additional Premises, Landlord will pay to
Tenant the allowance of $150,000.
7. Any alterations, or improvements shall only be performed in accordance
with plans and specifications previously approved by Landlord, all applicable
laws, ordinances, rules, regulations and directives of all governmental
authorities having jurisdiction over the Premises and the requirements of all
carriers of insurance on the Premises, the Board of Underwriters, Fire Rating
Bureau or
<PAGE> 3
similar organizations. Tenant shall pay when due all costs for work performed
and materials supplied to the Premises. Tenant shall keep Landlord and the
Premises free from all liens, stop notices and violation notices relating to
any improvements or alterations, and Tenant shall protect, indemnify, hold
harmless and defend Landlord and the Premises from any and all loss, cost,
damage, liability and expense, including attorneys fees, arising out of or
related to any such liens or notices. Tenant shall satisfy or otherwise
discharge all liens, stop notices or other claims or encumbrances within 10 days
after Landlord notifies Tenant in writing thereof. If Tenant fails to pay and
remove such lien, claim, or encumbrance within such 10-day period, Landlord at
its election may pay and satisfy the same and, in such event, the sum so paid by
Landlord with interest from date of payment at the rate set forth in Paragraph
20 of the Lease for amounts owed Landlord by Tenant shall be deemed to be
Additional Rent due and payable by Tenant at once upon demand.
8. As amended hereby, all other terms, conditions and provisions of the
Lease as previously amended shall remain in full force and effect.
ELEVEN INKSTER ASSOCIATES NATIONAL TECHTEAM, INC.
By: Seymour Levine By: Lawrence A. Mills
----------------------- --------------------------
It: Senior Vice President
--------------------------
"LANDLORD" "TENANT"
<PAGE> 4
EXHIBIT A
[ARCHITECTS DRAWING]
<PAGE> 1
EXHIBIT 10.30
[HEWLETT-PACKARD COMPANY LETTERHEAD]
May 30,1996
Mr. Brian G. Niemiec
Senior Vice President
National TechTeam, Inc.
27345 W Eleven Mile Road
Southfield, MI. 48034
Dear Brian,
Please consider this to be a revision of my letter of intent. Let's start
with authorization for ten (10) Customer Care Specialists.
Please call me at 408-345-8013, with any questions, thoughts or concerns.
Best Regards,
Robin Lemmo
Robin Lemmo
Advantage Center Manager
Hewlett Packard Company
cc: Lori Paulin - HP
<PAGE> 2
[HEWLETT-PACKARD COMPANY LETTERHEAD]
May 30,1996
Mr. Brian G. Niemiec
Senior Vice President
National TechTeam, Inc.
27345 W Eleven Mile Road
Southfield, MI. 48034
Dear Brian,
It was a pleasure meeting you and your team in Dallas and now is the time
to move our partnership forward. Brian, please consider this our letter of
intent and authorization to begin the recruiting, interviewing and hiring
process for the front-end of the HP Advantage Center. We will start with
authorization for five (5) Customer Care Specialist.
I'm confident that your team will hire Customer Care Specialists with the
highest levels of soft skills in the areas of customer satisfaction, pre-sales
level product knowledge and effective process and tool use. We're hoping these
specialists will map into our shared position plan, and be similar to the taped
conversations of our current Inbound Marketing Representatives. We're looking
for starting salary to be in the range of 26-28K$/yr.
Please call me at 408-345-8013, with any questions, thoughts or concerns.
Best Regards
Robin Lemmo
Robin Lemmo
Advantage Center Manager
Hewlett Packard Company
cc: Lori Paulin - HP
<PAGE> 3
Hewlett-Packard
Contract Authorization
(1)May 1, 1996
rev. 5/1/96
The attached contract between Hewlett-Packard and National TechTeam (NTT) is for
technical phone support for Hewlett Packard's Advantage Center.
The maximum cost of this activity for the period July 1, 1996 through June 30,
1997, is $ xxxK. The cost is derived assuming a fixed and dedicated personal
staff and telecom costs. These estimates are based on call length of 10
minutes per call. This is based on available industry data and estimates by
DMO and NTT of the staff necessary to support the program.
Authorizing signatures are required as follows:
Customer Care Operations Signature/Date
------------------------------
David Bylund
Customer Care Operations Manager
------------------------------
Carl Schulenburg
Project Manager
------------------------------
Lori Paulin
Call Center Manager
------------------------------
Robin Lemmo
DMO General Manager
------------------------------
Doug Moore
-------------------------------
Cathy FitzGerald
The original will be filed with the Corporate legal department, and had been
signed.
- -----------------------------
(1)Rev. 1 5/1/96
Agreement for Technical Support 06/04/96 Hewlett-Packard/National TechTeam
Services Page 1 of 8
<PAGE> 4
Page 1
MASTER AGREEMENT
This Master Agreement is entered into by and between Hewlett-Packard Company
("HP"), located at 3000 Hanover Street Palo Alto, CA 94304 and National
TechTeam, Inc. ("Seller"), located at 22000 Garrison Avenue, Dearborn, Michigan,
48124.
The Terms and Conditions herein constitute the Master Agreement for all call
center activity between HP and the Seller. To the extent that the terms and
conditions of a Program Specification Document are intended to supersede the
terms and conditions contained in this Master Agreement, the Program
Specification Document must expressly and clearly state which terms and
conditions in this Master Agreement are being superseded.
NOTICES
Any notices sent by the Seller pursuant to this Master Agreement are to be sent
to the HP address specified in this Agreement to the attention of the
contract manager..
CHOICE OF LAW
This Agreement shall be interpreted and governed in all respects by the laws of
the State of California.
TERM
This shall be a twenty four (24) month Agreement for the period of April 1,
1996 to March 31, 1998, inclusive. Either party may, at any time,
terminate this Agreement in writing upon sixty (60) days prior notice.
If no such notice is given, this Agreement will expire on the first
(1st) anniversary of the commencement date. HP shall be liable only
for payment in accordance with the provisions of this Agreement for
work performed prior to the effective date of termination.
60 days prior to the expiration date of this Agreement, HP and the Seller
will each provide notification to the other party of their intent
regarding continuation of the relationship. This intent may include:
renewal of the terms and conditions contained in this document,
re-negotiation of the terms and conditions of the relationship, or
termination of the relationship.
If the expiration date of this Agreement is reached and HP and the Seller
are in the process of renegotiating the terms and conditions of the
relationship, the terms of this agreement may be extended on a
month-to-month basis contingent upon the mutual written agreement of
HP and the Seller.
DEFINITIONS
Definitions in addition to the terms defined in the Agreement:
"Customers" are end-users of Hewlett-Packard products or services.
Additionally, customers may be Hewlett-Packard resellers,
Hewlett-Packard employees, HP OEMs (Original Equipment
Manufacturers), HP TPMs (Third Party Maintainers) and
Hewlett-Packard sales force representatives who are contacting
Seller for services specified in this agreement or in Program
Specific Documents.
"The Work" The services performed by the Seller as described in this
Agreement shall hereinafter be referred to as "the work".
"Technician" or "Agent" - interchangeable terms referring to a Seller
employee whose primary responsibility is answering Customer
inquiries on HP products or services.
"Talk-time" - the amount of time a Technician spends talking to
customers. This is measured on a per call or per day basis.
"After call work time" or "Wrap up time" interchangeable terms
referring to the amount of time spent by a Technician capturing
call information after the customer/Technician conversation has
ended.
<PAGE> 5
Page 2
"Transaction Time" - the sum of "talk time" plus "wrap up time".
"Availability" - the amount of time when a Technician is logged on to
the phone system and is ready to accept a call from a customer
but there are no calls from customers waiting to be handled.
"Idle" - the amount of time when an agent is logged on to the phone
system but is not ready to accept an incoming call from a
customer.
"Scheduled On-line time" - the amount of time a Technician is
scheduled to be on the phone ready to take calls from customers.
"Off-line time" - the amount of time a Technician is not scheduled to
be on the phone ready to take calls from customers.
"Silent Monitor" - a quality call measure performed by listening to
live agent calls as they happen. This may be performed at any
time but will occur at least on a monthly basis.
SERVICES PROVIDED
SERVICE DESCRIPTION
This Agreement covers the answering and processing of telephone calls and
facsimile requests from HP customers. These processes shall all take
place in a Seller owned facility. A detailed listing of
responsibilities is included in the attached Program Specification
Documents.
CALL TRANSFERS AND CALL REFERRALS
The Seller may be required to transfer or refer the Customer to other HP
locations. These may include, but are not limited to, transfers to
the Customer Support Center, HP product repair facilities, HP driver
distribution facilities, HP dealer locator services, and HP bulletin
board services, Service Parts ID (SPI), Direct Marketing Organization,
Order Fulfillment Center (OFC). Details of call transfers or
referrals will be spelled out in the Program Specification Documents.
RELATIONSHIP OF THE PARTIES
The relationship of the parties to this Agreement is that of owner and
contracting firm.
Seller shall neither assign any rights nor delegate any duties under this
Agreement without the prior written consent of HP. This prohibition
extends to all assignments and delegations that may be prohibited by
agreement. Seller shall not subcontract any of the work without the
prior consent of HP. If HP consents to the use of a subcontractor,
such subcontractor shall be bound by the terms and conditions of this
Agreement as an agent of the Seller.
The Seller shall be solely responsible for any and all employment related
taxes, insurance premiums, or other employment benefits related to the
Seller's performance of services under this Agreement, and shall hold
HP harmless on account thereof.
TRANSPARENCY OF SELLER TO HP CUSTOMERS
The Seller will provide support in a manner in which the origin of the support
is transparent to HP Customers. Generally, Customers are not to know
whether they are speaking with HP or with the Seller acting on behalf of
HP.
Generically, technicians will answer the phone "Thank you for calling
Hewlett-Packard, my name is 'technician name'". More specific
salutations are included in the attached Program Specification
Documents.
In the event that a customer specifically asks the seller technician of
their employment status, the response shall be "I am an employee of
National TechTeam who has contracted with Hewlett-Packard to provide
certain services".
HP BUSINESS FORECASTS
All business volume forecasts provided by HP pursuant to this Agreement are only
estimates, and shall not be construed to be commitments to a certain level
of business, and may be revised by HP as
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business requirements change. All Forecasts are confidential.
PRICING
REVIEW PERIOD The price for project start-up costs, facsimile services and
teleservices is in U.S. dollars, unless otherwise stated, and shall
remain in effect during the term of this Agreement. Prices and
volumes may be reviewed at the end of each three month period during
the Agreements term. Price changes must be agreed to in writing by
both HP and Seller.
PAYMENT HP shall pay Seller fees for services detailed in this Agreement in
accordance with the fee schedule in Addendum C, attached. Seller
shall bill HP at the end of each calendar month, based upon actual
costs incurred during that month, and HP shall pay such invoices net
37 days after receipt of an appropriate invoice from Seller.
DISCLOSURE Seller agrees to help HP understand Seller's costs. Seller
further agrees to disclose the cost components of its teleservices
processes with the intent of reducing overall costs. HP agrees to
provide assistance and information necessary to enable Seller to
reduce its costs with the understanding that such cost savings shall
be equally shared with HP.
PERSONNEL REQUIREMENTS AND SELLER EMPLOYEE CONDUCT
LIST OF PERSONNEL
Prior to the start of work, and subsequently as personnel are added,
Seller shall submit to HP a list of Seller's personnel who will
perform any portion of the work. This list shall state the
names, classifications, and working hours of each Seller employee
assigned. Prior to granting new personnel access to HP
confidential information or proprietary HP computer systems,
Seller will ensure that each Seller employee assigned is made
aware of and understands the Confidential Disclosure Agreement
between HP and the Seller and its applicability to the Seller's
employees. Seller will also ensure that, prior to assignment to
the HP account, all personnel will read and sign HP's
Non-Disclosure Agreement. Seller will keep these signed
Non-Disclosure Agreements on file during and after employment
terms of the Seller employees performing work for HP.
The confidential information disclosure period shall be the
entire term of this Agreement. All information disclosed by
HP to the Seller during this period shall be considered
confidential for 1 year after the termination date of this
Agreement or subsequent renewals to this Agreement.
SUPERVISION
All persons engaged in the work described in this Agreement shall be
subject to the direction, supervision, and control of the Seller.
Seller shall enforce strict discipline and good order among Seller's
employees and agents at all times during the performance of this work.
Seller shall assure that all persons involved in the work are
appropriately skilled for that portion of the work assigned to them.
SELLER'S EMPLOYEE OBLIGATIONS
When Seller employees are visiting an HP location, all employees of the
Seller are obliged and required to follow all written/verbal HP plant,
safety and security rules in place while on the premises of HP.
SELLER EMPLOYEE CONDUCT
Seller employees who work directly with HP customers will be required to
understand and abide by certain sections of the HP Standards of
Business Conduct when interacting With HP Customers on behalf of HP.
The pertinent sections of the HP Standards of Business Conduct are
attached to this agreement as Addendum B.
SELLER ACCESS TO HP PROPRIETARY DATABASES AND DOCUMENTATION
The Seller will, during the undertaking of the process defined in this
agreement, have access to HP confidential and proprietary databases
and documentation which are necessary for
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the successful completion of such processes. Seller's obligations
regarding treatment of this data are detailed in the Electronic
Communication Confidential Disclosure Agreement (Addendum A).
INSPECTION AND AUDIT
HP shall have the right to physically inspect at will the teleservices
processes being performed by the Seller. HP shall also have the right
to perform audits to ensure that customer service, quality, process,
and business controls are maintained. HP may perform this inspection
either by monitoring the seller's performance in person, at the
seller's place of business, or by remote silent monitoring of seller's
employees' incoming telephone calls from HP customers. HP's
inspection may be for any purpose reasonably related to this Agreement
including, without limitation, to assure Seller's compliance with HP's
quality requirements.
HP may periodically place simulated calls to the Seller as a means of
auditing the quality of the service provided by the Seller.
HP may conduct periodic Customer surveys to determine the quality of the
service provided by the Seller.
In order to verify the financial stability of the Seller's corporation, the
Seller will provide HP with annual audited financial results each year
the technical support relationship remains in effect
PHONE CALL RECORDING NOTIFICATION.
If the initial phone call terminates within the Seller's phone switch, the
Seller's VRU must contain clear notification to Customers that phone
calls may be recorded. This notification must occur immediately after
the initial VRU salutation. This notification and the timing thereof
must comply with all applicable laws, rules and regulations.
Sample VRU scripting:
"Thank you for calling Hewlett-Packard Technical Support. To
ensure high quality service, your call may be monitored or
recorded."
Specific VRU scripting will be specified in the attached program
specification documents.
HP EQUIPMENT
HP may provide equipment to Seller for the purposes of fulfilling the
requirements of this agreement. This equipment will remain the sole
property of Hewlett-Packard and shall only be provided to the Seller on an
"on loan" basis. In the event that HP does provide equipment or other
materials for use by Seller, the HP equipment shall:
Be clearly marked or tagged as property of HP;
Be subject to inspection by HP at any time;
Be used only in servicing HP customer needs;
Be reasonably kept separate from other materials, tools, or property of
Seller or held by Seller,
Not be modified in any manner by Seller unless so directed by HP;
Have periodic maintenance performed by Seller, and
Be kept free of liens and encumbrances which may arise due to actions of
Seller.
Be returned, in good working condition, to HP promptly upon HP's request or
upon termination of this agreement.
The Seller will maintain an inventory list of HP owned equipment and will
audit the inventory of HP equipment monthly. Results of the monthly
inventory audit will be reported to HP.
DISASTER RECOVERY
The Seller will have disaster recovery plans in effect at all times and
provide disaster recovery plans to HP upon request. These will address
the Seller's disaster avoidance plan and contingency plans in the
event phone service, computer activity, or facility power is
interrupted.
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The Seller will notify HP immediately after identifying any occurrence
which has interrupted or will interrupt the ability of the Seller
perform the services described in this agreement or the attached
program specification documents.
The Seller will invoke manual processes as specified by HP in the "DRP
Manual Process Guide" in the event of system disaster.
INDEMNIFICATION
RESPONSIBILITIES OF PARTIES
Seller shall defend, indemnify and hold harmless HP from and against any
and all claims, losses, demands, reasonable attorney fees, damages,
liabilities, costs, expenses, obligations, causes of action or suits;
For damage or injury (including death) to any person (including
employees) or damage to or loss of any property arising out of or
resulting from any negligent or criminal act or omission by the
Seller or its employees or agents;
Arising out of or relating to a failure by the Seller to comply with
any applicable federal, state or local law, regulation, order,
judgment or decree.
Arising out of or resulting from breach by the Seller of obligations
under this Agreement.
Arising out of any act by the Seller not authorized by this Agreement.
NOTIFICATION
Seller shall promptly notify HP in writing if Seller becomes aware of any
matter as to which the above indemnification obligation relates.
DEFENSE OF CLAIMS
HP shall promptly, notify the Seller of the existence of any claim, demand,
or other matter requiring a defense to which the Seller's obligations
under this section would apply. HP shall give the Seller a reasonable
opportunity to defend the claim, demand or matter at the Seller's own
expense and with counsel selected by the Seller and satisfactory to
HP; provided that HP shall at all times also have the right to fully
participate in the defense at its own expense. HP shall provide
Seller with reasonable assistance and information necessary to respond
to and defend such claim, comment, demand, or other matter. Any such
claim, demand or other matter shall not be settled or compromised
without the consent of HP - such consent will not be unreasonably
withheld.; If the Seller shall, within a reasonable time after the
receipt of the notice, fail to defend, HP shall have the right, but
not the obligation, to undertake the defense, and to compromise or
settle, exercising reasonable business judgment, the claim, demand or
other matter on behalf, for the account and at the risk of the Seller.
If the claim is one that cannot by its nature be defended solely by
the Seller (including, without limitation, any federal or state
proceeding), HP shall make available, or cause to be made available,
all information and assistance that the Seller may reasonably request
as reasonably related to the defense of the claim..
Limitation of Liability. Seller's liability herein shall in no event
exceed the liability that HP would have to its customers if HP were
providing the services to be performed by Seller hereunder. NEITHER
SELLER NOR HP SHALL BE LIABLE TO THE OTHER FOR INCIDENTIAL,
CONSEQUENTIAL, EXEMPLARY, INDIRECT OR SPECIAL DAMAGES OF ANY KIND,
INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS, SAVINGS, OR REVENUES
WHETHER OR NOT ADVISED OF THE POSSIBILITY OF SUCH LOSS, HOWEVER CAUSED
AND ON ANY THEORY OF LIABILITY ARISING OUT OF THIS AGREEMENT.
EXCLUSIVITY
To ensure protection of HP proprietary information, the Seller will not
perform activities for HP competitors which are similar to the
activities performed for Hewlett-Packard at the
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Sellers same physical location or facility as the HP work.
Competitors may include, but are not limited to, companies that make
computers or peripheral products, service companies that sell services
or products similar to HP's services or products, or companies that
support or promote a competitors products or services. Seller will
provide full disclosure of all clients that are located in the same
facility and prior to adding any new clients who may be potential
competitors, Seller will consult with HP to see if this paragraph
restrains Seller from accepting such business at this facility.
While this Agreement is in effect, Seller Technicians will perform service
exclusively for HP; If the business under this Agreement is
insufficient to keep all Technicians assigned hereto busy, such Agents
shall be reassigned to another HP project or program pursuant to
another program specification document between HP or other division of
HP and Seller.
INFORMATION OWNERSHIP AND USE
During the term of this Agreement significant documentation will be
supplied to the Seller by HP. Additionally, documentation and
information will be created, both by HP and the Seller. This
documentation and information will reside In various forms, including:
TOPIC database, HP developed support notes, Seller developed FOLIOs,
call tracking systems, product manuals, etc.
HP will retain ownership of all information provided by HP.
HP will assume ownership of all information created by the Seller as a
result of the activity described in this Agreement
The Seller may not use HP documentation or information for any
activity outside those activities intended by this Agreement
Seller will provide HP with unlimited access to all information held
at the Seller's location that relates to the Work or to HP.
All information provided by HP or collected by the Seller will be
considered confidential and will be handled by the Seller as HP
Confidential Information, otherwise described in section 18 of this
Agreement
HP reserves the right to review and approve or disapprove any documentation
created by the Seller for use in this project.
CONFIDENTIAL INFORMATION
CONFIDENTIAL DISCLOSURE AGREEMENT
A Confidential Disclosure Agreement must be in place and/or updated and
signed by the appropriate company representatives when confidential
information is shared and identified. The consistent terms of any
Confidential Disclosure Agreement are hereby incorporated by reference
in this Agreement
DEFINITION OF CONFIDENTIAL INFORMATION
Seller shall not disclose to any person or entity, except as necessary to
perform work under this Agreement, any confidential information of HP,
whether written or oral, which Seller may obtain from HP or otherwise,
discover. As used in this article, the term "confidential
information shall include, without limitation:
a) All information or data concerning or related to HP products
(including the discovery, invention, research, improvement,
development manufacture, or sale of HP products) or business
operations (including sales costs, profits, pricing methods,
organizations, employee or customer lists and processes, whether oral,
written or in computer readable format);
b) All forecasts for production, support or service requirements
submitted by HP pursuant to this Agreement, whether oral, written, or
communicated in computer-readable format; and
c) All HP software or other property of a confidential nature, including
without limitation, any and all software tools and databases provided.
Such software and any and all copies thereof shall remain the sole
property of HP.
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RELATIONSHIP EXISTENCE
HP's expectation Is that this relationship will remain confidential. The
existence of this relationship or terms of this Agreement will not be
disclosed without prior written approval from an HP division general
manager or HP vice president except as may be required by the United
States Securities Laws, In which case Seller will maximize HP's
confidentiality which may be available under the law.
SEPARATION OF BUSINESS
HP business and information related to HP business will be physically and
logically separated from other Seller business and information. The
Seller will provide proof of this separation to HP.
ACCESS
Seller shall maintain all confidential information in strict confidence.
Seller shall take all reasonable steps to ensure that no unauthorized
person or entity has access to confidential information, and that all
authorized persons having access to confidential information refrain
from any unauthorized disclosure. Seller may only use the
confidential information for the purposes set forth herein and for no
other purpose, and may only make copies of any software provided if
expressly authorized by HP in writing and in any case only as
reasonable necessary by Seller to perform its obligations hereunder.
EXCLUSIONS
These provisions related to confidential information shall not apply to any
information that
a) Is rightfully known to Seller prior to disclosure by HP;
b) Is rightfully obtained by Seller from any third party without any
obligation of confidentiality;
c) Is made available by HP to the public without restrictions;
d) Is disclosed by Seller with the prior written approval of HP; or
e) Is independently developed by Seller.
DOCUMENTATION
HP shall provide any proprietary or non-proprietary documentation to Seller
regarding the products and parts deemed necessary by HP to give
customer service for such products and parts. All documentation
provided by HP or created by the Seller as a result of this Agreement
shall be treated by the Seller as HP confidential information.
SURVIVAL OF SECTION
This section "Confidential Information" of this Agreement shall survive the
termination of this Agreement, and remain in force perpetually unless
HP agrees otherwise in writing.
CONTINGENCIES
DELAYING CAUSES
Seller shall not be liable for any delay in performance under this
Agreement caused by an act of God or any other cause beyond Seller's
control and without Seller's fault or negligence (collectively
"delaying cause"). Seller shall, in the event of a delaying cause,
immediately give notice to HP of that cause.
HP'S RIGHTS
In the event of a delaying cause, HP may elect in its sole discretion to
suspend the Agreement in whole or in part for the duration of the
delaying cause; or terminate this Agreement or any part thereof.
DEFAULT
HP'S RECOURSE
If the Seller fails to perform or breaches any material provision of this
Agreement, HP may provide written notice to the Seller of such failure
to perform or breach, and Seller must provide a written response
within ten (10) days from HP's written notice, and cure the failure to
perform or breach within thirty (30) days from the receipt of such
written notice or HP may, terminate the whole or any part of this
Agreement. Further, if voluntary bankruptcy proceedings are
instituted against Seller and not discharged within sixty (60) days,
HP
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may, except as otherwise prohibited by United States Bankruptcy laws,
terminate the whole or any part of this Agreement
PROCUREMENT OF SERVICES
In the event that HP terminates this Agreement in whole or in part, as
provided in this section on Default HP may procure, upon such terms
and in such manner as HP deems appropriate, services similar to the
services as to which this Agreement is terminated. Seller shall
reimburse HP upon demand for all additional costs incurred by HP in
purchasing such similar services.
RIGHTS OF LAW
The rights and remedies granted to HP pursuant to this Agreement are in
addition to, and shall not be deemed to limit or affect any other
rights or remedies available at law or in equity.
PROGRAM CONTACTS
Written correspondence regarding this Master Agreement should be addressed
as follows:
If to HP:
Hewlett-Packard Company
Customer Support Center
Attn: Brad Sprenger
11311 Chinden Blvd. MS 516
Boise, ID 83714
If to Seller:
National TechTeam
Attn: Brian Niemiec
Southfield, MI 48034
Electronic mail correspondence regarding this Master Agreement should be
addressed as follows:
If to HP:
[email protected]
If to Seller:
[email protected]
Telephone contacts regarding this Agreement are:
HP
Brad Sprenger (208) 333-5436
FAX number (208) 333-6916
SELLER
Jonathan Ahlbrand (810) 357-2866 x5051
FAX number (810) 357-2570
Contacts regarding specific Work performed by the Seller shall be called
out in the Program Specification Documents.
USE OF THE HEWLETT-PACKARD NAME AND TRADEMARKS
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HP grants to Seller a personal non-exclusive license to use the trademarks
identified below in conjunction with the services performed pursuant
to this Agreement provided that Seller and Seller's agents meet the HP
quality requirements set out in this Agreement or otherwise set by HP.
In connection with the use of these trademarks, Seller shall not
represent that Seller has any ownership in the Trademarks, Seller will
not attempt to register the mark in any form, and the parties
acknowledge that the use of the Trademarks shall be only for the
benefit of HP. HP may terminate this license immediately if Seller
does not meet the HP quality requirements or if this agreement is
terminated. Seller shall indemnify HP from any cost, claims or
damages arising from the intentional acts of Seller or its agents
relating to the use of the Trademark in any manner except as permitted
by this Agreement
Trademarks authorized for use by Seller: "HP", "Hewlett-Packard"
PRECEDENCE
The provisions of this Agreement and the attached exhibits and addenda
hereto take precedence over the Seller's additional or different terms
and conditions, to which notice of objection is hereby given.
This Agreement comprises the entire understanding between the parties and
supersedes any previous or contemporaneous communications,
representations, or contracts, whether oral or written. No change or
modification of any of the terms and conditions herein shall be valid
or binding on either party unless in writing and signed by an
authorized representative of each party.
In the event of any conflict between the provisions of this Agreement and
any addenda or attachments, the order of precedence is as follows:
This Agreement and any modifications to this Agreement;
The applicable addenda to this Agreement and any modifications to the
addenda;
Any Program Specification Documents for specific work.
ADDENDA ATTACHED
All addenda to this Agreement shall be deemed a part of this Agreement and
incorporated herein. Terms which are defined in this Agreement, and used
in any addendum, have the same meaning in the addendum as in the Agreement
The following addenda are hereby made a part of this Agreement
Addendum A - Confidential Disclosure Agreement
Addendum B - HP Standards Of Business Conduct
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their
duty authorized representatives.
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<TABLE>
<CAPTION>
<S> <C>
Hewlett-Packard Company National TechTeam
Worldwide Sales, Distribution, and Support By: Jonathan D. Ahlbrand Title: Senior Vice
By: Alex Sozonoff President
Title: Vice President, General Manager, Worldwide
Sales, Distribution, and Support
Signature: Signature:
---------------------------- ------------------------------------
- --- ---
Date Date
Signed: Signed:
------------------------------- ----------------------------------------
</TABLE>
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ADDENDUM A
HEWLETT-PACKARD COMPANY
CONFIDENTIAL DISCLOSURE AGREEMENT
Multi-part standard Confidential Disclosure Agreement attached.
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ADDENDUM B
HP STANDARDS OF BUSINESS CONDUCT
All National TechTeam employees who are involved in the delivery of HP work
will be held to the same Standards of Business Conduct as employees of
Hewlett-Packard Company. This addendum describes these Standards of Business
Conduct All National TechTeam employees who are involved in the delivery of HP
work must read and understand the entirety of this addendum. Any questions
related to any item should be directed through National Tech Team management to
Hewlett-Packard.
Non-compliance with any item described in this addendum will be considered
misconduct by the National TechTeam employee, and will constitute grounds for
immediate removal from all HP activity carried out by National TechTeam.
For purposes adherance to the HP Standards of Business Conduct only, National
Tech Team employees who are involved with HP work must comply with the same
rules as HP employees. This addendum does not in any way suggest that National
Tech Team employees are directly employed by HP. National Tech Team should
make it clear to National Tech Team employees that they are employed by
National Tech Team and not HP.
HP PRESIDENT'S MESSAGE
Our company's reputation means a lot to us. It's an asset money can't buy. It
opens doors for us when we call on customers, when we look for business
partnerships, when we deal with governments, and when we work to improve the
communities in which we operate. By all measures, HP enjoys one of the best
reputations any company has - in any business - anywhere in the world.
This hasn't happened by accident. Over the years employees at every level have
endeavored to build HP's reputation by fair and honest dealing in every
business transaction and relationship. Maintaining this reputation is a
critical objective for all entity managers. We expect every employee to make
this a personal responsibility as well.
These Standards of Business Conduct are intended to inform all employees of
their legal and ethical obligations to HP, its customers, competitors and
suppliers. Simply stated, every HP employee must comply with these standards. I
expect all managers to review these standards with their employees every year in
order to answer questions and to ensure compliance. Failure to comply with
these standards is regarded as misconduct and may result in termination of
employment.
Sometimes you may believe an HP employee has engaged in unethical or illegal
conduct. In this situation, you are expected to notify a manager or the
Personnel Department. As an alternative, a post office box has been established
by HP's Corporate Legal Department for worldwide use to receive information on
a confidential basis. The address is:
Hewlett-Packard Company
Corporate Legal Department (20 BQ)
Post Office Box 50161
Palo Alto, CA 94303-0890
The day-to-day performance of each of us adds to - or subtracts from - HP's
reputation as a company. Uncompromising integrity is part of the HP Way and
part of every HP job; it always has been, it always will be.
Lew Platt
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President and
Chief Executive Officer
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CONFLICTS OF INTEREST
GENERAL POLICY
Although you are generally free to engage in personal financial and
business transactions, this freedom is not unlimited. You must avoid
situations where your loyalties may be divided between HP's interests
and your own interests. HP wants you to conduct yourself so that you
do not even appear to have a conflict. You can avoid most unacceptable
conflicts by following the rules described below.
OUTSIDE EMPLOYMENT
What are the limits on my working for another company or having my own
business? HP policy does not prohibit all outside employment but does
forbid any outside employment that could lead to divided loyalties.
The following examples illustrate some of the limitations on outside
work:
*You may not be an employee, consultant or contractor for any
competitor of any HP division or operation. Example: you may not work
for a company which makes computers or peripheral products, even if
your division makes unrelated products.
*You may not be an employee, consultant or contractor for any HP
customer or supplier without written approval from your entity
manager. Further, you may not have more than one HP
employment status at a time. Example: you may not be an employee at
one division and also a consultant to another HP entity.
*You may not sell services or products similar to HP's services or
products. Example: you may not service HP products on your own time.
*You may not engage in activities which support or promote a
competitor's products or services. Example: you may not write and
sell software for a competitor's products.
*You may not accept a position with another company if the time
demands of the position interfere with your HP job. Example: a
position which required receiving phone calls during your HP work
hours would not be acceptable.
PERSONAL BENEFIT FROM HP BUSINESS
When would it be wrong for me to benefit personally from conducting HP
business?
You must disclose all situations where you may be conducting HP
business with friends or family members. You must obtain written
approval from your entity manager before conducting business with
these individuals and you must remove yourself from any involvement in
the decision to retain their services. Thus, you would need approval
to hire your brother-in-law to do repair work on an HP facility. If
the entity manager approves, the transaction should be handled by your
manager or another department and proposals from competing businesses
should be considered.
You may not personally benefit (other than your compensation from HP)
from any transaction undertaken on behalf of HP. For example, a sales
representative may not accept anything of value from an HP reseller in
return for promoting that company's products.
You may participate in published frequent traveler programs, except
those offering cash refunds. However, you may not participate in
frequent purchaser programs outside the travel industry. As an
example, you may not accept equipment from an office supply vendor
based on HP's purchases.
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GRATUITIES FROM THIRD PARTIES
Companies often exchange gifts. What can I accept?
Other than inexpensive advertising novelties or business meals and
entertainment you and your immediate family may not accept any gift,
payment, loan, or other favor from a customer, supplier or competitor.
Care should be exercised in accepting business meals and entertainment
Such activities should be infrequent consistent with accepted business
practices, and for the express purpose of furthering a business
relationship. You should not accept payment of travel expenses by a
customer or supplier without prior entity manager approval. Some HP
organizations may adopt more restrictive rules in these matters.
In rare circumstances, local custom may call for an exchange of gifts
having more than nominal value as part of a business relationship with
a foreign company. In these situations you may only accept such gifts
on behalf of HP and with the approval of your entity manager. Such
gifts should be turned over to HP for appropriate disposition such as
HP internal use, general employee benefit or donation to charity.
OUTSIDE DIRECTORSHIPS
What if I am asked to be a director for another organization?
You may not accept a position as a director of any HP competitor. You
may not accept a position as director of a company which supports or
promotes a competitor's products or services, without prior approval
of the Management Staff. Before becoming a director of any HP
customer or supplier, you must obtain the prior approval of HP's
president or an HP executive vice president. If you encounter any
situation as a director which conflicts with HP's interests, you will
need either to withdraw from participation in the decision or resign
as a director.
You may not receive separate compensation (including stock options)
for service on the board of directors of a company if the service is
at HP's request or in connection with an HP investment in, or
relationship with, that company.
FINANCIAL INTERESTS IN OTHER BUSINESSES
What personal investments are not acceptable?
You may not have a financial interest in any HP customer, supplier or
competitor that might cause divided loyalty or even the appearance of
divided loyalty. Whether there is divided loyalty depends upon many
factors, including: (a) your ability to influence HP decisions that
affect your personal interests; (b) the size of the investment
relative to your finances; and (c) the nature of the relationship
between HP and the other business.
REPORTING POTENTIAL CONFLICTS
When should I report an outside activity?
You do not have to report every outside activity. However, you must
promptly disclose in writing to your entity manager any actual or
potential conflicts of interest The manager will review the matter and
communicate HP's position in writing.
The manager will indicate either (a) that HP has no present objection
to the relationship, subject to future review, or (b) the steps you
must take to resolve the conflict to HP's
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satisfaction. Copies of the response and your disclosure will be kept
in your personnel file.
When reviewing a potential conflict HP will consider the following
questions:
- What kind of outside work will you be performing?
- Does the outside work involve an HP competitor, customer or
supplier?
- Are any HP products or services involved in your outside work?
- Does any HP entity offer similar products or services as the entity
engaging you for the outside work?
- Does the outside work support or promote a competitor's products?
- What are your HP duties?
- Can you influence HP decisions that affect the outside work?
- Will the outside work impact your ability to perform your HP
duties?
- Is this outside work an opportunity HP should take for itself?
- Will you be getting an improper personal advantage?
- Are members of your family, friends, or other HP employees involved
in the outside work?
- Are you receiving gratuities, gifts or money that may be
improper?
- How will your actions appear to others--both inside and outside
HP?
HANDLING COMPANY INFORMATION
GENERAL POLICY
HP business information is company property which may not be disclosed
outside HP unless properly released to the public by HP. If you
disclose information about existing, new, or proposed products or
processes, it can hurt HP's competitive position and jeopardize R&D
efforts.
You must be sure that confidential or proprietary information is
appropriately safeguarded against external disclosure as well as
unauthorized disclosure within HP. Remember, when you store sensitive
HP data on a personal computer or workstation, you are also
responsible for applying the appropriate level of protection. Under
no circumstances should you disclose it to third parties without prior
approval from the responsible department manager. Where business
needs require such information to be disclosed outside HP, you must
complete appropriate confidential disclosure agreements before
disclosure. You should be equally careful when releasing prototypes
or models.
CONFIDENTIAL INFORMATION GUIDELINES
How do I know how sensitive certain information is?
<PAGE> 20
Page 17
HP has established guidelines for marking and handling sensitive
information. These guidelines establish four classes of sensitive
information. No other legends or designations should be used within
HP. For a more detailed discussion of how to handle confidential and
proprietary HP information, you should consult the agreement signed by
employees at the time of hiring and the HP brochure called "Protecting
HP Trade Secrets".
* "HP Private - Not To Be Copied" - This designation is used for
information generated solely for management use to make major
decisions and must not be disclosed outside HP. "HP Private" documents
may be numbered for greater control and must not be reproduced without
written permission of the originator. Examples include non-public
consolidated financial information, strategic business plans,
significant technical product data, R&D proposals and certain product
marketing strategies. "HP Private" documents must be disposed of by
shredding.
* "HP Confidential" - This designation is used for information which
if disclosed would damage HP's interests, such as non-public
organization charts, and other kinds of personnel information, bids,
sales forecasts, lab notebooks and customer lists. "HP Confidential"
documents should be disposed of by shredding.
* "For HP Internal Use Only" - This designation is used for
information that will have broad distribution, but which is considered
sensitive and should not go outside HP, such as the International
Telephone and Communications Directory. In addition, an appropriate
designation such as "HP and HP Channel Partner Internal Use Only" may
be used for documents such as product training materials which the
business unit specifically decides may be shared with HP resellers or
other third party channels.
* "HP Proprietary" - This designation is used for drawings or other
documents containing proprietary information made available to HP
suppliers or other third parties. These drawings should not be
duplicated or disclosed except as authorized by the responsible HP
person.
HANDLING COMPANY ASSETS
GENERAL POLICY
Each employee must take care to safeguard HP's assets. This includes
protecting them from unauthorized use. Use of HP assets for any
unlawful or improper purpose is strictly prohibited.
COMMENTING ABOUT COMPETITORS
GENERAL POLICY
Competition is a fact of business life. HP emphasizes the quality of
its products and avoids disparaging comments about competitors or
their products. When you talk about a competitor or its products, the
statements must be fair, factual and complete.
BUSINESS PRACTICES INVOLVING BOTH END USER AND RESELLERS
GENERAL POLICY
You must deal fairly and honestly with HP's customers. You should
exercise caution when offering discounts on purchases of different
product combinations. Exchange of confidential information is not
permitted without a written agreement.
<PAGE> 21
Page 18
CLOSING COMMENT
The practices in this brochure are only some of the legal and ethical standards
you must observe as an HP employee. Each employee has an important
responsibility to help maintain HP's reputation for the highest standards of
integrity. If you have any questions, contact your supervisor who will in turn
contact the HP liaison.
<PAGE> 22
ADDENDUM A
HEWLETT-PACKARD COMPANY
CONFIDENTIAL DISCLOSURE AGREEMENT
Multi-part standard Confidential Disclosure Agreement attached.
Agreement for Technical Support 06/04/96 Hewlett-Packard / TechTeam
Services Addendum A - Page 1 of 1
<PAGE> 23
ADDENDUM C
PROCESS DEFINITIONS
1. DELIVERY AND HANDLING OF END USER AGENT ASSISTED CALLS
1.1. End users who are calling for questions on the CO CSO products
or services will call 1 (800) 637-7740. This phone number will
be and is owned by HP, but will ring at the Seller's location.
HP will incur all phone company service tariffs associated with
(800) 637-7740.
1.2. The Seller's Voice Response Unit (VRU) will route the calls as
defined by HP, if used.
1.3. The Seller Agent will answer the customer call based on
information in the Seller knowledge base or in HP product
documentation or provided toolset. If information pertaining to
the customer question does not exist, the Agent will note this
deficiency in the Seller call tracking system.
1.4. The Seller Agent will create a call summary for every call
handled. This call summary will be recorded in the Seller call
tracking system.
1.5. In the event that the customer must be escalated for either
technical or customer satisfaction reasons, the Technician will
do so as documented in Customer Satisfaction Escalations section
of Addendum B.
1.6. In the event a customer desires to place an order, the call must
be forwarded to the appropriate Order Fulfillment Center. The
Agent will do so as documented in Order Fulfillment Center
section of Addendum B.
1.7. Based on history, some Customers who do not have a HP CO product
or program inquiry will call 800-637-7740. The Seller will
redirect these customers to the appropriate HP CSO location via
a "warm transfer". A phone list of other HP locations and
purposes will be provided to the Seller by HP.
2. DELIVERY OF END USER TECHNICAL ASSISTANCE CALLS TO THE HP ORDER
FULFILMENT CENTER (OFC)
2.1. End users who are calling for questions on HP products or
services will call 1-800-637-7740. After the Seller answers
questions or resolves the pre-sales inquiry, if appropriate, the
Seller should encourage the end user to place an order with HP.
2.2. Assuming the End user wishes to place an order, the Seller will
then "warm" transfer the call to the appropriate CSR at the OFC
in Roseville, CA, or where applicable the Rockville OFC.
2.3. The Agent will record all call related data in the Seller call
tracking system. This should also occur while the Customer is
on-line, and verification process with customer on data.
4. CUSTOMER SATISFACTION ESCALATIONS
4.1. In some cases, Customer satisfaction issues may arise that are
outside the control of the Seller. These calls will be
initially handled by the Seller supervisor or lead. If no
resolution which is satisfactory to the Customer can be
reached, the Customer name, phone number, address, Seller
contact and problem description will be recorded and sent
either electronically or by fax
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum B - Page 1 of 7
<PAGE> 24
immediately to Robin Lemmo with a CC: to Denise Aiello. A
record of this action will be recorded in the Seller's call
tracking system. The call will remain in a open status upon
escalation.
4.1.1. Examples of customer satisfactions include:
- The customer believes HP owes money to the
customer (perhaps a product buy-back, warranty
extension, etc).
- The customer is questioning some HP policy or
procedure.
- Any issue where the customer discusses legal
proceedings that could involve HP.
- The customer indicates that they need to talk
with someone who has the authority to solve their
problem and that authority does not exist within
the Seller's organization.
4.2. The Expert Center will assume ownership of the call.
4.3. The escalation department will provide resolution information to
the Seller, and the call status will be modified to closed by
the Seller.
4.4. In the event that the Seller escalates the call to the Expert
Center organization, the Seller SHOULD NOT set the Customers
expectation about possible resolution beyond the telling the
customer their call is being forwarded to the Customer Quality
department.
5. TECHNICAL ESCALATIONS
5.1. Hewlett-Packard's group will provide technical backup for the
Seller. In the event a call is beyond the technical abilities
of the Seller Agents or the Seller's Senior Technicians, the
Seller Team Lead will arrange contact with the expert resource
desk. This may occur in the case of a user with an inquiry or
question outside those defined by HP's Customer Care training
or availability via the desktop toolset provided to Seller.
5.1.1. ASCSE and the Seller will arrange periodic conference
call periods where any open technical escalations or
issues can be addressed. TL & Resource
5.2. Access to the ASCSE technical backup group will be limited to
two Agents provided by the Seller, as scoped for the program.
As the program develops beyond ten Agents the technical backup
group will be limited to the Seller's Team Leads. The Seller
will be expected to document the issue and resolution of any
problem which is escalated to TCA. This issues and resolutions
will be included in the Sellers knowledge base.
5.2.1. HP will act as an additional technical resource for the
Seller. HP's Expert Center will retain ownership of
the call.
5.2.2. ASCSE can be reached at 1-800-772-9800.
6. HOURS OF OPERATION AND STAFFING
6.1. National TechTeam will provide staffing to handle in-bound
phone calls from 8am - 7pm CST, 5 days per week, excluding
weekends and HP Holidays. HP Holidays for the time period
specified are as follows: (These are US Holidays.).
7.
1996 1997
May 27th January 1
July 4th and 5th February 1xx
September 2 April xx
November 28th and 29th May xx
December 25th
8. PERFORMANCE METRICS
8.1 All performance metrics described below are HP's expectations
as of the commencement date of the Work. Any and all
performance measures are subject to change at HP's sole
discretion. The
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum B-Page 2 of 7
<PAGE> 25
Seller will be expected to adjust performance to match HP's
expectations within a reasonable time period. The appropriate time
period for adjustment will be jointly agreed to between HP and the
Seller.
8.2. 95% of all calls must be picked up and serviced by a Agent within
45sec.. This service level metric must be met on a daily basis.
8.2.1. Calls will not be pulled from the queue for later call back
in order to meet service level objective.
8.2.2. HP will provide a 3 month rolling forecast to the Seller.
This will be provided monthly. This forecast will include a
plus or minus 10% boundary.
8.2.3. The service level objective described in paragraph 7.2 above
will be met by the Seller up to the upper bound of the
forecast described above in paragraph 7.2.2. Beyond the upper
bound of the forecast, the seller will make every reasonable
attempt to service all callers as quickly as possible. HP
will consider service level degradation as predicted by the
Erlang C queuing model to be acceptable performance of the
Seller.
8.3. No call blockage is acceptable. Call blockage means: there are not
enough phone lines to handle the call demand and the Customer
receives a busy signal.
8.4. 94% of the Customers surveyed by HP will report a neutral or positive
experience with the technical assistance service delivered by the
Seller.
8.5. Results of HP Advantage Center silent call monitoring will show no
less than 90% success rate for calls handled by the Seller.
8.5.1. Success rate will be determined by the ratio of positive
responses to total responses as scored by HP Advantage Center
call monitoring teams.
8.5.2. The components of this score will include a combination of
communication skills, trouble shooting skills, and technical
accuracy. A copy of the "3rd Party Seller Monitoring Form" is
attached as Addendum F. HP may periodically change the items
on the "3rd Party Seller Monitoring Form" in order to better
reflect Customer expectations of support delivery.
8.6. Results of HP Advantage Center silent call monitoring will show 100%
adherence to knowledge base documentation and approved training
materials as an information source answering Customer questions.
9. HP SUPPLIED EQUIPMENT
9.1. CARE OF HP EQUIPMENT All designs, materials and equipment furnished
to Seller by HP or paid for by HP in connection with this Agreement
(collectively "HP Property") shall:
- Be clearly marked or tagged as property of HP;*
- Be subject to inspection by HP at any time;
- Be used only in servicing HP customer needs;
- Be reasonably kept separate from other materials, tools, or
property of Seller or held by Seller;
- Not be modified in any manner by Seller unless so directed by HP;
- Have periodic maintenance performed by Seller; and
- Be kept free of liens and encumbrances which may arise due to
actions of Seller.
- The Seller will maintain an inventory list of HP owned equipment
and will audit the inventory of HP equipment monthly. Results of
the monthly inventory audit will be reported to HP.
9.2. EQUIPMENT PROVIDED BY HP
HP will provide the following equipment to the Seller for use by
Seller in fulfilling the requirements of this Agreement. HP will
retain ownership of all equipment described in this section.
9.2.1. HP will provide copies of the NACAG manual, desktop toolset,
web page data, and literature pieces. The Seller will provide
Agents with access to this software, either over the network
or on the individual Agents desktops. HP will retain software
license ownership for this software tool.
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum B - Page 3 of 7
<PAGE> 26
9.3 EQUIPMENT PROVIDED BY NATIONAL TECHTEAM
At a minimum, the Seller will provide the following equipment for
use by Seller Technicians in fulfilling the requirements of this
Agreement. The Seller will retain ownership of this equipment
and/or maintain current software licenses.
9.3.1. Computer networking hardware and software that will allow
access by Technicians to necessary computer based support
tools.
9.3.2. All necessary phone equipment to accept delivery of the call
and route the call to the Seller Technician. The Seller will
provide a Voice Response Unit (VRU) to assist in automatic
customer call routing where applicable or appropriate.
9.3.3. All necessary phone equipment to transfer calls to other HP
locations.
9.3.4. Knowledge base and initial call tracking tools. (The move to
Callisto should be in September).
9.3.5. Reasonable equipment and connections to allow HP to perform
remote, silent monitoring of Technician calls.
9.3.6. The Seller will provide reasonable equipment and connections
to allow HP to remotely monitor the queue status of the HP
support group on the Seller's phone switch.
9.3.7. Bulletin board software and hardware to allow the customer to
upload configuration files for use by the Seller Technician
in the problem identification and resolution process.
10. TRAINING
10.1 The Seller's employees will be proficient with the personal computer
concepts, knowledge of basic system understanding, DOS, Windows, and
various software applications. Additionally, the Seller Agents will
have excellent Sales and Customer service skills. It is the
responsibility of the Seller to provide technology and environment
training, trouble shooting training, and Customer service skills
training for the Seller Technicians prior to beginning HP product
specific training or support.
10.1.1. HP will pay for training of all new Seller Technicians,
which are attributable to project growth, as described in
the pricing summary (Addendum C of this document).
10.1.2. The Seller will pay for Seller Agent training, when the new
Agents are a result of Seller employee turnover.
10.1.3. Additional training provided by Barry Rhein, and paid for by
NTT, and negotiated charges to HP.
10.2 If additional product support responsibility is awarded to the
Seller, HP and the Seller will jointly develop and deliver new
product support training. HP and the Seller will jointly determine
the appropriate method of training delivery (either class room,
train-the-trainer, self paced, etc.).
10.2.1. If this training can occur during the normal Seller Agent
work schedule, no additional costs will be covered by HP. If
Seller Agent must attend training outside their normal work
schedule, HP will reimburse the Seller for the actual cost
of training. This reimbursement will be dependent upon prior
expense authorization from HP.
10.2.2. Class room training for Seller Agents may either occur at
the Seller's location or HP's. This training will be
delivered by a Seller trainer or an HP trainer. The audience
for this training will be Seller Agents employed by the
Seller at the time the training occurs. HP will pay for the
travel cost of the HP trainer delivering the training
program, if HP feels that an HP trainer is required.
10.2.3. Train-the-trainer sessions will be held at an HP location in
California. This training will be delivered by an HP
trainer. The audience for these train-the-trainer sessions
will be determined by the Seller. The Seller will pay for
the travel cost of the Seller employees attending
train-the-trainer sessions at HP. The Seller employees who
attend the train-the-trainer sessions will be responsible
for training all Seller agents on the material covered
during the train-the-trainer session.
10.2.4. Seller needs to have back-ups in place.
11. SUPPORT INFORMATION
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum B- Page 4 of 7
<PAGE> 27
11.1. During the term of this Agreement support documentation will be
created, both by HP and the Seller. This documentation will
reside in various forms, including: Callisto database, HP
developed support notes, Seller developed FOLIOs, initial call
tracking systems, product manuals, etc.
11.1.1. HP will retain ownership of all information provided
by HP.
11.1.2. HP will assume ownership of all information created by
the Seller as a result of the activity described in
this Agreement.
11.1.3. The Seller may not use HP support information for any
activity outside those activities intended by this
Agreement.
11.1.4. Seller will provide HP with unlimited access to all
support information held at the Seller's location.
11.2. HP and the Seller will each create support information. The
master database containing all information will reside at HP
Advantage Center located in Cupertino, CA. The Seller and HP
will jointly determine the process for ensuring that the
Advantage Center database.
11.3. All information provided by HP or collected by the Seller will
be considered confidential and will be handled by the Seller
as HP Confidential information, otherwise described in
section 15 of the Agreement.
11.4. Customer support delivered by the Seller will follow HP
developed or HP approved support documentation or product
documentation.
11.5. HP reserves the right to review and approve or dis-approve any
documentation created by the Seller for use in this project.
12. QUALITY MONITORING AND REPORTING
12.1. The Seller will perform periodic Agent monitoring. The
frequency of the monitoring will be determined by the Seller.
12.2. The Seller will provide monthly metrics to HP regarding the
results of Agent monitoring. This will include a recap of
areas of deficiency and an action plan for resolution of any
deficiency.
12.3. The Seller will provide a mechanism for remote, silent
monitoring of Agents by HP.
12.4. HP will provide the Seller with feedback regarding the silent
monitoring of Seller Agents.
12.5. HP will have the right to request that individual Agents be
removed from the HP Customer Care Specialist team due to
misconduct by the Agent. The Seller will be expected to
immediately comply with these requests.
12.6. HP will provide the Seller with summaries of customer
satisfaction survey results.
12.7. The Seller will provide customer names and phone numbers to HP
daily upon request for the purpose of surveying the customer's
satisfaction with the support provided by the Seller.
12.8. HP and the Seller will meet weekly (via teleconferences) during
the first 3 months of the program to resolve issues/comments
or concerns to review the program.
13. CALL TRACKING
13.1. The Seller must have the ability to track call history and
product issues on all supported products.
13.2. HP and the Seller will jointly develop a list of pre-defined
sales issues and the corresponding definitions. The Seller
will report the results of data collected on these issues to
HP at least monthly. In some instances, the criticality of the
product issues may warrant reporting more frequently than
monthly.
13.2.1. Seller will have processes in place which enable Agents
to highlight issues which are not encompassed by the
pre-defined issues.
13.2.2. Problem codes to track (i.e. product not available,
stock-out, who do I call or where...)
13.3. HP will assume and retain ownership for all HP customer
information and HP products issues information that are
collected by or provided to the Seller.
13.4. HP will have unlimited access to all databases containing
customer information for call issues data.
13.5. HP may require periodic, ad-hoc data collection.
13.6. The Seller will monitor Customer issues and will immediately
report emerging issues to HP.
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum B - Page 5 of 7
<PAGE> 28
14. REPORTING
14.1. The following information will be reported by the Seller to HP
daily for the first month. This information will be faxed or
transmitted to Lori Paulin at HP (Fax: 1-408-447-0448) by 9:00 am
Pacific Standard time the day after the activity occurred:
14.1.1. service level - percent of calls picked up within 30
seconds, 60 seconds, 90 seconds, 120 seconds, 150 seconds,
and 180 seconds
14.1.2. average hold time
14.1.3. longest hold time
14.1.4. total calls offered, itemized by division (i.e. CPO,
CSO...)
14.1.5. total calls handled,
14.1.6. total call minutes, itemized by request
14.2. The following information will be reported by the Seller to HP
daily for first two weeks, then weekly for following month, to
bi-monthly for next 2 months, then to monthly. This information will
be faxed or transmitted to Lori Paulin by 5:00 p.m. Pacific Standard
time on the 2nd work day of the week after the activity occurred:
14.2.1. total calls offered.
14.2.2. total calls handled, itemized by VRU menu choice, where
applicable.
14.2.3. total call minutes handled, itemized by product or
request.
14.2.4. average inbound talk time, itemized by product.
14.2.5. total outbound calls handled, itemized by product.
14.2.6. total outbound minutes, itemized by product.
14.2.7. average outbound talk time, itemized by product.
14.2.8. total mis-routed calls which were redirected to another HP
support group.
14.2.9. service level - percent of calls picked up within 30
seconds, 60 seconds, 90 seconds, 120 seconds, 150 seconds,
and 180 seconds
14.2.10. total calls abandon. Abandon means the caller disconnected
(hung up) before a Agent picked up the call.
14.2.11. amount to be invoiced by Seller for the previous months
activity.
14.2.12. average hold time before the call is picked up by a Agent.
14.2.13. longest hold time before the call is picked up by a Agent.
14.2.14. Summarization of customer comments and/or issues including
customer data
14.3. The following information will be reported by the Seller to HP
monthly. This information will be faxed or transmitted to HP by 5:00
p.m. Pacific Standard time on the 10th work day of the month after
the activity occurred:
14.3.1. monthly summary of downtime of critical support systems
(phone, networks, etc.).
14.3.2. total calls blocked.
14.3.3. a copy of the invoice which was submitted by the Seller to
the HP accounts payable department.
14.3.4. monthly Seller employee turnover (specific to the HP
Customer Care Specialist). This will include the number of
Agents that left the HP Customer Care Specialist group, and
the number of Agents that joined the HP Customer Care
Specialist team.
14.3.5. monthly monitoring results and action plans to address any
deficiencies identified through the monitoring process.
14.3.6. results of the monthly HP equipment audit as described in
8.1 above.
14.3.7. total transactions associated with the Seller's call
tracking system (customers added, knowledge issues added,
calls added, customer modified data).
14.4. The following information will be reported by the Seller to HP
weekly. This information will be transmitted to HP by 9:00 am
Pacific Standard time on the Tuesday following the week after the
activity occurred:
14.4.1. Number of calls offered
14.4.2. Number of calls per option
14.4.3. Number of calls handled by product
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum B - Page 6 of 7
<PAGE> 29
14.4.4. Summary of calls by issue (as tracked in the call tracking
system). This is to be issue information, not individual
database records. This should include issues and
sub-issues, and all information entered in free form format
by Agents in the "comments" area.
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum B - Page 7 of 7
<PAGE> 30
ADDENDUM C
PRICING AND FEE SCHEDULE
C.1 TECHNICAL INFRASTRUCTURE START-UP COSTS
<TABLE>
<CAPTION>
Item Price each Total price for startup
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
CSU for T1-Span (2 needed for startup) 2142 Use HPD
T1 multiplexer card 4172 Use HPD
ACD queue message 901 Use HPD
Fax server PBX cards 636 Use HPD
Fax modem upgrade 552 Use HPD
Folio Macro Development in MS Word 1560
HP BBS system 4751 Use HPD
Call process system phase one (IVR license) 17613 Use HPD
File servers (2 duplex with UPS and tape b/u) 13039 Use HPD
Cisco 3000 router 2120 Use HPD
Report setup and customization
SCO FTP server software Use HPD
FTP server Use HPD
Remote access to TracTeam 4508
Remote access to NTT ACD-queue status 1255
Vendor Support Services 2218
DID trunk card configuration use HPD
TOTAL $
</TABLE>
C.2 ONE TIME PROGRAM MANAGEMENT START UP COSTS
<TABLE>
<S> <C> <C>
Program Management, Launch Coordination 1500.00
(XXX @ 25% x 1 mo. x $6000
Telecom 750.00
(Jim Kaske @ 25% x 1/2 mo. x $6000
Datacomm 937.50
(Mike Darnell @ 25% x 1 mo. $3750
Training Development & Delivery*
(10 individuals @ 1/4 man month @25% x
$4900)
TOTAL NTE$ $
</TABLE>
* Additional training development cost will be billed to HP at cost, as it
occurs, over the first 6 months of this project.
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum C-Page 1 of 3
<PAGE> 31
C.3 PER TECHNICIAN EQUIPMENT AND TRAINING START UP COSTS (THESE COSTS RECUR
FOR EVERY TECHNICIAN ADDED FOR THE LIFE OF THE PROGRAM)
<TABLE>
<S> <C> <C>
Rolm phone 624 display/ACS headset, and 1800 18000.00
ROLM phone card
Technician's Office 700 7000.00
Office equipment and terminal emulation sw 1400 14000.00
Technician training (per seat)** 1500 15000.00
TOTAL 54000.00
</TABLE>
**Training cost calculation: (76230 minutes per year x $.78 per minute)/(231
days per year).
TechTeam is providing technicians at cost during the training period
and does not recover development or delivery expenses in this fiqure..
C.4 MONTHLY PER-TECHNICIAN RUNNING COST
HP will pay a flat per agent fee for the period July 1, 1996 through June 30,
1997. HP must approve the hiring of additional technicians. Beginning July 1,
1997, the running cost for this activity will be paid for by HP via a per talk
minute fee if appicable. This per minute fee is yet to be determined, but will
be something less than $.78 per minute.
For the period July 1, 1996 through June 30, 1997, the per technical fee will
be: $5280.00 month
The calculation for this fee is: $.XX per minute x 76230 minutes per year/12
months = $xxxx
$.xx per minute is calculated as follows:
Technician cost per minute
Team lead cost per minute
Other overhead labor
Off hours, holiday premiums $278.00 per day
On-going training development/delivery
Turnover retraining
Travel
Employee care
Discount
TOTAL
Ageement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum C - Page 2 of 3
<PAGE> 32
ADDENDUM D
HP PRODUCTS SUPPORTED BY THE SELLER
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum D - Page 1 of 1
<PAGE> 33
ADDENDUM E
HP STANDARDS OF BUSINESS CONDUCT
All National TechTeam employees who are involved in the delivery of HP work
will be held to the same Standards of Business Conduct as employees of
Hewlett-Packard Company. This addendum describes these Standards of Business
Conduct. All National TechTeam employees who are involved in the delivery of
HP work must read and understand the entirety of this addendum. Any questions
related to any item should be directed through National TechTeam management to
Hewlett-Packard.
Non-compliance with any item described in this addendum will be considered
misconduct by the National TechTeam employee, and will constitute grounds for
immediate removal from all HP activity carried out by National TechTeam.
For purposes adherance to the HP Standards of Business Conduct only, National
TechTeam employees who are involved with HP work must comply with the same
rules as HP employees. This addendum does not in any way suggest that National
TechTeam employees are directly employed by HP. National TechTeam should
make it clear to National TechTeam employees that they are employed by
National TechTeam and not HP.
===============================================================================
PRESIDENT'S MESSAGE
Our company's reputation means a lot to us. It's an asset money can't buy. It
opens doors for us when we call on customers, when we look for business
partnerships, when we deal with governments, and when we work to improve the
communities in which we operate. By all measures, HP enjoys one of the best
reputations any company has -- in any business -- anywhere in the world.
This hasn't happened by accident. Over the years employees at every level have
endeavored to build HP's reputation by fair and honest dealing in every business
transaction and relationship. Maintaining this reputation is a critical
objective for all entity managers. We expect every employee to make this a
personal responsibility as well.
These Standards of Business Conduct are intended to inform all employees of
their legal and ethical obligations to HP, its customers, competitors and
suppliers. Simply stated, every HP employee must comply with these standards.
I expect all managers to review these standards with their employees every year
in order to answer questions and to ensure compliance. Failure to comply with
these standards is regarded as misconduct and may result in termination of
employment.
Sometimes you may believe an HP employee has engaged in unethical or illegal
conduct. In this situation, you are expected to notify a manager or the
Personnel Department. As an alternative, a post office box has been
established by HP's Corporate Legal Department for worldwide use to receive
information on confidential basis. The address is:
Hewlett-Packard Company
Corporate Legal Department (20 BQ)
Post Office Box 50161
Palo Alto, CA 94303-0890
The day-to-day performance of each of us adds to -- or subtracts from -- HP's
reputation as a company. Uncompromising integrity is part of the HP Way and
part of every HP job; it always has been, it always will be.
Lew Platt
President and
Chief Executive Officer
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum E - Page 1 of 5
<PAGE> 34
CONFLICTS OF INTEREST
GENERAL POLICY
Although you are generally free to engage in personal financial
and business transactions, this freedom is not unlimited. You
must avoid situations where your loyalties may be divided
between HP's interests and your own interests. HP wants you to
conduct yourself so that you do not even appear to have a
conflict. You can avoid most unacceptable conflicts by
following the rules described below.
OUTSIDE EMPLOYMENT
What are the limits on my working for another company or having
my own business? HP policy does not prohibit all outside
employment, but does forbid any outside employment that could
lead to divided loyalties. The following examples illustrate
some of the limitations on outside work:
*You may not be an employee, consultant or contractor for any
competitor of any HP division or operation. Example: you may
not work for a company which makes computers or peripheral
products, even if your division makes unrelated products.
*You may not be an employee, consultant or contractor for any HP
customer or supplier without written approval from your entity
manager. Further, you may not have more than one HP employment
status at a time. Example: you may not be an employee at one
division and also a consultant to another HP entity.
*You may not sell services or products similar to HP's services
or products. Example: you may not service HP products on your
own time.
*You may not engage in activities which support or promote a
competitor's products or services. Example: you may not write
and sell software for a competitor's products.
*You may not accept a position with another company if the time
demands of the position interfere with your HP job. Example: a
position which required receiving phone calls during your HP
work hours would not be acceptable.
PERSONAL BENEFIT FROM HP BUSINESS
When would it be wrong for me to benefit personally from
conducting HP business?
You must disclose all situations where you may be conducting HP
business with friends or family members. You must obtain
written approval from your entity manager before conducting
business with these individuals and you must remove yourself
from any involvement in the decision to retain their services.
Thus, you would need approval to hire your brother-in-law to do
repair work on an HP facility. If the entity manager approves,
the transaction should be handled by your manager or another
department, and proposals from competing businesses should be
considered.
You may not personally benefit (other than your compensation
from HP) from any transaction undertaken on behalf of HP. For
example, a sales representative may not accept anything of value
from an HP reseller in return for promoting that company's
products.
You may participate in published frequent traveler programs,
except those offering cash refunds. However, you may not
participate in frequent purchaser programs outside the travel
industry. As an example, you may not accept equipment from an
office supply vendor based on HP's purchases.
GRATUITIES FROM THIRD PARTIES
Companies often exchange gifts. What can I accept?
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum E - Page 2 of 5
<PAGE> 35
Other than inexpensive advertising novelties or business meals
and entertainment, you and your immediate family may not accept
any gift, payment, loan, or other favor from a customer,
supplier or competitor.
Care should be exercised in accepting business meals and
entertainment. Such activities should be infrequent, consistent
with accepted business practices, and for the express purpose of
furthering a business relationship. You should not accept
payment of travel expenses by a customer or supplier without
prior entity manager approval. Some HP organizations may adopt
more restrictive rules in these matters.
In rare circumstances, local custom may call for an exchange of
gifts having more than nominal value as part of a business
relationship with a foreign company. In these situations you
may only accept such gifts on behalf of HP and with the approval
of your entity manager. Such gifts should be turned over to HP
for appropriate disposition such as HP internal use, general
employee benefit or donation to charity.
OUTSIDE DIRECTORSHIPS
What if I am asked to be a director for another organization?
You may not accept a position as a director of any HP
competitor. You may not accept a position as director of a
company which supports or promotes a competitor's products or
services, without prior approval of the Management Staff.
Before becoming a director of any HP customer or supplier, you
must obtain the prior approval of HP's president or an HP
executive vice president. If you encounter any situation as a
director which conflicts with HP's interests, you will need
either to withdraw from participation in the decision or resign
as a director.
You may not receive separate compensation (including stock
options) for service on the board of directors of a company if
the service is at HP's request or in connection with an HP
investment in, or relationship with, that company.
FINANCIAL INTEREST IN OTHER BUSINESSES
What personal investments are not acceptable?
You may not have a financial interest in any HP customer,
supplier or competitor that might cause divided loyalty or even
the appearance of divided loyalty. Whether there is divided
loyalty depends upon many factors, including: (a) your ability
to influence HP decisions that affect your personal interests;
(b) the size of the investment relative to your finances; and
(c) the nature of the relationship between HP and the other
business.
REPORTING POTENTIAL CONFLICTS
When should I report an outside activity?
You do not have to report every outside activity. However, you
must promptly disclose in writing to your entity manager any
actual or potential conflicts of interest. The manager will
review the matter and communicate HP's position in writing.
The manager will indicate either (a) that HP has no present
objection to the relationship, subject to future review, or (b)
the steps you must take to resolve the conflict to HP's
satisfaction. Copies of the response and your disclosure will
be kept in your personnel file.
When reviewing a potential conflict, HP will consider the
following questions:
- What kind of outside work will you be performing?
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum E- Page 3 of 5
<PAGE> 36
- Does the outside work involve an HP competitor, customer or
supplier?
- Are any HP products or services involved in your outside work?
- Does any HP entity offer similar products or services as the
entity engaging you for the outside work?
- Does the outside work support or promote a competitor's
products?
- What are your HP duties?
- Can you influence HP decisions that affect the outside work?
- Will the outside work impact your ability to perform your HP
duties?
- Is this outside work an opportunity HP should take for itself?
- Will you be getting an improper personal advantage?
- Are members of your family, friends, or other HP employees
involved in the outside work?
- Are you receiving gratuities, gifts or money that may be
improper?
- How will your actions appear to others-both inside and
outside HP?
HANDLING COMPANY INFORMATION
GENERAL POLICY
HP business information is company property which may not be
disclosed outside HP unless properly released to the public by HP.
If you disclose information about existing, new, or proposed
products or processes, it can hurt HP's competitive position and
jeopardize R&D efforts.
You must be sure that confidential or proprietary information is
appropriately safeguarded against external disclosure as well as
unauthorized disclosure within HP. Remember, when you store
sensitive HP data on a personal computer or workstation, you are
also responsible for applying the appropriate level of protection.
Under no circumstances should you disclose it to third parties
without prior approval from the responsible department manager.
Where business needs require such information to be disclosed
outside HP, you must complete appropriate confidential disclosure
agreements before disclosure. You should be equally careful when
releasing prototypes or models.
CONFIDENTIAL INFORMATION GUIDELINES
How do I know how sensitive certain information is?
HP has established guidelines for marking and handling sensitive
information. These guidelines establish four classes of sensitive
information. No other legends or designations should be used
within HP. For a more detailed discussion of how to handle
confidential and proprietary HP information, you should consult
the agreement signed by employees at the time of hiring and the HP
brochure called "Protecting HP Trade Secrets".
* "HP Private - Not To Be Copied" - This designation is used for
information generated solely for management use to make major
decisions and must not be disclosed outside HP. "HP Private"
documents may be numbered for greater control and must not be
reproduced without written
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum E - Page 4 of 5
<PAGE> 37
permission of the originator. Examples include non-public
consolidated financial information, strategic business plans,
significant technical product data, R&D proposals and certain
product marketing strategies. "HP Private" documents must be
disposed of by shredding.
* "HP Confidential" - This designation is used for information
which if disclosed would damage HP's interests, such as
non-public organization charts, and other kinds of personnel
information, bids, sales forecasts, lab notebooks and customer
lists. "HP Confidential" documents should be disposed of by
shredding.
* "For HP Internal Use Only" - This designation is used for
information that will have broad distribution, but which is
considered sensitive and should not go outside HP, such as the
International Telephone and Communications Directory. In
addition, an appropriate designation such as "HP and HP Channel
Partner Internal Use Only" may be used for documents such as
product training materials which the business unit specifically
decides may be shared with HP resellers or other third party
channels.
* "HP Proprietary" - This designation is used for drawings or
other documents containing proprietary information made
available to HP suppliers or other third parties. These
drawings should not be duplicated or disclosed except as
authorized by the responsible HP person.
HANDLING COMPANY ASSETS
GENERAL POLICY
Each employee must take care to safeguard HP's assets. This
includes protecting them from unauthorized use. Use of HP
assets for any unlawful or improper purpose is strictly
prohibited.
COMMENTING ABOUT COMPETITORS
GENERAL POLICY
Competition is a fact of business life. HP emphasizes the
quality of its products and avoids disparaging comments about
competitors or their products. When you talk about a
competitor or its products, the statements must be fair, factual
and complete.
BUSINESS PRACTICES INVOLVING BOTH END USER AND RESELLERS
GENERAL POLICY
You must deal fairly and honestly with HP's customers. You
should exercise caution when offering discounts on purchases of
different product combinations. Exchange of confidential
information is not permitted without a written agreement.
CLOSING COMMENT
The practices in this brochure are only some of the legal and ethical standards
you must observe as an HP employee. Each employee has an important
responsibility to help maintain HP's reputation for the highest standards of
integrity. If you have any questions, contact your supervisor who will in turn
contact the HP liaison...
Agreement for Technical Support 06/04/96 Hewlett-Packard/TechTeam
Services Addendum E - Page 5 of 5
<PAGE> 38
ADDENDUM E(2)
Quality Monitoring Form
Agent Group: Call Number: Tape Number/Date:
---------- ---------- ----------
Product: Monitors:
---------- ---------------------------------------
Question:
----------------------------------------------------------------
SCORING:
<TABLE>
<S><C>
0 1 2 3 N/A
No Effort Made Minimal Effort Made Improvement Needed No Improvement Not Applicable
Needed
SECTION 1 - CUSTOMER SERVICE SKILLS
0 1 2 3
A. The agent offered their name and identified HP and/or product. [ ] [ ] [ ] [ ]
B. The agent used language in a manner which reflected the customer's
level of understanding. [ ] [ ] [ ] [ ]
C. The agent answered questions in a confident manner. [ ] [ ] [ ] [ ]
D. The agent was professional and courteous throughout the call. [ ] [ ] [ ] [ ]
NUMBER OF BOXES CHECKED PER COLUMN: SECT
----- ----- ----- ----- TOT
x0 x1 x2 x3
----- ----- ----- ----- -----
CUSTOMER SERVICE SKILLS SCORE: =0 = = =
----- ----- ----- ----- -----
SECTION 2 - TROUBLESHOOTING
0 1 2 3 N/A
A. The agent gathered pertinent information for the call and retained this [ ] [ ] [ ] [ ] [ ]
information throughout the call.
B. Agent used available resources and efficient troubleshooting techniques. [ ] [ ] [ ] [ ] [ ]
C. The agent proved product functionality. [ ] [ ] [ ]
D. The agent verified the solution. [ ] [ ] [ ]
E. The agent educated the customer to prevent callback (rework). [ ] [ ] [ ] [ ] [ ]
F. The information given was consistent with HP AdvantageCenter guidelines
of support. [ ] [ ] [ ] [ ] [ ]
NUMBER OF BOXES CHECKED PER COLUMN:
----- ----- ----- ----- -----
x0 x1 x2 x3
----- ----- ----- ----- -----
TROUBLESHOOTING SKILLS SCORE: =0 = = =
----- ----- ----- ----- -----
SECTION 3 - TECHNICALLY CORRECT
0 1 2 3 N/A
A. The elements of the call were technically correct. [ ] [ ] [ ] [ ] [ ]
BOXES CHECKED (MAXIMUM IS 1 FOR THIS SECTION)
----- ----- ----- ----- -----
x0 x2 x4 x6
----- ----- ----- ----- -----
TECHNICALLY CORRECT SCORE =0 = = = *
----- ----- ----- ----- -----
</TABLE>
- ----------------------
(2)HP CONFIDENTIAL
Agreement for Technical Support 06/04/96 Hewlett-Packard / Tech Term
Services Addendum F - Page 1 of 2
<PAGE> 39
Section 1 Total (Customer Service Skills)
-------------------------
+Section 2 Total (Troubleshooting Skills)
-------------------------
+Section 3 Total (Technically Correct)
-------------------------
= Total
-------------------------
+Highest Possible Score
2 -------------------------
=Call Quality Score
3 -------------------------
<PAGE> 1
<TABLE>
<S><C>
EXHIBIT 10.31
[CHRYSLER CORPORATION LOGO]
/X/ CHRYSLER CORPORATION, A DELAWARE CORPORATION, PURCHASE ORDER JUU2922354-A
(CHRYSLER), HEREBY AGREES TO PURCHASE AND RECEIVE, AND
/ / CHRYSLER CANADA LTD., A CANADIAN CORPORATION, (CHRYSLER),
HEREBY AGREES TO PURCHASE AND RECEIVE, AND
SUPPLIER NO. 51843 DATE OF ORDER 04-04-96
NATIONAL TECHTEAM INC DELIVERY DATE TYPED 04-09-96
C/O SUE BOLDRICK /X/ 03-28-96
22000 GARRISON AVENUE / / PER WRITTEN RELEASE
DEARBORN MI / / PER WRITTEN RELEASE OR BUYER AUTHORIZATION
48124 --------------------------------------------------
ROUTING AS INSTRUCTED BY BUYERS TRAFFIC DEPARTMENT
SELLER AGREES TO SELL AND DELIVER, THE GOODS OR SERVICES SPECIFIED HEREIN, IN
ACCORDANCE WITH THE TERMS AND CONDITIONS ON THE FACE AND REVERSE SIDE HEREOF
AND ANY SIGNED ATTACHMENTS HERETO, AND FURTHER, IN ACCORDANCE WITH THOSE F.O.B. (TITLE TRANSFER POINT)
CLAUSES IN THE CHRYSLER FORMS REFERENCED BELOW WHICH ARE NUMBERED AND COMPLETED
AS NOTED, ALL OF WHICH CONSTITUTE THE ENTIRE AND FINAL AGREEMENT OF THE PARTIES / / CARRIER /X/ SEE OUR / /
AND CANCELS AND SUPERSEDES ANY PRIOR OR CONTEMPORANEOUS NEGOTIATION OR SELLER'S BELOW PLANT
AGREEMENTS. THE CHRYSLER FORMS REFERENCED ARE IN BOOKLET 84-806-1824 (09/92) PLANT
THE RECEIPT OF WHICH SELLER HEREBY ACKNOWLEDGES BY ACCEPTANCE OF THIS ORDER.
SUCH FORMS MAY BE MODIFIED, AMENDED OR HAVE ADDITIONS MADE THERETO AND WHEN TERMS: NET 30TH PROX
SUCH MODIFICATIONS ARE WRITTEN AND SIGNED THEY WILL BE ATTACHED HERETO.
THIS ORDER EXPRESSLY LIMITS ACCEPTANCE TO THE TERMS OF THIS ORDER AND ANY
ADDITIONAL OR DIFFERENT TERMS, WHETHER CONTAINED IN SELLER'S FORMS OR OTHERWISE
PRESENTED BY THE SELLER ARE REJECTED UNLESS EXPRESSLY AGREED TO IN WRITING BY
THE PURCHASER.
- ------------------------------------------------------------------------------------------------------------------------------------
CLAUSES: 048
- -------------------------------------------------------------------------------
Description of Supplies and/or Services Ordered Price
- -------------------------------------------------------------------------------
THIS ORDER INCORPORATES THE TERMS AND CONDITIONS
CONTAINED IN CHRYSLER'S FACILITIES AND MATERIAL
PURCHASING GENERAL TERMS AND CONDITIONS, FORM
NUMBER 84-806-1652A (2/94)
SELLER UNDERSTANDS AND AGREES THAT INVOICED PRICE(S)
WILL BE HIS ESTABLISHED PRICE(S) AT THE TIME OF
SHIPMENT, SUBJECT TO ANY DISCOUNT AS CONTAINED HEREIN
OR PREVIOUSLY AGREED. IF UNABLE TO FILL THIS ORDER,
SELLER MUST IMMEDIATELY CONTACT CHRYSLER'S BUYER.
PLEASE DO NOT RETURN PRICING TO THE BUYER.
UU CHRYSLER INTERNATIONAL CORPORATION
F.O.B. OUR PLANT. SHIPPING POINT = SELLERS PLANT
FROM DEARBORN MI 48124
FREIGHT PPD & ADD
PAYABLE FUNDS ARE UNITED STATES
1 LOT ITEM # 60-058 NR
SERVICES REQUIRED TO SUPPORT THE ROLL-OUT OF DEALER DIRECT IN
FRANCE, GERMANY AND ITALY.
REFERENCE: RFQ #149563
REQUISITION NUMBER(S): DPUU9601099
SHIP TO: INVOICE TO:
RAJ DASGUPTA 424-22-10
Ship to /X/ PER WRITTEN / / 1100 CHRYSLER CORORATION CORPORATE ACCOUNTS PAYABLE
RELEASE M.I.S. CHRYSLER CORPORATION
Invoice to /X/ PER WRITTEN / / 25999 LAWRENCE AVE., BLDG. 112 P O BOX 537927
RELEASE CENTER LINE, MI 48015 LIVONIA, MI 48153-7927
- ------------------------------------------------------------------------------------------------------------------------------------
"DELAY IN PAYMENT OF INVOICES CAN RESULT IF THE REQUIREMENTS BELOW ARE NOT FOLLOWED.
- ------------------------------------------------------------------------------------------------------------------------------------
Invoices and packing slips must bear the Chrysler-assigned Supplier number: Purchase Order number, Part number (or
Non-Production Material code) and the Requisition number (on quantity buy) or Release number (on blanket order).
The "Ship To" address and Chrysler-assigned Plant Location code and "Invoice To" address is also required."
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 1 OF 8 Order No. JUU2922354 /A/
AMENDMENT
D.F. COOK 256629 (810) 758-8875
---------------------------------------
BUYER NAME & DECK NO.
5626
<PAGE> 2
<TABLE>
<S><C>
[CHRYSLER CORPORATION LOGO]
PURCHASE ORDER JUU2922354-A
/X/ CHRYSLER CORPORATION, A DELAWARE CORPORATION,
(CHRYSLER), HEREBY AGREES TO PURCHASE AND RECEIVE, AND
/ / CHRYSLER CANADA LTD., A CANADIAN CORPORATION, (CHRYSLER),
HEREBY AGREES TO PURCHASE AND RECEIVE, AND
SUPPLIER NO. 51843 DATE OF ORDER 04-04-96
DELIVERY DATE TYPED 04-09-96
/X/ 03-28-96
NATIONAL TECHTEAM INC / / PER WRITTEN RELEASE
C/O SUE BOLDRICK / / PER WRITTEN RELEASE OR BUYER AUTHORIZATION
22000 GARRISON AVENUE
DEARBORN MI 48124
ROUTING AS INSTRUCTED BY BUYERS TRAFFIC DEPARTMENT
SELLER AGREES TO SELL AND DELIVER, THE GOODS OR SERVICES SPECIFIED
HEREIN, IN ACCORDANCE WITH THE TERMS AND CONDITIONS ON THE FACE AND F.O.B. (TITLE TRANSFER POINT)
REVERSE SIDE HEREOF AND ANY SIGNED ATTACHMENTS HERETO, AND FURTHER,
IN ACCORDANCE WITH THOSE CLAUSES IN THE CHRYSLER FORMS REFERENCED / / CARRIER /X/ SEE OUR / /
BELOW WHICH ARE NUMBERED AND COMPLETED AS NOTED, ALL OF WHICH SELLER'S BELOW PLANT
CONSTITUTE THE ENTIRE AND FINAL AGREEMENT OF THE PARTIES AND CANCELS PLANT
AND SUPERSEDES ANY PRIOR OR CONTEMPORANEOUS NEGOTIATION OR AGREEMENTS. TERMS: NET 30TH PROX
THE CHRYSLER FORMS REFERENCED ARE IN BOOKLET 84-806-1824 (09/92) THE
RECEIPT OF WHICH SELLER HEREBY ACKNOWLEDGES BY ACCEPTANCE OF THIS ORDER.
SUCH FORMS MAY BE MODIFIED, AMENDED OR HAVE ADDITIONS MADE THERETO AND
WHEN SUCH MODIFICATIONS ARE WRITTEN AND SIGNED THEY WILL BE ATTACHED
HERETO.
THIS ORDER EXPRESSLY LIMITS ACCEPTANCE TO THE TERMS OF THIS ORDER AND
ANY ADDITIONAL OR DIFFERENT TERMS, WHETHER CONTAINED IN SELLER'S FORMS
OR OTHERWISE PRESENTED BY THE SELLER ARE REJECTED UNLESS EXPRESSLY
AGREED TO IN WRITING BY THE PURCHASER.
- -----------------------------------------------------------------------------------------------------------------------------
CLAUSES:
- -----------------------------------------------------------------------------------------------------------------------------
Description of Supplies and/or Services Ordered Price
- -----------------------------------------------------------------------------------------------------------------------------
1 LOT ITEM # 60-058-0001 530380.00
DEALER TRAINING LOT
**
REQUISITION NUMBER(S): DPUU9601099
1 LOT ITEM # 60-058-0002 393000.00
EUROPEAN HELP DESK LOT
REQUISITION NUMBER(S): DPUU9601099
1 LOT ITEM # 60-058-0003 120825.00
PROJECT MANAGEMENT LOT
**
REQUISITION NUMBER(S): DPUU9601099
1 LOT ITEM # 60-058-0004
TRANSITION SUPPORT
REQUISITION NUMBER(S): DPUU9601099 NR
CHRYSLER CONTACT: RAJ DASGUPTA (810) 758 8446 /TIE: 821-8446
PRICING DETERMINED AS FOLLOWS: NPM 60-058-0001:
COURSE DEVELOPMENT: $ 58,000
TRANSLATION EFFORTS: $ 13,000
TRAINING DELIVERY:
(176 DAYS @ $1,505): $264,880
SET UP/TEAR DOWN PER
Ship to / / PER WRITTEN / /
RELEASE
Invoice to / / PER WRITTEN / /
RELEASE
- ---------------------------------------------------------------------------------------------------------------------------------
"DELAY IN PAYMENT OF INVOICES CAN RESULT IF THE REQUIREMENTS BELOW ARE NOT FOLLOWED.
------------------------------------------------------------------------------------
Invoices and packing slips must bear the Chrysler-assigned Supplier number; Purchase Order number, Part number (or
Non-Production Material code) and the Requisition number (on quantity buy) or Release number (on blanket order). The "Ship To"
address and Chrysler-assigned Plant Location code and "Invoice To" address is also required."
- ---------------------------------------------------------------------------------------------------------------------------------
PAGE 2 OF 8 Order No. JUU2922354 / A /
AMENDMENT
D.F. COOK 256629 (810) 758-8875
-----------------------------------------
BUYER NAME & DECK NO.
5627
</TABLE>
<PAGE> 3
<TABLE>
<S><C>
[CHRYSLER CORPORATION LOGO]
PURCHASE ORDER JUU2922354-A
/X/ CHRYSLER CORPORATION, A DELAWARE CORPORATION,
(CHRYSLER), HEREBY AGREES TO PURCHASE AND RECEIVE, AND
/ / CHRYSLER CANADA LTD., A CANADIAN CORPORATION, (CHRYSLER),
HEREBY AGREES TO PURCHASE AND RECEIVE, AND
SUPPLIER NO. 51843 DATE OF ORDER 04-04-96
DELIVERY DATE TYPED 04-09-96
/X/ 03-28-96
NATIONAL TECHTEAM INC / / PER WRITTEN RELEASE
C/O SUE BOLDRICK / / PER WRITTEN RELEASE OR BUYER AUTHORIZATION
22000 GARRISON AVENUE
DEARBORN MI 48124
ROUTING AS INSTRUCTED BY BUYERS TRAFFIC DEPARTMENT
SELLER AGREES TO SELL AND DELIVER, THE GOODS OR SERVICES SPECIFIED
HEREIN, IN ACCORDANCE WITH THE TERMS AND CONDITIONS ON THE FACE AND F.O.B. (TITLE TRANSFER POINT)
REVERSE SIDE HEREOF AND ANY SIGNED ATTACHMENTS HERETO, AND FURTHER,
IN ACCORDANCE WITH THOSE CLAUSES IN THE CHRYSLER FORMS REFERENCED / / CARRIER /X/ SEE OUR / /
BELOW WHICH ARE NUMBERED AND COMPLETED AS NOTED, ALL OF WHICH SELLER'S BELOW PLANT
CONSTITUTE THE ENTIRE AND FINAL AGREEMENT OF THE PARTIES AND CANCELS PLANT
AND SUPERSEDES ANY PRIOR OR CONTEMPORANEOUS NEGOTIATION OR AGREEMENTS. TERMS: NET 30TH PROX
THE CHRYSLER FORMS REFERENCED ARE IN BOOKLET 84-806-1824 (09/92) THE
RECEIPT OF WHICH SELLER HEREBY ACKNOWLEDGES BY ACCEPTANCE OF THIS ORDER.
SUCH FORMS MAY BE MODIFIED, AMENDED OR HAVE ADDITIONS MADE THERETO AND
WHEN SUCH MODIFICATIONS ARE WRITTEN AND SIGNED THEY WILL BE ATTACHED
HERETO.
THIS ORDER EXPRESSLY LIMITS ACCEPTANCE TO THE TERMS OF THIS ORDER AND
ANY ADDITIONAL OR DIFFERENT TERMS, WHETHER CONTAINED IN SELLER'S FORMS
OR OTHERWISE PRESENTED BY THE SELLER ARE REJECTED UNLESS EXPRESSLY
AGREED TO IN WRITING BY THE PURCHASER.
- -----------------------------------------------------------------------------------------------------------------------------
CLAUSES:
- -----------------------------------------------------------------------------------------------------------------------------
Description of Supplies and/or Services Ordered Price
- -----------------------------------------------------------------------------------------------------------------------------
LOCATION @ $1,500 PER $ 66,000
TRANSPORTATION OF SYSTEMS, TOTAL ESTIMATE, 44 @ $1,000 $ 44,000
FACILITY USE, 44 CLASSES, 5 DAYS PER @ $350/DAY: $ 77,000
MANAGEMENT TRAVEL: $ 7,500
--------
TOTAL LOT COST: $530,380
========
PRICING DETERMINED AS FOLLOWS: ITEM 60-058-0002
STARTUP COSTS: NO CHARGE
3 MULTILINGUAL TECHNICIANS, MAY 1, 1996 (EST) THROUGH
DECEMBER 31, 1996, $8,891 PER TECH $213,384
COMMUNICATIONS COSTS, ACTUAL USAGE AT DISCOUNTED (20%)
TECH TEAM RATE, PLUS $0.10/MINUTE INTERACTIVE USAGE
(ESTIMATED) $179,616
--------
TOTAL ESTIMATED LOT COST: $393,000
========
**
PRICING DETERMINED AS FOLLOWS, ITEM 60-058-0003:
PRICED AT $13,425/MONTH FOR DURATION OF ROLL OUT.
**
PRICING DETERMINED AS FOLLOWS, ITEM 60-058-0004:
TO BE PRICED IF REQUIRED AND REQUESTED BY CHRYSLER.
TO BE PRICED AT $4,583/TECHNICIAN/MONTH.
Ship to / / PER WRITTEN RELEASE / /
Invoice to / / PER WRITTEN RELEASE / /
- ---------------------------------------------------------------------------------------------------------------------------------
**DELAY IN PAYMENT OF INVOICES CAN RESULT IF THE REQUIREMENTS BELOW ARE NOT FOLLOWED.
------------------------------------------------------------------------------------
Invoices and packing slips must bear the Chrysler-assigned Supplier number; Purchase Order number, Part number (or
Non-Production Material code) and the Requisition number (on quantity buy) or Release number (on blanket order). The "Ship To"
address and Chrysler-assigned Plant Location code and "Invoice To" address is also required."
- ---------------------------------------------------------------------------------------------------------------------------------
PAGE 3 OF 8 Order No. JUU2922354 / A /
AMENDMENT
D.F. COOK 256629 (810) 758-8875
-----------------------------------------
BUYER NAME & DECK NO.
5628
</TABLE>
<PAGE> 4
<TABLE>
<S><C>
[CHRYSLER CORPORATION LOGO]
PURCHASE ORDER JUU2922354-A
/X/ CHRYSLER CORPORATION, A DELAWARE CORPORATION,
(CHRYSLER), HEREBY AGREES TO PURCHASE AND RECEIVE, AND
/ / CHRYSLER CANADA LTD., A CANADIAN CORPORATION, (CHRYSLER),
HEREBY AGREES TO PURCHASE AND RECEIVE, AND
SUPPLIER NO. 51843 DATE OF ORDER 04-04-96
DELIVERY DATE TYPED 04-09-96
/X/ 03-28-96
NATIONAL TECHTEAM INC / / PER WRITTEN RELEASE
C/O SUE BOLDRICK / / PER WRITTEN RELEASE OR BUYER AUTHORIZATION
22000 GARRISON AVENUE
DEARBORN MI 48124
ROUTING AS INSTRUCTED BY BUYERS TRAFFIC DEPARTMENT
SELLER AGREES TO SELL AND DELIVER, THE GOODS OR SERVICES SPECIFIED
HEREIN, IN ACCORDANCE WITH THE TERMS AND CONDITIONS ON THE FACE AND F.O.B. (TITLE TRANSFER POINT)
REVERSE SIDE HEREOF AND ANY SIGNED ATTACHMENTS HERETO, AND FURTHER,
IN ACCORDANCE WITH THOSE CLAUSES IN THE CHRYSLER FORMS REFERENCED / / CARRIER /X/ SEE OUR / /
BELOW WHICH ARE NUMBERED AND COMPLETED AS NOTED, ALL OF WHICH SELLER'S BELOW PLANT
CONSTITUTE THE ENTIRE AND FINAL AGREEMENT OF THE PARTIES AND CANCELS PLANT
AND SUPERSEDES ANY PRIOR OR CONTEMPORANEOUS NEGOTIATION OR AGREEMENTS. TERMS: NET 30TH PROX
THE CHRYSLER FORMS REFERENCED ARE IN BOOKLET 84-806-1824 (09/92) THE
RECEIPT OF WHICH SELLER HEREBY ACKNOWLEDGES BY ACCEPTANCE OF THIS ORDER.
SUCH FORMS MAY BE MODIFIED, AMENDED OR HAVE ADDITIONS MADE THERETO AND
WHEN SUCH MODIFICATIONS ARE WRITTEN AND SIGNED THEY WILL BE ATTACHED
HERETO.
THIS ORDER EXPRESSLY LIMITS ACCEPTANCE TO THE TERMS OF THIS ORDER AND
ANY ADDITIONAL OR DIFFERENT TERMS, WHETHER CONTAINED IN SELLER'S FORMS
OR OTHERWISE PRESENTED BY THE SELLER ARE REJECTED UNLESS EXPRESSLY
AGREED TO IN WRITING BY THE PURCHASER.
- -----------------------------------------------------------------------------------------------------------------------------
CLAUSES:
- -----------------------------------------------------------------------------------------------------------------------------
Description of Supplies and/or Services Ordered Price
- -----------------------------------------------------------------------------------------------------------------------------
**
CLAUSE #135: UPON CHRYSLER MAKING A PROGRESS PAYMENT UNDER THIS
PURCHASE ORDER TITLE TO ALL WORK IN PROCESS, PARTS, MATERIALS,
INVENTORIES, DRAWINGS, AND OTHER WORK PRODUCT, THERETOFORE OR
THEREAFTER ACQUIRED OR PRODUCED BY SELLER IN THE PERFORMANCE OF WORK
HEREUNDER, SHALL THEREUPON VEST IN CHRYSLER, BUT SELLER SHALL BEAR
THE RISK OF LOSS THEREOF AND DAMAGE THERETO. SUCH WORK IN PROCESS,
PARTS, MATERIALS, INVENTORIES, DRAWINGS, AND OTHER WORK PRODUCT SHALL
BE PROPERLY HOUSED AND PROTECTED BY SELLER; SHALL BE DEEMED TO BE
PERSONAL PROPERTY AT ALL TIMES; SHALL BE MARKED BY SELLER "PROPERTY
OF CHRYSLER"; SHALL NOT BE USED EXCEPT FOR PERFORMANCE OF WORK
HEREUNDER; SHALL BE KEPT FREE AND CLEAR OF ALL LIENS AND
ENCUMBRANCES; SHALL NOT BE COMMINGLES WITH PROPERTY OF SELLER OR WITH
THAT OF ANY THIRD PARTY; SHALL NOT BE MOVED FROM SELLER'S PREMISES
WITHOUT CHRYSLER'S PRIOR WRITTEN APPROVAL; AND SHALL, UPON REQUEST OF
CHRYSLER, BE IMMEDIATELY DELIVERED TO CHRYSLER, F.O.B. CARS OR TRUCKS
AT SELLER'S PLANT, PROPERLY PACKED AND MARKED IN ACCORDANCE WITH THE
REQUIREMENTS OF THE CARRIER SELECTED BY CHRYSLER TO TRANSPORT SUCH
PROPERTY, OR SHALL, UPON REQUEST OF CHRYSLER, BE IMMEDIATELY
DELIVERED TO CHRYSLER BY SELLER AT ANY LOCATION DESIGNATED BY
CHRYSLER, IN WHICH EVENT CHRYSLER SHALL PAY TO SELLER THE COST OF
DELIVERING SUCH PROPERTY TO SUCH LOCATION. CHRYSLER SHALL HAVE THE
RIGHT TO ENTER ONTO SELLER'S PREMISES AT ALL REASONABLE TIMES TO
INSPECT SUCH PROPERTY AND SELLER'S RECORDS WITH RESPECT THERETO.
PAYMENT WILL BE MADE IN PARTIAL AMOUNTS AS SPECIFIED IN THE FOLLOWING
SCHEDULE UPON PRESENTATION OF SELLER'S INVOICES FOR SAME AND A
STATEMENT SIGNED BY AN OFFICER OF SELLER'S COMPANY
PER WRITTEN
Ship to / / RELEASE / /
PER WRITTEN
Invoice to / / RELEASE / /
- ----------------------------------------------------------------------------------------------------------------------
**DELAY IN PAYMENT OF INVOICES CAN RESULT IF THE REQUIREMENTS BELOW ARE NOT FOLLOWED.
- ------------------------------------------------------------------------------------
Invoices and packing slips must bear the Chrysler-assigned Supplier number; Purchase Order number; Part number (or
Non-Production Material code) and the Requisition number (on quantity buy) or Release number (on blanket order).
The "Ship To" address and Chrysler-assigned Plant Location code and "Invoice To" address is also required."
- ----------------------------------------------------------------------------------------------------------------------
PAGE 4 OF 8 Order No. JUU2922354 / A /
AMENDMENT
D.F. COOK 256629 (810) 758-8875
----------------------------------------------------------
BUYER NAME & DECK NO.
5629
</TABLE>
<PAGE> 5
<TABLE>
<S><C>
[CHRYSLER CORPORATION LOGO]
PURCHASE ORDER JUU2922354-A
/X/ CHRYSLER CORPORATION, A DELAWARE CORPORATION,
(CHRYSLER), HEREBY AGREES TO PURCHASE AND RECEIVE, AND
/ / CHRYSLER CANADA LTD., A CANADIAN CORPORATION, (CHRYSLER),
HEREBY AGREES TO PURCHASE AND RECEIVE, AND
SUPPLIER NO. 51843 DATE OF ORDER 04-04-96
DELIVERY DATE TYPED 04-09-96
/X/ 03-28-96
NATIONAL TECHTEAM INC / / PER WRITTEN RELEASE
C/O SUE BOLDRICK / / PER WRITTEN RELEASE OR BUYER AUTHORIZATION
22000 GARRISON AVENUE
DEARBORN MI 48124
ROUTING AS INSTRUCTED BY BUYERS TRAFFIC DEPARTMENT
SELLER AGREES TO SELL AND DELIVER, THE GOODS OR SERVICES SPECIFIED
HEREIN, IN ACCORDANCE WITH THE TERMS AND CONDITIONS ON THE FACE AND F.O.B. (TITLE TRANSFER POINT)
REVERSE SIDE HEREOF AND ANY SIGNED ATTACHMENTS HERETO, AND FURTHER,
IN ACCORDANCE WITH THOSE CLAUSES IN THE CHRYSLER FORMS REFERENCED / / CARRIER /X/ SEE OUR / /
BELOW WHICH ARE NUMBERED AND COMPLETED AS NOTED, ALL OF WHICH SELLER'S BELOW PLANT
CONSTITUTE THE ENTIRE AND FINAL AGREEMENT OF THE PARTIES AND CANCELS PLANT
AND SUPERSEDES ANY PRIOR OR CONTEMPORANEOUS NEGOTIATION OR AGREEMENTS. TERMS: NET 30TH PROX
THE CHRYSLER FORMS REFERENCED ARE IN BOOKLET 84-806-1824 (09/92) THE
RECEIPT OF WHICH SELLER HEREBY ACKNOWLEDGES BY ACCEPTANCE OF THIS ORDER.
SUCH FORMS MAY BE MODIFIED, AMENDED OR HAVE ADDITIONS MADE THERETO AND
WHEN SUCH MODIFICATIONS ARE WRITTEN AND SIGNED THEY WILL BE ATTACHED
HERETO.
THIS ORDER EXPRESSLY LIMITS ACCEPTANCE TO THE TERMS OF THIS ORDER AND
ANY ADDITIONAL OR DIFFERENT TERMS, WHETHER CONTAINED IN SELLER'S FORMS
OR OTHERWISE PRESENTED BY THE SELLER ARE REJECTED UNLESS EXPRESSLY
AGREED TO IN WRITING BY THE PURCHASER.
- -----------------------------------------------------------------------------------------------------------------------------
CLAUSES:
- -----------------------------------------------------------------------------------------------------------------------------
Description of Supplies and/or Services Ordered Price
- -----------------------------------------------------------------------------------------------------------------------------
OF INCURRED COSTS ON WHICH EACH INVOICE AMOUNT IS BASED.
SCHEDULE:
PROGRESSIVE PAYMENT ALLOWED
CLAUSE #022A:
DELAY IN PAYMENT AND RETURN OF INVOICE TO THE SELLER CAN RESULT
IF THE REQUIREMENTS BELOW ARE NOT FOLLOWED. INVOICES AND PACKING
SLIPS ISSUED AGAINST THIS PURCHASE ORDER MUST BEAR THE FOLLOWING:
- - SUPPLIER VENDOR CODE
- - COMPLETE PURCHASE ORDER NUMBER
- - REQUISITION AND/OR BLANKET ORDER RELEASE NUMBER
- - "SHIP TO" ADDRESS WITH LOCATION CODE, SEE BULLETINS FOR CODES
- - "INVOICE TO" ADDRESS (POST OFFICE BOX ADDRESS)
- - NON-PRODUCTION MATERIAL CODE (ITEM #) OR PRODUCTION PART #
- - SHIPMENT MODE
- - INVOICE AND RECEIPT NUMBER
- - INVOICE DATE/SHIP DATE
- - UNIT PRICE
- - QUANTITY AND UNIT OF MEASURE
- - PRICING/COST FOR BILLABLE CLAUSES
- - ADDITIONAL LINE ITEM EXPENSES
- - PROPER EXTENSION OF ALL LINE ITEMS
- - INVOICE GRAND TOTAL
FURTHER INFORMATION REGARDING INVOICE AND RECEIPT REQUIREMENTS CAN BE OBTAINED
FROM THE CHRYSLER CORPORATE ACCOUNTS PAYABLE DEPARTMENT DOCUMENT: "INFORMATION
BULLETIN - FACILITIES AND MATERIALS INVOICE AND RECEIPT REQUIREMENTS" OR
PRODUCTION INVOICE REQUIREMENTS. ADDITIONAL SHIPPING INSTRUCTIONS: IN ADDITION
TO PROPER LABELING, THE FOLLOWING MUST BE OBSERVED:
Ship to / / PER WRITTEN RELEASE / /
Invoice to / / PER WRITTEN RELEASE / /
- ---------------------------------------------------------------------------------------------------------------------------------
**DELAY IN PAYMENT OF INVOICES CAN RESULT IF THE REQUIREMENTS BELOW ARE NOT FOLLOWED.
------------------------------------------------------------------------------------
Invoices and packing slips must bear the Chrysler-assigned Supplier number; Purchase Order number, Part number (or
Non-Production Material code) and the Requisition number (on quantity buy) or Release number (on blanket order). The "Ship To"
address and Chrysler-assigned Plant Location code and "Invoice To" address is also required."
- ---------------------------------------------------------------------------------------------------------------------------------
PAGE 5 OF 8 Order No. JUU2922354 / A /
AMENDMENT
D.F. COOK 256629 (810) 758-8875
-----------------------------------------
BUYER NAME & DECK NO.
5630
</TABLE>
<PAGE> 6
<TABLE>
<S><C>
[CHRYSLER CORPORATION LOGO]
PURCHASE ORDER JUU2922354-A
/X/ CHRYSLER CORPORATION, A DELAWARE CORPORATION,
(CHRYSLER), HEREBY AGREES TO PURCHASE AND RECEIVE, AND
/ / CHRYSLER CANADA LTD., A CANADIAN CORPORATION, (CHRYSLER),
HEREBY AGREES TO PURCHASE AND RECEIVE, AND
SUPPLIER NO. 51843 DATE OF ORDER 04-04-96
DELIVERY DATE TYPED 04-09-96
/X/ 03-28-96
NATIONAL TECHTEAM INC / / PER WRITTEN RELEASE
C/O SUE BOLDRICK / / PER WRITTEN RELEASE OR BUYER AUTHORIZATION
22000 GARRISON AVENUE
DEARBORN MI 48124
ROUTING AS INSTRUCTED BY BUYERS TRAFFIC DEPARTMENT
SELLER AGREES TO SELL AND DELIVER, THE GOODS OR SERVICES SPECIFIED
HEREIN, IN ACCORDANCE WITH THE TERMS AND CONDITIONS ON THE FACE AND F.O.B. (TITLE TRANSFER POINT)
REVERSE SIDE HEREOF AND ANY SIGNED ATTACHMENTS HERETO, AND FURTHER,
IN ACCORDANCE WITH THOSE CLAUSES IN THE CHRYSLER FORMS REFERENCED / / CARRIER /X/ SEE OUR / /
BELOW WHICH ARE NUMBERED AND COMPLETED AS NOTED, ALL OF WHICH SELLER'S BELOW PLANT
CONSTITUTE THE ENTIRE AND FINAL AGREEMENT OF THE PARTIES AND CANCELS PLANT
AND SUPERSEDES ANY PRIOR OR CONTEMPORANEOUS NEGOTIATION OR AGREEMENTS. TERMS: NET 30TH PROX
THE CHRYSLER FORMS REFERENCED ARE IN BOOKLET 84-806-1824 (09/92) THE
RECEIPT OF WHICH SELLER HEREBY ACKNOWLEDGES BY ACCEPTANCE OF THIS ORDER.
SUCH FORMS MAY BE MODIFIED, AMENDED OR HAVE ADDITIONS MADE THERETO AND
WHEN SUCH MODIFICATIONS ARE WRITTEN AND SIGNED THEY WILL BE ATTACHED
HERETO.
THIS ORDER EXPRESSLY LIMITS ACCEPTANCE TO THE TERMS OF THIS ORDER AND
ANY ADDITIONAL OR DIFFERENT TERMS, WHETHER CONTAINED IN SELLER'S FORMS
OR OTHERWISE PRESENTED BY THE SELLER ARE REJECTED UNLESS EXPRESSLY
AGREED TO IN WRITING BY THE PURCHASER.
- -----------------------------------------------------------------------------------------------------------------------------
CLAUSES:
=============================================================================================================================
Description of Supplies and/or Services Ordered Price
- -----------------------------------------------------------------------------------------------------------------------------
- TWO (2) PACKING LISTS MUST BE INCLUDED WITH SHIPMENT. ONE
ATTACHED TO EXTERIOR OF SHIPPING CONTAINER AND ONE INSIDE
SHIPPING CONTAINER.
THE WORDS "NON-PRODUCTION MATERIAL" OR "PRODUCTION MATERIAL" MUST BE
CLEARLY MARKED AND VISIBLE ON OUTSIDE OF SHIPPING CONTAINER. THIS
PURCHASE ORDER IS ISSUED FOR THE ITEM(S) AS SPECIFICALLY IDENTIFIED ON
THIS ORDER. ANY SUBSTITUTION OF MATERIAL OTHER THAN DESCRIBED HEREIN
WITHOUT PRIOR PURCHASING APPROVAL, WILL BE CONSIDERED A VIOLATION OF
THE ORDER AND SUBJECT TO A DEBIT OF THE SELLER'S ACCOUNT AND REMOVAL
AS AN APPROVED CHRYSLER SUPPLIER.
FOR INVOICING PROBLEMS CALL THE APPROPRIATE PAYABLES LOCATION:
CORPORATE ACCOUNTS PAYABLE: (313) 252-7676
HUNTSVILLE ACCOUNTS PAYABLE: (205) 464-2688 PRODUCTION MATERIAL
(205) 464-2684 NON-PRODUCTION MAT'L
OR (205) 464-2696 **
CANADIAN ACCOUNTS PAYABLE: (519) 973-2131
EL PASO/JUAREZ WIRE ACCOUNTS PAYABLE: (915) 595-8111
BEAVER DAM MARINE DIV. ACCOUNTS PAYABLE: (414) 887-6190
MEXICO ACCOUNTS PAYABLE: 011-525-729-1450
Ship to / / PER WRITTEN / /
RELEASE
Invoice to / / PER WRITTEN / /
RELEASE
- ---------------------------------------------------------------------------------------------------------------------------------
**DELAY IN PAYMENT OF INVOICES CAN RESULT IF THE REQUIREMENTS BELOW ARE NOT FOLLOWED.
------------------------------------------------------------------------------------
Invoices and packing slips must bear the Chrysler-assigned Supplier number; Purchase Order number, Part number (or
Non-Production Material code) and the Requisition number (on quantity buy) or Release number (on blanket order). The "Ship To"
address and Chrysler-assigned Plant Location code and "Invoice To" address is also required."
- ---------------------------------------------------------------------------------------------------------------------------------
PAGE 6 OF 8 Order No. JUU2922354 / A /
AMENDMENT
D.F. COOK 256629 (810) 758-8875
-----------------------------------------
BUYER NAME & DECK NO.
5631
</TABLE>
<PAGE> 7
<TABLE>
<S><C>
[CHRYSLER CORPORATION LOGO]
PURCHASE ORDER JUU2922354-A
/X/ CHRYSLER CORPORATION, A DELAWARE CORPORATION,
(CHRYSLER), HEREBY AGREES TO PURCHASE AND RECEIVE, AND
/ / CHRYSLER CANADA LTD., A CANADIAN CORPORATION, (CHRYSLER),
HEREBY AGREES TO PURCHASE AND RECEIVE, AND
SUPPLIER NO. 51843 DATE OF ORDER 04-04-96
DELIVERY DATE TYPED 04-09-96
/X/ 03-28-96
NATIONAL TECHTEAM INC / / PER WRITTEN RELEASE
C/O SUE BOLDRICK / / PER WRITTEN RELEASE OR BUYER AUTHORIZATION
22000 GARRISON AVENUE
DEARBORN MI 48124
ROUTING AS INSTRUCTED BY BUYERS TRAFFIC DEPARTMENT
SELLER AGREES TO SELL AND DELIVER, THE GOODS OR SERVICES SPECIFIED
HEREIN, IN ACCORDANCE WITH THE TERMS AND CONDITIONS ON THE FACE AND F.O.B. (TITLE TRANSFER POINT)
REVERSE SIDE HEREOF AND ANY SIGNED ATTACHMENTS HERETO, AND FURTHER,
IN ACCORDANCE WITH THOSE CLAUSES IN THE CHRYSLER FORMS REFERENCED / / CARRIER /X/ SEE OUR / /
BELOW WHICH ARE NUMBERED AND COMPLETED AS NOTED, ALL OF WHICH SELLER'S BELOW PLANT
CONSTITUTE THE ENTIRE AND FINAL AGREEMENT OF THE PARTIES AND CANCELS PLANT
AND SUPERSEDES ANY PRIOR OR CONTEMPORANEOUS NEGOTIATION OR AGREEMENTS. TERMS: NET 30TH PROX
THE CHRYSLER FORMS REFERENCED ARE IN BOOKLET 84-806-1824 (09/92) THE
RECEIPT OF WHICH SELLER HEREBY ACKNOWLEDGES BY ACCEPTANCE OF THIS ORDER.
SUCH FORMS MAY BE MODIFIED, AMENDED OR HAVE ADDITIONS MADE THERETO AND
WHEN SUCH MODIFICATIONS ARE WRITTEN AND SIGNED THEY WILL BE ATTACHED
HERETO.
THIS ORDER EXPRESSLY LIMITS ACCEPTANCE TO THE TERMS OF THIS ORDER AND
ANY ADDITIONAL OR DIFFERENT TERMS, WHETHER CONTAINED IN SELLER'S FORMS
OR OTHERWISE PRESENTED BY THE SELLER ARE REJECTED UNLESS EXPRESSLY
AGREED TO IN WRITING BY THE PURCHASER.
- -----------------------------------------------------------------------------------------------------------------------------
CLAUSES:
- -----------------------------------------------------------------------------------------------------------------------------
Description of Supplies and/or Services Ordered Price
- -----------------------------------------------------------------------------------------------------------------------------
CLAUSE #133: THE AMOUNTS INVOICED UNDER THIS PURCHASE ORDER WILL BE BASED
ON ACTUAL AND DIRECT COSTS INCURRED BY SELLER IN PERFORMING THE WORK
DESCRIBED IN THIS PURCHASE ORDER. CHRYSLER MAY AUDIT SELLER'S BOOKS,
RECORDS AND THE BOOKS AND RECORDS OF SUBCONTRACTORS EMPLOYED BY THE SELLER,
WHICH PERTAIN TO ALL SUCH AMOUNTS INVOICED. ALL AMOUNTS PAID WHICH EXCEED
THE AMOUNT DUE TO SELLER, AS DETERMINED BY CHRYSLER'S AUDIT, WILL BE
REFUNDED TO CHRYSLER.
CLAUSE #294: GOVERNMENT REGULATIONS - TOXIC SUBSTANCES CONTROL ACT: TO THE
EXTENT THAT ANY OF THE ITEMS COVERED BY THIS PURCHASE ORDER ARE TO BE USED
BY CHRYSLER IN CONNECTION WITH ITS MANUFACTURE, PROCESSING, DISTRIBUTION IN
COMMERCE, USE OR DISPOSAL, SELLER HEREBY CERTIFIES AND REPRESENTS HE HAS
COMPLIED WITH ALL APPLICABLE RULES AND REGULATIONS ISSUED UNDER THE TOXIC
SUBSTANCES CONTROL ACT (PUBLIC LAW 94-469), AND WILL DEFEND, INDEMNIFY, AND
HOLD HARMLESS CHRYSLER FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES,
DAMAGES, COSTS, AND EXPENSES RESULTING FROM OR ARISING OUT OF ANY FAILURE
TO SO COMPLY WITH SAID ACT.
CLAUSE #409: NOTWITHSTANDING THE PROVISIONS OF CLAUSE 23 OF THE GENERAL
TERMS AND CONDITIONS (FORM NO. 84-806-1652A, REV. 2/94), THE 1980 UNITED
NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS, TO THE
EXTENT IT MAY BE DEEMED TO APPLY, SHALL NOT, PURSUANT TO ARTICLE 6 THEREOF,
APPLY TO THIS PURCHASE ORDER (INCLUDING AMENDMENTS) OR ANY TRANSACTIONS
PURSUANT THERETO.
Ship to / / PER WRITTEN / /
RELEASE
Invoice to / / PER WRITTEN / /
RELEASE
- ---------------------------------------------------------------------------------------------------------------------------------
** DELAY IN PAYMENT OF INVOICES CAN RESULT IF THE REQUIREMENTS BELOW ARE NOT FOLLOWED.
------------------------------------------------------------------------------------
Invoices and packing slips must bear the Chrysler-assigned Supplier number; Purchase Order number, Part number (or
Non-Production Material code) and the Requisition number (on quantity buy) or Release number (on blanket order). The "Ship To"
address and Chrysler-assigned Plant Location code and "Invoice To" address is also required."
- ---------------------------------------------------------------------------------------------------------------------------------
PAGE 7 OF 8 Order No. JUU2922354 / A /
AMENDMENT
D.F. COOK 256629 (810) 758-8875
-----------------------------------------
BUYER NAME & DECK NO.
5632
</TABLE>
<PAGE> 8
<TABLE>
<S><C>
[CHRYSLER CORPORATION LOGO]
PURCHASE ORDER JUU2922354-A
/X/ CHRYSLER CORPORATION, A DELAWARE CORPORATION,
(CHRYSLER), HEREBY AGREES TO PURCHASE AND RECEIVE, AND
/ / CHRYSLER CANADA LTD., A CANADIAN CORPORATION, (CHRYSLER),
HEREBY AGREES TO PURCHASE AND RECEIVE, AND
SUPPLIER NO. 51843 DATE OF ORDER 04-04-96
DELIVERY DATE TYPED 04-09-96
/X/ 03-28-96
NATIONAL TECHTEAM INC / / PER WRITTEN RELEASE
C/O SUE BOLDRICK / / PER WRITTEN RELEASE OR BUYER AUTHORIZATION
22000 GARRISON AVENUE
DEARBORN MI 48124
ROUTING AS INSTRUCTED BY BUYERS TRAFFIC DEPARTMENT
SELLER AGREES TO SELL AND DELIVER, THE GOODS OR SERVICES SPECIFIED
HEREIN, IN ACCORDANCE WITH THE TERMS AND CONDITIONS ON THE FACE AND F.O.B. (TITLE TRANSFER POINT)
REVERSE SIDE HEREOF AND ANY SIGNED ATTACHMENTS HERETO, AND FURTHER,
IN ACCORDANCE WITH THOSE CLAUSES IN THE CHRYSLER FORMS REFERENCED / / CARRIER /X/ SEE OUR / /
BELOW WHICH ARE NUMBERED AND COMPLETED AS NOTED, ALL OF WHICH SELLER'S BELOW PLANT
CONSTITUTE THE ENTIRE AND FINAL AGREEMENT OF THE PARTIES AND CANCELS PLANT
AND SUPERSEDES ANY PRIOR OR CONTEMPORANEOUS NEGOTIATION OR AGREEMENTS. TERMS: NET 30TH PROX
THE CHRYSLER FORMS REFERENCED ARE IN BOOKLET 84-806-1824 (09/92) THE
RECEIPT OF WHICH SELLER HEREBY ACKNOWLEDGES BY ACCEPTANCE OF THIS ORDER.
SUCH FORMS MAY BE MODIFIED, AMENDED OR HAVE ADDITIONS MADE THERETO AND
WHEN SUCH MODIFICATIONS ARE WRITTEN AND SIGNED THEY WILL BE ATTACHED
HERETO.
THIS ORDER EXPRESSLY LIMITS ACCEPTANCE TO THE TERMS OF THIS ORDER AND
ANY ADDITIONAL OR DIFFERENT TERMS, WHETHER CONTAINED IN SELLER'S FORMS
OR OTHERWISE PRESENTED BY THE SELLER ARE REJECTED UNLESS EXPRESSLY
AGREED TO IN WRITING BY THE PURCHASER.
- -----------------------------------------------------------------------------------------------------------------------------
CLAUSES:
- -----------------------------------------------------------------------------------------------------------------------------
Description of Supplies and/or Services Ordered Price
- -----------------------------------------------------------------------------------------------------------------------------
CLAUSE #429: CONTROLLING LAWS
THE TERMS AND PROVISIONS OF THIS AGREEMENT SHALL BE INTERPRETED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF MICHIGAN, UNITED STATES OF
AMERICA. FURTHER, THE PARTIES AGREE THAT THE JURISDICTION AND VENUE FOR ANY
ACTION BROUGHT BY EITHER PARTY SHALL BE SOLELY IN ANY STATE OR FEDERAL COURT
WITHIN THE EASTERN DISTRICT OF MICHIGAN.
CLAUSE #430: CONSTRUCTION
THIS AGREEMENT HAS BEEN FULLY NEGOTIATED BETWEEN THE PARTIES AND IN
INTERPRETING THIS AGREEMENT, THERE SHALL BE NO PRESUMPTION THAT EITHER PARTY
DRAFTED THE LANGUAGE BUT RATHER THE PARTIES SHALL BE DEEMED TO HAVE SHARED
EQUALLY IN THE DRAFTING OF THE PROVISIONS OF THIS AGREEMENT.
CLAUSE #431: ACCEPTANCE
SELLER ACCEPTS ALL OF THE TERMS AND CONDITIONS OF THIS PURCHASE ORDER AND
SPECIFICALLY WAIVES ITS SIGNED ACCEPTANCE THEREOF.
PER WRITTEN
Ship to / / RELEASE / /
PER WRITTEN
Invoice to / / RELEASE / /
- ----------------------------------------------------------------------------------------------------------------------
"DELAY IN PAYMENT OF INVOICES CAN RESULT IF THE REQUIREMENTS BELOW ARE NOT FOLLOWED.
- ------------------------------------------------------------------------------------
Invoices and packing slips must bear the Chrysler-assigned Supplier number; Purchase Order number, Part number (or
Non-Production Material code) and the Requisition number (on quantity buy) or Release number (on blanket order).
The "Ship To" address and Chrysler-assigned Plant Location code and "Invoice To" address is also required."
- ----------------------------------------------------------------------------------------------------------------------
PAGE 8 OF 8 Order No. JUU2922354 / A /
AMENDMENT
D.F. COOK 256629 (810) 758-8875
----------------------------------------------------------
BUYER NAME & DECK NO.
5633
</TABLE>
<PAGE> 1
EXHIBIT 10.32
MAY 9, 1996
National Tech. Team, Inc.
27345 West 11 Mile Road
Southfield, Michigan 48034
Attn: J. Ahlbrand
Re: Letter of Intent between
United Parcel Service General
Services Co. and National
Tech. Team, Inc. for
providing Help Desk Support
Dear Mr. Ahlbrand:
Pursuant to the above, this purpose of this letter is to confirm the verbal
agreement between United Parcel Service General Services Co. ("UPS") and
National Tech. Team, Inc. ("NIT") for NTT to provide telephone Help Desk Support
in acordance with the attached Statement of Work for the new suite of UPS
products "UPS On Line." The target date for the start up of services to train
NTT staff in this product is June 17,1996. Help Desk Support Service from NTT
is to begin July 1, 1996.
This letter is not to be construed as the final contract but rather a
document that reflects temporary agreement between our companies on certain
matters which will be reflected and further defined in a binding agreement.
The matters must be further specified and memorialized in an executed
contract before there can be final agreement between UPS and NTT.
Should the parties fail to successfully execute a binding agreement by July 15,
1996 UPS's liability to NTT shall not exceed the total of any reasonable
charges incurred by NTT in establishing and performing the Services as
described in this letter. Charges for services rendered shall not extend
beyond 30 days after receipt of notification.
A. DEFINITIONS
Billable Hour - Billable hour is defined as the time spent by NTT technical
staff answering inquiries from UPS customers, resolving the inquiry or
forwarding the inquiry to UPS for further research, on-going training, and
miscellaneous administrative activities. Refer to Performance Criteria for the
acceptable breakdown of time spent on each of the activities described.
Equivalent Staff - Refers to the number of technicians working billable
hours. Equivalent staff are calculated by adding the total amount of billable
hours of all service technicians per day divided by 8 hours to determine the
equivalent staff/day.
<PAGE> 2
B. SCOPE OF SERVICES/PLANNED LENGTH OF SUPPORT
UPS requests and NTT agrees to provide 80 "equivalent staff" daily who are
dedicated to perform technical Help Desk support for the suite of UPS products
"UPS On Line." (Equivalent staff is calculated by multiplying 80 by 8 billable
hours/day for a total of 640 billable hours incurred/day.)
NTT is to use the attached UPS job descriptions as guidance in hiring
technicians to perform this function.
UPS may require staff proficient in the French/Canadian language to answer
customer inquiries from Canada. Upon request, NTT will provide for staff with
this particular skill to UPS. Billable rate charges for such staff are defined
under Section F-Billing.
The service coverage period to perform support will be: 365/7 days/week/24
hours/day.
UPS may request NTT to make available more technicians than those described
above and agrees to provide two weeks notice to NTT if the situation warrants.
In such event, NTT is to schedule and conduct training classes every two weeks
and have staff begin performing Services immediately thereafter.
The planned length of the support is two years.
C. STAFF MANAGEMENT, ETC.
NTT will have sole responsibility for hiring, training, managing, and staff
administration of NTT personnel that will perform Services for UPS. Services
are to be provided at your facility located at: 19992 Kelly Road, Harper Woods,
Michigan, 48225. NTT agrees to provide workspace dedicated for use by two UPS
on site visitor personnel at no additional charge to UPS. NTT has full
responsibility for all expenses associated with maintaining the facility in
which Services are provided.
D. TRAINING PROGRAM
The training program will be three consecutive weeks. During the first two
weeks, all NTT technicians performing Services are to attend a formal training
program at the NTT location. The size of each training class and the start
dates are to be determined by mutual agreement by both parties. It is expected
that new training classes will commence every two weeks until NTT reaches 80
equivalent staff for supporting the UPS product. Immediately following
successful completion of the program, UPS will direct live UPS customer phone
inquiries to the technicians during the third week of the training program.
Their performance are to be monitored by mentors.
All training is to be conducted at NTT's location.
UPS will bear responsibility for providing all course materials and trainers
who will manage and conduct the initial class at NTT and will audit the second
class. NTT training staff will attend the first class and conduct and manage
the second and succeeding classes. UPS recognizes that NTT's training
staff may require assistance from UPS staff for some time until they are well
versed in the UPS product that NTT will support. UPS will lend all necessary
assistance as the situation warrants.
UPS may request NTT during the balance of 1996 to provide a steady increase
in additional staff above the requirements listed above to over 250 equivalent
staff by the end of December 1996. This is only a tentative projection and
does not in any way represent a commitment to NTT. NTT agrees that it has the
capability now to meet this possible requirement in terms of staff levels,
systems, administration, and facilities at its location at 19992 Kelly Road,
Harper Woods, Michigan 48225. In the event NTT elects to perform Services at
it Southfield site, NTT agrees to pay all telecommunications infrastructure set
up charges associated with the start up of Services at this site.
<PAGE> 3
PERFORMANCE CRITERIA/ALTERNATIVE CHARGE METHODS
The breakdown of billable hours of the technical staff is to be 77%-82%
answering/resolving inquiries or forwarding inquiries to UPS, 5%-8% devoted to
on-going training, and the balance of time allocated to administrative duties.
The target service level is that 95% of customer inquiry calls are to be
answered within 20 seconds.
UPS and NTT agree to negotiate and make a best effort to develop performance
criteria which may supplement or replace those defined above by the six (6)
month anniversary of the start date of Services. The criteria are to serve as
yardsticks to evaluate the performance of NTT on an on-going basis. At a
minimum, NTT's performance will be compared and judged relative to UPS's
remaining Help Desk. Support function in terms of productivity, timeliness,
and, and quality of service provided UPS customers. NTT's performance will be
considered satisfactorily if their performance, at a minimum, matches UPS's
Help Desk performance.
In conjunction with the development of performance criteria, both parties agree
to also negotiate the replacement of the billable hour rate method defined
under Billing with a method tied to performance criteria. Provided both
parties agree on a revised method, the use of the revised method is to begin on
the 1st day of the seventh month anniversary of the start date of Services or
on another date agreed to by both parties.
F. BILLING
The following are the sole charges due NTT for providing Services.
- -Initial Training - UPS will pay NTT $1,000/week/NTT trainee ($25.00/billable
hour, 40 billable hrs/week) for each trainee who successfully completes the
three week training program. If unsuccessful, UPS does not pay for training.
NTT has responsibility for providing new trainees, training and, and all
associated costs of all new staff who successfully completes the training
program and which serve as replacements for NTT staff who no longer perform
Services for whatever reason. (NTT training staff are to attend the initial
training program to become knowledgeable about the UPS product. UPS does not pay
for NTT's training staff to attend the initial class.)
After the NTT training staff successfully completes the first training program,
UPS agrees to pay NTT for the training services their staff provides at
subsequent training classes they conduct at the billable rate of $27.00/hour.
Billable charges are to be 40 billable hours/week/trainer and no more than 2
trainers/training class. It is expected that each class will accommodate 20
NTT trainees. UPS's total obligation to NTT for training charges of the 80
equivalent staff including trainers is: $259,440.
The above billable hourly rate during the formal training program applies
for each incremental new NTT employee which undergoes training.
- - On-going Training - Daily on going training for service technicians during
the eight hour work day will be provided for as defined under Performance
Criteria described above. There are to be no separate charges for this
training but is accounted for as one of several tasks of the service
technicians in the definition of Billable Hour.
UPS will pay NTT at the rate of $27.00/hr. for formal training your company
provides for product upgrades and new releases that is conducted outside the
normal workday. This rate applies to the number of hours spent by service
technicians in training and hours spent by NTT staff to develop and deliver the
training.
- - Billable Hourly Rate - UPS will pay NTT at the rate of $27.00/hour/support
technician to provide service coverage for the service period listed above. The
rate is to commence upon the start date of Services July 1, 1996.
NTT and UPS agrees that in the event that NTT is required to hire greater
than 1O% of its staff to have French/Canadian language skills, the direct
increased charges for hiring such staff and increase in the billable rate for
such staff only will be passed thru to UPS.
<PAGE> 4
Upon the two year anniversary of the start up of Services, NTT shall have the
right to increase the Billable Hourly Rate no greater than the cumulative
increase expressed as a percentage for the previous twelve (12) months in the
Employment Cost Index (Wages and Salaries only), Private Industry Workers by
Occupation and Industrial Group, as published by the Bureau of Labor
Statistics, Division of Employment Cost Trends of the United States Department
of Labor (June 1989=100).
- -Telecommunications Charges - UPS is obligated to pay for all costs associated
with the establishment of all voice and data communications with a
telecommunications carrier and all usage charges including the direct cost of
new equipment required to interface with the telecommunications carrier. The
equipment cost shall not exceed ___________. (NTT agrees to provide cost to UPS
no later than May 16, 1996.) In addition, UPS is obligated to pay NTT
$1,500/month for administrative telecommunications support.
- -Travel - The apportioning of any travel costs will be determined on a case
by case basis by NTT and UPS before any such related costs are incurred.
Reimbursement of any travel costs by UPS will be in accordance with UPS Travel
Guidelines.
Payment for any of the above listed charges will be due no later than thirty
(30) days after UPS receives a valid invoice from NTT.
G. TECHNOLOGY
NTT will provide each technician with a Pentium based PC and Aspect telephone
with a suite of standard software in accordance with the configuration listed
on the attached document.
H. TECHNOLOGY UPGRADES
In the event UPS requests at some point in the future, software and/or
hardware upgrades to the desktop technology provided each NTT technician at the
inception of the Agreement, UPS agrees to pay NTT, at their cost, for all such
upgrades. If requested and NTT has the capability, NTT agrees to provide labor
to install the upgrades at no cost to UPS. If NTT elects to contract with a
third party vendor to install upgrades, UPS and NTT agree to equally share the
labor costs for the installation of the upgrades.
I. UPS LAB EQUIPMENT/VISITOR WORK SPACE
UPS will require certain equipment for use by NTT technicians to support UPS
products identified as UPS Lab Equipment. UPS will provide, at its cost, all
necessary equipment for each lab. NTT agrees to provide the necessary space and
power/data communications required for the equipment and install the equipment
at no additional charge to UPS. UPS may require one (1) lab per 8 NTT
technicians. The number of labs and the equipment required for each lab is to
be determined.
NTT agrees to provide, at no charge to UPS, two (2) workstations for UPS
visitors at the NTT site in which services are performed for UPS. UPS agrees
to pay NTT for all telecommunications charges incurred by the UPS visitors.
J. REPORTS
NTT will provide UPS with CMS reports on a regular basis. The frequency,
format, and content of the reports are to be determined jointly by UPS and NTT.
K. TAX INCENTIVES
NTT agrees to co-operate with UPS in pursing economic incentives. Economic
incentives include: new job tax credits, enterprise zone tax credits, capital
investment tax credits, abatement of property taxes, or other similar type of
economic incentives. In the event such incentives are available, NTT agrees
to pass all incentives to the benefit of UPS.
L. TERMINATION
<PAGE> 5
In addition to terminating the Agreement for cause, UPS will have the right
to terminate the Agreement its convenience. NTT shall have the right to
terminate at its convenience provided its staff level proving Services is
100 equivalent staff or less. In such event, it shall give UPS one hundred
and twenty (120) day notice of termination. UPS shall have the right to
terminate for convenience provided it gives NTT seventy (70) day notice of
ternination.
If the forgoing is agreed and understood, please acknowledge this by signing
on the original copy of this letter where indicated below and return to the
attention of Henry Tully at UPS, 340 MacArthur Blvd., Mahwah, NJ.
Please call Henry Tully at 201-828-6058 if you have any questions regarding the
above.
Very Truly Yours,
Henry A. Tully
Sr. Contracts Adm.
Agreed to and Accepted by:
NATIONAL TECH TEAM, INC.
By: Jonathan D. Ahlbrand
------------------------
Name: Jonathan D. Ahlbrand
------------------------
Title: Senior Vice President
------------------------
Date: May 9, 1996
------------------------
<PAGE> 6
MASTER OUTSOURCING AGREEMENT
BETWEEN
NATIONAL TECH TEAM, INC.
AND
UNITED PARCEL SERVICE GENERAL SERVICES CO.
AGREEMENT NO. 96-7424
1
<PAGE> 7
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS ..................................................... 3
ARTICLE 2 - SCOPE OF SERVICES ............................................... 4
ARTICLE 3 - TERM ............................................................ 7
ARTICLE 4 - RATES AND CHARGES ............................................... 8
ARTICLE 5 - NOTICE OF DELAY ................................................. 9
ARTICLE 6 - MITIGATION OF DAMAGES ........................................... 9
ARTICLE 7 - PERFORMANCE INCENTIVES/CREDITS TO UPS ........................... 9
ARTICLE 8 - INVOICES ........................................................10
ARTICLE 9 - CUSTOMER RELATIONS ..............................................10
ARTICLE 10 - UPS SITE SECURITY AND SAFETY ...................................10
ARTICLE 11 - COOPERATION WITH UPS AUDITS ....................................10
ARTICLE 12 - THIRD PARTY AUDITS .............................................11
ARTICLE 13 - ADMINISTRATION OF SERVICES .....................................11
ARTICLE 14 - VENDOR SITE MANAGER ............................................11
ARTICLE 15 - INDEMNIFICATION ................................................11
ARTICLE 16 - LIMITATION OF LIABILITY ........................................12
ARTICLE 17 - FORCE MAJEURE ..................................................12
ARTICLE 18 - INSURANCE ......................................................12
ARTICLE 19 - TAX AND TRAINING INCENTIVES ....................................12
ARTICLE 20 - CONFIDENTIALITY ................................................13
ARTICLE 21 - MISCELLANEOUS CONFIDENTIALITY REQUIREMENTS .....................13
ARTICLE 22 - KEY VENDOR PERSONNEL ...........................................13
ARTICLE 23 - LAWS AND REGULATIONS ...........................................13
ARTICLE 24 - PROPERTY AND PROPRIETARY RIGHTS ................................13
ARTICLE 25 - UPS REPRESENTATIONS AND WARRANTIES .............................14
ARTICLE 26 - VENDOR'S REPRESENTATIONS AND WARRANTIES ........................14
ARTICLE 27 - TERMINATION ....................................................15
ARTICLE 28 - INDEPENDENT CONTRACTOR .........................................16
ARTICLE 29 - DISPUTE RESOLUTION .............................................16
ARTICLE 30 - MEDIATION AND ARBITRATION ......................................17
ARTICLE 31 - USE OF NAME ....................................................17
ARTICLE 32 - REGULAR EXECUTIVE REVIEWS ......................................17
ARTICLE 33 - TRAINING PROGRAM ...............................................17
ARTICLE 34 - TECHNOLOGY UPGRADES ............................................17
ARTICLE 35 - NOTICES ........................................................17
ARTICLE 36 - SURVIVING PROVISIONS ...........................................18
ARTICLE 37 - GENERAL PROVISIONS .............................................18
2
<PAGE> 8
THIS AGREEMENT, dated as of this ____ day of _____, 1996 ("Effective
Date"), by and between National Tech Team, Inc. ("Vendor"), a
corporation, and United Parcel Service General Services Company, a Delaware
corporation (hereinafter referred to as "UPS"). This Agreement covers the
terms and conditions agreed to between Vendor and UPS (hereinafter referred to
as "the Parties") for the provision of personnel and services for the Help Desk
function.
WHEREAS, Vendor is in the business of providing semi skilled services;
WHEREAS, Vendor has demonstrated the capability to provide outsourced
staffing personnel;
WHEREAS, UPS requires Vendor's services to provide telephone Help Desk
support to UPS customers for the suite of UPS Products "UPS On Line;"
WHEREAS, pursuant to the terms and conditions set forth below and in
the attachments hereto, UPS, because of Vendor's expertise, desires to engage
Vendor to perform services on its behalf, and Vendor desires to accept such
engagement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein and other good and valuable considerations, the
receipt and sufficiency of which are hereby mutually acknowledged, the Parties
hereto agree as follows:
ARTICLE 1 - DEFINITIONS
"Applicable Index" shall mean the administrative support, including the
clerical component of the Employment Cost Index (Wages and Salaries only),
Private Industry Workers by Occupation and Industrial Group, as published by
the Bureau of Labor Statistics, Division of Employment Cost Trends of the
United States Department of Labor (June 1989 = 100).
"Billable Hour" shall mean each hour spent by the Vendor's technical staff
answering inquiries from UPS customers , resolving the inquiry or forwarding
the inquiry to UPS staff for further research, on-going training, and
miscellaneous administrative activities. Refer to Performance Criteria for the
acceptable breakdown of time spent on each of the activities described.
"Billable Hourly Rate" is the hourly rate that is charged for each Billable
Hour.
"Equivalent Employee(s)" refers to the total of Billable Hours divided by
eight (8) hours. The number of Equivalent Employee(s)/Work Day is calculated
by adding the total of Billable Hours of all technicians worked on any given
day divided by eight (8) hours to determine the number of Equivalent
Employee(s)/Work Day.
"Key Personnel" shall mean Vendor personnel assigned by the Vendor to manage
UPS's Help Desk function.
"Performance Criteria" shall mean the minimal acceptable breakdown of Billable
Hours spent by the Vendor's technical staff during the Work Day. The
acceptable breakdown is: 77%-82% of Billable Hours answering/resolving
inquiries and/or forwarding inquiries to UPS, 5%-8% of Billable Hours devoted
to on going training, and the balance of time allocated to administrative
duties.
"Residuals" shall mean information in non-tangible form that is retained as
mental impressions by individuals having access to the work. Neither party
shall have an obligation to pay royalties for any work resulting from such
Residuals.
"Service" or "Services" shall mean the rendering of Help Desk Services by
Vendor's employees in a professional and workmanlike manner in accordance with
established Performance Criteria.
"Service Coverage Period" shall mean the period of time during the year that
the Vendor shall provide technicians to perform Services. The Service Coverage
Period shall be 365 days/year/7 days/week/24 hours/day.
"Site" shall mean the Vendor facility(s) specified in Exhibit C at which
Vendor Services shall be performed.
3
<PAGE> 9
"UPS Proprietary Information" shall mean all leads, personnel records, fees
and charges, and all documents evidencing business plans, proposals,
strategies, sales and marketing information, customer lists, training and
operations material and memoranda, and pricing and financial information, and
all computer software and computer programs identified to the recipient of such
information by the giving party as proprietary, and which are obtained by or
furnished, disclosed or disseminated to the recipient during the course of
Vendor's engagement by UPS. This information shall also include information
provided to one party to this Agreement by UPS orally or in writing which is
identified as confidential prior to disclosure or delivery to the recipient,
and all information and matters which constitute trade secrets of the
disclosing party, all of which are hereby agreed to be the property of and
confidential to the owner and discloser of Proprietary Information.
"UPS Product(s)" shall mean a suite of desk top software packages that UPS
offers its customers to facilitate its package delivery service to its
customers.
"UPS Site Coordinator" shall mean the person or persons assigned by UPS to
coordinate the rendering of Services by the Vendor to UPS at the Vendor Site.
"UPS" shall mean United Parcel Service General Services Co., together with
its parent company and any now exisiting or future direct or indirect
subsidiary of said parent company.
"Vendor Site Manager" shall mean the person or persons assigned by Vendor to
coordinate the rendering of Vendor's Services to UPS at the Vendor Site.
"Work Day" shall mean each day of the calendar year. The Vendor is to render
Services each Work Day, including those days recognized by UPS as Holidays for
UPS employees.
"Year" shall mean the twelve (12) month period beginning on the date of
commencement of Services at Vendor's Site or on any anniversary thereof.
ARTICLE 2 - SCOPE OF SERVICES
2.1. Services
During the Term, Vendor shall perform the Services during the Service Coverage
Period pursuant to the specifications set forth in Exhibit A, " Statement of
Work".
2.1.1 Vendor shall be solely responsible for all personnel-related
matters and expenses thereof regarding the rendition of Services,
including but not limited to employment, hiring, training (except as
otherwise provided herein), attendance, quality and quantity of work,
discipline, and termination of employment. UPS or its employees will
not counsel or discipline any Vendor employees.
2.1.2 From time to time hereafter, Vendor and UPS may mutually agree
upon additional services to be performed by Vendor or modifications to
Performance Criteria set forth in this Agreement and in Exhibit A. Any
such additional services or modified Performance Criteria shall be
mutually approved in writing and thereafter all references in this
Agreement to Services shall be deemed to include such additional
services or modified Performance Criteria.
2.1.3 Vendor shall hire full time qualified personnel using reasonable
business practices and in accordance with the specifications in
Exhibit B, "Job Description and Qualifications." Such personnel
shall perform the Services defined herein at the Vendor Site. At its
option and expense, Vendor may perform drug testing. Vendor warrants
that any tests conducted shall be validated by the appropriate state or
federal agency, and such testing shall be in compliance with all state
and federal employment guidelines and requirements.
2.1.4 The Vendor shall provide each technician the PC equipment,
software, and telephone equipment and necessary ancilliary equipment
listed in Exhibit E, "Vendor Equipment."
2.2 Vendor Responsibilities
2.2.1 Vendor shall render to UPS the Services as defined herein and in
Exhibit A, "Statement of Work".
4
<PAGE> 10
2.2.2 Vendor agrees to provide eighty (80) full-time Equivalent
Employees daily to perform Services during the term of the Agreement
at the Vendor Site specified in Exhibit C, "Site Location." UPS and
Vendor understand that this number of Equivalent Employees represents
the inital UPS Equivalent Employee rquirement and that it is subject to
change during the Initial or any Renewal Term of the Agreement.
2.2.3 Vendor shall work in good faith with UPS to re-engineer the
Services and functions described in Exhibit A, "Statement of
Work" that are related to providing Services to UPS and decrease the
costs to UPS for those Services.
2.2.4 In the performance of its obligations, Vendor and its employees
shall utilize UPS's and Vendor's computer-based systems or
applications to track and monitor the status and quality of all
Services provided in accordance with Exhibits A. If required, Vendor
shall provide information which will help UPS improve the efficiency of
such tracking and monitoring.
2.2.5 Vendor shall assign the following full-time Vendor employee as a
Site Manager at the Vendor Site,______________________. The Vendor
Site Manager shall coordinate the delivery of Services with those
performed at the Vendor's Site, and shall provide a single point of
contact for UPS's Site Coordinator. The Vendor Site Manager shall also:
(i) coordinate new procedures and any revisions to existing procedures;
(ii) coordinate implementation of such new or revised procedures; (iii)
deliver to UPS all information as described herein; and, (iv) generally
oversee Vendor's performance of Services pursuant to this Agreement.
2.2.6 The Parties shall establish and utilize a document change control
process with respect to the Services to be provided by the Vendor under
this Agreement. New procedures and all changes to systems or methods
used or supported by the Vendor at its Site shall be implemented in
accordance with such change control process. From time to time, Vendor
may, in accordance with the change control process, upgrade or enhance
such procedures, systems, and methods to improve the efficiency and
effectiveness of Vendors employees.
2.2.7 Vendor shall adopt the problem escalation and resolution
procedures used by UPS. Vendor and UPS may mutually agree to
modify such procedures in accordance with the change control process.
2.2.9 Vendor shall monitor its performance based on the Performance
Criteria established in Exhibit A, using procedures and methods
mutually agreed to by the Parties. Vendor shall conduct all monitoring
in compliance with Federal, state, and local laws and regulations.
Vendor shall enhance its monitoring practices and frequency
requirements to facilitate the achievement of UPS's Performance
Criteria.
2.2.9.1 Vendor shall provide such monitoring statistics to UPS as
hereinafter provided in Exhibit D, "Daily Reports." The results of
Vendor's monitoring shall be communicated to UPS in writing on a daily
basis, and shall contain information consistent with the requirements
in Exhibit D. The Vendor shall review such results and determine and
implement any required changes to the operation to better meet UPS's
Performance Criteria and to verify that Vendor has met UPS's
Performance Criteria as provided herein.
2.2.9.2 Vendor agrees that its performance of the Services will meet or
exceed UPS's Performance Criteria defined herein. In the event
Vendor's performance of the Service fails to meet UPS's Performance
Criteria, UPS may seek all remedies available to it in law or equity,
subject to the provisions of this Agreement. In any event, Vendor will
use its best efforts to the extent commercially reasonable under the
circumstances to meet or exceed all UPS Quality Standards.
2.2.9.3 As appropriate, the Parties shall periodically review UPS's
Performance Criteria and, if mutually agreed by the Parties, such
Performance Criteria will be adjusted to reflect changes in
circumstances, including without limitation, being made more or less
stringent to reflect improved performance capabilities associated with
advances in the technologies and methods used generally to perform
similar services.
2.2.10 Vendor will provide UPS with daily reports as defined in Exhibit
D, in order to maintain its Service and meet Performance Criteria,
and to permit monitoring of Vendor's performance against UPS's
5
<PAGE> 11
Performance Criteria under this Agreement and its Attachments. Vendor
will provide UPS with a monthly performance report, in a form and
with content mutually established by the Parties, documenting Vendor's
performance with respect to UPS's Performance Criteria. In addition,
Vendor will provide UPS with such other documentation and information
as may be reasonably requested by UPS from time to time in order to
verify that Vendor's performance of the Services is in compliance with
UPS's Performance Criteria.
2.2.11 In order to ensure Vendor's compliance with UPS's Performance
Criteria and Vendor's efficient use of resources, Vendor warrants that
it will use efficiently its resources to perform the Services in
accordance with UPS's Performance Criteria.
2.2.12 Vendor is responsible on a bi-weekly basis to provide in
writing to the UPS Site Coordinator a memorandum outlining how UPS has
not fulfilled its responsibilities under this Agreement. In the event
Vendor does not issue this memorandum, UPS shall be conclusively deemed
to have fulfilled its responsibilities. Questions dealing with a
dispute over UPS's responsibilities shall be escalated to key executive
level of both Parties and resolved within twenty-four (24) hours.
Failing that, the dispute shall be subject to either to the Dispute
Resolution or Arbitration provision in this Agreement.
2.2.13 Vendor acknowledges and agree to advise respectively its
employees, agents, and subcontractors that it is the policy of UPS
(1) to prohibit the use, possession, sale, and distribution of alcohol,
illegal drugs, or other controlled substances on its premises; and (2)
to prohibit the presence on UPS property of employees of a contractor,
subcontractor or agent who has such substances in his/her body for
nonmedical reasons. Entry onto UPS's property constitutes consent to
an inspection of the employees of the contractor, subcontractor, or
agent, including vehicles, and personal effects when entering, while
on, or upon leaving, UPS's property. A Vendor employee, subcontractor,
or agent who is found in violation of this policy will be removed and
barred from UPS's property.
Vendor further agrees that in the event one of its employees, agents,
or an employee of a subcontractor, while on UPS's property, has a
performance deviation, abnormal incident, or unusual behavior, this
employee will be asked to leave the premises.
All of Vendor's employees, agents, and subcontractors presently working
on UPS's property or used on UPS's jobs in the future are to be
immediately notified of UPS's policy. Any agents or subcontractors
under contract to Vendor must also be notified of UPS's policy. Vendor
agrees that any disciplinary actions or othe employment decisions
affecting Vendor's employees, subcontractors, agents, and applicants
that arise in any way out of matters related to this Article are the
sole responsibility of Vendor. UPS agrees to maintain the
confidentiality of its decisions as to whether to permit a Vendor
employee, subcontractor, or agent to enter or remain on UPS's property.
Vendor agrees to maintain the confidentiality of any information gained
or exchanged from or during the implementation of this policy.
2.2.14 Vendor shall obtain and maintain all licenses, franchises,
privileges, permits, consents, exemptions, certificates,
registrations, orders, approvals, authorizations, and similar documents
and instruments that are required by Federal, state, and local laws and
regulations applicable to the Vendor Site under this Agreement.
2.3 UPS's Responsibilities
2.3.1 UPS shall supply the UPS Site Coordinator with general
forecasting data related to the Services provided hereunder to assist
the Vendor Site Manager workforce planning.
2.3.2 UPS shall have the right to conduct periodic quality control
reviews of Vendors performance under this Agreement, provided that UPS
shall neither provide nor exercise any direct or indirect supervision
or control of Vendor's employees. Such reviews shall be performed
during the Parties' normal business hours and may include visits to
Vendor's facilities at the address noted herein for verification of
service quality levels and other activities reasonably related to
obtaining information for quality control review purposes. UPS shall
schedule such reviews with Vendor in advance.
2.3.3 UPS shall make available to Vendor all relevant documentation
with respect to UPS's problem escalation and resolution procedures as
described herein.
6
<PAGE> 12
2.3.4 When requesting additional Equivalent Employees, UPS shall
provide to Vendor a notice of (10) business days. In the event that
UPS wishes to cancel such order for additional employees, UPS will use
its best efforts to provide Vendor with a notice of five (5) business
days.
2.4 Vendor Site
2.4.1 Vendor shall perform the Services at the Vendor Site identified
in Exhibit C, which location is now owned or leased, or will be owned
or leased, by Vendor. UPS may request the Vendor to add addditional
technican staff up to a grand total of two hundred and fifty (250)
Equivalent Employees during the balance of the Agreement. UPS,
however, has no obligation whatsoever beyond the requirement for eighty
(80) Equivalent Staff. The Vendor warrants it will be able to meet the
staffing requirements as defined and that the Site does (or will have)
the capability to fully support such future requests in the time period
defined by UPS. UPS's sole obligation in the event UPS requests
additional technicians shall be those charges described under Article 4
- Rates and Charges. In the event the Vendor elects to migrate either
some or all of its employees providing Services to a site other than
that listed in Exhibit C, Vendor shall bear all costs, including
telecommunications, cabling, and all other costs associated with such a
migration.
2.4.2 Vendor shall be solely responsible for and shall bear all costs
and expenses with regard to the acquisition and/or leasing of the
Vendor Site and the reasonable maintenance of the Site's structural
components under the Occupational Safety and Health Act (OSHA) and
other similar laws applicable to it, and all employees or independent
contractors of Vendor fulfilling such maintenance responsibilities, and
shall indemnify and defend UPS against all claims with respect thereto.
Vendor shall be solely responsible for and shall bear all costs and
expenses with regard to Site maintenance.
2.4.3 Vendor shall be solely responsible for and shall bear all
expenses incurred in the rendition of the Services at its Site with
respect to: (i) wages and benefits of Vendor's employees, including
employees' sick time, vacation time, personal time, and holidays; and,
(ii) prevention of property damage to UPS's equipment. Vendor agrees
to bear all costs associated with prevention of the damage or theft of
UPS's property and equipment by Vendor's employees.
2.4.3.1 UPS shall provide certain equipment, hardware, and software
("Equipment") required for Vendor's employees' rendition of the
Services. Such Equipment is and shall remain the property of UPS.
Vendor's employees are expressly prohibited from bringing or using
their own tools, equipment, hardware, or software ("Supplies") in the
rendition of the Services at the Vendors Site. Accordingly, if a
Vendor employee violates the terms of this Article 2.4.3.1 by bringing
in or using its own Supplies in the rendition of the Service, then such
event shall constitute a breach of this Agreement, and UPS shall be
entitled to all remedies at law or in equity available to it for such
breach. Notwithstanding this breach, however, Vendor warrants that it
or its employees has the unconditional right to license or to use such
Supplies and such use shall not infringe upon any copyright, patent,
trademark, trade secret, or any other intellectual property right.
2.5 Commencement of Services
2.5.1 Vendor shall commence the Service as provided herein on July 8,
1996 whereby Vendor shall provide employees as required in Exhibit A
and as subsequently agreed to by the Parties.
ARTICLE 3 - TERM
3.1 Term
The initial term of this Agreement shall be for a two (2) year period
("Initial Term"), effective June 24, 1996 ("Effective Date") through June 23,
1998. This Agreement shall renew for successive periods of one (1) year each
thereafter ("Renewal Term") provided Vendor notifies UPS of such Renewal at
least ninety (90) days, but not more that one-hundred and twenty (120)
days, prior to the effective date of such renewal. In the event that Vendor
fails to so notify UPS, UPS may at its option terminate this Agreement at any
time thereafter upon fifteen (15) days' prior notice to Vendor.
3.2 For purposes of this Article, the term "meets or exceeds the Performance
Criteria" shall be determined with regard to rendition of the Services on a
monthly average during the Term of the Agreement.
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<PAGE> 13
ARTICLE 4 - RATES AND CHARGES
4.1 Rates for training and Services
UPS agrees to pay Vendor in the following manner:
4.1.1 Charges for Initial Formal Training of Technicians
Vendor shall invoice UPS monthly for charges related to formal training
rendered the previous calendar month at the rate of $25.00/Billable Hour for
each technician trainee ($1,000/ week based upon 40 Billable Hours/week) which
successfully completes three weeks of training in the use and support of UPS
Products that Vendor's support in performance of Services. Upon request by
UPS, the Vendor shall certify those trainees that successfully complete the
training program by providing a list of the trainees to UPS. UPS shall not be
obligated to pay training charges of trainees that do not successfully complete
the training program. Charges shall commence for each trainee upon the
commencement of the formal training program.
UPS shall not be obligated to pay training charges for technician trainees
who serve as replacements for Vendor technicians which had been previously, but
no longer are, providing Services for whatever reason.
Vendor training staff are to attend the Initial Formal Training at no charge
to UPS. Provided the training staff successfully completes the Initial Formal
Training, UPS agrees to pay Vendor for training services rendered by Vendor
staff at the rate of $27.00/Billable Hour for each succeeding training program.
Billable Hours are not to exceed 40 Billable Hours/week/trainer with no more
than two (2) trainers/training class. It is expected that each class is to
consist of 20 trainees although the total number of trainees/class is to be
agreed upon by UPS and the Vendor prior to commencement of training. UPS's
total obligation to the Vendor for training eighty (80) Equivalent Employees and
for two Vendor trainers providing training is two hundred and fifty-nine
thousand four hundred and forty dollars ($259,440).
4.2 Charges for Additional Formal Training
In the event UPS requires the Vendor to provide Additional Formal Training
during the Initial or any Renewal Term thereafter in any new enhancements to
Products or new products, Vendor shall invoice UPS monthly for charges related
to such Additional Training which are rendered the previous month at the rate
of $27.00/Billable Hour/technician. The same rate shall apply for services
rendered by the Vendor's trainers in proving Additional Fomal Training. Prior
to the commencement of any training, UPS and the Vendor shall work jointly and
agree upon the total amount of Billable Hours/trainee and Billable Hours for
the trainers that are required to provide Additional Formal Training related to
new Product enhancements or new products.
4.1.2 Charges for Services Rendered
Vendor shall invoice UPS monthly for charges for Services rendered the
previous calendar month at the rate of $27.00/Billable Hour/technician. This
is an all inclusive rate for Services rendered. UPS does not pay for
supervisory, systems, or administrative support staff required by the Vendor to
successfully render the Services. Charges shall begin to accrue upon
commencement of Services by each technican which shall be the first Work Day
after successful completion of the (three week) formal training program.
4.1.3 Increases in Charges Related to Special Language Skills
In the event UPS requires the Vendor to have more than ten percent (10%) of
the Vendor's Equivalent Employees to be proficient in French/Canadian language
skills, UPS agrees to reimburse the Vendor for the direct increased cost
incurred by the Vendor for hiring such technician staff and the increase in the
hourly rate, if any, the Vendor pays such staff over the hourly rate the Vendor
pays its non-French/Canadian language skill technicians.
The Vendor agrees to provide thirty (30) days advance written notice to UPS
if it projects that the total number of its French/Canadian language skilled
technicians rendering Services will exceed ten percent (10%) of its Equvalent
Staff within thirty (30) days of the notice date. Such projections are to be
calculated on the basis of written requests from UPS specifying the need for
French/Canadian language skilled technicians.
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4.1.4 Change in Billable Rate
Upon the two year anniversary of the commencement of Services, the Vendor
shall have the right to increase the Billable Rate no greater than the
cumulative increase, expressed as a percentage for the previous twelve (12)
months, in the Applicable Index.
4.1.5 Telecommunication Charges
UPS is obligated to pay for all costs associated with the establishment of
all voice and data communications with a a telecommunications carrier and all
usage charges including the direct cost of new equipment needed at the Vendor's
Site to interface with the telecommunications carrier. If UPS elects to
establish its own line with a telecommunications carrier under its name, it
will have full responsibility for paying the carrier for all telecommunication
services rendered by the carrier.
In addition to the above, the Vendor shall invoice UPS monthly for
administrative telecommunications support provided the previous month at the
rate of $1,500/MONTH.
In the event UPS requires dedicated data telecommunication lines to
technician workstations, the Vendor shall invoice, at cost, if any, the charges
from the telecommunication carriers for such lines.
4.1.6 Travel
The apportioning of any travel costs will be determined on a case by case
basis by UPS and the Vendor before any such costs are incurred. Reimbursement
of travel costs will be in accordance with UPS's Travel Guidelines, attached
hereto as Exhibit F.
4.1.7 Maintenance Expenses for Equipment Owned by UPS
UPS shall be responsible for all equipment manufacturer's maintenance charges
and licensor's license fees related to all UPS owned equipment and licensed
software at the Vendor's site.
4.1.8 In the event that during the Initial Term or Renewal Term of the
Agreement, Vendor's costs for the rates which it pays to its employees are
affected by a collective bargaining agreement or any other reason, UPS will not
be responsible for any such increase and such increase will not be passed on to
UPS.
ARTICLE 5 - NOTICE OF DELAY
5.0 In the event of an actual or potential delay in Vendor's performance under
this Agreement, Vendor shall immediately notify the UPS Site Coordinator,
describing the cause, effect, and expected duration of such delay or failure
and thereafter shall immediately give notice to the UPS Site Coordinator of all
changes to such conditions.
ARTICLE 6 - MITIGATION OF DAMAGES
6.0 In the event of delay or failure of Vendor in performing hereunder arising
from any cause, UPS may obtain like services elsewhere, including attendant
expenses incurred therewith, for the duration of such delay or failure without
liability to UPS, including liability for minimum payments to Vendor for such
period.
ARTICLE 7 - PERFORMANCE INCENTIVES/CREDITS TO UPS
7.0 UPS and Vendor agree, upon the six (6) month anniversary of the Effective
Date of the Agreement, to consider replacing the current method of calculating
technician labor charges with another method which more closely defines the
productivity of the technicians. Coupled with the new method of calculating
labor charges, UPS and the Vendor are to work jointly to develop and use new
performance criteria that would replace or modify the existing Performance
Criteria defined herein. The intention is to use new performance criteria to
determine credits due the Vendor as a reward for exceeding performance criteria
or, conversely, to calculate credits due UPS for the failure of the Vendor to
meet the performance criteria. As a minimum, the Vendor's performance will be
judged relative to UPS's remaining Help Desk Support function in terms of
productivity, timeliness, and quality of
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service provided UPS customers. The Vendors performance will be considered
satisfactory if their performance, at a minimum, matches UPS's Help Desk
performance.
ARTICLE 8 - INVOICES
8.1 Vendor shall submit invoices to UPS on a monthly basis for Services
rendered by the Vendor during the preceding month. UPS agrees to pay all
undisputed amounts on such invoices within thirty (30) days of receipt. If
UPS, in good faith, questions any item(s) in the invoice, UPS may delay payment
of such item until the question has been resolved, but shall not delay payment
of the balance of the invoice. The reason for delaying payment must be
provided in writing at the time of payment of the undisputed amounts. Vendor
shall provide UPS with such documentation and other written information with
respect to each invoice as may be reasonably requested by UPS to verify that
Vendor's charges to UPS are accurate, correct, and valid, and are in accordance
with the provisions of this agreement.
8.2 In addition to all other charges specified herein, Vendor shall invoice
UPS for, and UPS shall pay, all federal, state, and local municipalities' sales
or use taxes based upon this Agreement. Vendor shall pay all other taxes of
whatever nature, including without limitation, franchise taxes and taxes based
upon Vendor's net income.
ARTICLE 9 - CUSTOMER RELATIONS
In any contacts with UPS's customers or callers (herein referred to
collectively as "Customers"), Vendor employees shall identify themselves as
"____________________ or ____________________. At no time will Vendor
employees provide a Vendor identification to UPS's customers.
ARTICLE 10 - UPS SITE SECURITY AND SAFETY
10.1 For a UPS-owned or controlled Site, UPS shall be responsible for
safeguarding the Site by providing controlled access to the Site, and shall
reasonably investigate security breaches and take customary and satisfactory
remedial steps. UPS shall also properly safeguard and maintain its Equipment
and related materials, which shall include UPS's proprietary software, other
UPS proprietary information and documents, and/or other related systems,
telephone, communication lines, and use or access thereof which could cause
loss to UPS. Vendor shall be responsible and liable for any Equipment that its
employees remove, exchange, or modify without the written authorization of an
authorized UPS representative. Such authorization shall release Vendor of its
liability. Vendor's liability will include, but not be limited to, the
replacement cost of any missing Equipment or materials and/or loss due to
misuse or unauthorized access or use of any materials, Equipment, or systems by
Vendor's employees.
10.2 For a Vendor-owned or controlled Site, Vendor shall be responsible for
safeguarding the Site by providing controlled access to the Site, and shall
reasonably investigate security breaches and take customary and satisfactory
remedial steps. Vendor shall also properly safeguard and maintain its
Equipment and related materials, which shall include UPS's proprietary
software, other UPS proprietary information and documents, and/or other related
systems, telephone, communication lines, and use or access thereof which could
cause loss to UPS. Vendor shall be responsible and liable for any Equipment
that its employees remove, exchange, or modify without the written
authorization of an authorized UPS representative. Such authorization shall
release Vendor of its liability. Vendor's liability will include, but not be
limited to, the replacement cost of any missing Equipment or materials and/or
loss due to misuse or unauthorized access or use of any materials, Equipment,
or systems by Vendor's employees.
10.3 With respect to all work performed by the Vendor, its agents, or its
subcontractors at UPS facilities, such work shall comply with all applicable
Federal government, state, and local laws and regulations in effect where such
work is being performed and applicable to such work.
ARTICLE 11 - COOPERATION WITH UPS AUDITS
Vendor shall provide UPS auditors and inspectors, as UPS may designate in
writing, access to the Vendor's facilities, and to UPS's existing data and work
product, if any, being developed by Vendor hereunder, and to related
documentation for the purpose of performing, at UPS's expense, those audits and
inspections of Vendor's business reasonably requested by UPS. This shall
include without limitation, to the extent applicable to the Vendor's Services,
audits of (i) software use practices and procedures; (ii) application and
operating systems, (iii)
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general controls and security practices and procedures; (4) general call
monitoring, performance and procedures; and, (iv) disaster recovery and back-up
procedures.
ARTICLE 12 - THIRD PARTY AUDITS
Once every twelve (12) months during the term of this Agreement, Vendor will
permit an industry consultant selected by the Parties and paid for by UPS to
review Vendor's operating practices and procedures with respect to resource
utilization in connection with the performance of the Services during the prior
year. Such review shall be conducted to confirm that Vendor is exercising
commercially reasonable and efficient practices and procedures to review the
resources utilized in providing the Services. The industry consultant shall
issue a written report to the Parties setting forth its findings, conclusions,
and recommendation for changes, if any, in Vendor's practices and procedures.
The Parties will review the industry consultant's report and work together in
good faith to mutually agree on any appropriate adjustments to Vendor's
operating practices and procedures.
ARTICLE 13 - ADMINISTRATION OF SERVICES
In order to meet UPS's Performance Criteria, the Parties shall work together in
good faith to identify any operational issues relating to the Services
performed pursuant to this Agreement and, as required, UPS shall accordingly
make any necessary upward or downward staffing projections or adjustments,
training requirements, and the like. The UPS Site Coordinator shall work with
the Vendor to minimize staffing constraints and to help the Vendor meet or
exceed UPS's Performance Criteria.
ARTICLE 14 - VENDOR SITE MANAGER
The Vendor shall assign an individual to serve as the Vendor Site Manager. The
Vendor Site Manager shall have primary responsibility for Vendor's performance
of the Services, as well as communication between the UPS Site Coordinator and
the Vendor.
ARTICLE 15 - INDEMNIFICATION
15.1 Each Party shall defend, indemnify, and hold the other Party, and its
parent company and any and all subsidiaries of its parent company, and their
respective directors, officers, employees, and agents ("Indemnified Parties"),
harmless from and against any and all claims, losses, damages, judgments,
costs, and expenses (including attorney's fees) which the aggrieved Indemnified
Parties may suffer or incur arising out of or in connection with injuries to
persons (including death) or loss of, or damage to, property, occasioned by the
negligence, unlawful act, or willful misconduct of the aggrieving party, or of
the aggrieved party's personnel, subcontractors, or agents.
15.2 If any third party claims or asserts in any suit, action, or proceeding
that UPS or any UPS affiliate's use of the Vendor supplied hardware or software
by Vendor or its employees or any portion thereof infringes or violates any
patent, copyright, trademark, trade secret, or other third party proprietary
right, UPS shall promptly notify Vendor thereof and Vendor shall, at its own
expense, defend such action and indemnify and hold harmless UPS from and
against any and all claims, losses, damages, judgments, costs, and expenses
(including attorney's fees) arising therefrom or caused thereby. Vendor shall
permit UPS to participate in such defense to the extent that, in UPS's
judgment, UPS may be prejudiced thereby, and Vendor shall not settle any such
action without the prior, written consent of UPS, which consent shall not be
unreasonably withheld. If UPS or Vendor is enjoined from using the hardware or
software or any portion thereof, Vendor shall promptly, at its expense, either:
(i) procure for UPS the right to use the hardware or software or portion
thereof, the use of which is enjoined; or (ii) modify the same so that it is no
longer infringing, but performs the same functions in an equivalent manner; or
(iii) substitute with software or hardware which performs the same functions in
an equivalent manner without any degradation in performance.
15.2 If any third party claims or asserts in any suit, action, or proceeding
that Vendor's or any Vendor affiliate's use of UPS provided hardware or
software by Vendor or its employees or any portion thereof infringes or
violates any patent, copyright, trademark, trade secret, or other third party
proprietary right, Vendor shall promptly notify UPS thereof and UPS shall, at
its own expense, defend such action and indemnify and hold harmless Vendor from
and against any and all claims, losses, damages, judgments, costs, and expenses
(including attorney's fees) arising therefrom or caused thereby. UPS shall
permit Vendor to participate in such defense to the extent that, in Vendor's
judgment, Vendor may be prejudiced thereby, and UPS shall not settle any such
action without the prior, written consent of Vendor, which consent shall not be
unreasonably withheld. If UPS or Vendor is enjoined from
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using the hardware or software or any portion thereof, UPS shall promptly, at
its expense, either: (i) procure for Vendor the right to use the hardware or
software or portion thereof, the use of which is enjoined; or (ii) modify the
same so that it is no longer infringing, but performs the same functions in an
equivalent manner; or (iii) substitue with software or hardware which performs
the same functions in in an equivalent manner without any degradation in
performance.
ARTICLE 16 - LIMITATION OF LIABILITY
16.1 Neither Indemnifying Party shall be liable to the other nor be deemed to
be in breach of this Agreement for special, indirect, incidental or
consequential damages, including without limitation damages for lost revenues
or lost opportunities even if such damages were foreseeable or result from a
breach of this Agreement.
16.2 With the exception of Vendor's liability under Article 15,
Indemnification, neither Vendor nor UPS shall be liable to the other for any
special, indirect, or consequential damages arising out of this Agreement, even
if advised in advance of the possibility of such damages.
ARTICLE 17 - FORCE MAJEURE
Neither party shall be liable to the other for any delays in performance or
nonperformance of any obligations hereunder to the extent that such performance
is prevented or delayed for a period not to exceed seven (7) days by acts of
God or other causes beyond the reasonable control of such party, and no breach
hereunder shall result therefrom, provided that the affected party shall have
exercised reasonable efforts to remove or avert the cause(s) of delay, and
shall have given prompt notice to the other Party of the date of commencement
and nature of the Force Majeure event.
ARTICLE 18 - INSURANCE
Vendor shall, at its own cost and expense, obtain and maintain in full force
and effect, with sound and reputable insurers, during the term of this
Agreement, the following insurance coverages: (a) Worker's Compensation
insurance as required by the law of the state of hire; (b) Employer's Liability
Insurance with minimum limits of $1,000,000 of liability, and not less than
$1,000,000 aggregate limit of liability per policy year for disease, including
death at any time resulting therefrom, not caused by accident; (c)
Comprehensive General Liability insurance against all hazards with a minimum
limit of liability for personal injury, including death resulting therefrom, on
an occurrence basis of $10,000,000 in the aggregate, and with a minimum limit
of liability for property damage on an occurrence basis of $10,000,000 in the
aggregate; (d) Automobile Liability insurance against liability arising from
the maintenance or use of all owned, non-owned and hired automobiles and trucks
with a minimum limit of liability for bodily injury of $5,000,000 in the
aggregate, and with a minimum limit or liability for property damage of
$5,000,000 per accident; (e) Fire Legal Liability Insurance of $1 000,000 and
(f) Crime Insurance including, at a minimum, fidelity coverage, computer theft
and fraud covered with a minimum of $5,000,000 coverage. Vendor's insurance
shall be deemed primary. Vendor shall provide UPS with certificates of
insurance evidencing the coverages required hereunder within ten (10) days
after execution of this Agreement and prior to commencement of Services. Each
policy required hereunder shall name UPS as an additional insured and shall
provide that UPS shall receive thirty (30) days' advance written notice in the
event of a cancellation or material change in such policy. In the event that
any Service under this Agreement to be rendered by persons other than Vendor's
employees, Vendor shall arrange to furnish UPS with evidence of insurance for
such persons subject to the same terms and conditions as set forth above and
applicable to Vendor prior to commencement of service by such person(s). In
the event of failure to furnish such certificates or notice of the cancellation
of any required insurance, UPS may immediately terminate this Agreement.
ARTICLE 19 - TAX AND TRAINING INCENTIVES
Subject to applicable law, and so long as UPS is in compliance with the terms
of this Agreement, Vendor agrees to co-operate with UPS in its pursuit of
economic incentives and to allow UPS to be eligible to receive available tax
and training incentives based upon Vendor's performance of Services and the
employment of employees by Vendor. Economic incentives include: new job tax
credits, enterprise zone tax credits, capital investment tax credits, abatement
of property taxes, or other similiar type of economic incentives. In the event
such incentives are available, the Vendor agrees to pass all incentives to the
benefit of UPS.
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ARTICLE 20 - CONFIDENTIALITY
Vendor shall treat as strictly confidential and shall not use for its own
purposes or divulge or permit to be divulged to others (i) all information and
data obtained by Vendor in connection with this Agreement or otherwise which
are confidential or proprietary to UPS or its customers, including, without
limitation, information and data relating to UPS's operations, policies,
procedures, techniques, accounts, and personnel; and (ii) all information and
data which are confidential or proprietary to a third party and which are in
the possession, custody or control of UPS. In the event of a breach or
threatened breach of the provisions of this paragraph, UPS shall be entitled to
an injunction restraining such breach or threatened breach without having to
prove actual damages. The obligations of this paragraph shall survive the
termination or expiration of this Agreement.
ARTICLE 21 - MISCELLANEOUS CONFIDENTIALITY REQUIREMENTS
21.1 Until the expiration or termination of this Agreement, except as
expressly provided herein, or with the written consent of the other party,
neither UPS nor Vendor will solicit or cause any third party to solicit any
employee of the other or make such other contact with any such employee, the
product of which contact with or may yield the termination of the employment
relationship of such employee from such party.
21.3 During the term of this Agreement and for a period of two (2) years
after expiration of this Agreement, Vendor shall not assign any of its
employees who performed Services pursuant to this Agreement to provide any
other service related to any project substantially similar in nature to the
subject matter of this Agreement for a person or entity in the express letter,
parcel delivery, parcel express, customs brokerage, vehicle routing or vehicle
scheduling systems, or transportation logistics and distribution business
navigational or vehicle tracking systems or communications equipment for
aircraft, marine, or land-based vehicle applications
ARTICLE 22 - KEY VENDOR PERSONNEL
The Parties agree that Vendor's corporate personnel assigned to this project
are critical to Vendor's successful performance of this Agreement and are key
persons of the Vendor ("Key Person" or "Key Personnel"). Vendor agrees that it
will assign each Key Person to the performance of this Agreement during its
Term. If, because of incapacitation or resignation any Key Person becomes
unavailable for the performance of this Agreement, Vendor agrees to replace
each Key Person with a person of equal or better qualifications. Vendor agrees
to provide a new Key Person in the same method as it provides a Site Manager
in accordance with Article 2.2.4 herein. The Vendor's Key Person is __________.
ARTICLE 23 - LAWS AND REGULATIONS
Vendor agrees that it will comply with all laws and regulations applicable to
its employees and the Service, including but not limited to the Fair Labor
Standards Act, Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the
Immigration Reform and Control Act of 1986, the Americans with Disabilities Act
of 1990, the Occupational Safety and Health Act (OSHA), the affirmative action
responsibilities to comply with the Office of Federal Contract Compliance
Program (OFCCP) Guidelines, and other such employment laws which may be enacted
during the life of this Agreement, and other similar laws in effect or
hereinafter enacted dealing with Vendor's employees.
ARTICLE 24 - PROPERTY AND PROPRIETARY RIGHTS
24.1 Each Party retains all intellectural property rights in any proprietary
software which are used in the rendering of Services and are either owned or
licensed by each prior to the Commencement of Services.
24.2 All work produced by Vendor under this Agreement, including, without
limitation, all inventions, creations, expressions, improvements, computer
programs, specifications, operating instructions, notes, and all other
documentation, whether patentable or unpatentable, which are first conceived or
made or first actually or constructively reduced to practice during the life of
this Agreement or within six (6) months following the expiration or
cancellation hereof, and which are conceived or made in response to matters
related to the Services or based in whole or in part on or derived from
infomation supplied by UPS or its Affiliated Companies, whether preliminary or
final, and on whatever media rendered (collectively, the "Work Product"), shall
be deemed work made for hire and
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made in the course of services rendered under this Agreement and shall be the
exclusive property of UPS. UPS shall have the unlimited right to make, have
made, use, reconstruct, repair, modify, reproduce, publish, distribute, and
sell the Work Product, in whole or in part, or combine the Work Product with
other matter, or not use the Work Product at all, as it sees fit.
24.3 In consideration of UPS's payment to Vendor of amounts specified herein
under this Agreement, and to the extent that title to any such Work Product may
not, by operation of law, vest in UPS, or such Work Product may not be
considered to be work made for hire, Vendor hereby (i) irrevocably transfers
and assigns to UPS in perpetuity all worldwide right, title, and interest in
and to the patent rights, copyrights, trade secrets and other proprietary
rights (including, without limitation, applications for registration thereof,
and all priority rights therein under applicable international conventions for
the protection of such rights) in, and ownership of, the Work Product that
Vendor may have, as and when such rights arise, (ii) grants to UPS an
unrestricted, irrevocable, nonexclusive, fully paid up, perpetual license,
with the right to sublicense, in and to Vendor's proprietary rights to the
Vendor Property required for use in connection with the Work Product, and
further agrees that other UPS outsourcing vendors may use these enhanced
systems on UPS projects without paying a royalty.
24.4 Vendor shall cooperate fully in (i) vesting in UPS the ownership of the
proprietary rights to the Work Product, and (ii) assisting UPS in obtaining
patent, copyright or any other intellectual property rights in the Work Product
and in maintaining and protecting UPS's, proprietary rights, including, without
limitation, executing any documents which UPS reasonably deems necessary for
such purpose.
24.5 Title to all materials and documentation furnished by UPS to Vendor,
including, without limitation, system specifications, shall remain in UPS.
Vendor shall deliver to UPS any and all such Work Product and property,
including all copies thereof on whatever media rendered, upon (i) UPS's request
or (ii) the termination of this Agreement for any reason.
24.6 UPS shall be free to use the Residuals resulting from any work
developed pursuant to this Agreement that are owned by the Vendor, and any
ideas, concepts, know-how, or techniques contained therein, for any purpose,
except to prepare any other work substantially similar to such work.
ARTICLE 25 - UPS REPRESENTATIONS AND WARRANTIES
UPS represents and warrants to Vendor as follows:
25.1 The execution, delivery, and performance of this Agreement by UPS and
the performance by UPS of the transactions contemplated hereby have been duly
and validly authorized by all necessary action, corporate or otherwise on its
part, and that this Agreement constitutes the valid, legal, and binding
obligation of UPS, enforceable against it in accordance with its terms.
25.2 Neither the execution, delivery, nor performance of this Agreement,
with or without the giving of notice, the passage of time, or both, will result
in the violation or breach of any contract, agreement, instrument, undertaking,
order, judgment, decree, rule, regulation, law, or any other restriction to
which UPS is a party or pursuant to which UPS or its assets are subject or
otherwise.
ARTICLE 26 - VENDOR'S REPRESENTATIONS AND WARRANTIES
Vendor represents and warrants to UPS as follows:
26.1 The execution, delivery and performance of this Agreement by Vendor and
the performance by Vendor of the transactions contemplated hereby have been
duly and validly authorized by all necessary action, corporate or otherwise on
its part, and that this Agreement constitutes the valid, legal and binding
obligation of Vendor, enforceable against it in accordance with its terms.
26.2 Neither the execution, delivery, nor performance of this Agreement,
with or without the giving of notice, the passage of time, or both, will result
in the violation or breach of any contract, agreement, instrument, undertaking,
order, judgment, decree, rule, regulation, law, or any other restriction to
which Vendor is a party or pursuant to which Vendor or its assets are subject
or otherwise.
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26.3 Vendor warrants that while this Agreement is in effect, it shall
maintain a staff, sufficient in number and training, to properly perform the
obligations imposed on Vendor by the terms and conditions of this Agreement,
and shall dedicate such staff to performing such obligation during that time,
and Vendor shall perform such obligations in a professional and timely manner.
26.4 Vendor warrants to UPS that (i) It shall perform all Services in a good
and professional manner and in accordance with this Agreement and its
Attachments, or any other applicable and mutually agreed upon specifications;
and, (ii) It has the legal right to perform all Services specified herein.
ARTICLE 27 - TERMINATION
27.1 Termination for Changed Laws. UPS shall have the right to terminate
this Agreement, without liability to Vendor, in the event of judicial,
regulatory or legislative change rendering performance of this Agreement
impossible, illegal or impractical. UPS shall provide Vendor written notice of
such termination as promptly as possible, but in no event less than ninety (90)
days prior to the termination date.
27.2 Termination for Cause. In the event that either Party hereto: (i)
materially breaches any of its duties or obligations hereunder (except for a
breach of UPS's payment obligations hereunder), which breach shall not be
substantially cured within forty-five (45) days after written notice is given
to the breaching party specifying the +breach; or (ii) commits a material
breach in the performance of any of its duties or obligations hereunder (which
the breaching party is able to demonstrate to the reasonable satisfaction of
the other party cannot reasonably be cured with forty-five (45) days), and
fails to proceed promptly after being given written notice specifying the
breach to commence during said breach and thereafter to proceed with all due
diligence to substantially cure the same; or, (iii) repeatedly breaches any of
its duties or obligations hereunder and fails to substantially cure and cease
committing such repeated breaches within forty-five (45) days after being given
written notice thereof to the breaching party, the non-breaching party may
terminate this Agreement as of a date specified in such notice of termination.
27.3 Termination for Convenience. Notwithstanding the provisions of Article
3.1, UPS shall have the right to terminate at its convenience by giving the
Vendor written notice of termination seventy (70) days prior to termination.
The Vendor shall have the right to terminate at its convenience provided the
Equivalent Employees staff level providing Services is one hundred (100)
Equivalent Employees or less. In such event, it shall give UPS one hundred and
twenty day (120) written notice of termination.
27.4 Termination for Nonpayment. In the event that UPS breaches its
obligation to pay to Vendor any amount due to Vendor hereunder and does not
cure such breach within thirty (30) days after being given written notice of
such breach, then Vendor may, by giving written notice thereof to UPS,
terminate this Agreement as of a date specified in such notice of termination.
Notwithstanding the foregoing, Vendor may not terminate this agreement pursuant
to this Article for UPS's failure to pay to Vendor any amount that is
reasonably disputed by UPS in good faith so long as UPS promptly notifies
Vendor of any disputed amount being withheld from Vendor and specifies the
reasons why that amount Is disputed.
27.5 Termination for Insolvency. In the event that either party hereto is
insolvent, then the other party hereto may, by giving written notice thereof to
such party, terminate this Agreement as of a date specified in such notice of
termination. A party shall be deemed insolvent if it:
(1) Is unable to pay its debts generally as they come due;
(2) Is declared insolvent or bankrupt;
(3) Is the subject of any proceedings relating to its liquidation,
insolvency, or for the appointment of a receiver or similar officer for it;
(4) Makes an assignment for the benefit of all or substantially all of its
creditors; or,
(5) Enters into an agreement for the composition, extension, or
readjustment of all or substantially all of its obligations,
27.6 Termination Assistance. Commencing upon any notice of termination by
either party pursuant to the above Articles hereof or expiration of the Initial
Term or any Renewal Term of this Agreement, Vendor will provide to UPS or its
designee any and all termination assistance reasonably requested by UPS to
allow the Services to continue without interruption or adverse effect and to
facilitate the orderly transfer of responsibility for the Services to UPS or
its designee. If and to the extent that such assistance is provided after the
termination date or otherwise
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requires resources in addition to those resources then being regularly utilized
in the performance of the Services, UPS will pay Vendor for such assistance on
a time and materials basis at reasonable negotiated rates therefor or on any
other mutually acceptable basis. The termination assistance to be provided to
UPS by Vendor shall include, without limitation, the following:
27.6.1 Continuing to perform, for a reasonable period following the termination
date, any or all of the Services then being performed by Vendor; and,
27.6.2 Developing, with the assistance of UPS, a plan for the transition of
operations from Vendor to UPS or its designee, which plan shall include,
but not be limited to, the extent requested by UPS and not inconsistent
with the provisions of this Agreement:
(i) Identifying alternate outsourcing providers.
(ii) Assistance with implementation and transition plans.
(iii) Ongoing Service provision until a new provider is in place.
27.6.3 Providing training for personnel of UPS and its designee in the
performance of the operations then being transition to UPS or its
designee; and,
27.7 Allowing UPS or its designee to make offers of employment to all Vendor
employees dedicated to performing the Services. Upon the request of
UPS, Vendor will provide UPS or its designee with the names, job
titles, and work locations of the applicable employees.
ARTICLE 28 - INDEPENDENT CONTRACTOR
28.1 Vendor shall act at all times as an independent contractor, and nothing
contained herein shall be construed to create the relationship of principal and
agent, or employer and employee, between Vendor and UPS. Vendor employees
assigned to perform the Services for UPS are solely the employees of Vendor.
Vendor shall have sole authority and responsibility to counsel, discipline,
review, evaluate, set the pay rates of, and terminate its employees who
perform the Services. Vendor will maintain all necessary payroll and personnel
records, and compute wages and withhold applicable federal, state, and local
taxes and social security payments for Vendor personnel performing the Services.
28.2 Vendor shall develop its own screening, testing and hiring process to be
implemented; prior to the implementation of such process, Vendor shall review
applicable processes currently maintained by UPS.
28.3 The relationship of Vendor and UPS hereunder shall in no way be construed
to create a joint venture or partnership, it being agreed and understood the
relationship between Vendor and UPS is an independent contractor relationship.
ARTICLE 29 - DISPUTE RESOLUTION
In the event of any continuing dispute between the parties which has not been
resolved after reasonable attempts by either party to do so, including without
limitation any continuing dispute relating to the interpretation of any
provision of this Agreement, the performance or non-performance by either party
hereunder, or the amount of any disputed charges arising hereunder, then, upon
the written request of either party, each of the parties will appoint a
designated executive management representative who does not devote
substantially all of his or her time to performance under this Agreement, whose
task it will be to meet for the purpose of endeavoring to resolve such
dispute. The designated representatives shall meet as often as the parties
reasonably deem necessary in order to gather and furnish to the other all
information with respect to the matter in issue which the parties believe to be
appropriate and germane in connection with its resolution. Such
representatives shall discuss the problem and negotiate in good faith in an
effort to resolve the dispute without the necessity of any formal proceeding
relating thereto. During the course of such negotiation, all reasonable
requests made by one party to the other for information will be honored in
order that each of the parties may be fully advised in the subject matter of
the dispute. The specific format for such discussions will be left to the
discretion of the designated representatives. Arbitration for the resolution
of such dispute pursuant to this Article hereof may not be commenced until the
earlier to occur of (i) the designated representatives concluding in good faith
that amicable resolution through continued negotiation of the matter in issue
does not appear likely, or (ii) thirty (30) days next following. Except where
clearly prevented by the area in dispute, both parties agree to continue
performing their respective obligations under this Agreement while the dispute
is being resolved unless and until this Agreement expires or is terminated in
Draft 7/8/96 16
<PAGE> 22
accordance herewith. This provision shall not preclude either party from
seeking immediate relief such as a preliminary injunction, temporary
restraining order, or declaratory proceeding.
ARTICLE 30 - MEDIATION AND ARBITRATION
(A) Mediation. If a dispute arises out of or related to this Agreement or the
breach thereof and if the dispute cannot be settled through negotiations, the
parties agree first to try in good faith to settle the dispute by mediation
administered by the American Arbitration Association ("AAA") under its
Commercial Mediation Rules before resorting to arbitration. All disputes,
claims, or causes of action arising out of or relating to this Agreement, or the
validity, interpretation, breach, violation, or termination thereof, shall be
finally and solely determined and settled by arbitration to be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") in effect at the date of execution of this Agreement.
(B) Arbitration. Before any dispute under this Agreement is submitted to
arbitration, the claimant shall give written notice to the other party
describing in detail the acts, omissions, or conduct of which that party
complains. The service of such notice shall not be deemed to be a commencement
of an action or arbitration. The other party may respond in writing within ten
(10) days of said notice. The parties shall attempt in good faith to resolve
the dispute before submitting the matter to arbitration. If the matter cannot
be resolved after the notice has been sent and response time has expired,
subject to the limitations imposed by all applicable statutes of limitation,
either party shall have the right to submit the dispute to arbitration by
serving a demand for arbitration in writing on the other party and filing same
with the AAA.
Any arbitration commenced pursuant to this Article 30 shall be conducted by a
panel of three neutral arbitrators. These arbitrators shall have a minimum of
three years commercial experience with information systems contracts and
Intellectual Property, including, but not limited to, Patents, Trade Secrets,
Trademarks, and Copyrights.
In the event of any inconsistencies between the terms and conditions of this
Agreement and those of the Commercial Arbitration Rules of the AAA, the terms
and conditions of this Agreement shall control.
ARTICLE 31 - USE OF NAME
Vendor shall not use the name, logo, service marks or trademarks of UPS or
United Parcel Service, or any abbreviations or adaptation thereof, in any
advertising, trade displays, or public statement, or for any commercial
purposes without the prior written consent of UPS.
ARTICLE 32 - REGULAR EXECUTIVE REVIEWS
During the Term, representatives of Vendor and UPS shall meet quarterly to
review the status of matters contemplated by this Agreement, including but not
limited to, Service performance, quality performance, status of transition,
enhancement to Services (as set forth in Article 2 hereof), and quality
improvement processes.
ARTICLE 33 - TRAINING PROGRAM
UPS shall facilitate an initial formal training program hereto, at Vendors Site
on such date or date(s) as may be agreed between UPS and Vendor. UPS shall
provide all necessary documentation, necessary proprietary software, and
trainers, at its expense, to administer and conduct the initial training
program for Vendor trainees. The Vendors' trainers are to attend the initial
training program and manage and conduct the second and all succeeding classes.
UPS staff will audit the second training class. UPS agrees to provide UPS
employees for some time after the initial training class to provide support to
the Vendor. The number of UPS employees and the period they are to provide
support are subject to discussions between UPS and the Vendor.
ARTICLE 34 - TECHNOLOGY UPGRADES
In the event UPS requests the Vendor to install (or have installed) either
hardware and/or software upgrades during the Initial Term, or any Renewal Term
thereafter, on the Vendor owned Equipment on each technician's workstation, UPS
agrees to reimburse the Vendor its cost for purchasing the hardware/licensing
the software upgrades. If requested and the Vendor has the technical
capability, the Vendor shall install the upgrade(s) at no cost to UPS. If the
Vendor elects to contract with a third party vendor to install the upgrades,
UPS and the Vendor
Draft 7/8/96 17
<PAGE> 23
ARTICLE 35 - NOTICES
All notices or requests required to be given under this Agreement and all other
communications related to this Agreement shall be in writing and shall be
deemed to have been duly given when sent by UPS Next Day Air Letter or
personally delivered or addressed as follows:
If to UPS: If to Vendor:
UPS National Tech Team, Inc.
340 MacArthur Blvd. 27345 West Eleven Mile Road
Mahwah, NJ 07430 Southfield, Michigan 48034-2231
Attn: Procurement Manager Attn: Senior Vice President,
National Support Center
Either party may change its address, or the name or title of the individual to
whom notices or invoices shall be directed by written notice issued and
delivered as set forth above.
ARTICLE 36 - SURVIVING PROVISIONS
Articles 6, 7, 9, 10, 11, 12, 15, 16, 18, 20, 21, 23, 24, 27.6, 27.7, 29, 30,
31, and 37 shall survive termination of this Agreement for any reason.
ARTICLE 37 - GENERAL PROVISIONS
37.1 This Agreement, which includes all attached schedules and exhibits
referenced herein, constitutes the entire Agreement between UPS and Vendor with
respect to the subject matter hereof, and supersedes all proposals, oral or
written, and all other communications between the parties with respect to such
subject matter.
37.2 No failure or delay of either party to exercise any rights or remedies
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of the same or other rights or remedies preclude any further
or other exercise of the same or other rights or remedies, nor shall any waiver
of any rights or remedies with respect to any circumstances be construed as a
waiver thereof with respect to any other circumstances.
37.3 Vendor may not assign any rights or delegate any of its duties pursuant to
this Agreement without the prior written consent of UPS, and any attempted
assignment without such consent shall be void.
37.4 In the event that there is a change of control in the ownership of Vendor,
UPS shall have the option to terminate this Agreement without penalty on at
least sixty (60) days prior written notice to Vendor.
37.5 In the event that any provision of this Agreement is held invalid or
unenforceable in any circumstances by a court of competent jurisdiction, the
remainder of this Agreement, and the application of such provision in any other
circumstances, shall not be affected thereby.
37.6 This Agreement may be executed in any number of counterparts, and each
counterpart shall constitute an original instrument, but such separate
counterparts shall constitute one and the same agreement.
37.7 This Agreement shall be construed in accordance with the laws of the State
of New Jersey, without regard to its conflict of laws. Both parties concede to
the jurisdiction of the State of the Courts of New Jersey.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
NATIONAL TECH TEAM, INC. UNITED PARCEL SERVICE GENERAL
SERVICES CO.
Signature_____________________ Signature______________________
Name__________________________ Name___________________________
Title_________________________ Title__________________________
Date__________________________ Date___________________________
18
Draft 7/8/96
<PAGE> 24
EXHIBIT A - STATEMENT OF WORK
STATEMENT OF WORK
OVERVIEW AND PROJECT GOALS
UPS Information Services Support Center, located in Mahwah and Morristown, New
Jersey, is planning to contract to supplement our staff providing software
support and problem determination for its shipping and tracking systems, and
desires to ensure that these services are of superior quality and value. It is
UPS's intention to outsource these support activities to one or more Vendors
demonstrating the ability to meet UPS's staffing and operational needs. Vendors
will assume full responsibility for identifying and retaining employees who will
perform support service. The vendor is expected to use our Problem Management
system for recording calls and providing support 24 hours a day, seven days a
week. It must also have the ability to accommodate up to 250 technicians at one
location.
CURRENT PRODUCT TO BE SUPPORTED
UPS ONLINE PROFESSIONAL OVERVIEW
UPS Online Professional is a Windows-based Graphical user interface product.
The hardware and software are both UPS provided and supported. UPS Online
Professional has three main objectives which are Shipping, Shipping History and
Tracking. The first function (Shipping) allows our customers to:
- - Create a database which allows them to enter and save their customer
information which can then be retrieved when processing future
packages.
- - Enter their package information using available options as well as
access to price quotes for services based on package detail and
destination.
- - Use available Billing options.
- - Print the shipping labels to put on their packages.
- - Void and/or edit package information and reprint labels.
- - Process several packages as a shipment or one package as a shipment.
- - Generate summary reports for their UPS drivers and their own records as
well as a number of management reports.
- - Create a commodity database which allows them to enter and save
detailed information about commodities that are shipped. This
information can be accessed and used for commercial invoices and other
shipping documents when processing international shipments.
- - Send their package data to UPS's mainframe computer.
The second function (Shipping History) allows our customer to:
- - View pickup records.
- - View Shipper names listed by company name by which the package was
processed.
- - View shipments which are listed by company name of the recipient
(consignee) under the shipper.
- - View every package in a pickup record, even single packages sent to a
destination processed in the shipment.
- - Track from within History.
- - Access management reports.
The third and final function (Tracing) allows our customer to:
- - Find tracking numbers which can be standard, reference, delivery
confirmation and UPS Hundredweight Shipment numbers.
- - Track single or multiple tracking numbers as well as shipments.
- - Trace requests for information.
<PAGE> 25
EXHIBIT A - STATEMENT OF WORK
- - Print a variety of reports and delivery confirmation letters.
Along with the above features there are tools available to make working with
UPS Online Professional easier. There is an administration option which allows
the customer to customize its system. The UPS Online Professional system has
the ability to be upgraded through the use of Electronic Software Distribution
Online help is readily available to assist with any question that may arise.
UPS ONLINE OFFICE OVERVIEW
UPS Online Office is also a Windows-based Graphical User interface product.
This is a software only package which allows our domestic customers to:
- - Record their package data.
_ Send their package data to UPS' mainframe computer.
- - Print the shipping labels to put on their packages.
- - Save the information about each day's shipping so that they can refer to it
when they send their packages to the same person or company.
- - Track their packages.
- - Generate summary reports for their UPS driver and their own records.
UPS ONLINE FOR THE OFFICE OVERVIEW
UPS Online For The Office is also a Windows based Graphical User interface
product. This is a software ONLY package which allows our Canadian customers
to:
- - Access shipment price quotes for services based on shipment detail and
destination.
- - Receive guaranteed time in transit for services based on shipment detail and
destination.
- - Automatically call UPS for driver pickup with just the click of a button
when they are ready to have their shipments picked up.
- - Have tracking capabilities using UPS MaxiTrac to provide delivery
information or current status of their shipments.
- - Create a customer database which allows them to enter and save their
customer information which can then be retrieved when processing shipments.
- - Create a commodity database which allows them to enter and save detailed
information about commodities they haved shipped. This information can be
accessed and used for commercial invoices when processing international
shipments.
- - When necessary, obtain readily available online help.
PRODUCTS THAT MAY BE SUPPORTED IN THE FUTURE
MAXISHIP SYSTEM OVERVIEW
MaxiShip is a DOS-based software product. The hardware and software are UPS
supplied and supported.
MaxiShip allows our customers to:
- - Enter and save a customer database for processing present and future
packages.
- - Rate packages according to their services and options.
- - Print necessary labels for these packages.
- - Access package history and print reports accordingly. Print a Pickup record
for the UPS driver and themselves as well as management reports.
- - Customize screens and system configurations.
- - Transmit package information to UPS's mainframe computer.
The UPS MaxiShip system has the ability to be upgraded through the use of
Electronic Software Distribution and also contains built-in help screens for
the various functions.
<PAGE> 26
EXHIBIT A - STATEMENT OF WORK
TIME FRAMES/PROJECT DELIVERABLES
The Vendor must respond to each milestone listed below. If the Vendor has
determined any exceptions to these dates or feels that its services might be
offered within a different time frame, be sure to specifically indicate this in
your response.
Training facilities ready July 1
UPS trainers start training June 24
Telecom connectivity ready June 24
ACD group ready June 24
Work stations ready June 24
Technicians take calls July 1
UPS mentors help w/calls July 1
UPS will provide new hire training for the first three months. Thereafter, it
is the responsibility of the Vendor to provide new hire trainers and mentors.
PERSONNEL REQUIREMENTS
UPS's projected staffing requirements for technicians are as follows:
MAXISHIP SYSTEM
Date In Training # of Technicians Total Technicians
Class taking calls for Product I on Staff
June 24 20 - 20
July 1 20 20 40
July 15 20 20 60
July 29 - 20 80
Note 1: The number of staff attending each class may fluctuate. However, the
grand total of staff either in training or performing Services is to
be 80.
Note 2: The above addresses those who are to provide MaxiShip System support.
Scheduling classes for staff that are to provide support for other UPS
products is to be determined.
The vendor will identify and hire employees meeting the requirements specified
in Exhibit B - Job Description/Qualifications. The majority of these positions
require semi-skilled employees; the skilled employees comprise a small
percentage of the total. Vendors employees must be willing and able to
successfully complete two weeks of UPS class room training provided at the
vendors facility. Note that dates, positions, and staffing levels are subject
to change by UPS at any time.
UPS will determine hours of coverage provided by the Vendor and the Vendor will
be responsible for scheduling its staff accordingly.
STAFFING
The Vendor is solely responsible for all employment-related activities and
responsibilities, including but not limited to: supervision, compensation,
unemployment and disability insurance, benefits administration, hiring,
training, health and safety training, attendance, work scheduling, quality, and
quality of work, discipline, and termination of employment.
Based on Exhibit B - Job Descriptions/Qualifications, the Vendor will interview
and test candidates, conduct background checks, and select and hire personnel
to perform Services. UPS will not counsel or
<PAGE> 27
EXHIBIT A - STATEMENT OF WORK
discipline any Vendor employee in any manner. The vendor will assign one
single point of contact to serve as the coordinator for the UPS Operations
Manager. UPS and the Vendor will jointly establish an acceptable annual turnover
percentage "not to exceed" level.
ADDITIONAL PERSONNEL REQUIREMENTS
The Vendor and UPS are to jointly determine the total staff hired in each group
for the Initial Formal Training Program. The Vendor must have the capability
to adjust the hiring of employees as needed in the event that projections are
adjusted upward or downward.
REPLACEMENT EMPLOYEES
In the event that an assigned Vendor employee, for whatever reason, is unable
to perform the tasks required in this Exhibit and in Exhibit B, "Job
Descriptions/Qualifications," Vendor must be willing to: (1) Replace any
non-performing employee within thirty six (36) hours; or (2) at its own
expense, re-train a non-performing employee so that UPS's minimal requirements
are met. The Vendor shall determine, using its own methods and procedures, the
specific cause or causes of any employee who does not meet the requirements in
Exhibit A and B. The Vendor shall determine if an employee is to be replaced
or retrained.
Once training is completed, employees must be able to handle the support calls
at the required Service Levels within three (3) weeks. Upon Vendor's
determination, those employees not able to meet this standard will be retrained
or replaced.
GENERAL STAFF REQUIREMENTS
- - MINIMUM REQUIRED EDUCATION/EXPERIENCE
Support Operators are semi-skilled personnel having the ability to follow
detailed procedures and to quickly and accurately diagnose, test, configure,
and repair software problems. No prior experience is required.
- - LANGUAGE CAPABILITIES
The Vendor shall provide the following language capabilities: English and
Spanish.
- - PERSONAL SKILLS
At the minimum, the Vendor will select or train employees that have the Skills
Set described in Exhibit B - Job Descriptions/Qualifications.
SPACE FOR UPS ON SITE MANAGEMENT
The Vendor will provide two action stations and one guest action station or
cube for UPS management at no cost except telecommunications charges.
PERFORMANCE CRITERIA
The Vendor is expected to meet or exceed the UPS's statistical ratings in the
following areas within three (3) months of the Commencement of Services.
A. QUALITY
- - Random customer call backs will be done by UPS or a designated party for the
purposes of measuring quality according to:
Technical Ability - The level of technical support provided to the
customer.
<PAGE> 28
EXHIBIT A - STATEMENT OF WORK
Customer Service - The level of Customer Service and satisfaction
provided to the customers request.
Professionalism - The level of Professionalism and courtesy provided by
the Technician.
In addition to the above, telephone Help Desk calls will be subject to
monitoring by UPS staff, evaluations prepared and submitted to the Vendor.
- - PERCENT OF CALLS LOGGED
Percent of calls logged, defined as the number of calls logged divided by the
number of calls answered, will be obtained from the Expert Advisor software
package and reviewed.
- - RESOLUTION RATE
Resolution Rate, defined as the difference between answered calls and
escalated calls divided by the answered calls, will also be obtained from
the Expert Advisor software package and reviewed.
B. PRODUCTIVITY. ALLOCATION OF HOURS WORKED:
77 TO 82% Phone in ear taking calls
05 to 08% on going training
Note 1: UPS employee hours may not be allocated in this fashion.
Note 2: UPS and Vendor are to determine the best approach to determine these
percentage breakdowns.
Upon agreement with UPS and the Vendor, these allocations may change.
- - CALL DURATION statistics will be obtained from the ACD system and reviewed.
- - AFTER CALL WORK TIME or "Wrap up" will also be obtained from the ACD system
and reviewed.
C. SERVICE LEVEL
All calls received should be answered within twenty seconds (20) ninety-five
percent (95%) of the time.
<PAGE> 29
EXHIBIT B - JOB DESCRIPTION/QUALIFICATIONS
WORLD CLASS SUPPORT CENTER
United Parcel Service
External Help Desk Technician
POSITION: EXTERNAL HELP DESK TECHNICIAN
REPORTS TO: EXTERNAL HELP DESK SUPERVISOR
SUMMARY OF POSITION:
The External Help Desk Technician is responsible for answering and resolving
first level calls from the UPS user community. This includes problem or
inquiries arising with the on-line regions, batch processing or remote site
hardware. UPS customers who have UPS software or computer equipment are also
supported by the External Help Desk Technician.
Dimensions:
- - This is an A.O.T. grade level 8 position.
- - Personnel: no people report to this position
KNOWLEDGE AND EXPERIENCE:
- - College Degree, High School Diploma or equivalent.
- - One or two years experience on a Support Center, call center environment.
- - Experience or knowledge in one or more of the following areas:
- Understanding of IBM network.
- Acquire and release on-line remote terminals and printers.
- Initiating Problem Logs using the Information Management software.
- Display User Hardware' using the Netview software.
- Knowledge of PC and LAN technology in a distributive environment.
- Knowledge of mainframe and minicomputers.
- - Knowledge of CICS, VTAM, NETVIEW.
NATURE AND SCOPE:
The External Help Desk Technician works closely with all region and district
departments, local I.S., Computer Operations and Production Control, Operation
Support and Problem Coordination personnel.
There are some External Help Desk Technicians whose primary contacts are UPS
customers.
There are External Help Desk Technician must have excellent communications
skills. He/She must be able to learn quickly and retain new procedures. The
Technician works with a high degree of supervision.
<PAGE> 30
EXHIBIT B - JOB DESCRIPTION/QUALIFICATIONS
WORLD CLASS SUPPORT CENTER
PRINCIPAL ACCOUNTABILITIES:
The External Help Desk Technician works with his/her supervisor to meet the
objectives in the following areas:
1) Service Level
Responsible for answering all users' calls promptly and within a specified time
span to ensure a high level of availability to the user community.
2) Problem Determination
Assists the end users in resolving any equipment or processing problems.
Escalates problem determination to the appropriate group after a period of
fifteen minutes has passed without resolution.
3) Problem Logs
Initiates problem logs using the Information Management System with clear and
concise descriptions of the problem and transfers the record to the appropriate
support group.
4) Statistics
Records all information needed to report on the service level effectiveness of
the External Help Desk Department.
EXTERNAL CONTACTS:
- - UPS Customers
- - National, Region, District department personnel, domestic and international.
<PAGE> 31
EXHIBIT B - JOB DESCRIPTION/QUALIFICATIONS
TECHNICIAN SKILL SET
- - Experience using Personal Computer Software.
(MS Excel, MS Word, Lotus, Word Perfect, Etc...)
- - Knowledge of Personal Computer Hardware.
- - Working Knowledge of DOS
- - Working Knowledge of Windows.
- - Understanding of Memory Management
- - Knowledge of Modems/telecommunication programs
- - Understanding of Mainframe Environment
- - Understanding of Novell Networks
- - Typing Speed >35
- - Deductive troubleshooting skill.
- - Excellent communication skills
- Verbal command
- Clarity
- Volume
- - Strong Inter-personal Skills.
- - Strong Customer Service Background.
<PAGE> 32
EXHIBIT C - SITE LOCATION
National TechTeam, Inc.
19992 Kelly Road
Harper Woods, Michigan 48225
<PAGE> 33
EXHIBIT D - DAILY REPORTS
<PAGE> 34
EXHIBIT E - VENDOR EQUIPMENT/SOFTWARE
The following lists the typical desktop hardware/software configuration
provided to each technician.
A. VENDOR PROVIDED DESKTOP HARDWARE/SOFTWARE
HARDWARE
- - Pentium based 75 Mhz
- - 16 megabytes RAM
- - 420 megabyte Hard Disk
- - 14.4 Baud Modem
SOFTWARE
- - Operating system - Windows NT
- - TN 3270 Host Connectivity Facility (access to CMS, Mainframe, UPS LAN)
- - Adobe Acrobat Reader for OnLine Manuals
- - Network Navigator
- - Laplink for Windows (TBD)
B. UPS PROVIDED SOFTWARE
- - Expert Advisor
- - UPS Maxiship
- - UPS Link 1.0X
- - UPS On Line Professional
Note 1: The software provided by UPS to Vendor are either owned by UPS or
licensed by UPS from third parties (Expert Advisor from Software Artistry) to
assist the Vendor in rendering of Services.
Note 2: Desk top phone instrument and ancilliary system to be provided by
Vendor. System installed is:
<PAGE> 35
EXHIBIT F - UPS TRAVEL POLICY
UNITED PARCEL SERVICE
CONSULTANT TRAVEL & EXPENSE GUIDELINES
Receipts for all individual expenditures $25.00 and over must be attached to
expense report.
UPS will reimburse consultants for approved legitimate REASONABLE/ACTUAL
expenses incurred as specified.
LODGING
UPS will reimburse the consultant for reasonable lodging expense while
traveling on UPS business.
Room rates are to be moderate/competitive at a hotel specified by UPS or at a
hotel that carries a corporate rate for UPS.
Business phone calls pertaining to the work being performed for UPS are
covered. Personal, marketing, and other business calls are not covered.
Meeting rooms and food service must be arranged through UPS Procurement
Department via Order. UPS will not cover meeting rooms as personal expense.
(See miscellaneous for laundry expenses.)
AIRFARE
Airline reservations should be for the lowest possible non-restricted,
non-penalty rate in economy or coach class. If flying another class the
consultant will be responsible for the difference in rates. Reservations
should be made through UPS's travel agent, or, if the consultant does not use
UPS's Travel Agent, UPS will pay the lower of the actual airfare of the airfare
UPS's Travel Agent would have billed. Advanced reservation fares should be
utilized as soon as meetings are scheduled.
GROUND TRANSPORTATION
While traveling away from home on UPS business ground transportation is
covered. The travel mode chosen should be either taxi or limousine,
considering distance, cost and scheduling. Less costly means of transportation
should be used whenever possible.
<PAGE> 36
AUTOMOBILE RENTALS
Economy or compact cars are to be rented. If several individuals are traveling
together, a larger size car is acceptable.
If a long-term (one month or more) car rental is required, please contact
External Services.
PERSONAL AUTO USE
If personal autos are used for UPS business, a standard fee per mile will be
paid. Commuting is not covered.
To compute business mileage, take the total mileage to and from the designated
UPS workplace and subtract your normal daily commute mileage. The total will
be the reimbursable mileage.
Tolls will be reimbursed if tolls aren't regularly encountered in your normal
daily commute to and from work.
Consultant must provide origin and destination for business miles driven.
GROUP EXPENSES
Consultants traveling on UPS business must pay for individual expenses. Group
expenses are acceptable for pre-approved meetings only, provided a legitimate
business purpose exists. Group meals with UPS employees must be paid for by
the UPS employees.
MEALS
Consultants will be reimbursed for breakfast and dinner while traveling away
from home.
Meal expenses must be reasonable and vary according to location, area of the
country and other factors.
Receipts are required for any meals that exceed $25.00.
MISCELLANEOUS
Tolls, parking fees, and gasoline for rental cars are covered when incurred for
UPS business travel.
Reasonable laundry charges will be covered if your stay is extended over a
weekend.
<PAGE> 37
Movie rentals are not covered.
UPS requires traveling during non-business hours, except when essential and
approved by consultant's UPS' project manager.
Domestic travel time will be covered at one-quarter of the consultant's daily
rate.
Trans-oceanic travel will be covered at half of the consultant's daily rate.
Travel time in excess of 8 hours in one day, will be remunerated at a maximum
rate of half of the consultant's daily rate.
Any combination of work and travel time in one day exceeding 8 hours will be
covered up to 8 hours or the work time, whichever is greater.
<PAGE> 1
EXHIBIT 10.33
AGREEMENT FOR SERVICES
BETWEEN
OWENS-CORNING FIBERGLAS CORPORATION
AND
NATIONAL TECHTEAM
<PAGE> 2
1. BACKGROUND AND OBJECTIVES ........................................ 1
1.1 Background ................................................. 1
1.2 Objectives ................................................. 2
1.3 Construction ............................................... 3
1.4 DEFINITIONS ................................................ 3
1.5 Other Terms ................................................ 4
2. PROVISION OF SERVICES ............................................ 4
2.1 Provision of Services ...................................... 4
2.2 Entities Receiving Services ................................ 5
3. TERM ............................................................. 5
3.1 Term ....................................................... 5
3.2 Extension .................................................. 5
4. PERFORMANCE STANDARDS ............................................ 6
4.1 General .................................................... 6
4.2 Periodic Reviews ........................................... 6
4.3 Failure to Perform ......................................... 6
4.4 Measurement and Monitoring Tools ........................... 7
5. PROJECT AND CONTRACT MANAGEMENT .................................. 7
5.1 Key Personnel .............................................. 7
5.2 Replacement, Qualifications, and Retention of TechTeam
Personnel .................................................. 8
5.3 Procedures Manual .......................................... 8
5.4 Change Control ............................................. 9
5.5 Use of Subcontractors ...................................... 10
5.6 Reports and Meetings ....................................... 11
5.7 Annual Technology Plan ..................................... 12
5.8 Quality Assurance .......................................... 12
5.9 Viruses .................................................... 12
5.10 Disabling Code ............................................. 13
6. AUDIT RIGHTS ..................................................... 13
6.1 Audit Access ............................................... 13
6.2 Audit Follow-up ............................................ 14
7. OWENS-CORNING RESPONSIBILITIES ................................... 14
7.1 Responsibilities ........................................... 14
<PAGE> 3
7.2 Saving Clause ............................................... 15
8. CHARGES ........................................................... 15
8.1 General ..................................................... 15
8.2 Pass-Through Expenses ....................................... 15
8.3 Incidental Expenses ......................................... 15
8.4 Taxes ....................................................... 16
8.5 Additional Services ......................................... 17
9. INVOICING AND PAYMENT ............................................. 18
9.1 Invoicing ................................................... 18
9.2 Payment Due ................................................. 18
9.3 Accountability .............................................. 18
9.4 Proration ................................................... 19
9.5 Refundable Items ............................................ 19
9.6 Set Off ..................................................... 19
9.7 Disputed Charges ............................................ 19
10. SAFEGUARDING OF DATA; CONFIDENTIALITY ............................. 19
10.1 Owens-Corning Data ........................................... 19
10.2 Safeguarding Owens-Corning Data .............................. 20
10.3 Confidentiality .............................................. 20
11. INTELLECTUAL PROPERTY ............................................. 22
11.1 Ownership .................................................... 22
11.2 Export ....................................................... 22
12. REPRESENTATIONS AND WARRANTIES .................................... 23
12.1 Work Standards ............................................... 23
12.2 Maintenance .................................................. 23
12.3 Efficiency and Cost Effectiveness ............................ 23
12.4 Technology ................................................... 23
12.5 Non-Infringement ............................................. 24
12.6 Authorization ................................................ 24
12.7 Inducements .................................................. 24
12.8 Disclaimer ................................................... 24
13. INSURANCE AND RISK OF LOSS ........................................ 24
13.1 Insurance .................................................... 24
<PAGE> 4
13.2 Risk of Loss ............................................. 25
14. INDEMNITIES ................................................... 26
14.1 Indemnity by TechTeam. ................................... 26
14.2 Indemnity by Owens-Corning. ............................. 26
14.3 Additional Indemnities. ................................. 27
14.4 Infringement. ............................................ 27
14.5 Indemnification Procedures. ............................. 27
14.6 Subrogation. ............................................ 28
15. LIABILITY ..................................................... 29
15.1 General Intent. .......................................... 29
15.2 Liability Restrictions. ................................. 29
15.3 Force Majeure. .......................................... 29
16. DISPUTE RESOLUTION ............................................ 30
16.1 Informal Dispute Resolution. ............................ 30
16.2 Arbitration. ............................................ 31
16.3 Litigation. ............................................. 33
16.4 Continued Performance. .................................. 33
16.5 Governing Law. .......................................... 33
17. TERMINATION ................................................... 33
17.1 Termination for Cause. .................................. 33
17.2 Termination for Convenience. ............................ 34
17.3 Termination Upon Change of Control. ..................... 34
17.4 Extension of Termination Effective Date. .............. 35
17.5 Termination/Expiration Assistance. ...................... 35
17.6 Equitable Remedies. ..................................... 36
18. GENERAL ....................................................... 37
18.1 Binding Nature and Assignment. .......................... 37
18.2 Entire Agreement; Amendment. ............................ 37
18.3 Compliance with Laws and Regulations. ................... 37
18.4 Notices. ................................................ 37
18.5 Counterparts. ........................................... 39
18.6 Headings. ............................................... 39
18.7 Relationship of Parties. ................................ 39
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18.8 Severability. ............................................ 39
18.9 Consents and Approval. ................................... 39
18.10 Waiver of Default; Cumulative Remedies. ................. 40
18.11 Survival. ............................................... 40
18.12 Media Releases. ......................................... 40
18.13 Service Marks. .......................................... 40
18.14 Third Party Beneficiaries. .............................. 40
18.15 Covenant Against Pledging. .............................. 41
18.16 Covenant of Good Faith. ................................. 41
18.17 Order of Precedence. .................................... 41
<PAGE> 6
AGREEMENT FOR SERVICES
This Agreement for Services (the "Agreement"), effective December 15,
1995 (the "Effective Date"), is entered into by and between OWENS-CORNING
FIBERGLAS CORPORATION, a Delaware corporation with its principal place of
business located at Fiberglas Tower, Toledo, Ohio 43659 ("Owens-Corning"), and
NATIONAL TECHTEAM, INC., a Delaware corporation with its principal place of
business located at 22000 Garrison Avenue, Dearborn, Michigan 48124
("TechTeam"). As used in this Agreement, "Party" means either Owens-Corning or
TechTeam, as appropriate, and "Parties" means Owens-Corning and TechTeam. The
Parties agree that the following terms and conditions will apply to the
services to be provided by TechTeam under this Agreement.
1. BACKGROUND AND OBJECTIVES
1.1 BACKGROUND.
This Agreement is being made and entered into with reference to the
following:
(a) Owens-Corning is a global, technology-based enterprise that
develops, manufactures and markets materials for consumers and industrial
customers. Construction of new facilities and the modification to existing
facilities are critical to Owens-Corning's growth agenda and are underlying
Owens-Corning's Global Workplace Vision. As part of Owens-Corning's current
information technology strategy, Owens-Corning desires to roll-out a
standardized global response center and software application help desk.
(b) In connection with the foregoing effort, Owens-Corning desires
such activities and responsibilities currently being performed by or for
Owens-Corning be performed and managed by a third party skilled in the
performance and management of such functions. In an effort to locate such a
third party, Owens-Corning issued a Request for Proposal ("RFP"), dated
October 13, 1995.
(c) TechTeam, a large and well-known provider of computer "help
desk" services, provided a proposal to Owens-Corning. TechTeam represents
that it has the skills, qualifications and experience necessary to perform and
manage such services in an efficient, cost effective and controlled manner,
with a high degree of quality and responsiveness, and that is has performed
similar services for other customers. The Parties intend that TechTeam will
constantly strive to improve the efficiency, quality and effectiveness of the
Services to be provided to Owens-Corning under this Agreement.
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(d) In reliance on these statements and representations, and after
examination and evaluation of TechTeam's and competitive proposals to
Owens-Corning, Owens-Corning has selected TechTeam as its vendor of choice to
provide the services described herein during the Term of this Agreement. This
Agreement documents the terms and conditions under which Owens-Corning agrees
to purchase, and Tech Team agrees to provide, such services.
1.2 OBJECTIVES.
In entering into this Agreement, the Parties have indentified specific
objectives intended to be satisfied through performance of this Agreement.
These objectives include the following:
(a) Entering into a strategic relationship that supports and
advances Owens-Corning's guiding principles of customer satisfaction,
individual dignity and shareholder value, and its Global Workplace Vision.
(b) Enabling Owens-Corning's Information Services to concentrate on
its internal core competencies by transferring to TechTeam functional
responsibility for certain of its information services, activities and
responsibilities.
(c) Ensuring that TechTeam will provide a seamless transition from
its current help desk environment to the Owens-Corning designated standardized
solution.
(d) Improving "help desk" service levels, including rapid response
times and problem resolution performance, and reducing the costs associated
with its current deployment of internal IS resources.
(e) Increasing the cost effectiveness and quality of the services
being transferred from Owens-Corning to TechTeam.
(f) Obtaining and maintaing most favored customer status with
TechTeam.
(g) Ensuring that disruption to Owens-Corning's business operation
will be minimized due to Owens-Corning's transition of the services to TechTeam
and transition of the services back to Owens-Corning or its designee(s) upon
expiration or termination of the Agreement.
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1.3 CONSTRUCTION
The provisions of Sections 1.1 and 1.2 are intended to be a general
introduction to this Agreement and are not intended to expand the scope of the
Parties' obligations under this Agreement or to alter the plain meaning of the
terms and conditions of this Agreement. However, to the extent the terms and
conditions of this Agreement do not address a particular circumstance or are
otherwise unclear or ambiguous, such terms and conditions are to be interpreted
and construed so as to give effect to the provisions set forth in Sections 1.1.
and 1.2.
1.4 DEFINITIONS
CERTAIN DEFINITIONS.
As used in this Agreement:
(a) "Affiliate" shall mean, with respect to any entity, any other
entity Controlling, Controlled by or under Common Control with such entity.
(b) "Control" and its derivatives shall mean with regard to any
entity the legal, beneficial, or equitable ownership, directly or indirectly,
of fifty (50) percent or more of the capital stock (or other ownership
interest, if not a corporation) of such entity ordinarily having voting
rights.
(c) "Effective Date" shall be December 15, 1995.
(d) "Including" shall mean including without limitation. This term
is as defined, whether or not capitalized in this Agreement.
(e) "Key TechTeam Personnel" shall have the meaning given in Section
5.1.
(f) "Losses" shall mean all losses, liabilities, damages and claims
(including taxes), and all related costs and expenses (including reasonable
legal fees and disbursements and costs of investigation, litigation,
settlement, judgment, interest and penalties).
(g) "Out-of-Pocket Expenses" shall mean reasonable and actual
out-of-pocket expenses incurred by TechTeam for equipment, materials, supplies,
or other Services provided to Owens-Corning under this Agreement, but not
including TechTeam's overhead costs (or allocations thereof), administrative
expenses or other mark-ups.
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(h) "Owens-Corning Data" shall mean information respecting
Confidential Information (as such term is defined in Section 10.3(a)) of
Owens-Corning and any other information respecting the businesses of
Owens-Corning, including the operations, facilities, call response information,
and consumer markets, all as provided to or obtained by TechTeam following
issuance of Owens-Corning's Request for Proposal dated October 13, 1995 or
during the Term of this Agreement.
(i) "Owens-Corning Project Executive" shall have the meaning given
in Section 7.1(a).
(j) "Pass-Through Expenses" shall mean the TechTeam expenses listed
in Schedule A-1, which Owens-Corning has agreed to pay directly or reimburse
TechTeam for on an Out-of-Pocket Expenses basis.
(k) "Performance Standards" shall mean, individually and
collectively, the quantitative and qualitative performance standards and
commitments for the Services contained in this Agreement.
(l) "Procedures Manual" shall mean the procedures manual described
in Section 5.3(a).
(m) "Services" shall have the meaning given in Section 2.1.
(n) "Service Levels" shall have the meaning given in Section 4.1.
1.5 OTHER TERMS.
Other terms used in this Agreement are defined in the context in which
they are used and shall have the meanings there indicated.
2. PROVISION OF SERVICES
2.1 PROVISION OF SERVICES.
(a) Under this Agreement, TechTeam shall provide the "Services,"
consisting of the following, as they may evolve during the Term of this
Agreement and as they may be supplemented, enhanced, modified or replaced:
(1) the services, functions and responsibilities described
in this Agreement and its Schedules; and
(2) the services, functions and responsibilities performed
during the twelve (12) months preceding the Effective Date by Owens-Corning
personnel
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(employees and contractors) who were displaced or whose functions were
displaced as a result of this Agreement, even if the service, function, or
responsibility is not specifically described in this Agreement.
(b) If any services, functions or responsibilities not specifically
described in this Agreement are required for the proper performance and
provision of the Services, they shall be deemed to be implied by and included
within the scope of the Services to the same extent and in the same manner as
if specifically described in this Agreement. Except as otherwise expressly
provided in this Agreement, TechTeam shall be responsible for providing the
facilities, personnel and other resources as necessary to provide the Services.
2.2 ENTITIES RECEIVING SERVICES.
As of the Effective Date, TechTeam will provide Services to
Owens-Corning and to those Affiliates of Owens-Corning and other entities in
which Owens-Corning has an ownership interest, as to which Owens-Corning was
providing services similar to the Services prior to the Effective Date. During
the Term, TechTeam shall provide the Services to such additional Affiliates and
other related entities as may be designated by Owens-Corning during the Term.
The charges for the Services provided to such additional entities are included
in the charges defined in Schedule A.
3. TERM
3.1 TERM.
The term of this Agreement shall begin on the Effective Date and shall
expire 1 year thereafter, unless terminated earlier or extended in accordance
with this Agreement ("Term").
3.2 EXTENSION.
Upon giving written notice to TechTeam no less than 3 months prior to
the then-existing expiration date of this Agreement, Owens-Corning shall have
the right to extend this Agreement for up to 12 months at the terms and
conditions then in effect. Owens-Corning shall have an additional extension
option of up to 12 months, however, TechTeam agrees to renegotiate with
Owens-Corning in good faith the rates for the second year option with rate
increases not to exceed 5%.
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4. PERFORMANCE STANDARDS
4.1 GENERAL.
TechTeam shall perform the Services at least at the same level and with
the same degree of accuracy, quality, completeness, and responsiveness as was
provided prior to the Effective Date by Owens-Corning. Initial quantitative
performance standards for certain of the Services are set forth in Schedule B
("Service Levels"). In addition, the parties agree to mutually establish
Service Levels within 4 months of effective date which will be the basis for
measuring and managing on-going performance. TechTeam's level of performance
shall be at least consistent with industry standards and specific Service
Levels identified in this Agreement.
4.2 PERIODIC REVIEWS.
Within 4 months after the Effective Date and at least annually
thereafter, Owens-Corning and TechTeam shall review the Service Levels and
shall make adjustments to them as appropriate to reflect improved performance
capabilities associated with advances in the technology and methods used to
perform the Services. The Parties expect and understand that the Service Levels
will be improved over time. As part of this review process, the Parties shall
jointly determine and agree on additional Service Levels, Critical Service
Levels, and Service Level Credits to be added to Schedule B.
4.3 FAILURE TO PERFORM.
(a) TechTeam recognizes that its failure to meet Critical Service
Levels as set forth in Schedule B and as subsequently revised as provided in
Section 4.2, may have an adverse impact on the business and operations of
Owens-Corning and that the damage from TechTeam's failure to meet a Critical
Service Level is not susceptible of precise determination. Accordingly, in the
event that TechTeam fails to meet Critical Service Levels for reasons other
than the wrongful actions of Owens-Corning or circumstances that constitute
force majeure under this Agreement, then in addition to any non-monetary
remedies available to Owens-Corning under this Agreement, at law, or in equity,
Owens-Corning may elect in lieu of pursuing other monetary remedies to recover
as its sole and exclusive monetary remedy for such failure to meet Critical
Service Levels the Service Level Credits to be specified in Schedule B as
liquidated damages. This Schedule shall be developed in conjunction with the
4 month Service Level bench-mark conducted pursuant to Section 4.2 herein.
(b) If TechTeam fails to meet any Service Level, TechTeam shall (i)
promptly investigate and report on the causes of the problem; (ii) use best
efforts to correct the
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<PAGE> 12
problem and to begin meeting the Service Levels as soon as practicable; and
(iii) advise Owens-Corning, as and to the extent requested by Owens-Corning, of
the status of remedial efforts being undertaken with respect to such problems.
4.4 MEASUREMENT AND MONITORING TOOLS.
TechTeam shall implement the necessary measurement and monitoring tools
and procedures required to measure and report TechTeam's performance of the
Services against the applicable Service Levels. Such measurement and
monitoring shall permit reporting at a level of detail sufficient to verify
compliance with the Service Levels. TechTeam shall provide Owens-Corning with
information and access to such tools and procedures upon request, for purposes
of verification.
5. PROJECT AND CONTRACT MANAGEMENT
5.1 KEY PERSONNEL.
(a) "Key TechTeam Personnel" shall be the personnel filling the
positions of "Program manager" and the multilingual "Technicians".
(1) Owens-Corning may from time to time change the positions
designated as Key TechTeam Personnel under this Agreement, provided that
without TechTeam's consent, the number of Key TechTeam Personnel shall not
exceed 75% of the number of Owens-Corning dedicated technicians.
(2) Owens-Corning shall designate an individual, in accordance
with Section 5.1(b), to serve as "Account Manager", hereafter identified as
"Program Manager", for Owens-Corning. The Program Manager shall (i) serve as
the single point of accountability for the Services, and (ii) have day-to-day
authority for undertaking to ensure Owens-Corning satisfaction. The Program
Manager shall be located at TechTeam's facility in Southfield, Michigan during
the Term and shall be deemed one of the Key TechTeam Personnel.
(b) TechTeam shall cause each of the Key TechTeam Personnel to devote
substantially full time and effort to the provision of the Services under this
Agreement. Before assigning an individual to a position designated hereunder,
whether as an initial assignment or a subsequent assignment, TechTeam shall
notify Owens-Corning of the proposed assignment, shall introduce the individual
to appropriate Owens-Corning representatives, and shall provide Owens-Corning
with a resume and other information about the individual reasonabl requested
by Owens-Corning. If Owens-Corning in good faith objects to the proposed
assignment, the Parties shall attempt to resolve Owens-Corning's concerns on a
mutually agreeable basis. If the Parties have not been
<PAGE> 13
able to resolve Owens-Corning's concerns within 5 working days, TechTeam shall
not assign the individual to that position and shall propose to Owens-Corning
the assignment of another individual of suitable ability and qualifications.
Key TechTeam Personnel may not be transferred or re-assigned until a suitable
replacement has been approved by Owens-Corning.
5.2 REPLACEMENT, QUALIFICATIONS, AND RETENTION OF TECHTEAM PERSONNEL.
(a) In the event that Owens-Corning determines in good faith that the
continued assignment to the Owens-Corning account of particular TechTeam
personnel performing Services hereunder is not in the best interests of
Owens-Corning, then Owens-Corning shall give TechTeam written notice to that
effect requesting that such personnel be replaced. Promptly after its receipt
of such a request by Owens-Corning, TechTeam shall investigate the matters
stated in the request and discuss its findings with Owens-Corning. If
Owens-Corning still in good faith requests replacement of such an individual,
TechTeam shall replace that individual with a person of suitable ability and
qualifications, and to the extent applicable, pursuant to Section 5.1(b).
(b) The personnel TechTeam assigns to perform the Services shall be
properly educated, trained and qualified for the Services they are to perform.
(c) Owens-Corning and TechTeam both agree that it is in their best
interests to keep the turnover rate of TechTeam personnel performing the
Services to a reasonably low level. Accordingly, if Owens-Corning determines
that TechTeam's turnover rate is excessive and so notifies TechTeam, TechTeam
shall provide data concerning its turnover rate and shall meet with
Owens-Corning to discuss the reasons for the turnover rate. If appropriate,
TechTeam shall submit to Owens-Corning its proposals for reducing the turnover
rate, and the Parties shall mutually agree on a program to bring the turnover
rate down to an acceptable level. In any event, notwithstanding transfer or
turnover of personnel, TechTeam remains obligated to perform the Services
without degradation and in accordance with this Agreement.
5.3 PROCEDURES MANUAL.
(a) The Standards and Procedures Manual ("Procedures Manual") shall
describe how TechTeam shall perform the Services under this Agreement, the
equipment and software being used, and the documentation (e.g., operating
manuals, user guides, specifications, etc.) which provide further details of
such activities. The Procedures Manual shall describe the activities TechTeam
proposes to undertake in order to provide the Services, including where
appropriate, those direction, supervision, monitoring, staffing, reporting,
planning and oversight activities normally undertaken at facilities that
provide services of the type TechTeam shall provide under this
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Agreement. The Procedures Manual shall be suitable for use by Owens-Corning to
understand the Services.
(b) Within 90 days after the Effective Date, TechTeam shall deliver
a draft Procedures Manual to Owens-Corning, for its comments and review.
TechTeam shall incorporate reasonable comments or suggestions of Owens-Corning
and shall finalize the Procedures Manual within 150 days of the Effective Date.
The final Procedures Manual shall be subject to the approval of Owens-Corning.
TechTeam shall periodically update the Procedures Manual to reflect changes
in the operations or procedures described therein. Updates of the Procedures
Manual shall be provided to Owens-Corning for review, comment, and approval.
TechTeam shall perform the Services in accordance with the Procedures Manual.
In the event of a conflict between the provisions of this Agreement and the
Procedures Manual, the provisions of this Agreement shall control unless the
Parties expressly agree otherwise and such agreement is set forth in the
relevant portion of the Procedures Manual. TechTeam expressly agrees that
Owens-Corning retains the right to reproduce and implement all or part of
these procedures during and after the term of this Agreement.
5.4 CHANGE CONTROL.
(a) TechTeam shall comply with the following change control
requirements:
(1) Prior to using any software or equipment to provide the
Services, TechTeam shall have verified that the item has been properly
installed, is operating in accordance with its specifications, and is
performing its intended functions in a reliable manner.
(2) TechTeam shall make no change which adversely affects
the function or performance of, or decreases to any significant degree the
resource efficiency of, the Services, including implementing changes in
technology, without first obtaining Owens-Corning's approval, which approval
Owens-Corning may withhold in its sole discretion. TechTeam may make temporary
changes required by an emergency if it has been unable to contact an
appropriate Owens-Corning manager to obtain such approval after making
reasonable efforts. TechTeam shall document and promptly report such emergency
changes to Owens-Corning.
(3) TechTeam shall move programs from development and test
environments to production environments in a controlled and documented manner,
so that no changes are introduced into the programs during such activity.
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5.5 USE OF SUBCONTRACTORS.
(a) Except as and to the extent Owens-Corning may agree otherwise in
writing, TechTeam shall not subcontract its obligations under this Agreement
except as follows:
(1) Prior to entering into a subcontract with third party, TechTeam
shall give Owens-Corning reasonable prior written notice specifying the
components of the Services affected, the scope of the proposed subcontract,
and the identity and qualifications of the proposed subcontractor. At
Owens-Corning's request, TechTeam shall forward to Owens-Corning the contract
that exists or will exist between TechTeam and the subcontractor. Subject to
Section 5.6(a)(2), Owens-Corning shall have the right to approve or disapprove
of proposed subcontractors in its sole discretion. Owens-Corning also shall
have the right during the Term to revoke its prior approval of a subcontractor
and direct TechTeam to replace such subcontractor, if the subcontractor's
performance is materially deficient, good faith doubts exist concerning the
subcontractor's ability to render future performance because of changes in the
subcontractor's ownership, management, financial condition, or otherwise, or
there have been material misrepresentations by or concerning the subcontractor.
(2) TechTeam may, in the ordinary course of business, subcontract for
third party services or products that are not dedicated to Owens-Corning, that
are not material to a particular function constituting a part of the Services,
and that do not result in a material change in the way TechTeam conducts its
business, provided such subcontract does not adversely affect Owens-Corning,
whether in performance of or charges for the Services or otherwise. If
Owens-Corning expresses concerns to TechTeam about such subcontract, TechTeam
shall discuss such concerns with Owens-Corning and work in good faith to
resolve Owens-Corning's concerns on a mutually acceptable basis.
(b) TechTeam shall remain responsible for obligations performed by
subcontractors to the same extent as if such obligations were performed by
TechTeam employees. TechTeam shall be Owens-Corning's sole point of contact
regarding the Services, including with respect to payment. Owens-Corning may
require that a subcontractor and TechTeam execute an agreement designing
TechTeam as the subcontractor's payment agent with respect to Owens-Corning.
TechTeam shall not disclose Confidential Information of Owens-Corning to a
subcontractor unless and until such subcontractor has agreed in writing to
protect the confidentiality of such Confidential Information in a manner
substantially equivalent to that required of TechTeam under this Agreement.
(c) TechTeam agrees to cooperate with and work with Owens-Corning
consultants, subcontractors and third party representatives as requested by
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Owens-Corning. Owens-Corning may require such consultants, subcontractors, and
third party representatives to execute nondisclosure agreements protecting
Owens-Corning's Confidential Information.
5.6 REPORTS AND MEETINGS.
(a) Reports. Promptly after the Effective Date, the Parties will
identify an appropriate set of periodic reports to be issued by TechTeam to
Owens-Corning. Such reports shall be no less comprehensive, and shall be issued
at no less frequent intervals, than the Owens-Corning's internal reporting prior
to the Effective Date. Within 15 days of such notification, TechTeam shall
provide Owens-Corning with suggested formats for such reports, for
Owens-Corning's review and approval. In any event, TechTeam shall provide to
Owens-Corning, commencing on the month after the Effective Date, a monthly
performance report delivered to Owens-Corning within 15 days after the end of
each month, in a form mutually established by the Parties, describing TechTeam's
performance of the Services in the preceding month. Such report shall:
(1) separately address TechTeam's activities respecting
the Global Call Respond Center (collectively, hereinafter referred to as
"Response Center"), and the Application Help Desk, service and support
(collectively, hereinafter referred to as "Help Desk");
(2) for each area, assess the degree to which it has
attained or failed to attain the pertinent objectives in that area, including
measurements with respect to the Performance Standards;
(3) describe the status of resolution efforts for any
identified problems, and of other initiatives;
(4) explain deviations from the Performance Standards and
include a plan for corrective action where appropriate;
(5) include such documentation and other information as
Owens-Corning may reasonably request to verify compliance with this Agreement;
and
(6) set forth a record of all equipment, software, and
personnel changes that pertain to the Services and describe planned changes
during the upcoming month that may affect the Services.
(b) Meetings. Within 30 days after the Effective Date, the Parties
shall determine an appropriate set of meeting to be held between
representatives of Owens-Corning and TechTeam. TechTeam shall prepare and
circulate an agenda
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sufficiently in advance to give participants an opportunity to prepare for the
meeting, and shall incorporate into such agenda items that Owens-Corning
desires to discuss. At Owens-Corning's request, TechTeam shall prepare and
circulate minutes promptly after a meeting. As of the Effective Date, such
meetings shall include the following:
(1) a monthly meeting among operational personnel
representing Owens-Corning and TechTeam to discuss daily performance and
planned or anticipated activities and changes that might adversely affect
performance;
(2) a quarterly meeting of the management personnel of
Owens-Corning and TechTeam, including the Owens-Corning Project Executive and
TechTeam Program Manager, to review the monthly performance reports for the
quarter, review TechTeam's overall performance under the Agreement, review
progress on the resolution of issues, provide a strategic outlook for
Owens-Corning's RESPONSE CENTER AND HELP DESK requirements, and discuss such
other matters as appropriate; and
(3) a semi-annual senior management meeting by all of the
Parties to review relevant contract and performance issues.
5.7 ANNUAL TECHNOLOGY PLAN.
The Parties shall jointly prepare an annual technology plan in
accordance with the provisions of this Section (the "Technology Plan"). The
Technology Plan shall address the information technology Help Desk and Response
Center requirements of Owens-Corning. Each Technology Plan after the first
shall review and assess the immediately preceding Technology Plan. The
Technology Plan shall consist of a three-year plan and annual implementation
plans.
5.8 QUALITY ASSURANCE.
TechTeam shall provide and implement the quality assurance procedures
that are reasonably necessary for the Services to be performed in accordance
with the Performance Standards. Such procedures shall include checkpoint
reviews, testing, acceptance, and other procedures for Owens-Corning to assure
the quality of TechTeam's performance, and shall be included in the Procedures
Manual.
5.9 VIRUSES.
TechTeam shall use its best efforts to ensure that no viruses or
similar items ("Viruses") are coded or introduced into the systems used to
provide the Services. TechTeam agrees that, in the event a Virus is found to
have been introduced into the systems used to provide the Services, TechTeam
shall use its best efforts at no
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additional charge to assist Owens-Corning in reducing the effects of the Virus
and, if the Virus causes a loss of operational efficiency or loss of data, to
assist Owens-Corning to the same extent to mitigate and restore such losses.
5.10 DISABLING CODE.
TechTeam represents and warrants that, without the prior written
consent of Owens-Corning, TechTeam shall not insert into the software any code
which would have the effect of disabling or otherwise shutting down all or any
portion of the Services. TechTeam further represents and warrants that, with
respect to any disabling code that may be part of the software, TechTeam shall
not invoke such disabling code at any time, including upon expiration or
termination of this Agreement for any reason, without Owens-Corning's prior
written consent.
6. AUDIT RIGHTS
6.1 AUDIT ACCESS.
(a) TechTeam shall provide to Owens-Corning, its auditors
(including internal audit staff), inspectors, regulators and other
representatives as Owens-Corning may from time to time designate in writing,
access at all reasonable times to the part of a facility at which TechTeam is
providing the Services, to the TechTeam personnel providing the Services, and
to the data and records relating to the Services for the purpose of performing
audits and inspections of Owens-Corning and their businesses, to verify the
integrity of data owned by Owens-Corning, to examine the systems that
process, store, support and transmit that data, and to examine TechTeam's
performance of the Services. To the extent applicable to the Services performed
by TechTeam and to the charges therefor, audits and inspections may be (i) of
practices and procedures, (ii) of systems, (iii) of general controls and
security practices and procedures, (iv) of disaster recovery and back-up
procedures, (v) of the efficiency and costs of TechTeam in performing the
Services (but only to the extent potentially affecting the charges to
Owens-Corning or the time of delivery of Services to Owens-Corning), and (vi)
any audit necessary to enable Owens-Corning to meet applicable regulatory
requirements.
(b) TechTeam shall provide to such auditors, inspectors,
regulators, and representatives such assistance as they reasonably require,
including installing and operating audit software. TechTeam shall cooperate
fully with Owens-Corning or their designees in connection with audit functions
and with regard to examinations by regulatory authorities. Owens-Corning's
auditors and other representatives shall
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comply with TechTeam's reasonable security requirements.
(c) Both parties agree that routine audits are not expected to
occur more frequently than once per year, unless government imposed or
conducted in connection with non-performance.
6.2 AUDIT FOLLOW-UP.
(a) As part of an audit or examination, Owens-Corning shall conduct
(in the case of an internal audit), or request its external auditors or
examiners to conduct, an exit conference with TechTeam to obtain factual
concurrence with issues identified in the review. TechTeam shall make available
promptly to Owens-Corning the results of any review or audit conducted by
TechTeam, its parent, Affiliates, or subsidiaries, or their contractors, agents
or representatives (including internal and outside auditors), relating to
TechTeams's operating practices and procedures to the extent relevant to the
Services or Owens-Corning.
(b) TechTeam and Owens-Corning RESPONSE CENTER AND HELP DESK
management shall meet to review each audit report promptly after the issuance
thereof and to mutually agree upon the appropriate manner, if any, in which to
respond to the changes suggested by the audit report. Owens-Corning and
TechTeam agree to develop mutually acceptable operating procedures for the
sharing of audit and regulatory findings and reports related to TechTeam's
operating practices and procedures produced by auditors or regulators of either
party.
7. OWENS-CORNING RESPONSIBILITIES
7.1 RESPONSIBILITIES.
In addition to Owens-Corning's responsibilities as expressly set forth
elsewhere in this Agreement, Owens-Corning shall be responsible for the
following:
(a) Owens-Corning shall designate, prior to commencement of the
Services by TechTeam, two individuals to whom all TechTeam communications
concerning this Agreement may be addressed (the "Owens-Corning Project
Executives"). Owens-Corning will designate a technical project executive and a
contact management executive.
(b) Owens-Corning shall cooperate with TechTeam by, among other
things, making available, as reasonably requested by TechTeam, management
decisions, information, approvals and acceptances so that TechTeam may
accomplish its obligations and responsibilities hereunder.
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7.2 SAVING CLAUSE.
Owens-Corning's failure to perform any of its responsibilities set forth
in this Agreement (other than as provided in Section 17.1(b) with respect to
Owens-Corning's failure to pay undisputed amounts) shall not be deemed to be
grounds for termination by TechTeam; provided, however, that TechTeam's
nonperformance of its obligations under this Agreement shall be excused if and
to the extent (i) such TechTeam nonperformance results from Owens-Corning's
failure to perform its responsibilities, and (ii) TechTeam provides
Owens-Corning with reasonable notice of such nonperformance and uses
commercially reasonable efforts to perform notwithstanding Owens-Corning's
failure to perform (with Owens-Corning reimbursing TechTeam for its additional
Out-of-Pocket Expenses for such efforts).
8. CHARGES
8.1 GENERAL.
All charges for the Services are set forth in this Article 8 or in
Schedule A. Owens-Corning shall not be required to pay any amounts for the
Services in addition to those payable to TechTeam under this Article 8 or
under Schedule A.
8.2 PASS-THROUGH EXPENSES.
Pass-Through Expenses are charges to be paid directly by Owens-Corning
or through TechTeam on an Out-of-Pocket Expenses basis. All Pass-Through
Expenses are listed in Schedule A, 5.0. If the Parties agree that a particular
Pass-Through Expense is to be paid by Owens-Corning directly, TechTeam shall
promptly provide Owens-Corning with the original third-party invoice for such
expense together with a statement that TechTeam has reviewed the invoiced
charges and made a determination of which charges are proper and valid and
should be paid by Owens-Corning. Otherwise, TechTeam shall act as payment
agent for Owens-Corning and shall pay third-party charges comprising the
Pass-Through Expense. Prior to making any such payment, however, TechTeam
shall review the invoice charges to determine whether such charges are proper
and valid and should be paid and shall provide Owens-Corning with a reasonable
opportunity to review the invoice to confirm TechTeam's determination.
Following such review by TechTeam and Owens-Corning, TechTeam shall pay the
amounts due and shall invoice Owens-Corning for such charges.
8.3 INCIDENTAL EXPENSES.
TechTeam acknowledges that, except as expressly provided otherwise in
the Agreement, expenses that TechTeam expects to incur in performing the
Services (such
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but not limited to, marketing expenses and account relationship activities are
included in TechTeam's charges and rates set forth in this Agreement.
Accordingly, such TechTeam expenses are not separately reimbursable by
Owens-Corning unless, on a case-by-case basis for unusual expenses,
Owens-Corning has agreed in advance and in writing to reimburse TechTeam for
the expense.
8.4 TAXES.
The Parties' respective responsibilities for taxes arising under or in
connection with this Agreement shall be as follows:
(a) Each Party shall be responsible for any personal property taxes
on property it owns or leases, for franchise and privilege taxes on its
business, and for taxes based on its net income or gross receipts.
(b) TechTeam shall be responsible for any sales, use, excise,
value-added, services, consumption, and other taxes and duties payable by
TechTeam on any goods or services used or consumed by TechTeam in providing the
Services where the tax is imposed on TechTeam's acquisition or use of such
goods or services and the amount of tax is measured by TechTeam's costs in
acquiring such goods or services.
(c) In the case of any sales, use, excise, value-added, services,
consumption or other tax during the Term of this Agreement that is assessed on
the provision of the Services as a whole, or on any particular Service received
by Owens-Corning from TechTeam, such taxes are the sole responsibility of
Owens-Corning.
(d) The Parties agree to cooperate with each other to enable each
to more accurately determine its own tax liability and to minimize such
liability to the extent legally permissible. TechTeam's invoices shall
separately state the amounts of any taxes TechTeam is collecting from
Owens-Corning. Each Party shall provide and make available to the other any
resale certificates, information regarding out-of-state or out-of-country sales
or use of equipment, materials or services, and other exemption certificates or
information reasonably requested by either Party.
(e) In the event that a sales, use, excise, value added, services,
consumption, or other tax is assessed on the provision of any of the Services,
the Parties shall work together to segregate the payments under this Agreement
into payment streams for those Services that are taxable and nontaxable.
(f) TechTeam shall promptly notify Owens-Corning of, and coordinate
with Owens-Corning the response to and settlement of, any claim for taxes
asserted by applicable taxing authorities for which Owens-Corning is
responsible hereunder, it being understood that with respect to any claim
arising out of a form or return signed by a Party to this Agreement, such Party
shall have the right to elect to control the
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response to and settlement of the claim, but the other Party shall have all
rights to participate in the responses and settlements that are appropriate to
its potential responsibilities or liabilities. If Owens-Corning requests
TechTeam to challenge the imposition of any tax, Owens-Corning shall reimburse
TechTeam for the reasonable legal fees and expenses it incurs. Owens-Corning
shall be entitled to any tax refunds or rebates granted to the extent such
refunds or rebates are of taxes that were paid by Owens-Corning.
8.5 ADDITIONAL SERVICES.
In the event that Owens-Corning requests TechTeam to perform functions
relating to the RESPONSE CENTER AND HELP DESK requirements of Owens-Corning
that are materially different from, and in addition to, the Services, the
Parties' obligations with respect to such functions shall be as follows:
(a) If the performance of the additional functions would be
reflected in an increased volume of chargeable resource usage, and the
incremental resources and expenses required to perform the additional
functions would not be disproportionately greater than the corresponding
increase in the volume or composition of such chargeable resource usage from
performing such additional functions, then the charge, if any, for such
additional functions shall be determined pursuant to Schedule C and in any, for
such additional functions shall be determined pursuant to Schedule C and the
other provisions of this Article 8, and the additional functions shall then be
considered "Services" and shall be subject to the provisions of this Agreement.
(b) If the incremental resources and expenses required to perform
the additional functions would be disproportionately greater than the
corresponding increase in the volume or composition of resource usage from
performing them, then prior to performing such additional functions:
(1) TechTeam shall quote to Owens-Corning a charge for such
additional functions that is no more that the charge TechTeam provides to
customers similar to Owens-Corning for similar services.
(2) Owens-Corning, upon receipt of such quote, may then
elect to have TechTeam perform the additional functions, and the charges under
this Agreement shall be adjusted, if appropriate, to reflect such functions.
If Owens-Corning so elects, such services shall then be deemed "Services" and
shall be subject to the provisions of this Agreement.
(c) Owens-Corning may elect to solicit and receive bids from third
parties to perform such additional functions. If Owens-Corning elects such
third party services, TechTeam shall cooperate with those third parties.
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(d) The Parties anticipate that the Services will evolve and be
supplemented, modified, enhanced or replaced over time to keep pace with
technological advancements and improvements in the methods of delivering
services, and the Parties acknowledge that these will not be deemed to result in
functions materially different from and in addition to the Services.
9. INVOICING AND PAYMENT
9.1 INVOICING.
(a) TechTeam shall invoice Owens-Corning for amounts due under this
Agreement on a monthly basis in arrears. Invoices shall be in duplicate and
forwarded to Ms. Joyce Slusher, Owens-Corning, Fiberglas Tower, Toledo, Ohio.
TechTeam shall include the calculations utilized to establish the charges.
(b) To the extent a credit may be due Owens-Corning pursuant to this
Agreement, TechTeam shall provide Owens-Corning with an appropriate credit
against amounts then due and owing; if no further payments are due to TechTeam,
TechTeam shall pay such amounts to Owens-Corning within 45 days.
(c) TechTeam shall render a single consolidated invoice for each month's
charges, showing such details as reasonably specified by Owens-Corning to
satisfy Owens-Corning's internal accounting and chargeback requirements,
including, at Owens-Corning's request, allocating charges among Service
components, locations, and departments.
9.2 PAYMENT DUE.
Subject to the other provisions of this Article 9, each invoice provided
for under Section 9.1 shall be due and payable within 45 days after receipt of
the invoice. Any amount due under this Agreement for which a time for payment
is not otherwise specified shall be due and payable within 45 days after receipt
of the invoice for such amount.
9.3 ACCOUNTABILITY.
TechTeam shall maintain complete and accurate records of and supporting
documentation for the amounts billable to and payments made by Owens-Corning
hereunder, in accordance with generally accepted accounting principles applied
on a consistent basis, and shall retain such records in accordance with its
records retention policy as that policy may be adjusted from time to time.
TechTeam agrees to provide Owens-Corning with documentation and other
information with respect to each invoice as may be reasonably requested by
Owens-Corning to verify accuracy and compliance
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with the provisions of this Agreement. Owens-Corning and its authorized agents
and representatives shall have access to such records for purposes of audit
during normal business hours during the Term and during the period for which
TechTeam is required to maintain such records.
9.4 PRORATION.
Periodic charges under this Agreement are to be computed on a calendar
month basis, and shall be prorated for any partial month.
9.5 REFUNDABLE ITEMS.
(a) Prepaid Amounts. Where Owens-Corning has prepaid for a service or
function for which TechTeam is assuming financial responsibility under this
Agreement, TechTeam shall refund to Owens-Corning, upon either Party
identifying the prepayment, that portion of such prepaid expense which is
attributable to periods on and after the Effective Date.
(b) Refunds and Credits. If TechTeam should receive a refund, credit or
other rebate for goods or services paid for Owens-Corning, TechTeam shall
promptly notify Owens-Corning of such refund, credit or rebate and shall
promptly pay the full amount of such refund, credit or rebate, as the case may
be to Owens-Corning.
9.6 SET OFF.
With respect to any amount to be paid by Owens-Corning hereunder,
Owens-Corning may set off against such amount any amount that TechTeam is
obligated to pay Owens-Corning hereunder.
9.7 DISPUTED CHARGES.
Subject to Section 9.6, Owens-Corning shall pay undisputed charges when
such payments are due under this Article and Schedule D. Disputed amounts will
be communicated in writing to TechTeam within 15 days of receipt of the invoice
in which the disputed charge appears. Owens-Corning may, without breach,
withhold payment of particular charges that Owens-Corning disputes in good
faith.
10. SAFEGUARDING OF DATA; CONFIDENTIALITY
10.1 OWENS-CORNING DATA.
Owens-Corning Data shall be and remain the property of Owens-Corning, and
upon Owens-Corning's request, the termination or expiration of this Agreement
for any reason or, with respect to any particular data, on such earlier date
that the same shall
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be no longer required by TechTeam in order to render the Services hereunder,
such Owens-Corning Data shall be promptly returned to Owens-Corning by TechTeam
in a form mutually acceptable to Owens-Corning and TechTeam or, if Owens-Corning
so elects, shall be destroyed. Owens-Corning Data shall not be utilized by
TechTeam for any purpose other than that of rendering the Services under this
Agreement, nor shall Owens-Corning Data or any part thereof be sold, assigned,
leased, or otherwise disposed of to third parties by TechTeam or commercially
exploited by or on behalf of TechTeam, its employees or agents. TechTeam shall
not possess or assert any lien or other right against or to Owens-Corning Data.
10.2 SAFEGUARDING OWENS-CORNING DATA.
TechTeam shall establish and maintain safeguards against the destruction,
loss, or alteration of Owens-Corning Data in the possession of TechTeam which
are no less rigorous than those maintained by Owens-Corning as of the Effective
Date, and shall be no less rigorous than those maintained by TechTeam for its
own information of a similar nature. Owens-Corning shall have the right to
establish backup security for data and to keep backup data and data files in its
possession if it chooses.
10.3 CONFIDENTIALITY.
(a) Confidential Information. TechTeam and Owens-Corning each acknowledge
that the other possesses and will continue to possess information that has been
developed or received by it, has commercial value in its business or that of its
customers and is not in the public domain. Except as otherwise specifically
agreed in writing by the Parties, "Confidential Information" shall mean all
information of a Party marked confidential, restricted, proprietary, or with a
similar designation. The terms and conditions of this Agreement shall be deemed
Confidential Information. In the case of Owens-Corning, Confidential
Information also shall include software provided to TechTeam by or through
Owens-Corning, Owens-Corning Data, Owens-Corning lists, Owens-Corning
information, account information, information regarding Owens-Corning's
businesses, plans, operations, consumer markets, or other information or data
stored on magnetic media or otherwise or communicated orally, and obtained,
received, transmitted, processed, stored, archived, or maintained by TechTeam
under this Agreement.
(b) Obligations.
(1) Each Party's Confidential Information shall remain the property of
that Party except as expressly provided otherwise by the other provisions of
this Agreement. Owens-Corning and TechTeam shall each use at least the same
degree of care, but in any event no less than a reasonable degree of care, to
safeguard and to prevent disclosing to third parties the Confidential
Information of the other as it employs to avoid unauthorized disclosure,
publication, dissemination destruction, loss, or
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alteration of its own information (or information of its customers) of a
similar nature; provided, however, that the Parties may disclose such
information to entities performing services required hereunder where (i) use of
such entity is authorized under this Agreement, (ii) such disclosure is
necessary or otherwise naturally occurs in that entity's scope of
responsibility, and (iii) the entity agrees in writing to assume the obligations
described in this Section. Any disclosure to such entity shall be under the
terms and conditions as provided herein.
(2) Furthermore, neither TechTeam nor Owens-Corning shall (i) make any
use or copies of the Confidential Information of the other except as
contemplated by this Agreement,(ii) acquire any right in or assert any lien
against the Confidential Information of the other, (iii) sell, assign, lease, or
otherwise dispose of Confidential Information to third parties or commercially
exploit such information, (iv) refuse for any reason (including a default or
material breach of this Agreement by the other Party) to promptly provide the
other Party's Confidential Information (including copies thereof) to it if
requested to do so (in the case of Owens-Corning Data, in the form reasonably
requested). Upon expiration or any termination of this Agreement and completion
of a Party's obligations under this Agreement, each Party shall (except as
otherwise provided with respect to TechTeam intellectual property, archival
files, or elsewhere in this Agreement) return or destroy, as the owner may
direct, all documentation in any medium that contains, refers to, or relates to
the other Party's Confidential Information, and retain no copies. In addition,
the Parties shall take reasonable steps to ensure that their employees comply
with these confidentiality provisions.
(c) Exclusions. Section 10.3(b) shall not apply to any particular
information which TechTeam or Owens-Corning can demonstrate (i) was, at the time
of disclosure to it, in the public domain; (ii) after disclosure to it, is
published or otherwise becomes part of the public domain through no fault of the
receiving Party; (iii) was in the possession of the receiving Party at the time
of disclosure to it; (iv) was received after disclosure to it from a third party
who had a lawful right to disclose such information to it; or (v) was
independently developed by the receiving Party without reference to Confidential
Information of the furnishing Party. In addition, a Party shall not be
considered to have breached its obligations under this Article for disclosing
Confidential Information of the other Party as required to satisfy any legal
requirement of a competent government body provided that, immediately upon
receiving any such request and to the extent that it may legally do so, such
Party advises the other Party promptly and prior to making such disclosure in
order that the other Party may interpose an objection to such disclosure, take
action to assure confidential handling of the Confidential Information, or take
such other action as it deems appropriate to protect the Confidential
Information.
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(d) Loss of Confidential Information. In the event of any disclosure or
loss of, or inability to account for, any Confidential Information of the
furnishing Party, the receiving Party shall notify the furnishing Party
immediately.
(e) No Implied Rights. Nothing contained in this Article shall be
construed as obligating a Party to disclose its Confidential Information to the
other Party, or as granting to or conferring on a Party, expressly or impliedly,
any rights or license to the Confidential Information of the other Party.
11. INTELLECTUAL PROPERTY
11.1 OWNERSHIP.
(a) Owens-Corning shall be the sole and exclusive owner of software owned
by it as of the Effective Date, including United States and foreign intellectual
property rights in such software.
(b) All work performed by TechTeam under this Agreement (including any
software developed by TechTeam under this Agreement) and funded by Owens-Corning
shall be considered works made for hire owned by Owens-Corning. If any such
work product may not be considered a work made for hire under applicable law,
TechTeam hereby irrevocably assigns to Owens-Corning without further
consideration, all of TechTeam's right, title and interest in and to such work
product, including United States and foreign copyrights. TechTeam acknowledges
that Owens-Corning and the successors and assigns of Owens-Corning shall have
the right to obtain and hold in their own name any intellectual property rights
in and to such work product. TechTeam agrees to execute any documents and take
any other actions reasonably requested by Owens-Corning to effectuate the
purposes of this Section.
(c) Owens-Corning grants to TechTeam a worldwide, fully paid-up,
non-exclusive right and license during the Term of this Agreement to use, copy,
maintain, modify, enhance and create derivative works of the software and works
described in (a) and (b) above for the sole purpose of providing the Services
pursuant to this Agreement; provided that this license does not give TechTeam
the right, and TechTeam is not authorized, to sublicense such software and
works.
11.2 EXPORT.
The Parties acknowledge that certain software and technical data to be
provided hereunder and certain transactions hereunder may be subject to export
controls under the laws and regulations of the United States and other
countries. No Party shall export or re-export any such items or any direct
product thereof or undertake any transaction in violation of any such laws or
regulations. To the extent within
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TechTeam's control, TechTeam shall be responsible for, and shall coordinate and
oversee, compliance with such export laws in respect of such items exported or
imported hereunder.
12. REPRESENTATIONS AND WARRANTIES
12.1 WORK STANDARDS.
TechTeam represents and warrants that the Services shall be rendered with
promptness and diligence and shall be executed in a workmanlike manner, in
accordance with the practices and high professional standards used in
well-managed operations performing services similar to the Services. TechTeam
represents and warrants that it shall use adequate numbers of qualified
individuals with suitable training, education, experience, and skill to perform
the Services.
12.2 MAINTENANCE.
TechTeam represents and warrants that it shall maintain the equipment and
software used in performing the Services so that they operate in accordance with
their specifications, including (i) maintaining equipment in good operating
condition, subject to normal wear and tear, (ii) undertaking repairs and
preventive maintenance on equipment in accordance with the applicable equipment
manufacturer's recommendations, and (iii) performing software maintenance in
accordance with the applicable software TechTeam's documentation and
recommendations.
12.3 EFFICIENCY AND COST EFFECTIVENESS.
TechTeam represents and warrants that it shall use its best efforts to use
efficiently the resources or services necessary to provide the Services.
TechTeam represents and warrants that it shall use its best efforts to perform
the Services in the most cost-effective manner consistent with the required
level of quality and performance.
12.4 TECHNOLOGY.
TechTeam represents and warrants that it shall provide the Services using,
consistent with the Change Control Procedures, proven, current technology that
will enable Owens-Corning to take advantage of technological advancements in its
industry and support Owens-Corning's efforts to maintain competitiveness in the
markets in which it competes.
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12.5 NON-INFRINGEMENT.
Each Party represents and warrants that it shall perform its
responsibilities under this Agreement in a manner that does not infringe, or
constitute an infringement or misappropriation of, any patent, copyright,
trademark, trade secret or other proprietary rights of any third party.
12.6 AUTHORIZATION.
Each Party represents and warrants to the other that:
(a) It has the requisite corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated by this Agreement; and
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by the requisite corporate action on the part of such Party.
12.7 INDUCEMENTS.
TechTeam represents and warrants to Owens-Corning that it has not violated
any applicable laws or regulations or any Owens-Corning policies of which
TechTeam has been given notice regarding the offering of unlawful inducements in
connection with this Agreement. If at any time during the Term of this
Agreement, Owens-Corning determines that the foregoing warranty is inaccurate,
then, in addition to any other rights Owens-Corning may have at law or in
equity, Owens-Corning shall have the right to terminate this Agreement for cause
without affording TechTeam an opportunity to cure.
12.8 DISCLAIMER.
EXCEPT AS PROVIDED IN THIS AGREEMENT, THERE ARE NO OTHER EXPRESS
WARRANTIES AND THERE ARE NO IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
13. INSURANCE AND RISK OF LOSS
13.1 INSURANCE.
During the Term of this Agreement, TechTeam shall have and maintain
insurance coverages with limits not less than those set forth below with
insurers
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satisfactory to Owens-Corning. Owens-Corning makes no representation that the
minimum limits or coverage types that it requires are adequate to protect
TechTeam.
(a) Worker's Compensation Insurance, including occupational illness or
disease coverage, or other similar social insurance in accordance with the laws
of the country, state, or territory exercising jurisdiction over the employee
and Employer's Liability Insurance with a minimum limit of $500,000 per
occurrence.
(b) Commercial General Liability Insurance, including Contractual Liability
and Broad Form Property Damage Liability coverage for damages to any property
with a minimum combined single limit of $2,000,000 per occurrence. This policy
shall be endorsed to name Owens-Corning as additional insured.
(c) Automotive Liability Insurance covering use of all owned, non-owned,
and hired automobiles with a minimum combined single limit of $1 000,000 per
occurrence for bodily injury and property damage liability. This policy shall
be endorsed to name Owens-Corning as additional insured.
(d) Errors and Omissions Liability Insurance covering the liability for
financial loss due to error, omission, negligence of employees and machine
malfunction in an amount of at least $2,000,000.
(e) An "umbrella" policy in an amount of $10,000,000 which shall provide
excess coverage if any one or more of the insurance coverages provided in
Paragraphs 13.2(a) through (d) are exhausted.
The foregoing insurance coverages shall be primary and non-contributing with
respect to any other insurance or self insurance which may be maintained by
Owens-Corning. TechTeam shall cause its insurers to issue certificates of
insurance evidencing that the coverages and policy endorsements required under
this Agreement are maintained in force and that not less than thirty (30) days
written notice shall be given to Owens-Corning prior to any modification,
cancellation or non-renewal of the policies. The insurers selected by TechTeam
are subject to approval by Owens-Corning. TechTeam shall assure that its
subcontractors, if any, maintain insurance coverages as specified in this
Article 13 or are endorsed as additional insureds on all required TechTeam
coverages.
13.2 Risk of Loss.
Each Party shall be responsible for risk of loss of, and damage to, any
equipment, software or other materials in its possession or under its control.
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14. INDEMNITIES
14.1 INDEMNITY BY TECHTEAM.
TechTeam agrees to indemnify, defend and hold harmless Owens-Corning and
its Affiliates and their respective officers, directors, employees, agents,
successors, and assigns, from any and all Losses and threatened Losses arising
from or in connection with any of the following:
(a) TechTeam's failure to observe or perform any duties or obligations to
be observed or performed on or after the Effective Date by TechTeam under any of
the contracts for which TechTeam has financial, administrative, or operational
responsibility;
(b) TechTeam's breach of its obligations with respect to Owens-Corning's
Confidential Information;
(c) Any claims arising out of or related to occurrences TechTeam is
required to insure against pursuant to Article 13;
(d) Any claims of infringement of any patent, trade secret, copyright or
other proprietary rights, alleged to have occurred because of systems or other
resources provided to Owens-Corning or based upon performance of the Services by
TechTeam; and
(e) Any claim or action by, on behalf of, or related to, the Transferred
Employees, including but not limited to claims arising under the occupational
health and safety or other applicable federal, state, or local laws or
regulations, arising on or after the Effective Date.
14.2 INDEMNITY BY OWENS-CORNING.
Owens-Corning agrees to indemnify, defend and hold harmless TechTeam and
its Affiliates and their respective officers, directors, employees, agents,
successors, and assigns, from any Losses and threatened Losses arising from or
in connection with any of the following:
(a) Owens-Corning's failure to observe or perform any duties or obligations
to be observed or performed prior to the Effective Date by Owens-Corning under
any of the contracts for which TechTeam, after the Effective Date, has
financial, administrative, or operational responsibility;
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(b) Owens-Corning's breach of its obligations with respect to TechTeam's
Confidential Information;
(c) Any claims of infringement of any patent, trade secret, copyright or
other proprietary rights, alleged to have occurred because of systems or other
resources provided to TechTeam by Owens-Corning or based upon Owens-Corning's
activities under this Agreement; and
(d) Any claim or action by, on behalf of, or related to, the Transferred
Employees, including but not limited to claims arising under the occupational
health and safety or other applicable federal, state, or local laws or
regulations, arising prior to the Effective Date.
14.3 ADDITIONAL INDEMNITIES.
TechTeam and Owens-Corning each agree to indemnify, defend and hold
harmless the other, and its Affiliates, officers, directors, employees, agents,
successors, and assigns, from any and all Losses and threatened Losses arising
from or in connection with any of the following: (a) the death or bodily injury
of any agent, employee, Owens-Corning business invitee, or business visitor or
other person caused by the tortious conduct of the indemnitor; (b) the damage,
loss or destruction of any real or tangible personal property caused by the
tortious conduct of the indemnitor; and (c) any claim, demand, charge, action,
cause of action, or other proceeding asserted against the indemnitee but
resulting from an act or omission of the indemnitor in its capacity as an
employer of a person.
14.4 INFRINGEMENT.
If any item used by TechTeam to provide the Services becomes, or in
TechTeam's reasonable opinion is likely to become, the subject of an
infringement or misappropriation claim or proceeding, TechTeam shall, in
addition to indemnifying Owens-Corning as provided in this Article and to the
other rights Owens-Corning may have under this Agreement, promptly take the
following actions at no additional charge to Owens-Corning and in the listed
order of priority: (i) secure the right to continue using the item; (ii) replace
or modify the item to make it non-infringing, provided that any such replacement
or modification will not degrade the performance or quality of the affected
component of the Services or; (iii) remove the item from the Services and
equitably adjust the charges to reflect such removal.
14.5 INDEMNIFICATION PROCEDURES.
With respect to third-party claims, the following procedures shall apply:
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(a) Notice. Promptly after receipt by any entity entitled to
indemnification under Sections 14.1 through 14.3 of notice of the commencement
or threatened commencement of any civil, criminal, administrative, or
investigative action or proceeding involving a claim in respect of which the
indemnitee will seek indemnification pursuant to any such Section, the
indemnitee shall notify the indemnitor of such claim in writing. No failure to
so notify an indemnitor shall relieve it of its obligations under this Agreement
except to the extent that it can demonstrate damages attributable to such
failure. Within 15 days following receipt of written notice from the indemnitee
relating to any claim, but no later than 10 days before the date on which any
response to a complaint or summons is due, the indemnitor shall notify the
indemnitee in writing if the indemnitor elects to assume control of the defense
and settlement of that claim (a "Notice of Election").
(b) Procedure Following Notice of Election. If the indemnitor delivers a
Notice of Election relating to any claim within the required notice period, the
indemnitor shall be entitled to have sole control over the defense and
settlement of such claim; provided, however, that (i) the indemnitee shall be
entitled to participate in the defense of such claim and to employ counsel at
its own expense to assist in the handling of such claim, and (ii) the indemnitor
shall obtain the prior written approval of the indemnitee before entering into
any settlement of such claim or ceasing to defend against such claim. After the
indemnitor has delivered a Notice of Election relating to any claim in
accordance with the preceding paragraph, the indemnitor shall not be liable to
the indemnitee for any legal expenses incurred by such indemnitee in connection
with the defense of that claim. In addition, the indemnitor shall not be
required to indemnify the indemnitee for any amount paid or payable by such
indemnitee in the settlement of any claim for which the indemnitor has delivered
a timely Notice of Election if such amount was agreed to without the written
consent of the indemnitor.
(c) Procedure Where No Notice of Election Is Delivered. If the indemnitor
does not deliver a Notice of Election relating to any claim within the required
notice period, the indemnitee shall have the right to defend the claim in such
manner as it may deem appropriate, at the cost and expense of the indemnitor.
The indemnitor shall promptly reimburse the indemnitee for all such costs and
expenses.
14.6 SUBROGATION.
In the event that an indemnitor shall be obligated to indemnify an
indemnitee pursuant to Sections 14.1 through 14.3, the indemnitor shall, upon
payment of such indemnity in full, be subrogated to all rights of the indemnitee
with respect to the claims to which such indemnification relates.
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15. LIABILITY
15.1 GENERAL INTENT.
Subject to the specific provisions of this Article 15, it is the intent
of the Parties that each Party shall be liable to the other Party for any
actual damages incurred by the non-breaching Party as a result of the
breaching Party's failure to perform its obligations in the manner required by
this Agreement.
15.2 LIABILITY RESTRICTIONS.
IN NO EVENT SHALL A PARTY BE LIABLE FOR INDIRECT OR CONSEQUENTIAL
DAMAGES EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES
AND NEITHER PARTY SHALL BE LIABLE FOR EXEMPLARY OR PUNITIVE DAMAGES; provided
that this limitation of liability shall not apply with respect to (i) damages
occasioned by the willful misconduct or gross negligence of a Party, (ii)
claims that are the subject of indemnification pursuant to Article 14, or (iii)
damages occasioned by the improper or wrongful termination of this Agreement by
TechTeam. Each Party shall have a duty to mitigate damages for which the other
Party is responsible.
15.3 FORCE MAJEURE.
(a) No Party shall be liable for any default or delay in the
performance of its obligations under this Agreement (i) if and to the extent
such default or delay is caused, directly or indirectly, by: fire, flood,
earthquake, elements of nature or acts of God; riots, civil disorders,
rebellions or revolutions in any country; or any other cause beyond the
reasonable control of such Party, (ii) provided the non-performing Party is
without fault in causing such default or delay, and such default or delay could
not have been prevented by reasonable precautions and can not reasonably be
circumvented by the non-performing Party through the use of alternate sources,
workaround plans or other means.
(b) In such event the non-performing Party shall be excused from
further performance or observance of the obligation(s) so affected for as long
as such circumstances prevail and such Party continues to use its best efforts
to recommence performance or observance whenever and to whatever extent possible
without delay. Any Party so delayed in its performance shall immediately notify
the Party to whom performance is due by telephone (to be confirmed in writing
within 2 days of the inception of such delay) and describe at a reasonable level
of detail the circumstances causing such delay.
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(c) If any of an event under Section 15.3(a) substantially prevents,
hinders, or delays performance of the Services necessary for the performance of
critical Owens-Corning functions for more than 3 consecutive days, then at
Owens-Corning's option (i) Owens-Corning may procure such services from an
alternate source; or (ii) Owens-Corning may terminate any portion of this
Agreement so affected and the charges payable hereunder shall be equitably
adjusted to reflect those terminated Services; or (iii) this Agreement will
terminate without liability to Owens-Corning as of a date specified by
Owens-Corning in a written notice of termination to TechTeam. TechTeam shall
not have the right to any additional payments from Owens-Corning as a results of
any force majeure occurrence.
16. DISPUTE RESOLUTION
Any dispute between the Parties, either with respect to the
interpretation of any provision of this Agreement or with respect to the
performance by TechTeam or Owens-Corning, shall be resolved as provided in this
Article 16.
16.1 INFORMAL DISPUTE RESOLUTION.
Prior to the initiation of formal dispute resolution procedures, the
Parties shall first attempt to resolve their dispute informally, as follows:
(a) Upon the written request of a Party, the other Party shall
appoint a designated representative who is not directly involved in the dispute
and whose task it will be to meet for the purpose of endeavoring to resolve
such dispute.
(b) The designated representatives shall meet as often as the
Parties reasonably deem necessary in order to gather and furnish to the other
all information with respect to the matter in issue which Parties believe to be
appropriate and germane in connection with its resolution. The representatives
shall discuss the problem and negotiate in good faith in an effort to resolve
the dispute without the necessity of any formal proceeding.
(c) During the course of negotiations, all reasonable requests made
by one Party to another for non-privileged information, reasonably related to
this Agreement, shall be honored in order that each of the Parties may be fully
advised of the other's position.
(d) The specific format for the discussions shall be left to the
discretion of the Parties, but may include the preparation of agreed-upon
statements of fact or written statements of position.
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(e) Should the Parties fail to reach agreement pursuant to paragraphs (a)
through (d) above, or at any other time as the Parties may mutually agree, the
Vice President and Chief Information Officer of Owens-Corning and the Chief
Executive Officer of National Tech Team shall meet and endeavor to resolve the
dispute:
(f) Formal proceedings for the resolution of a dispute may not be
commenced until the earlier of:
(1) the designated representatives concluding in good faith that
amicable resolution through continued negotiation of the matter does not appear
likely; or
(2) 30 days after the initial request to negotiate the dispute.
This provision shall not be construed to prevent a Party from instituting, and
a Party is authorized to institute, formal proceedings earlier to avoid the
expiration of any applicable limitations period, or to preserve a superior
position with respect to other creditors, or as provided in Sections 16.3 and
17.6.
16.2 ARBITRATION.
If the Parties are unable to resolve a dispute under this Agreement as
contemplated by Section 16.1 and if such dispute is not subject to Sections 16.3
or 17.6 of this Agreement, then such dispute shall be submitted to mandatory and
binding arbitration at the election of either Party (the "Disputing Party")
pursuant to the following conditions:
(a) Selection of Arbitrator. The Disputing Party shall notify the
American Arbitration Association and the other Party in writing describing in
reasonable detail the nature of the dispute ("the Dispute Notice"), and shall
request that the American Arbitration Association furnish a list of 5 possible
arbitrators who shall have at least 5 years experience in data processing
matters. Each Party shall have 15 days to reject two of the proposed
arbitrators. If only one individual has not been so rejected, he or she shall
serve as arbitrator; if two or more individuals have not been so rejected, the
American Arbitration Association shall select the arbitrator from those
individuals.
(b) Conduct of Arbitration. The arbitrator shall allow reasonable
discovery in the forms permitted by the Federal Rules of Civil Procedure, to the
extent consistent with the purpose of the arbitration. The arbitrator shall have
no power or authority to amend or disregard any provision of this Section 16.2.
The arbitration hearing shall be commenced promptly and conducted expeditiously,
with each of Owens-Corning and TechTeam being allocated one-half of the time for
the presentation of its case. Unless
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otherwise agreed to by the Parties, an arbitration hearing shall be conducted
on consecutive days.
(c) Replacement of Arbitrator. Should the arbitrator refuse or be
unable to proceed with arbitration proceedings as called for by this Section
16.2, such arbitrator shall be replaced by an arbitrator selected from the
other four arbitrators originally proposed by American Arbitration Association
and not rejected by the Parties, if any, or if there are no remaining proposed
arbitrators who have not been rejected, by repeating the process of selection
described in paragraph (a) above. If an arbitrator is replaced pursuant to this
paragraph (c), then a rehearing shall be take place in accordance with the
provisions of this Section 16.2.
(d) Findings and Conclusions. The arbitrator rendering judgment
upon disputes between Parties as provided in this Section 16.2 shall, after
reaching judgment and award, prepare and distribute to the Parties a writing
describing the findings of fact and conclusions of law relevant to such
judgment and award and containing an opinion setting forth the reasons for the
giving or denial of any award. The award of the arbitrator shall be final and
binding on the Parties, and judgment thereon may be entered in a court of
competent jurisdiction.
(e) Place of Arbitration Hearings. Arbitration hearings hereunder
shall be held in Toledo, Ohio. If TechTeam and Owens-Corning agree,
arbitration hearings may be held in another location.
(f) Time of the Essence. The arbitrator is instructed that time is
of the essence in the arbitration proceeding, and that the arbitrator shall
have the right and authority to issue monetary sanctions against either of the
Parties if, upon a showing of good cause, that Party is unreasonably delaying
the proceeding. The arbitrator shall render his or her judgment or award
within 15 days following the conclusion of the hearing and in any event within
four months of selection of the arbitrator. Recognizing the express desire of
the Parties for an expeditious means of dispute resolution, the arbitrator
shall limit or allow the Parties to expand the scope of discovery as may be
reasonable under the circumstances.
(g) Limitation on Authority of Arbitrator. If the Parties comply
with the provisions of Section 16.1 and the arbitrator finds that a material
breach of this Agreement has occurred, the arbitrator shall not have the
authority to exclude the right of a Party to terminate this Agreement by virtue
of such material breach. The arbitrator further shall not have the authority
to award punitive damages, and may not, in any event, make any ruling, finding
or award that does not conform to the terms and conditions of this Agreement.
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16.3 LITIGATION.
(a) Immediate Injunctive Relief. The Parties agree that the only
circumstance in which disputes between them shall not be subject to the
provisions of Sections 16.1 and 16.2 is where a Party makes a good faith
determination that a breach of the terms of this Agreement by the other Party
is such that the damages to such Party resulting from the breach will be so
immediate, so large or severe, and so incapable of adequate redress after the
fact that a temporary restraining order or other immediate injunctive relief is
the only adequate remedy. If a Party files a pleading with a court seeking
immediate injunctive relief and this pleading is challenged by the other Party
and the injunctive relief sought is not awarded in substantial part, the Party
filing the pleading seeking immediate injunctive relief shall pay all of the
costs and attorneys' fees of the Party successfully challenging the pleading.
(b) Jurisdiction. The Parties consent to venue in Toledo, Ohio and
to the non-exclusive jurisdiction of competent Ohio state courts or federal
courts in the Northern District of Ohio for all litigation which may be
brought, subject to the requirement for arbitration hereunder, with respect to
the terms of, and the transactions and relationships contemplated by, this
Agreement. The Parties further consent to the jurisdiction of any state court
located within a district with encompasses assets of a Party against which a
judgment has been rendered, either through arbitration or through litigation,
for the enforcement of such judgment or award against the assets of such Party.
16.4 CONTINUED PERFORMANCE.
Each Party agrees to continue performing its obligations under this
Agreement while any dispute is being resolved; provided that TechTeam shall not
be required to continue to perform to the extent which the circumstances in
Section 17.1(b) apply.
16.5 GOVERNING LAW.
This Agreement and performance under it shall be governed by and
construed in accordance with the laws of state of Ohio without regard to its
choice of law principles.
17. TERMINATION
17.1 TERMINATION FOR CAUSE.
(a) In the event that TechTeam:
(1) commits a material breach of this Agreement, which
breach is not cured within 30 days of Owens-Corning's receipt of TechTeam's
action plan to cure;
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such plan to be provided to Owens-Corning within 30 days of notice of breach
from Owens-Corning to TechTeam;
(2) commits a material breach of this Agreement which is not
capable of being cured within thirty 30 days; or
(3) commits numerous breaches of its duties or obligation which
collectively constitute a material breach of this Agreement;
then Owens-Corning may, by giving written notice to TechTeam, terminate the
Agreement, in whole or in part, as of a date specified in the notice of
termination. If Owens-Corning chooses to terminate the Agreement in part, the
charges payable under the Agreement will be equitably adjusted to reflect those
services that are terminated.
(b) In the event that Owens-Corning fails to pay TechTeam when due
undisputed charges under the Agreement totaling at least one month's invoice
and fails to make such payment within 45 days of notice from TechTeam of the
failure to make such payment then TechTeam may by giving written notice to
Owens-Corning terminate the Agreement as of a date specified in the notice of
termination.
17.2 TERMINATION FOR CONVENIENCE.
(a) Owens-Corning may terminate this Agreement for convenience and
without cause at any time by giving TechTeam at least 3 months prior written
notice designating the termination date and paying to TechTeam (i) for all
Services performed by TechTeam up to and including the date of termination,
(ii) TechTeam's actual expenses reasonably incurred as a result of the
termination ("Termination Expenses") and, (iii) the amount specified on
Schedule D to cover TechTeam's unrecovered startup costs. Termination Expense
shall be expenses that (A) would not have been incurred by TechTeam but for
TechTeam's reasonable expectation that Owens-Corning would continue to receive
the Services during the Term, and (B) cannot be reduced or eliminated by
commercially reasonable efforts, including termination of leases and using
resources to provide services for TechTeam.
(b) In the event that a puported termination for cause by
Owens-Corning under Section 17.1 is determined by a competent authority not to
be properly a termination for cause, then such termination by
Owens-Corning shall be deemed to be a termination for convenience under this
Section 17.2.
17.3 TERMINATION UPON CHANGE OF CONTROL.
In the event of a change in Control of Owens-Corning or TechTeam where
such Control is acquired, directly or indirectly, in a single transaction or
series of related
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transactions, or all or substantially all of the assets of Owens-Corning or
TechTeam, as applicable, are acquired, by any entity, or Owens-Corning or
TechTeam, as applicable, is merged with or into another entity to form a new
entity, then, at any time within 6 months after the last to occur of such
events, Owens-Corning may then terminate this Agreement by (i) giving TechTeam
at least 90 days' prior written notice and designating a date upon which such
termination shall be effective, and (ii) paying to TechTeam the amounts as
specified in Section 17.2.
17.4 EXTENSION OF TERMINATION EFFECTIVE DATE.
Owens-Corning may extend the effective date of termination one or more
times as it elects, at its sole discretion, provided that the total of all such
extensions shall not exceed 180 days following the original effective date of
termination. For any notice or notices of such extensions provided to TechTeam
within 30 days of the actual date of termination, Owens-Corning shall reimburse
TechTeam for additional Out-of-Pocket Expenses caused by such notices.
17.5 TERMINATION/EXPIRATION ASSISTANCE.
(a) Commencing 6 months prior to expiration or on such earlier date
as Owens-Corning may request, or commencing upon any notice of termination or
of non-renewal (including, without limitation, notice based upon breach or
default by Owens-Corning), and continuing through the effective date of
expiration (as such effective date may be extended pursuant to Section 3.2),
or, if applicable, through the effective date of termination of this Agreement
(as such effective date may be extended pursuant to Section 17.4), TechTeam
shall provide to Owens-Corning, or at Owens-Corning's request to
Owens-Corning's designee, the reasonable termination/expiration assistance
requested by Owens-Corning to allow the Services to continue without
interruption or adverse effect and to facilitate the orderly transfer of the
Services to Owens-Corning or its designee. Such assistance shall include the
assistance described in Schedule B and the following:
(1) Owens-Corning or Owens-Corning's designee shall be
permitted to undertake, without interference from TechTeam, to hire any
TechTeam employees primarily performing the Services as of the date TechTeam
receives notice of termination, or, in the case of expiration, within the
6-month period (or longer period requested by Owens-Corning) prior to
expiration. TechTeam shall waive, and shall cause its subcontractors to waive,
their rights, if any, under contracts with such personnel restricting the
ability of such personnel to be recruited or hired by Owens-Corning.
Owens-Corning or its designee shall have reasonable access to such personnel
for interviews and recruitment.
(2) If Owens-Corning is entitled pursuant to this Agreement
to a sublicense or other right to use any software owned or licensed by
TechTeam and
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utilized in performing the Services, TechTeam shall provide Owens-Corning with
such sublicense or other right.
(3) TechTeam shall make available to Owens-Corning or its
designee, pursuant to reasonable terms and conditions, any equipment owned or
leased by TechTeam that is substantially dedicated to the performance of the
Services. Owens-Corning or its designee may purchase such equipment owned by
TechTeam at the lower of TechTeam's then current book value or the unrecovered
capital payments for such equipment and may assume TechTeam's rights and
obligations with respect to any such equipment leased by TechTeam.
(4) TechTeam shall make available to Owens-Corning or its
designee, pursuant to reasonable terms and conditions, any third party services
then being utilized by TechTeam in the performance of the Services. TechTeam
shall be entitled to retain the right to utilize any such third party services
in connection with the performance of services for any other TechTeam
Owens-Corning.
(b) This Section 17.5(b) shall survive termination/expiration of
this Agreement. For a period of 12 months following the effective date of
termination/expiration under the provisions of this Agreement, TechTeam shall
provide to Owens-Corning, at Owens-Corning's request, any or all of the Services
being performed by TechTeam prior to such effective date, including without
limitation any of the Services under Section 17.5(a) and Schedule B. To the
extent TechTeam is to perform Services under this Section 17.5(b), the
provisions of this Agreement shall be applicable as such provisions would have
been applicable to such Services prior to such effective date, provided the
charge therefor shall be at the rates otherwise applicable under this
Agreement.
17.6 EQUITABLE REMEDIES.
TechTeam acknowledges that, in the event it breaches (or attempts or
threatens to breach) its obligation to provide Owens-Corning
termination/expiration assistance as provided in Section 17.5, Owens-Corning
will be irreparably harmed. In such a circumstance, Owens-Corning may proceed
directly to court. If a court of competent jurisdiction should find
that TechTeam has breached (or attempted or threatened to breach) any such
obligations, TechTeam agrees that without any additional findings of
irreparable injury or other conditions to injunctive relief, it shall not
oppose the entry of an appropriate order compelling performance by TechTeam and
restraining it from any further breaches (or attempted or threatened breaches).
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18. GENERAL
18.1 BINDING NATURE AND ASSIGNMENT.
This Agreement shall be binding on the Parties hereto and their
respective successors and assigns. Neither Party may, or shall have the power
to, assign this Agreement without the prior written consent of the other,
except that Owens-Corning may assign its rights and obligations under this
Agreement without the approval of TechTeam to an entity which acquires all or
substantially all of the assets of Owens-Corning or to any subsidiary or
Affiliate or successor in a merger or acquisition of Owens-Corning; provided,
however, that in no event shall such assignment relieve Owens-Corning of its
obligations under this Agreement.
18.2 ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including any Schedules referred to herein and
attached hereto, each of which is incorporated herein for all purposes,
constitutes the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior agreements, whether written or
oral, with respect to the subject matter contained in this Agreement. No
change, waiver, or discharge hereof shall be valid unless in writing and signed
by an authorized representative of the Party against which such change, waiver,
or discharge is sought to be enforced.
18.3 COMPLIANCE WITH LAWS AND REGULATIONS.
(a) TechTeam shall perform its obligations in a manner that
complies with the applicable laws, regulations, ordinances and codes, including
without limitation identifying and procuring required permits, certificates,
approvals and inspections. If a charge of non-compliance by TechTeam with any
such laws, regulations, ordinances, or codes occurs, TechTeam shall promptly
notify Owens-Corning of such charges in writing.
(b) TechTeam's execution, delivery, and performance of this
Agreement may not constitute a violation of any judgment, order, or decree; a
material default under any material contract by which it or any of its material
assets are bound; or an event that would, with notice or lapse of time, or
both, constitute such a default.
18.4 NOTICES.
All notices, requests, demands, and determinations under this
Agreement (other than routine operational communications), shall be in writing
and shall be deemed duly given (i) when delivered by hand, (ii) one (1) day
after being given to an express courier with a reliable system for tracking
delivery, (iii) when sent by confirmed
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facsimile with a copy sent by another means specified in this Section 18.4, or
(iv) 6 days after the day of mailing, when mailed by United States mail,
registered or certified mail, return receipt requested, postage prepaid, and
addressed as follows:
In the case of Owens-Corning:
Owens-Corning Fiberglas Corporation
Fiberglas Tower
Toledo, Ohio 43569
Att: Ms. Joyce Slusher
With copies to:
Director
Global Information Technologies
Supplier Alliances and
Legal Department
Fiberglas Tower
Toledo, Ohio 43569
In the case of TechTeam:
National TechTeam, Inc.
22000 Garrison Avenue
Dearborn, Ml 48124
Att: Brian Niemiec
Senior Vice President
With a copy to:
National TechTeam, Inc.
27345 W. Eleven Mile Road
Southfield, MI 48034
Att: Karen Trevas
National Account Manager
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A Party may from time to time change its address or designee for notification
purposes by giving the other prior written notice of the new address or
designee and the date upon which it will become effective.
18.5 COUNTERPARTS.
This Agreement may be executed in several counterparts, all of which
taken together shall constitute one single agreement between the parties
hereto.
18.6 HEADINGS.
The article and section headings and the table of contents used herein
are for reference and convenience only and shall not enter into the
interpretation hereof.
18.7 RELATIONSHIP OF PARTIES.
TechTeam, in furnishing services to Owens-Corning hereunder, is acting
as an independent contractor, and TechTearn has the sole right and obligation
to supervise, manage, contract, direct, procure, perform or cause to be
performed, all work to be performed by TechTeam under this Agreement.
TechTeam is not an agent of Owens-Corning and has no authority to represent
Owens-Corning as to any matters, except as expressly authorized in this
Agreement.
18.8 SEVERABILITY.
In the event that any provision of this Agreement conflicts with the
law under which this Agreement is to be construed or if any such provision is
held invalid by an arbitrator or a court with jurisdiction over the Parties,
such provision shall be deemed to be restated to reflect as nearly as possible
the original intentions of the Parties in accordance with applicable law. The
remainder of this Agreement shall remain in full force and affect.
18.9 CONSENTS AND APPROVAL.
Except where expressly provided as being in the sole discretion of a
Party, where agreement, approval, acceptance, consent, or similar action by
either Party is required under this Agreement, such action shall not be
unreasonably delayed or withheld. An approval or consent given by a Party
under this Agreement shall not relieve the other Party from responsibility for
complying with the requirements of this Agreement, nor shall it be construed as
a waiver of any rights under this Agreement, except as and to the extent
otherwise expressly provided in such approval or consent.
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18.10 WAIVER OF DEFAULT; CUMULATIVE REMEDIES.
(a) A delay or omission by either Party hereto to exercise any
right or power under this Agreement shall not be construed to be a waiver
thereof. A waiver by either of the Parties hereto of any of the covenants to
be performed by the other or any breach thereof shall not be construed to be a
waiver of any succeeding breach thereof or of any other covenant herein
contained.
(b) All remedies provided for in this Agreement shall be
cumulative and in addition to and not in lieu of any other remedies available
to either Party at law, in equity or otherwise.
18.11 SURVIVAL.
Any provision of this Agreement which contemplates performance or
observance subsequent to any termination or expiration of this Agreement shall
survive any termination or expiration of this Agreement and continue in full
force and effect.
18.12 MEDIA RELEASES.
All media releases, public announcements, and public disclosures by
either Party relating to this Agreement or the subject matter of this
Agreement, including without limitation, promotional or marketing material
(both internal and external), but not including announcements intended solely
for internal distribution or to meet legal or regulatory requirements beyond
the reasonable control of the disclosing Party, shall be coordinated with and
approved by the other Party prior to release. Notwithstanding the foregoing,
TechTeam may list Owens-Corning as a customer and describe in general terms the
services provided by TechTeam under this Agreement in proposals and other
marketing materials.
18.13 SERVICE MARKS.
TechTeam agrees that it shall not, without Owens-Corning's prior
written consent, use the name, service marks or trademarks of Owens-Corning.
18.14 THIRD PARTY BENEFICIARIES.
Except as provided in Article 14, this Agreement is entered into
solely between, and may be enforced only by, Owens-Corning and TechTeam; and
this Agreement shall not be deemed to create any rights in third parties,
including without limitation suppliers and customers of a Party, or to create
any obligations of a Party to any such third parties.
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18.15 COVENANT AGAINST PLEDGING.
TechTeam agrees that, without the prior written consent of
Owens-Corning, it shall not assign, transfer, pledge, hypothecate or otherwise
encumber its rights to receive payments from Owens-Corning under this Agreement
for any reason whatsoever.
18.16 COVENANT OF GOOD FAITH.
Each Party agrees that, in its respective dealings with the other
Party under or in connection with this Agreement, it shall act in good faith.
18.17 ORDER OF PRECEDENCE.
Should there be a conflict between this Agreement for Services and any
document included by reference, the following order of precedence will apply:
1. the Purchase Order and any successive Purchase Order Changes;
2. this Agreement, Schedules A, B, C, and D;
3. this Agreement, Sections 1 through 18.7;
4. Statement of Work for Global Call Response Center, dated 10/23
Rev.A., Schedule E;
5. Statement of Work for Commodity Application Help Desk, dated
1/4/95 Rev.A., Schedule F.
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IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first above written.
OWENS-CORNING FIBERGLAS CORPORATION
By: [SIG]
---------------------------------
Title: VP & CIO
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NATIONAL TECHTEAM, INC.
By: Brian Niemiec
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Title: Senior Vice President
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SCHEDULE A
CHARGES FOR SERVICES
11/27/95
(1) DEDICATED TECHNICIANS
Subject to Paragraph 3 of Schedule B, TechTeam shall provide 11 technicians
dedicated to service Owens-Corning. Tech Team shall provide coverage to
Owens-Corning callers from 2 a.m. through 8 p.m. 5 days per week (Monday through
Friday, holidays excluded), 52 weeks per year.
Owens-Corning shall pay TechTeam $6,544 per technician per month. In the event
that two (2) technicians on different shifts use the same cubicle and equipment
("hoteling"), Owens-Corning shall pay TechTeam $6,265 per technician per month
for the second technician. Fees apply to technician training period at a
prorated amount of $6,138 per technician per month.
(2) MULTI PRODUCT SUPPORT
TechTeam shall provide support from their multi product support technicians
between the hours of 8 p.m. and 2 a.m. weekdays, from 8 p.m. Fridays through 2
a.m. Mondays and on Owens-Corning USA Holidays. This pool of multi product
support technicians will also be utilized to accommodate and overflow traffic
which arises during the hours the dedicated staff is operating.
The monthly charges for the multi product support "best effort" are based upon
an expectancy of approximately 520 calls per month, Owens-Corning shall pay
TechTeam $18.00 per incident. An "incident" shall mean the complete call
response activity, beginning with the receipt of the call, appropriate
corrective response, and customer satisfaction close out.
(3) INITIAL SETUP CHARGES
The charges referenced in Paragraphs 1 and 2 of Schedule A include the
amortization of the "per seat" setup. Owens-Corning shall pay TechTeam an
approximately $11,600 one time start up fee. This fee covers approximately 80
hours each for TechTeam developing of a knowledge base and
TechTeam/Owens-Corning customizing of call tracking database.
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(4) ADDITIONAL SUPPORT COST
In the event that the permanent staffing requires adjusting (either upward or
downward) to support the service levels defined in Schedule B;
Adding dedicated staff requiring dedicated workstations will be $6,544 per
month. Adding dedicated staff who will be (are) sharing workstations will be
$6,265 per month. In the event staff is decreased, like amounts will be
deducted from monthly charges.
In the event Owens-Corning requests additional design, development or
engineering assistance from TechTeam, TechTeam agrees to provide these
services to Owens-Corning at $65.00 per hour or at the lowest rate charged to
any of their customers whichever is less.
(5) PASS THROUGH EXPENSES
Pass through expenses, as defined in Paragraph 8.2 of the Agreement shall be
those travel lodging and telephone service expenses incurred by TechTeam that
are within the guidelines set forth on Exhibit A-1, attached hereto.
(6) The assets used by TechTeam will be the property of
TechTeam.
(7) The tools and software used by TechTeam to perform
the responsibilities associated with this contract remain the property of
TechTeam, however, TechTeam will grant Owens-Corning a license to use any custom
software through the life of this Agreement. The tools and software used by
TechTeam to perform the Services remain the property of TechTeam.
(8) All of the above dollars are in U.S. funds.
(9) The above prices are established for a period of time
not to be less than two years. it is anticipated that future costs for the
listed services will be reduced as a result of continuous improvements which
will be implemented. This improvement in costs may be offset somewhat by normal
inflation. Both parties agree to negotiate rates for services for the second
option year, however, in no instance will these costs increase more than five
(5) percent.
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SCHEDULE A-1
PASS THROUGH EXPENSES
1. All Service related telecommunications and datacommunications expenses.
2. Owens-Corning agrees that any travel, meals, or lodging expense incurred by
TechTeam/Owens-Corning Project members directly in performance of services
will be passed through to Owens-Corning at cost and are payable to TechTeam
by Owens-Corning. Allowable travel expenses are those that fall within the
Travel Guidelines attached.
3. Any required technology infrastructure expenses that are necessary to
support changes that are requested by Owens-Corning pursuant to Paragraph 8.5
of the Agreement.
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SCHEDULE A-1 - Attachment
OWENS-CORNING TRAVEL GUIDELINES
Meals: A fixed per diem rate of $25.00 per business day.
Lodging: A target rate of $62.00 per business day.
Air: TechTeam should book the lowest available coach-fare airline
tickets. OC agrees that should OC's change of plans require TechTeam to forgo
the use of a noncancellable ticket, OC shall reimburse TechTeam for that airline
ticket.
Car Rental: Weekly or monthly rental rates should be contracted for when
appropriate. Mid-sized or smaller car sizes are appropriate.
Auto Mileage: A $.30 per mile rate for private automobile mileage for
TechTeam's personnel who choose to utilize their personal automobile.
Travel Time: TechTeam shall not be paid for travel time.
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SCHEDULE B
SERVICE LEVELS
11/27/95
1.0 SERVICES
The services will include all of those services identified in the Global Call
Response Center Statement of Work dated 10/23 Rev. A and the Commodity
Application Help Desk Statement of Work dated 1/4/96 Rev. A modified as
follows:
1.1 HOURS OF SUPPORT
TechTeam will provide dedicated individuals assigned specifically to support
Owens-Corning between the hours of 2 a.m. and 8 p.m. Monday through Friday
excluding Owens-Corning declared U.S. holidays. TechTeam will provide
technical support from their multi product support technicians to cover any
overload conditions during the above listed hours. The multi product support
technicians will support Owens-Corning requirements on all Owens-Corning
holidays, evenings between the hours of 8 p.m. and 2 a.m. Monday morning.
1.2 SERVICE LEVELS
TechTeam shall utilize its best efforts to meet the following initial service
levels with an initial staff of 11 technicians dedicated to Owens-Corning.
TechTeam will provide technical services from the TechTeam multi product
support team to accommodate overload conditions to assist in meeting these
service levels.
1.2.1 INITIAL SERVICE LEVELS
Initial service levels have been established as follows:
1.2.1.1 CALL RESPONSE
a) Seventy-five percent (75%) of all calls placed to the Global Call
Response Center will be answered by a TechTeam technician within 120
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seconds.
b) Ninety-eight percent (98%) of all calls placed to the Global Call
Response Center will be answered by a TechTeam technician within 180 seconds.
1.2.1.2 CALL RESOLUTION
a) Eighty percent (80%) of calls received will be resolved to the
callers satisfaction within ten (10) minutes.
b) Eighty-five percent (85%) of calls received will be resolved to the
callers satisfaction within sixty (60) minutes.
c) Ninety-five percent (95%) of all calls received will be resolved to
the callers satisfaction within four (4) hours.
d) Ninety-eight percent (98%) of all calls received will be resolved to
the callers satisfaction within twenty-four (24) hours.
2.0 SERVICE LEVEL ADJUSTMENTS/SERVICE CREDITS
During the first one hundred twenty days of this contract TechTeam shall
utilize its best efforts to meet and exceed the service levels listed in 1.2
above. Consistent with Paragraph 4.2 of the Agreement, one hundred twenty
(120) days after the effective date of this contract, Owens-Corning and
TechTeam will jointly review the actual service levels that have been achieved.
Based upon the service levels actually achieved and any adjustments which may
be agreed upon in the dedicated staffing levels, a set of service levels will
be mutually established for the remaining eight (8) months of the initial
contract period.
Service credits may also be defined and may apply as provided in Paragraph 4.2
of the Agreement.
3.0 ADJUSTMENTS TO TECHNICIANS
TechTeam shall:
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a) Utilize best efforts to provide additional English speaking
technicians to be added to Owens-Corning dedicated staff within thirty (30)
days of receiving the request.
b) Utilize best efforts to provide additional multilingual
speaking technicians to be added to Owens-Corning dedicated staff within
forty-five (45) days of receiving the request.
c) Reduce technicians dedicated to Owens-Corning within thirty
(30) days of such request from Owens-Corning.
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SCHEDULE C
HOURLY LABOR RATES
11/27/95
The following hourly rates will be applicable to Owens-Corning if/when
Owens-Corning elects to contract with TechTeam to provide technical support for
activities not covered in the initial Agreement. These hourly rates are firm
for the initial Term and for the subsequent next year option with provisions
for renegotiations with increases in rates not to exceed 5% for any additional
years.
Sr. Network Engineer $125
Network Engineer $ 95
Network Administrator $ 75
Network Technician $ 65
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SCHEDULE D
TERMINATION LIABILITIES
11/27/95
1.0 UNRECOVERED START UP COSTS
TechTeam will retain all of the initial $11,600 Start Up costs identified
in Page 24 of National TechTeam Proposal.
2.0 PER SEAT START UP COSTS
TechTeam will make a best effort to dispose of any remaining
"seat"/management technology/and office equipment purchased for dedicated use
to support this contract. The revenues derived from these disposal actions will
be compared with the following allocation formulae. TechTeam may recover the
loss difference between the value received and the remaining depreciated value
of the equipment. These payments from Owens-Corning to TechTeam will be made
in a manner consistent with Section 9 of this contract.
Personal Computers and Software $207 per unused month
Total life of PC related equipment
planned at twenty-four (24) months
Office Equipment $71.46 per unused month
Total life of office equipment
planned at 60 months
Management Technology $127.80 per unused month
Total life of management Technology
planned at 60 months
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SCHEDULE E
OWENS CORNING INFORMATION SYSTEMS
GLOBAL CALL RESPONSE CENTER
STATEMENT OF WORK
1. REQUIREMENT NARRATIVE
1.1 GENERAL
Owens-Corning is a global, technology based enterprise that develops,
manufactures, and markets materials for consumers and industrial customers.
Information technologies are critical to Owens-Corning's growth agenda and are
underlying Owens Corning Advantage 2000 and Global Workplace Vision initiatives
and effort. As part of Owens-Corning's current information technology strategy,
Owens-Coming desires to obtain full-spectrum. site operations support and
maintenance for Owens-Corning Global operations from an independent
supplier/contractor.
There are a number of factors which have influenced our decision to
acquire these support services from a third party. These factors reflect both
challenge and opportunity to Owens-Corning.
1. The major re-engineering of Owens-Corning's core
business processes and associated IT/IS requirements;
2. Need for increased emphasis on core business
processes and initiatives and underlying products
(e.g., SAP);
3. The rapid change of Owens-Corning's technological and
product base, corporate IT architecture and
infrastructure, including heavy emphasis on
outsourcing various resources and services;
4. The need to increase responsiveness and productivity
in the Customer Service area;
5. The need to continue to support existing applications
and largely Commercial Off The Shelf (COTS) products
during their replacement;
6. The planned on-going roll-out of major new COTS
products in support of various initiatives to
provide, enforce, corporate standardization;
7. Increased need for a life-cycle view of all processes
from concept to support;
8. The truly global, 24-hour-per-day nature of
Owens-Corning's emerging IS architecture,
infrastructure, and business processes and
operations.
Owens-Corning has embarked upon a dynamic and iterative approach to
information technology with greater attention to initial "mission" or business
needs and direction, support planning-specific input from the Owens-Corning
"Global Development Leaders" and their teams, and more definitive commitment to
Customer Service with the overall integration and deployment capabilities and
entities.
Thus, a more life cycle-oriented view is required in this new dynamic
environment, with the concomitant ability to rapidly acquire, allocate, and
apply human assets to meet rapidly changing technological and business needs.
Similarly, Owens-Corning's movement to standardized desktop and
workplace environments with broader use by our employees of a "kit of parts" of
advanced technology productivity-enhancing tools, will require a more rigorous
and defined support environment for these standard "tools'". This new rigor
should allow the emphasis on Owens-Corning's dramatically reduced number of core
business processes.
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2.0 THE ENVIRONMENT
2.1 CURRENT ENVIRONMENT
Currently, Owens-Corning has some 300 different automation and desktop
products deployed to some 7,000+ users. Due to major initiatives in process
re-engineering, over 200 legacy systems will be reduced to some (6) core
processes (Finance, Procurement, Order Handling, Production, Distribution, and
Logistics); various desktop office suites will be replaced with one new
integrated desktop/workplace system; multiple electronic mail (E-Mail) systems
will be replaced with one integrated system with an X.400 backbone (with X.500
directory support planned); diverse communications networks/facilities will be
replaced by and integrated into one unified global communications network; and
new productivity tools will be placed into service for our existing internal and
external users, as well as extending improved automation into Owens-Corning's
plants, literally to the "shop/manufacturing plant floor."
Much of the new products and technology to be deployed will be released in
formal releases, while others will be available on a "customer"-needs basis.
Owens-Corning is defining a broad set of "kits of parts". These "kits" contain
the hardware and/or software necessary to support specific new functions, such
as desktop video-conferencing, conferencing, work-group applications, and other
process-supportive and process-specific functions and capabilities. These kits
are defined in increments, typically up to six months or more prior to
deployment, and are subjected to rigorous in-house testing both functionally,
and from an integration perspective. Users can "order" the kits, but not
subsets of them; in some cases, whole groups or users by department or class of
user (e.g., executive) will receive the kits as a group. In many cases, these
kits are tied to functional. capabilities versus being process-specific. A
typical "Kit" will contain 8 - 15 pieces of hardware (monitor, processor, mouse,
modem card, interconnect cables, docking station, etc.) plus associated
software.
As a function of both the testing process and deployment planning, the Site
Support provider will have ample lead time to prepare for deployment and support
of these product "kits". On a periodic basis based on the "kits" and their
components, and the related technologies underlying the kits, the products will
be reassessed for upgrade (version to version, enhancements), or replacement if
appropriate. Again, the same processes will be effected, and the
Service/Support contractor will be integral to the planning.
The new applications re-engineering and consolidation initiatives are built
around several industry-leading software products, such as SAP and PeopleSoft.
These initiatives involve a complex development and roll-out (deployment)
schedule, incorporating both new applications and commercial products into
integrated releases. The overall outsourcing plan has been divided into seven
major statements of work; Global Call Response Center, Commodity Application
Help Desk, Public Network Support, Site Support, Enterprise Support, Asset
Management (Hardware / Software Provider & Configurer) training.
2.2 STATEMENT OF WORK SCOPE
This statement of work provides the first level response service to
Information Systems users who are requesting help in using the Owens Corning
information network and associated tools. This scope is to provide telephone
answering service 24 hours day / 7 days per week / 365 days per year . Calls may
be coming from any of the Owens Corning global locations and / or selected Owens
Corning customers and suppliers who may be attached to the Owens Corning network
(both plant locations and field remote locations). Calls may be received in the
language prevailing in the originating country. The provider of the services
identified in this statement of work will receive the calls, interpret the
callers requirement, and either satisfy the users request or transfer the
request to the appropriate organization for corrective action. In all cases the
provider will be responsible to track the corrective actions to assure the
callers requests have reached satisfactory closing.
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3.0 DEFINITIONS
3.1 AS USED IN THIS STATEMENT OF WORK
(a) "Affiliates" shall mean with. respect to any entity, any
other entity Controlling, Controlled by or under common Contract with such
entity.
(b) "COTS" (Commercial Off The Shelf) shall mean that product and
equipment which is available to the general public as a standard commercial
product. As a general rule these products are priced through catalog and / or
price lists. The product generally is designed and produced to standard
configurations and sold to the general public in these standard configurations.
Any variations to the standard configurations generally are priced as standard
options
(c) "Effective Date" shall be Contract Award Date.
(d) "Equipment" shall mean the hardware installed to support and
operate the Integrated Business Systems. Equipment shall include, but not to
be limited to, LAN/desktop workstations, personal computers and associated
attachments, features, accessories, peripheral devices, cabling, UPS, modems,
hubs, bridges, controllers and related telecommunication hardware, printers,
servers, routers, disks, tape or other backup media, consoles, network
components and connections to the network presence provided by Owens-Corning's
network provider, and includes all "data center" equipment up to such
connections.
(e) "Including" shall mean including without limitation.
(f) "Global Development Leader" shall mean Owens Corning project
managers who define the overall project approach. Their active participation
is dependent upon the scope and complexity of the project.
(g) "Integrated Business Systems" and "IBS" shall mean the
application and database software that operates under a relational database
within an open, client/server architecture utilizing and AIX or UNIX operating
system. Applications operating in this environment include applications such
as SAP/R3, Manugistics, FAST, PeopleSoft, and others as may be designated from
time to time by Owens-Corning.
(h) "Integrated Business Systems Computing Environment" or "IBS
Computing Environment" shall mean the computing hardware and associated
hardware peripheral devices and the systems and operating software required to
functionally operate the IBS.
(i) "hardware" shall mean all computing mainframe, peripheral
devices, personal computers, servers, routers, printers, and any interconnected
equipment required to functionally support the Owens-Corning Integrated Business
Systems Computing Environment.
(j) "Nodes" shall mean a major unit of hardware which is physically
later connected to the Network (Personal Computer, Server, Router, Printer,
Plotter, Terminal, etc.)
(k) "Performance Standards" shall mean, individually and
collectively, the quantitative and qualitative performance standards and
commitments for the Services contained in this statement of work.
(l) "Services" shall have the meaning given in Attachment A.
(m) "Service Levels" shall have the meaning given in Attachment B.
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(n) "Shrink Wrap" shall mean standard software which is available
for purchase by the general public and / or companies. "Shrink Wrap" refers to
the fact that generally this software is packaged with the appropriate
instructions in packages protected in "Shrink Wrap" plastic.
(o) "Systems Software" shall mean those program and programming,
including the supporting documentation and media, that perform tasks basic to
the functioning of the Equipment and that are required to support and operate
the Integrated Business Systems or otherwise support the provision of Services
by Vendor. Systems Software includes, but is not limited to, operating
systems, system utilities, data security software, and database managers.
(p) "Vendor" shall mean the supplier proposing to / or contracted
to provide services / product to Owens-Corning. The terms "vendor" and
"provider" shall be interchangeable in this Statement of Work
3.2 OTHER TERMS
Other terms used in this statement of work are defined in the context
in which they are used and shall have the meanings there indicated.
4.0 SERVICES
4.1 PROVISION OF SERVICES
Provider shall provide the "Services" described in Attachment A and
elsewhere in this statement of work, as they may evolve and as they may be
supplemented, enhanced, modified, or replaced.
4.2 ENTITIES RECEIVING SERVICES
Provider shall provide the Services to Owens-Corning and to those
Affiliates of Owens-Corning and other entities in which Owens-Corning has an
ownership interest as Owens-Corning designates from time to time throughout the
Term. Where the statement of work contains a reference to Services being
provided to, or actions taken for the benefit of Owens-Corning, such reference
shall be deemed to include both Owens-Corning and all other entities designated
to pursuant to this Section provided that any unique terms and conditions and
potential charges of other such entities outside the United States of America
are incorporated.
5.0 CURRENT NETWORK ENVIRONMENT
This section describes the current network environment and operating
and support processes, provisions, and staffing levels as appropriate. Its
purpose is to provide potential vendors with a high level of the scope of the
process and cultural changes inherent in the project.
5.1 HARDWARE, SOFTWARE, AND TOPOLOGY OVERVIEW
This subsection and its following sub subsections describe the
hardware; network, operating, and desktop application software; and the
topology of the current Owens-Corning network environment
5.1.1 PHYSICAL LAN & TRANSPORT
An overview profile of the Owens-Corning physical LAN and transport
environment is as follows:
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- 42% of nodes are supported by Remote LAN Support (RLS):
- (RLS) Standard of intelligent hubs is supported by Wellfleet
Routers.
- NETBEUI is the standard protocol for all print and file
servers.
- TCP/IP is the strategic direction for all network services.
- Protocol mix is approximately:
* 60% NETBEUI,
* 30% TCP/IP,
* <10% SNA
* small amounts of IPX Decnet, others, which are
controlled and filtered.
5.1.2 NETWORK INTERFACE CARDS & HUBS
Network Interface Cards (NICs) and concentrator hubs for Toledo and
Composites consist of the following:
- IBM Token-ring 4/16 cards;
- Ungermann Bass intelligent hubs (50% of total
connection);
- IBM "dumb" MAUs (50% of total connection); and
- some ethernet for HP equipment.
Insulation NICs are provided by a variety of manufacturers with both 4
and 4/16 cards in use. Insulation hubs are:
- 80% IBM"dumb" MAUs;
- 10% UB intelligent hubs; and
- 10% StarTek intelligent hubs.
Plans are to use ethernet in new installations due to lower cost per
connection (NIC and Hub port) and future benefits of new technologies based on
ethernet, such as ethernet switching. Cabletron has been selected as the hub
for new sites and existing sites as they are migrated to Ethemet.
5.1.3 BRIDGES/ROUTERS
The Owens-Corning profile of bridges and routers is as follows:
Toledo - two Wellfleet Backbone Concentrator Nodes (BCN);
Granville - one Wellfleet BCN;
- some Ungermann Bass local bridges;
- some IBM local bridges; and
- some ACC token-ring source-route bridges for
remote intenet working.
Almost all local bridges are Ungermann/Bass. Wellfleet and ACC, used
for remote bridging, are moving to Cisco. Relevant approximate counts by
category in North America are:
16 MB rings - 67
4 MB rings - 70
Ethernet segments - 21
UB Access One Enclosures - 80
UB Local TRN bridges - 100
UB TRN/ Ethernet bridges - 22
UB TRN 12-port Concentrators - 300
Wellfleet local bridges/routers - 5
Wellfleet BCN bridges (3 boxes) - 35
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5.1.4 LOCAL AREA NETWORK OPERATING SYSTEM (NOS)
Microsoft LAN MANAGER has been Owens-Corning's primary LAN operating
system.
Owens-Corning is migrating to Novell NetWare 4.x
The current NOS percent server usage is as follows:
Microsoft LAN MANAGER - 81%
WINDOWS NT/AS - 3%
MM LAN Server - 1%
Novell NetWare 4.x. - 15%
5.1.5 LAN SERVERS AND 3270 GATEWAYS
The current Owens-Corning LAN Server and 3270 Gateway general hardware
standard is the Compaq Proliant 2000. For smaller sites, 20-30 nodes, the
Compaq Prosignia VS is the standard. These servers utilize RAID 5 disk array
technology that allows continuous operation in the event of a crash of a single
connected disk.
In Toledo, forty-two percent of users are supported by the RLS
standard of Compaq Proliant 2000. The balance, 58%, are supported by the IBM
PS/2 Model 95. Compaq Deskpro XES are also being used for print servers.
Composites sites use Compaq Systempros while Insulation sites are a mixture of
Proliant, Systempro, and various clones.
5.1.6 DESKTOP HARDWARE AND OPERATING SYSTEM PLATFORM
Standard desktop hardware at Owens-Corning is:
Desktop - 486/66, 8MB RAM, 270MB hard disk;
Laptop - 486, 8MB RAM, 340MB, hard disk.
Owens-Corning current desktop and laptop hardware vendor is COMPAQ.
Currently 42% of desktops use the RLS standard desktop, and the balance are a
mixture of configurations.
There are approximately 5,000 PC's installed in North America and 1100
workstations in Europe. Two-thirds of the North American PC's are "Windows
capable." Twenty-five percent of the workstations in North America are remotely
supported by the central IS group.
The standard desktop operating system is DOS with Windows 3.1.
However, many users and departments are not running Windows, and a few are
running OS/2. The Owens-Corning strategic direction is to move to Windows For
Work groups as soon as possible.
5.1.7 DESKTOP SOFTWARE SUITE
The former standard desktop application suite at Owens-Corning., used
by forty percent of the users, consists of the following core applications:
- Microsoft Excel (Windows);
- Lotus Ami Pro (Windows);
- Lotus Freelance (Windows); and
- Lotus cc:Mail (mix of both DOS and Windows).
The current strategic direction is to move to one vendor's desktop
application "suite" and the mail product from the same vendor. The new standard
suite of desktop applications is:
- Microsoft Office (Windows), including MsMail,
Schedule+, Word, Powerpoint and Excel;
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Other standard software products used include:
- WinFax (FAX);
- Microsoft Project;
- Outside In
- Acrobat
- Netscape Navigator
- Impromptu (data access);
- Organizer (calendar);
- Attachmate Extra (3270 access);
- Reflections (mini platform access);
- McAfee Associates Virus Protection;
- Relay Gold
- VISIO
- SHIVA LanRover (for remote access)
- Lotus Notes
5.1.8 FIELD LS.
Field I.S. is made up of 36 employees with varying degrees of skill
levels. Individuals are located at all the insulation North America sites and
all of the Composite North America sites. Large locations have 1-3, smaller
have 0-1. A summary of their duties as follows:
CATEGORY: % OF TIME SCOPE
--------- --------- --------------------------
Equipment 24 (HP3000, HP9000, LAN, WAN,
Desktop, Phone)
Applications 27 (HP3000, HP9000, PC Apps)
Training 10 (of others, self)
Projects 22 (Corporate, Local, Other)
Other 17 (vacation, planning,
communication, absent, etc.)
Total 100
The staffing levels for both Insulation and Composites in North
America by location are as follows:
Composites:
Aiken, SC 3
Amarillo, TX 4
Anderson, SC 4
Guelph, Ontario 2
Huntingdon, PA 3
Jackson, TN 1
---
Sub Total 17
Insulation:
Candiac, Quebec 2
Delmar, NY 2
Edmonton, Alberta 2
Toronto, Ontario 2
Fairburn., GA 1
Kansas City, KS 1
Newark, OH 4
Santa Clara, CA 2
Waxahachie, TX 2
---
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Sub Total 18
5.1.9 CONTINGENCY
In addition to RAID 5 technology, the RLS standard configuration
contains at least two application file servers with half of the user accounts
on one and half on the other. The intent is to keep every other desk working
even if one file server fails. Nightly, tape backups are also made and are the
responsibility of the Owens-Coming Customer Service area.
6.0 SERVICE
This section describes the service which a customer can expect from
the combination of the Global Call Response Center, the Commodity Application
Help Desk provider, the Public Network Support provider, the Site Support
provider, and the Enterprise Support provider.
6.0.1 METHODS & RESPONSE CRITERIA
1. Owens-Corning will use a common problem management systems and
all calls will be tracked and followed. Global Call Response
Center will provide the system.
2. AU incoming calls will be received by the Global Call Response
Center provider. This provider will perform the initial
interpretation of the problem reported by the customer. The
Global Call Response Center provider will translate the user
request into English and route the request to the appropriate
Support provider for continued resolution. Problems related
to the use of Owens Corning standard "Shrink Wrap" software
will be routed to the Commodity Application Help Desk,
problems related to data transmission through the Network will
be routed to Enterprise Support, problems related to
Application software will be routed to Owens Corning Legacy
Systems support team or an Owens-Corning support team in case
of new development Support, and problems related to equipment
performance will be reported to the Site Support provider.
3. The Global Call Response Center provider shall be staffed
appropriately to answer the incoming phone in an average of 20
seconds. In the event all Global Call Response Specialists are
working caller problems, the call will automatically be
answered by an Automatic Call Distributor (ACD) system which
will queue the call and inform the caller that their call will
be answered by the next available Customer Response Specialist.
The maximum time a caller shall be on "hold" is approximately
two minutes.
Although resolution times may vary depending on the complexity
of a problem and/or the skill of the caller,
80% of all calls should be resolved within 1 - 3 minutes
90% of all calls should be resolved within 5 minutes
100% of all calls should be resolved within 10 minutes
6.02 TECHNICIAN PROCEDURES, AVAILABILITY, SKILLS
The following list represents technician procedures, availability,
and skills requirements expected of the Enterprise Support personnel, the
Site Support personnel, the Public Network Support personnel,
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and the Commodity Application Help Desk personnel in order to satisfactorily
meet the requirements of the work encompassed by the user requests.
1. Technician must be available from 7AM-6PM for Toledo
and Granville, 7AM-4PM for plant sites
2. Technician must be reachable 24/7/365 for critical
problems
3. Technician must be authorized for warranty repair by
the manufacturer of standard hardware selected by
Owens-Corning. All warranty repair paperwork must be
performed without Owens-Corning involvement
4. Installation of new nodes will be performed by Site
Support technician
5. Preventive maintenance will be regularly scheduled,
and performed by technician
6. Site documentation will be kept up-to-date by
technician and will be available to the Enterprise
Support administrators
7. On site technician will change server backup tape
daily, and restore files from tape at the request of
an end-user, or the centralized help desk. At
locations where a site technician is not assigned an
Owens Corning person will be assigned the
responsibility to back up servers.
8. Technician will use the Owens-Corning change
management notification procedures for all planned
and unplanned problems
9. Technician will be skilled in 2nd level on-site LAN
diagnostics and troubleshooting, and will use common
tools (i.e. Sniffer)
10. On occasion Site Support technicians will provide
one-on-one training/consulting when not involved in
support issues.
11. Enterprise Support staff will be available 24 X 7.
7.0 LOCATIONS/CONFIGURATION
The following is provided to acquaint the Global Call Response Center
provider with the diversity of locations within the Owens Corning network where
equipment is installed and consequently calls may originate. Calls originating
in foreign countries as indicated in the following locations generally will be
in English, however the Global Call Response Center provider must be able to
translate the originating language to English and effectively route the
respective callers requests in English to the respective support providers who
will be responsible to resolve the callers problems. In addition to the
following lists, there are "Mobile" remote locations where Owens Corning
personnel may tie into the network. These could be personal residences,
motels, remote offices. etc.
The following codes represent the status of equipment configured at
each respective site:
N = New OC standard network / server configuration
0 = Currently contains legacy equipment scheduled to be
replaced with new in 1996
L = Legacy equipment with varying configurations, not currently
scheduled for upgrade
7.1 APPENDIX I TOLEDO - CORPORATE HQ
Included here are the following locations:
LOCATIONS: NODES:
---------- ------
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One Lake Erie Center, Toledo, OH 130
Willis Day, Toledo, OH 25
EAP, Fort Industry Square, Toledo, OH 15
Health Center, Arcade, Toledo, OH 10
FIBERGLAS Tower - 28 Floors 1075
----
1255
====
Comments:
- Approximately 1255 nodes in Toledo.
- Approximately 600 nodes in Toledo have been
standardized (about 48%).
- Several projects are in the planning stages which will
standardize an additional 200 nodes by end of 1995.
- The Customer Service function (help desk, support and
some installations) is located in Toledo (Tower 6th
floor).
- The plan for the new corporate headquarters is to
consolidate all of Toledo in one site sometime in 1996.
- Approximately 70% of the workstations in Toledo are
"Windows able" the remaining 30% would need upgraded.
7.2 APPENDIX 2 GRANVILLE SCIENCE AND TECHNOLOGY
LOCATIONS: STATUS: NODES:
---------- ------- ------
Granville, OH Law L 25
Granville, OH S&T L 825
---
850
===
Comments:
- Approximately 850 nodes total.
- Granville has two HP9000 LMX servers (one is a mirror).
An additional 25 dial-up or PC platform servers are
also being used.
- Approximately 100 printers are in use.
- About 40% of the desktops would need to be upgraded
(340 units) and standardized.
7.3 APPENDIX 3 INSULATION NORTH AMERICA
Included here are the following locations approximate number of nodes:
LOCATIONS: STATUS: NODES:
---------- ------- ------
Delmar, NY O 100
Fairburn, GA O 100
Kansas City, KS O 150
Newark, OH O 300
Santa Clara, CA O 100
Waxahachie, TX O 150
Candiac, Quebec L 100
Edmonton, Alberta L 100
Scarborough, Ontario L 150
----
1250
====
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Comments:
- 75% new desktops required - or approx. 940 units (15% laptops)
_ 75% new file servers required - or approx. 27 servers (Proliant
2000)
- These are the same locations included in the initial RFI LAN
study.
7.4 APPENDIX 4 ROOFING & ASPHALT NORTH AMERICA__
Included here are the following locations:
LOCATIONS: STATUS: NODES:
---------- ------- ------
Atlanta, GA N 23
Brookville, IN N 17
Compton, CA N 23
Denver, CO-Roofing N 17
Denver, CO-Asphalt N 7
Detroit, MI N 7
Houston, TX N 23
Irving, TX N 23
Jacksonville, FL N 23
Jessup, MD N 23
Kearny, NJ N 23
Medina, OH N 23
Memphis, TN-Roofing N 17
Memphis, TN-Asphalt N 7
Minneapolis, MN N 23
Mishawaka, In N 7
Morehead City, NC N 7
Oklahoma City, OK N 7
Portland, OR N 23
Savannah, GA N 23
Summit, IL N 30
---
369
===
Comments:
- all of Roofing and Asphalt sites have been upgraded with new
desktops, servers, Ethernet (Cabletron Hubs), Microsoft Office and Novell
Netware.
7.5 APPENDIX 5 COMPOSITES NORTH AMERICA
Included here are the following locations:
LOCATIONS: STATUS: NODES:
---------- ------- ------
Aiken, SC L 175
Amarillo, TX L 150
Anderson, SC L 200
Ft. Smith, AR L 30
Guelph, Ontario L 125
Huntingdon, PA L 175
Jackson, TN L 50
---
905
11
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Comments:
These ongoing locations have been standardized but not to
current configuration standards.
7.6 APPENDIX 6 NEW WORLD HEADQUARTERS__
The New World Headquarters will be located in downtown Toledo, Ohio, on
a site called the Middlegrounds. Construction began in January 1995 with
completion and move-in scheduled for June of 1996. The facility will consist
of approx. 400,000 to 450,000 square feet in a campus like setting.
The company has established new goals for the way we will work in the
new headquarters. These goals have been expanded beyond the HQ and are
outlined in the Global Workplace Vision. Within the vision, there is a
continuous theme that states workplace productivity will be enhanced through
emerging technologies. This is consistent with the global concept that
supports the new world headquarters as a tool and corporate resource designed
to meet the business objectives and goals of the company rather than just a
place to work. In addition, there will be a focus on:
1) the flexibility for the individual;
2) quality of work life in and out of the office; and
3) continuous productivity improvements.
The five key influences of the Global Workplace Vision are as follows.
TEAMING -supports the existing and growing team
concept at OC where group development
and problem solving is replacing
monolithic thinking, as well as
supporting individual creative
processes.
LEARNING -involves a migration from "let us
train our employees" to empowering
employee with a responsibility to
learn.
CUSTOMER FOCUS -provide a home-like environment for
our customers that is informal,
hospitable, inviting and relaxed.
Separate areas for hoteling and free
addressing shall be provided for our
customers' business comfort.
MOBILE WORKER -provide mobility both internal and
external to the headquarters with
7 x 24 access to information regardless
of geographic location.
PAPERFREE -designed to work without paper. This
supported by process re-engineering
and technology to access "filed"
information electronically.
The new workplace will consist of approximately 1500 workstations.
The OC standard software suite will be on all workstations. A high capacity
network backbone, ATM and/or FDDI, will be installed providing access to a
centralized server room. Other technologies such as wireless connectivity for
mobility within the workspace, multi-media and collaborative technologies for
teaming and document management for paperfree will be employed throughout the
facility.
7.7 APPENDIX 7 EUROPE___
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The following locations are included here:
LOCATION: NODES:
--------- ------
Apeldoorn, Netherlands 50
Ascott, United Kingdom 15
Barcelona, Spain 15
Battice, Belgium 100
Birkeland, Norway 15
Brussels, Belgium 200
L'Ardoise, France 100
Milano, Italy 15
Neuhof, Germany 15
Regina, United Kingdom 50
St. Vincente, Spain 25
Survilliers, France 15
Troyes, France 15
Veroc, Norway 50
Vise, Belgium 75
Wrexham, United Kingdom 75
Wiesbaden, Germany 15
-------------------------------------------
880
Pilkington (recent acquisition)
Queensferry, N. Wales 15
Pontyfelin, S. Wales 15
Ravenshead Site: St. Helens 80
Newcastle, United Kingdom 10
Kingston, United Kingdom 10
Kitson Distribution Co. Leicester, UK 70
(14 sites) ----
200
----
1080
Comments:
- Mostly IBM equipment and technology.
- Starting migration into WINDOWS.
- Europe included in RFP to understand supplier/partner
global capabilities and to provide some background of
Owens-Corning's worldwide operations.
7.8 APPENDIX 8 FABRICATION CENTERS
Included here are the following locations:
LOCATION: STATUS: NODES:
--------- ------- ------
Grove City, OH N 8
Orlando, FLA. N 8
Atlanta, GA. N 8
Grand Rapids, MI N 8
Los Angeles, CA N 8
Rancho Cordova, CA N 8
Dallas, TX N 8
Memphis, TN N 8
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Comments:
-above sites have been installed with all new
equipment/software in the past few months.
7.9 APPENDIX 9 OTHER LOCATIONS
Included here are the following locations
LOCATIONS NODES:
--------- ------
Shared Services-Charleston, WV 60
Toronto, Ontario 50
Ridgeview Machine Shop-Duncan, SC 25
Hong Kong Sales Office-Wanchai 15
Mt. Vernon, OH 25
----
175
====
Comments:
- All these locations are standardized, but not to new
configuration.
8.0 PERFORMANCE STANDARDS
8.1 GENERAL
Global Call Response Center provider shall perform the Services at
least at the same level and with the same degree of accuracy, quality,
completeness and responsiveness as is consistent with industry standards.
Quantitative performance standards for certain of the the Services include
those set forth in Attachment B ("Service Levels"). Vendor's level of
performance shall be at lease equal to such Service Levels.
8.2 MEASUREMENT AND MONITORING TOOLS
Global Call Response Center provider shall implement the necessary
measurement and monitoring tools and procedures required to measure and report
Providers performance of the Services against applicable Service Levels. Such
measurement and monitoring shall permit reporting at a level of detail
sufficient to verify compliance with the Service Levels. Provider shall
provide Owens-Corning with information and access to such non-proprietary
tools, data base information and non-proprietary procedures upon request, for
purposes of verification.
9.0 PROJECT AND CONTRACT MANAGEMENT
9.1 VENDOR ACCOUNT MANAGER
(a) Provider shall designate an individual to serve as the "Vendor
Account Manager" for Owens-Corning. The Vendor Account Manager shall (I) serve
as the single point of accountability for the Services, and (ii) have
day-to-day authority for undertaking to ensure Owens-Corning satisfaction. As
and to the extend required by Owens-Corning, the Vendor Account Manager shall
be located at the location where the Incoming calls are initially received.
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(b) Provider shall cause the Vendor Account Manager to dedicate the amount
of time and effort necessary to effect the timely and responsive provision of
the Services of this statement of work. Provider shall provide Owens-Corning
with resumes and other information about individual candidates reasonably
requested by Owens-Corning.
9.2 REPLACEMENT, QUALIFICATIONS, AND RETENTION OF VENDOR PERSONNEL
(a) The personnel Vendor assigns to perform the Services shall be properly
educated, trained and qualified for the Services they are to perform.
9.3 QUALITY ASSURANCE
Vendor shall provide and implement the quality assurance procedures that
are reasonably necessary for the Services to be performed.
9.4 TECHNICAL CHANGE CONTROL
Vendor shall comply with the following technical change control
requirements:
(a) Provider shall make no change which adversely affects the
function performance of, or decreases to any significant degree
the resource efficiency of, the Services, including implementing
changes in technology, without first obtaining Owens-Corning's
approval, which approval Owens-Corning may withhold in its sole
discretion. Provider may make temporary changes required by an
emergency if it has been unable to contact an appropriate
Owens-Corning manager to obtain such approval after making
reasonable efforts. Provider shall document and promptly report
such emergency changes to Owens Corning.
9.5 USE OF SUBCONTRACTORS
(a) Except as and to the extent Owens-Corning may agree otherwise in
writing, Provider shall not subcontract its obligations under this
statement of work. In the event Vendor proposes to subcontract part of
the services defined in this statement of work;
1. Vendor shall specifying the components of the Services affected, the
scope of the proposed subcontract, and the identity and qualifications of the
proposed subcontractor. Owens-Corning shall have the right to approve or
disapprove of proposed subcontractors in its sole discretion.
2. Vendor may, in the ordinary course of business, subcontract for third
party services or products that are not dedicated to Owens-Corning, that are not
material to a particular function constituting a part of the Services, and that
do not result in a material change in the way Vendor conducts its business,
provided such subcontract does not adversely affect Owens-Corning, whether in
performance of or charges for the Services or otherwise. If Owens-Corning
expresses concerns to Vendor about such subcontract, Vendor shall discuss such
concerns with Owens-Corning and work in good faith to resolve Owens-Corning's
concerns on a mutually acceptable basis.
3. Vendor shall remain responsible for obligations performed by
subcontractors to the same extent as if such obligations were performed by
Vendor employees and shall ensure that all subcontractors have adequate skills
and observe standards of performance and conduct at least equal to those of
Vendor's and Owens-Corning's employees. Vendor shall be Owens-Corning's sole
point of contact regarding the
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<PAGE> 72
Services, including with the respect to payment. Owens-Corning may require
that a subcontractor and vendor execute an agreement designating Vendor as the
subcontractor's payment agent with respect to Owens-Corning. Vendor shall not
disclose Confidential Information of Owens-Corning to a subcontractor unless
and until such subcontractor has agreed in writing to protect the
confidentiality of such Confidential Information in a manner substantially
equivalent to that required of Vendor.
9.6 REPORTS AND MEETINGS
(a) Promptly after the Effective Date, the Parties will identify an
appropriate set of periodic reports to be issued by Vendor to Owens-Corning.
Within fifteen (15) days of such notification, Vendor shall provide
Owens-Corning's review and approval. In any event, Vendor shall provide to
Owens-Corning, commencing on the month after the Effective Date, a monthly
performance mutually established by the Parties, describing Vendor's
performance of the Services in the preceding month. Such report shall:
(1) for each area, assess the degree to which it has attained or
failed to attain the pertinent objectives in that area, including measurements
with respect to the Performance Standards;
(2) describe the status of resolution efforts for any identified
problems, and of other initiatives;
(3) explain deviations from the Performance Standards and
include a plan for corrective action where appropriate;
(4) include such documentation and other information as
Owens-Corning may reasonably request to verify compliance with this Statement
of Work; and
(5) set forth a record of all equipment, software, and personnel
changes that pertain to the Services and describe planned changes during the
upcoming month that may affect the Services.
(b) The Parties shall conduct the following regular meetings:
(1) a monthly meeting among operational personnel representing
Owens-Corning and Vendor to discuss daily performance and planned or
anticipated activities and changes that might adversely affect performance;
(2) a quarterly meeting of the management personnel of
Owens-Corning and Vendor, to review the monthly performance reports for the
quarter, review Vendor's overall performance review progress on the resolution
of issues, and discuss such other matters as appropriate; and
(3) an annual senior management meeting by the Parties to
review relevant contract and performance issues.
Vendor shall prepare and circulate an agenda sufficiently in advance to give
participants an opportunity to prepare for the meeting, and shall incorporate
into such agenda items that Owens-Corning desires to discuss. At
Owens-Corning's request, Vendor shall prepare and circulate minutes promptly
after a meeting.
10.0 AUDIT RIGHTS
10.1 AUDIT ACCESS
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(a) Vendor shall provide to Owens-Corning, its auditors (including
internal audit staff), inspectors, technical consultants, and regulators
access at all reasonable times to the part of a facility at which Vendor
is providing the Services, to the Vendor personnel providing the Services, and
to the data and records relating to the Services for the purpose of performing
audits and inspections of Owens-Corning, to examine the systems that process,
store, support and transmit that data, and to examine Vendor's performance of
the Services. To the extent applicable to the Services performed by Vendor and
to the charges therefor, audits and inspections may be (I) of non-proprietary
practices and procedures, (ii) of non-proprietary systems, (iii) of general
controls and security practices and procedures, (iv) of disaster recovery and
back-up procedures, (v) of the efficiency and costs of Vendor in performing the
Services (but only to the extent potentially affecting the charges to
Owens-Corning or the time of delivery of Services to Owens-Corning), and (vi)
any audit necessary to enable Owens-Corning to meeting applicable regulatory
requirements.
(b) Vendor shall provide to such auditors, inspectors, regulators,
and representatives such assistance as they reasonably require, including
installing and operating audit software provided that such assistance
does not impede Vendor's ability to perform the Services or create an adverse
financial impact. Vendor shall cooperate fully with Owens-Corning or their
designees in connection with audit functions and with regard to examinations by
regulatory authorities subject to 10.1 (a). Owens-Corning's auditors and other
representatives shall comply with Vendor's reasonable security requirements.
10.2 AUDIT FOLLOW-UP
(a) As part of an audit or examination, Owens-Corning shall conduct
(in the case of an internal audit), or request its external auditors or
examiners to conduct, an exit conference with Vendor to obtain factual
concurrence with issues identified in the review. Vendor shall make available
promptly to Owens-Corning the results of any review or audit conducted by
Vendor, its parent, Affiliates, or subsidiaries, or their contractors, agent or
representatives (including internal and outside auditors), relating to problems
in Vendor's performance of the Services.
(b) Vendor and Owens-Corning management shall meet to review each
audit report promptly after the issuance thereof and to mutually agree upon the
appropriate manner, if any, in which to respond to the changes suggested by the
audit report. Owens-Corning and Vendor agree to develop mutually acceptable
operating procedures for the sharing of audit and regularity findings and
reports related to Vendor's non-proprietary operating practices and procedures
for the Services produced by auditors of regulators of either party.
11.0 OWENS-CORNING RESPONSIBILITIES
In addition to Owens-Corning's responsibilities as expressly set forth
elsewhere in this statement of work, Owens-Corning shall be responsible for the
following:
(a) Owens-Corning shall designate, prior to commencement of the
Services by Vendor, one individual to whom all Vendor communications concerning
this statement of work may be addressed.
(b) Owens-Corning shall cooperate with Vendor by, among other things,
making available, as reasonably requested by Vendor, management decisions,
information, approvals and acceptances so that Vendor may accomplish its
obligations and responsibilities hereunder.
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ATTACHMENT A
SCOPE OF SERVICES
GLOBAL CALL RESPONSE CENTER
CONTENTS
Below is a brief description of the service categories and their
respective sections addressed by this Attachment. In general, Provider shall
be responsible for managing and operating the Global Call Response Center
necessary to support Owens-Corning business requirements. Provider will
determine the optimum, most economical utilization of personnel resources (on
site or remote location or on call) to meet the service requirements at the
lowest total cost.
SECTION 1 PROBLEM IDENTIFICATION. Provider will be staffed to
professionally and courteously answer all incoming calls relating to request
for assistance in using the Owens Corning Information Systems and associated
equipment. Provider will be capable to respond effectively 7/24/365 days in
English and in the predominating language of the user. (French, Spanish,
Portuguese, etc.)
- Provider will maintain a staff of individuals qualified to
efficiently perform the following as a minimum
- Understand the Owens Corning Information Systems hardware and
network configuration to a level whereby the provider can determine whether a
users problem requires a additional assistance from the Commodity Application
Help Desk provider or should be referred to the either the Site Support
provider, the Public Network Support provider, the Enterprise Support provider,
the Legacy Application Support provider, or one of the application support
teams for further resolution.
SECTION 2 PROBLEM MANAGEMENT. Provider will be responsible for tracking
all problems to resolution. Problems which must be referred to the Commodity
Application Help Desk provider, the Public Network Support provider, the site
Support provider/or the Enterprise Support provider will not be considered
complete until the Global Call Response Center provider has confirmation that
the user requesting the service is satisfied. Included in these
responsibilities, provider will:
- Maintain communications with Owens-Corning and affected users on
all problems through resolution.
- Manage all escalated calls from the initial call through
resolution.
- Provide an integrated problem tracking system which will
communicate with the Site Support, Enterprise Support, the
Commodity Application Help Desk, Legacy Application Support and
the PublicNetwork provider.
- Recognize and provide a mechanism for expedited handling of
problems which are of high business priority to Owens-Corning.
- Notify the Owens Corning designate by 9:00 Am (EST) each working
day of all customer calls which currently remain open and are
greater than 12 hours old. A problem will not be considered
corrected until Global Call Response Center receives confirmation
from the respective initial caller or the respective support
provider that the problem has been corrected and the end user
has been notified of such correction by
10/23 Rev A
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<PAGE> 75
the respective providers.
- Provide monthly reports on problems including statistics on
types of problems, total number of problems, outstanding
problems and resolution time. Reports should also include the
root causes for the problems.
- Maintain tracking statistics on the following performance
measurements;
- Number of incoming calls per day
- Location of user making incoming calls
- Length of time problem remained open
- Length of time on phone resolving problem
- Number of calls routed to "help" desk
- Number of calls routed to Enterprise Support
- Number of calls routed to Site Operations
- Number of calls routed elsewhere for resolution
- Number of calls re-routed after initial routing
Note: The above data will be used to determine the level and effect of
training which the Global Call Response Center provider should maintain. It is
anticipated that as the proficiency of the Global Call Response provider
increases the requirements on the Commodity Application Help Desk, Enterprise
Support, and the Site Support should correspondingly decrease. Likewise the
length of time a call manager is on the phone with a user will also decrease.
- Conduct weekly problem review meetings with Owens-Corning to
ensure accurate problem resolution.
SECTION 3 OWENS CORNING RESPONSIBILITY. Owens Corning will provide all
incoming and outgoing communication lines to the provider. These lines will be
installed at the providers facility based upon the providers assessment of the
appropriate number of lines required to meet the objective.
Owens Corning will install not more than three Owens Corning
workstations at the providers facility. These workstations will be refreshed
to the latest configuration not less frequently than once annually.
Owens Corning will assist the provider in identifying appropriate
training facilities where the provider can increase their efficiency in the
standard software. In those cases where the training is available at Owens
Corning Toledo facilities, Owens Corning will provide the training to the
provider without additional charge.
SECTION 4 PROVIDERS RESPONSIBILITY. Supplier will provide the physical
facility for the Global Call Response Center operation. It is preferred (but
not mandatory) that the facility is located within a three hour drive from
Toledo. The facility must be secured to a level that significant force would
be required to gain unauthorized entry. It is suggested (but not mandatory)
that the provider maintain a backup facility which could become the recovery
location if necessary.
Provider will be responsible for all providers employee human relation
activities including appropriate training and development of personnel.
10/23 Rev A
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ATTACHMENT B
SERVICE LEVEL OBLIGATIONS
GLOBAL CALL RESPONSE CENTER
1. Supplier will provide continuous availability of the Global Call Response
Center function on a 24 hour/7 day basis with an obligation to provide monthly
availability of 99.8%. Supplier will implement the appropriate backup process
to assure this response to incoming calls.
2. The provider will implement an appropriate communication channel with the
Enterprise Support provider, the Public Network provider, the Enterprise
Support provider, and the Commodity Application Help Desk provider and Owens
Corning so as to be able to provide a real time (99.8% availability) status on
any network, applications, or equipment problems which may be contributing to a
remote users problem. The Global Call Response Center is the focal point for
communication of scheduled outages for maintenance, notification of affected
parties on partial system outages, etc.
3. Answer incoming calls in an average of 20 seconds. The maximum time a caller
shall be on "hold" is two minutes.
Although resolution times may vary depending on the complexity
of a problem and/or the skill of the caller,
80% of all calls should be resolved within 1 - 3 minutes
90% of all calls should be resolved within 5 minutes
100% of all calls should be resolved within 10 minutes
Resolution in this case means that either the user problem is
solved or the correct support team is working on the problem.
4. The provider shall develop a performance plan which will;
a. Within one month after implementation of Global Call Response Center
determine the performance baselines:
1. Calls received
2. Number of calls resolved by Global Call
Response Center without assistance
3. Number and percentage of calls routed to the
each of the Second Level Support providers.
b. Work with Owens Corning to identify areas where performance
improvements can be realized
Note: It is anticipated that as the Global Call Response Center provider
increases in efficiency in responding and servicing user calls, the requirement
for Commodity Applications Help Desk, Enterprise Support, Public Network
Support, and /or Site Support assistance will decrease.
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SCHEDULE F
----------
OWENS-CORNING INFORMATION SYSTEMS
COMMODITY APPLICATION HELP DESK
STATEMENT OF WORK
1. REQUIREMENT NARRATIVE
1.1 GENERAL
Owens-Corning is a global, technology based enterprise that develops,
manufactures, and markets materials for consumers and industrial customers.
Information technologies are critical to Owens-Corning's growth agenda and are
underlying Owens-Corning Advantage 2000 and Global Workplace Vision initiatives
and effort. As part of Owens-Corning's current information technology strategy,
Owens-Corning desires to obtain full-spectrum site operations support and
maintenance for Owens-Corning Global operations from an independent
supplier/contractor.
There are a number of factors which have influenced our decision to
acquire these support services from a third party. These factors reflect both
challenge and opportunity to Owens-Corning.
1. The major re-engineering of Owens-Corning's core
business processes and associated IT/IS requirements;
2. Need for increased emphasis on core business processes
and initiatives and underlying products (e.g., SAP);
3. The rapid change of Owens-Corning's technological and
product base, corporate IT architecture and
infrastructure, including heavy emphasis on outsourcing
various resources and services;
4. The need to increase responsiveness and productivity in
the Customer Service area;
5. The need to continue to support existing applications
and largely Commercial Off The Shelf (COTS) products
during their replacement;
6. The planned on-going roll-out of major new COTS
products in support of various initiatives to provide,
enforce corporate standardization;
7. Increased need for a life-cycle view of all processes
from concept to support;
8. The truly global, 24-hour-per-day nature of
Owens-Corning's emerging IS architecture,
infrastructure, and business processes and operations.
Owens-Corning has embarked upon a dynamic and iterative approach to
information technology with greater attention to initial "mission" or business
needs and direction, support planning-specific input from the Owens-Corning
"Global Development Leaders" and their teams, and more definitive commitment to
Customer Service with the overall integration and deployment capabilities and
entities.
Thus, a more life cycle-oriented view is required in this new dynamic
environment, with the concomitant ability to rapidly acquire, allocate, and
apply human assets to meet rapidly changing technological and business needs.
Similarly, Owens-Corning's movement to standardized desktop and
workplace environments with broader use by our employees of a "kit of parts" of
advanced technology productivity-enhancing tools, will require a more rigorous
and defined support environment for these standard "tools". This new rigor
should allow the emphasis on Owens-Corning's dramatically reduced number of
core business processes.
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2.0 THE ENVIRONMENT
2.1 CURRENT ENVIRONMENT
Currently, Owens-Corning has some 300 different automation and desktop
products deployed to some 7,000+ users. Due to major initiatives in process
re-engineering, over 200 legacy systems will be reduced to some (6) core
processes (Finance, Procurement, Order Handling, Production, Distribution, and
Logistics); various desktop office suites will be replaced with one new
integrated desktop/workplace system; multiple electronic mail (E-Mail) systems
will be replaced with one integrated system with an X.400 backbone (with X.500
directory support planned); diverse communications networks/facilities will be
replaced by and integrated into one unified global communications network; and
new productivity tools will be placed into service for our existing internal
and external users, as well as extending improved automation into
Owens-Corning's plants, literally to the "shop/manufacturing plant floor."
Much of the new products and technology to be deployed will be released
in formal releases, while others will be available on a "customer"-needs basis.
Owens-Corning is defining a broad set of "kits of parts". These "kits" contain
the hardware and/or software necessary to support specific new functions, such
as desktop video-conferencing, conferencing, work-group applications, and other
process-supportive and process-specific functions and capabilities. These kits
are defined in increments, typically up to six months or more prior to
deployment, and are subjected to rigorous in-house testing both functionally,
and from an integration perspective. Users can "order" the kits, but not
subsets of them; in group. In many cases, these kits are tied to functional
capabilities versus being process-specific. A typical "Kit" will contain 8 -
15 pieces of hardware (monitor, processor, mouse, modem card, interconnect
cables, docking station, etc.) plus associated software.
As a function of both the testing process and deployment planning, the
Site Support provider will have ample lead time to prepare for deployment and
support of these product "kits". On a periodic basis based on the "kits" and
their components, and the related technologies underlying the kits, the
products will be reassessed for upgrade (version to version, enhancements), or
replacement if appropriate. Again, the same processes will be effected, and
the Service/Support contractor will be integral to the planning.
The new applications re-engineering and consolidation initiatives are
built around several industry-leading software products, such as SAP and
PeopleSoft. These initiatives involve a complex development and roll-out
(deployment) schedule, incorporating both new applications and commercial
products into integrated releases. The overall outsourcing plan has been
divided into seven major statements of work; Global Call Response Center,
Commodity Application Help Desk, Public Network Support, Enterprise Support,
Site Support, Asset Management (Hardware/Software Provider & Configurer)
training.
2.2 STATEMENT OF WORK SCOPE
This statement of work provides the second level response service to
Information System users who are requesting help in using the Owens-Corning
information network and associated tools. This scope is to provide Commodity
Application Help Desk in using and implementing commercial off the shelf
software 24 hours day/7days per week/365 days per year. Application problem
calls may be coming into the Global Call Response Center from any of the
Owens-Corning global locations and/or selected Owens-Corning customers and
suppliers who may be attached to the Owens-Corning network (both plant
locations and field remote locations). Calls may be received by the Global
Call Response Center provider in the language prevailing in the originating
country. The provider of the services identified in this statement of work
will receive the interpreted calls from the Global Call Response Center
provider, and take the appropriate actions to satisfy the users request.
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3.0 DEFINITIONS
3.1 AS USED IN THIS STATEMENT OF WORK
(a) "Affiliates" shall mean with respect to any entity, any other
entity Controlling, Controlled by or under common Contract with such entity.
(b) "COTS" (Commercial Off The Shelf) shall mean that product and
equipment which is available to the general public as a standard commercial
product. As a general rule these products are priced through catalog and/or
price lists. The product generally is designated and produced to standard
configurations and sold to the general public in these standard
configurations. Any variations to the standard configurations generally are
priced as standard options.
(c) "Effective Date" shall be Contract Award Date.
(d) "Equipment" shall mean the hardware installed to support and
operate the Integrated Business Systems. Equipment shall include, but not to be
limited to, LAN/desktop workstations, personal computers and associated
attachments, features, accessories, peripheral devices, cabling, UPS, modems,
hubs, bridges, controllers and related telecommunication hardware, printers,
servers, routers, disks, tape or other backup media, consoles, network
components and connections to the network presence provided by Owens-Corning's
network provider, and includes all "data center" equipment up to such
connections.
(e) "Including" shall mean including without limitation.
(f) "Global Development Leader" shall mean Owens-Corning project
managers who define the overall project approach. Their active participation is
dependent upon the scope and complexity of the project.
(g) "Integrated Business Systems" and "IBS" shall mean the
application and database software that operates under a relational database
within an open, client/server architecture utilizing and AIX or UNIX operating
system. Applications operating in this environment include applications such
as SAP/R3, Manugistics, FAST, PeopleSoft, and others as may be designated from
time to time by Owens-Corning.
(h) "Integrated Business Systems Computing Environment" or "IBS
Computing Environment" shall mean the computing hardware and associated
hardware peripheral devices and the systems and operating software required to
functionally operate the IBS.
(i) "hardware" shall mean all computing mainframe, peripheral
devices, personal computers, servers, routers, printers, and any interconnected
equipment required to functionally support the Owens-Corning Integrated
Business Systems Computing Environment.
(j) "Nodes" shall mean a major unit of hardware which is physically
later connected to the Network (Personal Computer, Server,
Router, Printer, Plotter, Terminal, etc.)
(k) "Performance Standards" shall mean, individually and
collectively, the quantitative and qualitative performance standards and
commitments for the Services contained in this statement of work.
(l) "Services" shall have the meaning given in Attachment A.
(m) "Service Levels" shall have the meaning given in Attachment B.
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(n) "Shrink Wrap" shall mean standard software which is available
for purchase by the general public and / or companies. "Shrink Wrap" refers to
the fact that generally this software is packaged with the appropriate
instructions in packages protected in "Shrink Wrap" plastic.
(o) "Systems Software" shall mean those programs and programming,
including the supporting documentation and media, that perform tasks basic to
the functioning of the Equipment and that are required to support and operate
the Integrated Business Systems or otherwise support the provision of Services
by Vendor. Systems Software includes, but is not limited to, operating
systems, system utilities, data security software, and database managers.
(p) "Vendor" shall mean the supplier proposing to / or contracted
to provide services / product to Owens-Corning. The terms "vendor" and
"provider" shall be interchangeable in this Statement of Work
3.2 OTHER TERMS
Other terms used in this statement of work are defined in the context
in which they are used and shall have the meanings there indicated.
4.0 SERVICES
4.1 PROVISIONS OF SERVICES
Provider shall provide the "Services" described in Attachment A and
elsewhere in this statement of work, as they may evolve and as they may be
supplemented, enhanced, modified, or replaced.
4.2 ENTITIES RECEIVING SERVICES
Provider shall provide the Services to Owens-Corning and to those
Affiliates of Owens-Corning and other entities in which Owens-Corning has an
ownership interest as Owens-Corning designates from time to time throughout the
Term. Where the statement of work contains a reference to Services being
provided to, or actions taken for the benefit of, Owens-Corning, such reference
shall be deemed to include both Owens-Corning and all other entities designated
to pursuant to this Section provided that any unique terms and conditions and
potential charges of other such entities outside the United States of America
are incorporated.
5.0 CURRENT NETWORK ENVIRONMENT
This section describes the current network environment and operating
and support processes, provisions, and staffing levels as appropriate. Its
purpose is to provide potential vendors with a high level understanding of the
scope of the process and cultural changes inherent in the project.
5.1 HARDWARE, SOFTWARE, AND TOPOLOGY OVERVIEW
This subsection and its following sub subsections describe the
hardware; network, operating, and desktop application software; and the
topology of the current Owens-Corning network environment.
5.1.1 PHYSICAL LAN & TRANSPORT
An overview profile of the Owens-Corning physical LAN and transport
environment is as follows:
- 42% of nodes are supported by Remote LAN Support (RLS):
- (RLS) Standard of intelligent hubs is supported by
Wellfleet Routers.
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- NETBEUI is the standard protocol for all print and file
servers.
- TCP/IP is the strategic direction for all network
services.
- Protocol mix is approximately:
* 60% NETBEUI,
* 30% TCP/IP,
* <10% SNA,
* small amounts of IPX, Decnet, others, which are
controlled and filtered.
5.1.2 NETWORK INTERFACE CARDS & HUBS
Network Interface Cards (NICs) and concentrator hubs for Toledo and
Composites consist of the following:
- IBM Token-ring 4/16 cards;
- Ungermann Bass intelligent hubs (50% of total
connection);
- IBM "dumb" MAUs (50% of total connection); and
- some ethernet for HP equipment.
Insulation NICs are provided by a variety of manufacturers with both 4
and 4/16 cards in use. Insulation hubs are:
- 80% IBM "dumb" MAUs;
- 10% UB intelligent hubs; and
- 10% StarTek intelligent hubs.
Plans are to use ethernet in new installations due to lower cost per
connection (NIC and Hub port) and future benefits of new technologies based on
ethernet, such as ethernet switching. Cabletron has been selected as the hub
for new sites and existing sites as they are migrated to Ethernet.
5.1.3 BRIDGES/ROUTERS
The Owens-Corning profile of bridges and routers is as follows:
Toledo - two Wellfleet Backbone Concentrator
Nodes (BCN);
Granville - one Wellfleet BCN;
- some Ungermann Bass local bridges;
- some IBM local bridges; and
- some ACC token-ring source-route
bridges for remote internet working.
Almost all local bridges are Ungermann/Bass. Wellfleet and ACC, used
for remote bridging, are moving to Cisco. Relevant approximate counts
by category in North America are:
16 MB rings - 67
4 MB rings - 70
Ethernet segments - 21
UB Access One Enclosures - 80
UB Local TRN bridges - 100
UB TRN/Ethernet bridges - 22
UB TRN 12-port Concentrators - 300
Wellfleet local bridges/routers - 5
Wellfleet BCN bridges (3 boxes) - 35
5.1.4 LOCAL AREA NETWORK OPERATING SYSTEM (NOS)
Microsoft LAN MANAGER is Owens-Corning's primary LAN operating
system. Owens-Corning is migrating to Novell NetWare 4.x.
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The current NOS percent server usage is as follows:
Microsoft LAN MANAGER - 95%
WINDOWS NT/AS - 3%
IBM LAN Server - 1%
Novell NetWare 4.x. - 15%
5.1.5 LAN SERVERS AND 3270 GATEWAYS
The current Owens-Corning LAN Server and 3270 Gateway general hardware
standard is the Compaq Proliant 2000. For smaller sites, 20-30 nodes, the Compaq
Prosignia VS is the standard. These servers utilize RAID 5 disk array technology
that allows continuous operation in the event of a crash of a single connected
disk.
In Toledo, forty-two percent of users are supported by the RLS standard of
Compaq Proliant 2000. The balance, 58%, are supported by the IBM PS/2 Model 95.
Compaq Deskpro XES are also being used for print servers. Composites sites use
Compaq Systempros while Insulation sites are a mixture of Proliant, Systempro,
and various clones.
5.1.6 DESKTOP HARDWARE AND OPERATING SYSTEM PLATFORM
Standard desktop hardware at Owens-Corning is:
Desktop - 486/66, 8MB RAM, 270MB hard disk;
Laptop - 486, 8MB RAM, 340MB hard disk;
Owens-Corning current desktop and laptop hardware vendor is COMPAQ.
Currently 42% of desktops use the RLS standard desktop, and the balance are a
mixture of configurations.
There are approximately 5,000 PC's installed in North America and 1100
workstations in Europe. Two-thirds of the North American PC's are "Windows
capable". Twenty-five percent of the workstations in North America are remotely
supported by the central IS group.
The standard desktop operating system is DOS with Windows 3.1. However,
many users and departments are not running Windows, and a few are running
OS/2. The Owens-Corning strategic direction is to move to Windows For Work
groups as soon as possible.
5.1.7 DESKTOP SOFTWARE SUITE
The former standard desktop application suite at Owens-Corning, used by
forty percent of the users, consists of the following core applications:
- Microsoft Excel (Windows);
- Lotus Ami Pro (Windows);
- Lotus Freelance (Windows); and
- Lotus cc:Mail (mix of both DOS and Windows).
The current strategic direction is to move to one vendor's desktop
application "suite" and the mail product from the same vendor. The new standard
suite of desktop applications is:
- Microsoft Office (Windows), including MsMail, Schedule+,
Word, Powerpoint and Excel;
Other standard software products used include:
- WinFax (FAX);
- Microsoft Project;
- Outside In
- Acrobat
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- Netscape Navigator
- Impromptu (data access);
- Organizer (calendar):
- Attachmate Extra (3270 access);
- Reflections (mini platform access);
- McAfee Associates Virus Protection;
- Relay Gold
- VISIO
- SHIVA LanRover (for remote access)
- Lotus Notes
5.18 FIELD I.S.
Field I.S. is made up of 36 employees with varying degrees of skill
levels. Individuals are located at all the Insulation North America sites and
all of the Composite North America sites. Large locations have 1-3, smaller
have 0-1. A summary of their duties as follows:
CATEGORY: % OF TIME SCOPE
--------- --------- -----
Equipment 24 (HP3000, HP9000, LAN, WAN,
Desktop, Phone)
Applications 27 (HP3000, HP9000, PC Apps)
Training 10 (of others, self)
Projects 22 (Corporate, Local, Other)
Other 17 (vacation, planning,
communication, absent, etc.)
---
Total 100
The staffing levels for both Insulation and Composites in North America
by location are as follows:
Composites:
Aiken, SC 3
Amarillo, TX 4
Anderson, SC 4
Guelph, Ontario 2
Huntingdon, PA 3
Jackson, TN 1
--
Sub Total 17
Insulation:
Candiac, Quebec 2
Delmar, NY 2
Edmonton, Alberta 2
Toronto, Ontario 2
Fairburn, GA 1
Kansas, City, KS 1
Newark, OH 4
Santa Clara, CA 2
Waxahachie, TX 1
--
Sub Total 17
5.1.9 CONTINGENCY
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In addition to RAID 5 technology, the RLS standard configuration
contains at least two application file servers with half of the user accounts
on one and half on the other. The intent is to keep every other desk working
even if one file server fails. Nightly, tape backups are also made and are the
responsibility of the Owens-Corning Customer Service area.
6.0 SERVICE
This section describes the service which a customer can expect from the
combination of the Global Call Response Center provider, the Site Support
provider, and the Enterprise Network Management provider.
6.0.1 METHODS & RESPONSE CRITERIA
1. Owens-Corning will use a problem management systems defined and
managed by the Global Call Response Center provider and all
calls will be tracked and followed by the Global Call Response
Center provider from receipt of incoming call until full
customer satisfaction that problem has been resolved.
2. All incoming calls will be received by the Global Call Response
Center provider. This provider will perform the initial
interpretation of the problem reported by the customer. The
Global Call Response Center provider will interpret the nature
of the problem and route the request to the appropriate
Support provider for continued resolution. Problems related
to the use of Owens-Corning standard "Shrink Wrap" software
will be routed to the Commodity Application Help Desk. The
Commodity Application Help Desk Provider will have the
appropriate personnel to resolve the problems related to the
operation and use of the standard Owens-Corning "Shrink Wrap"
software. Problems related to Network will be routed to the
Enterprise Support provider, equipment problems will be routed
to the Site Support provider. Problems related to Application
software will be routed to an Owens-Corning Legacy Systems
support team or an Owens-Corning support team in case of new
development Support.
3. The Commodity Application Help Desk provider shall be staffed
appropriately to answer the incoming phone on the average of 20
seconds. In the event all Application Specialists are working
caller problems, the call will automatically be answered by an
Automatic Call Distributor (ACD) system which will queue the
call and inform the caller that their call will be answered by
the next available Application Specialist. The maximum time a
caller shall be on "hold" is two minutes.
Although resolution times may vary depending on the complexity
of a problem and/or the skill of the caller,
80% of all calls should be resolved within 4-25 minutes
90% of all calls should be resolved within the first hour
95% of all calls should be resolved within two hours
The time to resolve the remaining calls will vary but should
fall either into a condition requiring additional assistance
from site operations provider or from the Software
manufacturer. The Commodity Application Help Desk provider
will be responsible to utilize the Global Call Response Center
provider to dispatch the Site Support provider should a
problem require assistance from both providers. All of the
providers are required to co-ordinate and assist as required to
resolve the problem. It is anticipated that the Global Call
Response Center will use techniques suchas teleconferencing in
the necessary resources to effect resolution.
6.0.2. TECHNICIAN PROCEDURES, AVAILABILITY, SKILLS
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The following is provided to assist the Commodity Applications Help
Desk provider in understanding the technical support available through the Site
Support provider. The list represents technician procedures, availability, and
skills requirements expected of Site Operations provider technicians in order
to satisfactorily meet the requirements of the work encompassed by this
Installation, Service, and Support subsection.
1. Technician must be available from 7AM-6PM for Toledo and
Granville, 7AM-4PM for plant sites
2. Technician must be reachable 24/7/365 for critical problems
3. Technician must be authorized for warranty repair by the
manufacturer of standard hardware selected by Owens-Corning.
All warranty repair paperwork must be performed without Owens-
Corning involvement
4. Installation of new nodes will be performed by Site Support
technician
5. Preventive maintenance will be regularly scheduled, and
performed by technician
6. Site documentation will be kept up-to-date by technician and
will be available to the Commodity Application Help Desk
provider upon request.
7. On site technicians will change backup server tape daily, and
restore files from tape at the request of an end-user, or the
centralized help desk. At locations where a site technician is
not assigned an Owens-Corning person will be assigned the
responsibility to back up servers.
8. Technician will use the Owens-Corning change management
notification procedures for all planned and unplanned problems
9. Technician will be skilled in 2nd level on-site LAN diagnostics
and troubleshooting, and will use common tools (i.e. Sniffer)
10. On-site technician will provide one-on-one training/consulting
when not involved in support issues.
11. Enterprise Support will be available 24 X 7.
7.0 LOCATIONS/CONFIGURATION
The following is provided to acquaint the Commodity Application Help
Desk provider with the diversity of locations within the Owens-Corning network
where equipment is installed and consequently calls may originate. In addition
to the following lists, there are "Mobile" remote locations where
Owens-Corning personnel may tie into the network. These could be personal
residences, motels, remote offices, etc. The Codes preceding the locations
represent the status of equipment configuration at each respective site.
N= New OC standard network/server configuration
O= Currently contains legacy equipment scheduled to be replaced
with new in 1996
L= Legacy equipment with varying configurations, not currently
scheduled for upgrade
7.1 APPENDIX 1 TOLEDO-CORPORATE HQ
Included here are the following locations:
LOCATIONS: NODES:
--------- ------
One Lake Erie Center, Toledo, OH 130
Willis Day, Toledo, OH 25
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EAP, fort Industry Square, Toledo, OH 15
Health Center, Arcade, Toledo, OH 10
FIBERGLAS Tower - 28 Floors 1075
----
1255
====
Comments:
- Approximately 1255 nodes in Toledo.
- Approximately 600 nodes in Toledo have been
standardized (about 48%).
- Several projects are in the planning stages which will
standardize an additional 200 nodes by end of 1995.
- The Customer Service function (help desk, support, and
some installations) is located in Toledo (Tower 6th
floor).
- The plan for the new corporate headquarters is to
consolidate all of Toledo in one site sometime in 1996.
- Approximately 70% of the workstations in Toledo are
"Windows able" the remaining 30% would need upgraded.
7.2 APPENDIX 2 GRANVILLE SCIENCE AND TECHNOLOGY
LOCATIONS: STATUS: NODES:
---------- ------- ------
Granville, OH Law L 25
Granville, OH S&T L 825
---
850
=====
Comments:
- Approximately 850 nodes total.
- Granville has two HP9000 LMX servers (one is a mirror).
An additional 25 dial-up or PC platform servers are also
being used.
- Approximately 100 printers are in use.
- About 40% of the desktops would need to be upgraded
(340 units) and standardized.
7.3 APPENDIX 3 INSULATION NORTH AMERICA
Included here are the following locations aproximate number of nodes:
LOCATIONS STATUS: NODES:
--------- ------- ------
Delmar, NY O 100
Fairburn, GA O 100
Kansas City, KS O 150
Newark, OH O 300
Santa Clara, CA O 100
Waxahachie, TX O 150
Candiac, Quebec L 100
Edmonton, Alberta L 100
Scarborough, Ontario L 150
----
1250
====
Comments:
- 75% new desktops required - or approx. 940 units (15%
laptops)
- 75% new file servers required - or approx. 27 servers
(Proliant 2000)
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- These are the same locations included in the initial
RFI LAN study.
7.4 APPENDIX 4 ROOFING & ASPHALT NORTH AMERICA
Included here are the following locations:
LOCATIONS: STATUS: NODES:
---------- ------- ------
Atlanta, GA N 23
Brookville, IN N 17
Compton, CA N 23
Denver, CO-Roofing N 17
Denver, CO-Asphalt N 7
Detroit, MI N 7
Houston, TX N 23
Irving, TX N 23
Jacksonville, FL N 23
Jessup, MD N 23
Kearny, NJ N 23
Medina, OH N 23
Memphis, TN-Roofing N 17
Memphis, TN-Asphalt N 7
Minneapolis, MN N 23
Mishawaka, IN N 7
Morehead City, NC N 7
Oklahoma City, OK N 7
Portland, OR N 23
Savannah, GA N 23
Summit, IL N 30
---
369
===
Comments:
- all of Roofing and Asphalt sites have been upgraded
with new desktops, servers, Ethernet (Cabletron Hubs), Microsoft Office and
Novell Netware.
7.5 APPENDIX 5 COMPOSITES NORTH AMERICA
Included here are the following locations:
LOCATIONS: STATUS: NODES:
---------- ------- ------
Aiken, SC L 175
Amarillo, TX L 150
Anderson, SC L 200
Ft. Smith, AR L 30
Guelph, Ontario L 125
Huntingdon, PA L 175
Jackson, TN L 50
---
905
===
Comments:
- These ongoing locations have been standardized but not
to current configuration standards.
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7.6 APPENDIX 6 NEW WORLD HEADQUARTERS
The New World Headquarters will be located in downtown Toledo, Ohio, on
a site called the Middlegrounds. Construction began in January 1995 with
completion and move-in scheduled for June of 1996. The facility will consist
of approx. 400,000 to 450,000 square feet in a campus like setting.
The company has established new goals for the way we will work in the
new headquarters. These goals have been expanded beyond the HQ and are
outlined in the Global Workplace Vision. Within the vision, there is a
continuous theme that states workplace productivity will be enhanced through
emerging technologies. This is consistent with the global concept that
supports the new world headquarters as a tool and corporate resource designed to
meet the business objective and goals of the company rather than just a place
to work. In addition, there will be a focus on:
1) the flexibility for the individual;
2) quality of work life in and out of the office; and
3) continuous productivity improvements.
The five key influences of the Global Workplace Vision are as follows.
TEAMING -supports the existing and growing team
concept at OC where group development
and problem solving is replacing
monolithic thinking, as well as
supporting individual creative
processes.
LEARNING -involves a migration from "let us
train our employees" to empowering
employee with a responsibility to
learn.
CUSTOMER FOCUS -provide a home-like environment for
our customers that is informal,
hospitable, inviting and relaxed.
Separate areas for hoteling and free
addressing shall be provided for our
customers' business comfort.
MOBILE WORKER -provide mobility both internal and
external to the headquarters with
7 x 24 access to information regardless
of geographic location.
PAPERFREE -designed to work without paper. This
is supported by process re-engineering
and technology to access "filed"
information electronically.
The new workplace will consist of approximately 1500 workstations. The
OC standard software suite will be on all workstations. A high capacity
network backbone, ATM and/or FDDI, will be installed providing access to a
centralized server room. Other technologies such as wireless connectivity for
mobility within the workspace, multi-media and collaborative technologies for
teaming and document management for paperfree will be employed throughout the
facility.
7.7 APPENDIX 7 EUROPE
The following locations are included here:
LOCATION: NODES:
--------- ------
Apeldoorn, Netherlands 50
Ascott, United Kingdom 15
Barcelona, Spain 15
Battice, Belgium 100
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Birkeland, Norway 15
Brussels, Belgium 200
L'Ardoise, France 100
Milano, Italy 15
Neuhof, Germany 15
Regina, United Kingdom 50
St. Vincente, Spain 25
Survilliers, France 15
Troyes, France 15
Veroc, Norway 50
Vise, Belgium 75
Wrexham, United Kingdom 75
Wiesbaden, Germany 15
------------------------------------------
880
Pilkington (recent acquisition)
Queensferry, N. Wales 15
Pontyfelin, S. Wales 15
Ravenshead Site: St. Helens 80
Newcastle, United Kingdom 10
Kingston, United Kingdom 10
Kitson Distribution Co. Leicester, UK 70
(14 sites) ----
200
----
1080
Comments:
- Mostly IBM equipment and technology.
- Starting migration into WINDOWS.
- Europe included in RFP to understand supplier/partner
global capabilities and to provide some background of
Owens-Corning's worldwide operations.
7.8 APPENDIX 8 FABRICATION CENTERS
Included here are the following locations:
LOCATION: STATUS: NODES:
Grove City, OH N 8
Orlando, FLA. N 8
Atlanta, GA. N 8
Grand Rapids, MI N 8
Los Angeles, CA N 8
Rancho Cordova, CA N 8
Dallas, TX N 8
Memphis, TN N 8
Comments:
- above sites have been installed with all new
equipment/software in the past few months.
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7.9 APPENDIX 9 OTHER LOCATIONS
Included here are the following locations:
Location: Nodes:
--------- ------
Shared Services-Charleston, WV 60
Toronto, Ontario 50
Ridgeview Machine Shop-Duncan, SC 25
Hong Kong Sales Office- Wanchai 15
Mt. Vernon, OH 25
----
175
====
Comments:
- All these locations are standardized, but not to new
configuration.
8.0 PERFORMANCE STANDARDS
8.1 GENERAL
Commodity Application Help Desk provider shall perform the Services at
least at the same level and with the same degree of accuracy, quality,
completeness, and responsiveness as is consistent with industry standards.
Quantitative performance standards for certain of the Services include those
set forth in Attachment B ("Service Levels"). Vendor's level of performance
shall be at least equal to such Service Levels.
8.2 MEASUREMENT AND MONITORING TOOLS.
Commodity Application Help Desk provider shall implement the necessary
measurement and monitoring tools and procedures required to measure and report
Providers performance of the Services against the applicable Service Levels.
Such measurement and monitoring shall permit reporting at a level of detail
sufficient to verify compliance with the Service Levels. Providers shall
provide Owens-Corning with information and access to such non-proprietary
tools, data base information and non-proprietary procedures upon request, for
purpose of verification.
9.0 PROJECT AND CONTRACT MANAGEMENT
9.1 VENDOR ACCOUNT MANAGER
(a) Provider shall designate an individual to serve as the "Vendor
Account Manager" for Owens-Corning. The Vendor Account Manager shall (I) serve
as the single point of accountability for the Services, and (ii) have
day-to-day authority for undertaking to ensure Owens-Corning satisfaction. As
and to the extent required by Owens-Corning, the Vendor Account Manager shall
be located at the location where the Incoming calls are initially received.
(b) Provider shall cause the Vendor Account Manager to dedicate the
amount of time and effort necessary to effect the timely and responsive
provision of the Services of this statement of work. Provider shall provide
Owens-Corning with resumes and other information about individual candidates
reasonably requested by Owens-Corning.
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9.2 REPLACEMENT, QUALIFICATIONS, AND RETENTION OF VENDOR PERSONNEL
(a) The personnel Vendor assigns to perform the Services shall be
properly educated, trained and qualified for the Services they are to perform.
9.3 QUALITY ASSURANCE
Vendor shall provide and implement the quality assurance procedures
that are reasonably necessary for the Services to be performed.
9.4 TECHNICAL CHANGE CONTROL
Vendor shall comply with the following technical change control
requirements:
(a) Provider shall make no change which adversely affects the
function or performance of, or decreases to any
significant degree the resource efficiency of, the Services,
including implementing changes in technology, without first
obtaining Owens-Corning's approval, which approval
Owens-Corning may withhold in its sole discretion. Provider
may make temporary changes required by an emergency if it has
been unable to contact an appropriate Owens Corning manager to
obtain such approval after making reasonable efforts.
Provider shall document and promptly report such emergency
changes to Owens-Corning.
9.5 USE OF SUBCONTRACTORS
(a) Except as and to the extent Owens-Corning may agree otherwise
in writing, Provider shall not subcontract its obligations
under this statement of work. In the event Vendor proposes
to subcontract part of the services defined in this statement
of work;
1. Vendor shall specifying the components of the Services
affected, the scope of the proposed subcontract, and the identity and
qualifications of the proposed subcontractor. Owens-Corning shall have the
right to approve or disapprove of proposed subcontractors in its sole
discretion.
2. Vendor may, in the ordinary course of business, subcontract
for third party services or products that are not dedicated to Owens-Corning,
that are not material to a particular function constituting a part of the
Services, and that do not result in a material change in the way Vendor
conducts its business, provided such subcontract does not adversely affect
Owens-Corning, whether in performance of or charges for the Services or
otherwise. If Owens-Corning expresses concerns to Vendor about such
subcontract, Vendor shall discuss such concerns with Owens-Corning and work in
good faith to resolve Owens-Corning's concerns on a mutually acceptable basis.
3. Vendor shall remain responsible for obligations performed by
subcontractors to the same extent as if such obligations were performed by
Vendor employees and shall ensure that all subcontractors have adequate skills
and observe standards of performance and conduct at least equal to those of
Vendor's and Owens-Corning's employees. Vendor shall be Owens-Corning's sole
point of contact regarding the Services, including with the respect to payment.
Owens-Corning may require that a subcontractor and vendor execute an agreement
designating Vendor as the subcontractor's payment agent with respect to
Owens-Corning. Vendor shall not disclose Confidential Information of
Owens-Corning to a subcontractor unless and until such subcontractor has agreed
in writing to protect the confidentiality of such Confidential Information in a
manner substantially equivalent to that required of Vendor.
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9.6 REPORTS AND MEETINGS
(a) Promptly after the Effective Date, the Parties will identify
an appropriate set of periodic reports to be issued by Vendor to Owens-Corning.
Within fifteen (15) days of such notification, Vendor shall provide
Owens-Corning's review and approval. In any event, Vendor shall provide to
Owens-Corning, commencing on the month after the Effective Date, a monthly
performance mutually established by the Parties, describing Vendor's
performance of the Services in the preceding month. Such report shall:
(1) for each area, assess the degree to which it has
attained or failed to attain the pertinent objectives in that area, including
measurements with respect to the Performance Standards;
(2) describe the status of resolution efforts for any
identified problems, and of other initiatives;
(3) explain deviations from the Performance Standards and
include a plan for corrective action where appropriate;
(4) include such documentation and other information as
Owens-Corning may reasonably request to verify compliance with this Statement of
Work; and
(5) set forth a record of all equipment, software, and
personnel changes that pertain to the Services and describe planned changes
during the upcoming month that may affect the Services.
(b) The Parties shall conduct the following regular meetings:
(1) a monthly meeting among operational personnel
representing Owens-Corning and Vendor to discuss daily performance and planned
or anticipated activities and changes that might adversely affect performance;
(2) a quarterly meeting of the management personnel of
Owens-Corning and Vendor, to review the monthly performance reports for the
quarter, review Vendor's overall performance under the Agreement, review
progress on the resolution of issues, and discuss such other matters as
appropriate; and
(3) an annual senior management meeting by the Parties to
review relevant contract and performance issues.
Vendor shall prepare and circulate an agenda sufficiently in advance to give
participants an opportunity to prepare for the meeting, and shall incorporate
into such agenda items that Owens-Corning desires to discuss. At Owens-Coming's
request, Vendor shall prepare and circulate minutes promptly after a meeting.
10.0 AUDIT RIGHTS
10.1 AUDIT ACCESS
(a) Vendor shall provide to Owens-Corning, its auditors (including
internal audit staff), inspectors, technical consultants, and regulators access
at all reasonable times to the part of a facility at which Vendor is providing
the Services, to the Vendor personnel providing the Services, and to the data
and records relating to the Services for the purpose of performing audits and
inspections of Owens-Corning, to examine the systems that process, store,
support and transmit that data, and to examine Vendor's performance of the
Services. To the extent applicable to the Services performed by Vendor and
to the charges therefor, audits and inspections may be (I) of non-proprietary
practices and procedures, (ii)
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of non-proprietary systems, (iii) of general controls and security
practices and procedures, (iv) of disaster recovery and back-up procedures, (v)
of the efficiency and costs of Vendor in performing the Services (but only to
the extent potentially affecting the charges to Owens-Corning or the time of
delivery of Services to Owens-Corning), and (vi) any audit necessary to enable
Owens-Corning to meeting applicable regulatory requirements.
(b) Vendor shall provide to such auditors, inspectors, regulators, and
representatives such assistance as they reasonably require, including
installing and operating audit software provided that such assistance does not
impede Vendor's ability to perform the Services or create an adverse financial
impact. Vendor shall cooperate fully with Owens-Corning or their designees in
connection with audit functions and with regard to examinations by regulatory
authorities subject to 10. 1 (a). Owens-Coming's auditors and other
representatives shall comply with Vendor's reasonable security requirements.
10.2 AUDIT FOLLOW-UP
(a) As part of an audit or examination, Owens-Corning shall conduct
(in the case of an internal audit), or request its external auditors or
examiners to conduct, an exit conference with Vendor to obtain factual
concurrence with issues identified in the review. Vendor shall make available
promptly to Owens-Corning the results of any review or audit conducted by
Vendor, its parent, Affiliates, or subsidiaries, or their contractors, agent or
representatives (including internal and outside auditors), relating to problems
in Vendor's performance of the Services.
(b) Vendor and Owens-Corning management shall meet to review each
audit report promptly after the issuance thereof and to mutually agree upon the
appropriate manner, if any, in which to respond to the changes suggested by the
audit report. Owens-Corning and Vendor agree to develop mutually acceptable
operating procedures for the sharing of audit and regularity findings and
reports related to Vendor's non-proprietary operating practices and procedures
for the Services produced by auditors of regulators of either party.
11.0 OWENS-CORNING RESPONSIBILITIES
In addition to Owens-Corning's responsibilities as expressly set forth
elsewhere in this statement of work, Owens-Corning shall be responsible for the
following:
(a) Owens-Corning shall designate, prior to commencement of the
Services by Vendor, one individual to whom all Vendor communications concerning
this statement of work may be addressed.
(b) Owens-Corning shall cooperate with Vendor by, among other
things, making available, as reasonably requested by Vendor, management
decisions, information, approvals and acceptances so that Vendor may accomplish
its obligations and responsibilities hereunder.
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ATTACHMENT A
SCOPE OF SERVICES
COMMODITY APPLICATION HELP DESK
CONTENTS
Below is a brief description of the service categories and their
respective sections addressed by this Statement of Work. In general, Vendor
shall be responsible for managing and operating the Commodity Application Help
Desk necessary to support Owens-Corning business requirements. Provider will
determine the optimum, most economical utilization of personnel resources (on
site or remote location or on call) to meet the service requirements at the
lowest total cost.
SECTION 1 PROBLEM IDENTIFICATION. Provider will be staffed to
professionally and courteously answer all incoming calls relating to request
for assistance in using the "Shrink Wrapped" "Commercial Off the Shelf (COTS)
Application software. Provider will be capable to respond effectively 7 / 24 /
365 days.
- Provider will maintain a staff of individuals qualified to
efficiently perform the following as a minimum:
- Remain highly proficient in the operational aspects
all of the Off the Shelf "Shrink wrap" software packages that are considered
Owens-Corning standards. This includes, but is not limited to;
Microsoft Office Lotus Ami Pro
Microsoft Excel Lotus Freelance
Microsoft Word Lotus cc.mail,
cc.mail remote,
cc:mobile
Msmail Organizer
PowerPoint Lotus 123
WinFax Lotus Notes
Outside In Impromptu
Acrobat Relay Gold
Attachmate Reflections
McAfee anti-Virus Word Perfect 5.1,
6.0
Microsoft Project VISIO
Shiva LanRover Lexus Nexus
Netscape Navigator Calender Creator
Windows 3.1 DOS
Windows for Workgroups Org+
Windows 95 Harvard Graphics
Lanmanager Profesional Write
Novell 4.x ABC Flowchart
Lotus Organizer Dbase
Norton Utility Volkswriter
DW4 Displaywriter
Quatropro Rbase
Approach Procom
pcAnywhere Professional File
Reachout
- Maintain a library containing technical and/or user
manuals for all "Shrink Wrap" software referenced in this Statement of Work
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<PAGE> 95
- Be qualified to work with the Owens-Corning user via
the telephone and resolve not less than 95% of user questions regarding the
operation and use of the Owens-Corning standard software
SECTION 2 PROBLEM MANAGEMENT. Provider will resolve all application
software related problems utilizing appropriate problem management
procedures. Included in these responsibilities, provider will:
- Maintain communications with Owens-Corning and affected users
on all problems through resolution.
- Escalate and manage all escalated calls from the initial call
through resolution. (Escalation in this statement of work relates to problems
that are escalated to the appropriate software product vendor).
- Use or interface to a common problem tracking system. (common
to all providers)
- Recognize and provide a mechanism for expedited handling of
problems which are of high business priority to Owens-Corning.
- Correct all problems within the scope of providers
responsibility. A problem will not be considered corrected until Vendor
receives confirmation from the Owens-Corning problem reporter or control person
that it has been corrected and the end user has been notified of such
correction by Vendor.
- Provide assistance to the user for Application Usage. (The
Commodity Application Help Desk will provide practical "how to use advice",
primarily focusing on product functionality, configuration, and documented
features. Engineers will recommend training and consulting services as
appropriate to meet more extensive Owens-Corning user needs.)
- Provide assistance to Site Operations, Enterprise Network
Management, Global Call Center as required where problem resolution requires
multiple disciplines.
- Provide monthly reports on problems including statistics on
types of problems, total number of problems, outstanding problems and
resolution time.
- Maintain tracking statistics on the following performance
measurements;
- Number of incoming calls per day per application
- Location of user making incoming calls
- Length of time problem remained open
- Length of time on phone resolving problem
- Number of calls that were incorrectly routed to this
Help Desk (and passed back to Global Call Center)
- Number of calls escalated to software vendor
Note: The above data will be used to determine the level and effect of
training which the Commodity Application Help Desk provider should maintain.
It is anticipated that as the proficiency of the Commodity Application Help
Desk provider increases the requirements on the Enterprise Support, and the
Site Support should correspondingly decrease. Likewise the length of time an
application specialist is on the phone with a user will also decrease.
- Conduct with Owens-Corning weekly problem review meetings to
ensure accurate problem resolution.
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<PAGE> 96
SECTION 3 OWENS-CORNING RESPONSIBILITY. Owens-Corning will provide all
incoming and outgoing communication lines to the provider. These lines will be
installed at the providers facility based upon the providers assessment of the
appropriate number of lines required to meet the objective.
Owens-Corning will install not more than three Owens-Corning
workstations at the providers facility. These workstations will be refreshed
to the latest configuration not less frequently than once annually. These
workstations will have access to all of the "Shrink Wrap" software referenced
in this Statement of Work.
If required, Owens-Corning will assist the provider in identifying
appropriate training facilities where the provider can increase their
efficiency in the standard software. In those cases where the training is
available at Owens-Corning Toledo facilities, Owens-Corning will provide the
training to the provider without charge.
SECTION 4 PROVIDERS RESPONSIBILITY. Supplier will provide the physical
facility for the Commodity Application Help Desk operation. It is
preferred (but not mandatory) that the facility is located within a three hour
drive from Toledo. The facility must be secured to a level that significant
force would be required to gain unauthorized entry. It is suggested (but not
mandatory) that the provider maintain a backup facility which could become the
recovery location if necessary.
Provider will be responsible for all providers employee human relation
activities including appropriate training and development of personnel.
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ATTACHMENT B
SERVICE LEVEL OBLIGATIONS
COMMODITY APPLICATION HELP DESK
1. Supplier will provide continuous availability of the Commodity
Application Help Desk function on a 24 hour / 7 day / 365 basis with an
obligation to provide monthly availability of 99.8%. Supplier will implement
the appropriate process to:
1. Answer calls within an average time of 20 seconds.
2. maintain maximum "on-hold" time of 2 minutes.
2. The provider will engage a professional staff capable of resolving;
. 80% of application software problems within 4 - 25 minutes
of receiving the call
. 90% of the problems within the first hour
. 95% of the problems within the first two hours
. Remainder of problems within 24 hours (48 hours where
escalation to Software vendor is required).
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<PAGE> 1
EXHIBIT 10.34
[TECHTEAM LETTERHEAD]
March 5, 1996
Mr. Mark Lutchen
Chief Information Officer
Price Waterhouse
1177 Ave. of the Americas
New York, NY 10036
Dear Mr. Lutchen
National TechTeam, Inc. (thereafter "NTT") is excited that Price
Waterhouse LLP (hereafter PW) has decided to pursue negotiations with NTT
in connection with its possible selection as the provider of Help Desk
Services for PW.
I am confident that our mutual interests will be met through the on-going
cohesive relationship that we have already begun and are continuing to
work on as we work together to seek to define the various processes,
procedures and needs which have the goal of providing Help Desk Service to
PW by NTT if and when NTT is selected to do so.
This Letter of Understanding shall serve as the basis of our mutual
understanding, consistent with the terms of the Request for Proposal by
PW, and the formal response by NTT, for the services to be provided
pursuant to this Letter during discussions by the parties about a possible
definitive agreement covering more extensive services.
NTT SERVICES TO BE PROVIDED
- Fundamental and Intermediate support as defined on Page 2 of the
NTT response to Request for Proposal until such time as PW shall
provide one or more formal written requests to NTT upon which
basis NTT will expand, reduce or cancel these support services.
- Master Service Support to be provided at a rate of $19.00 per
incident until such time as PW shall provide one or more formal
written requests to NTT upon which basis Master Support is to be
defined, expanded, reduced or canceled, and the cost of delivery
of said service support shall be determined or adjusted by NTT.
- NTT will provide all Infrastructure (facility, equipment, tools,
shrink wrap software, telecom and datacom).
- Delivery of the services to be provided no sooner than February
15, 1996 and no later than February 28, 1996. NTT and PW
currently plan to launch the support services on February 28,
1996.
- All other services to be provided consistent with the terms of
the NTT response to the PW Request for Proposal.
<PAGE> 2
Price Waterhouse
Letter Of Intent
March 5, 1996
REPORTS:
UPON INITIAL LAUNCH OF THE PROJECT NTT WILL DELIVER THE FOLLOWING ACD
REPORTS MONTHLY:
- Number of calls offered
- Number of calls answered and escalated based on calls
offered minus calls abandoned
- Number of calls abandoned
- Average queue time once call enters our technician queue
- Average talk time
- Number of outbound calls and average talk time
- Average wait before abandon
- Call arrival patterns
FEES DUE NTT FOR FUNDAMENTAL AND INTERMEDIATE SERVICES
- One Time Start-Up Cost -- $48,000.00 (billable upon execution of this
Letter of Understanding)
- Additional Start-Up Fees -- PW agrees to pay additional fees for
additional start-up requirements only in the event that NTT has
provided PW with a written needs analysis including a requirements
definition and a cost analysis and has gained an approval from PW to
proceed and, if such an approval is obtained, PW agrees to reimburse
NTT either in whole, or in part in the event the parties decide not to
execute the agreement for the expenditures based upon a mutual
assessment by PW and NTT of the effort expended.
- Per User Per Subscription -- $10.50 per month (billed consistent to the
roll-out schedule referenced in the fax dated 1/14/96, a copy of
which is attached hereto.
- Hour of Operation are 6:00 a.m. -- Midnight, Eastern Standard Time,
Monday through Friday excluding holidays. Outside of these hours --
$19.00 per incident,unlimited duration.
NTT and PW mutually agree not to issue any press release or otherwise disclose
the terms or conditions or existence of this Letter of Understanding or any
subsequent agreement(s) without prior consent of the other party.
The term of this Letter of Understanding shall inure to the benefit of PW
and NTT and shall not be assignable without the consent of the other party. Said
assignment shall not be unreasonably withheld.
The term of this Letter of Understanding is temporary and shall be
obligatory to PW and NTT only until such time as the formal agreement is
executed or the parties decide not to execute the agreement.
<PAGE> 3
Price Waterhouse
Letter of Intent
March 5, 1996
Except with respect to (i) NTTs obligation to provide the services and
resources set forth above and its obligations to protect confidential
information of PW in accordance with the nondisclosure agreement executed by it
on February 14, 1996, and (ii) PWs obligation to make payments for services and
resources of NTT as provided above, neither party will have any legal or other
obligation to the other arising out of or in connection with the subject matter
of this Letter of Understanding or to enter into or pursue any business or
other relationship with the other party unless and until the parties have
negotiated and executed a mutually satisfactory definitive agreement covering
the services, resources, payments, and other obligations of the parties (the
"Definitive Agreement"). Either party may terminate this Letter of
Understanding for any reason or for no reason upon 15 days prior written notice
to the other party. Unless the Definitive Agreement is executed by the parties
on or before April 30, 1996, or a later date mutually agreed upon, regardless
of the reason for such Definitive Agreement not having been so executed, this
Letter of Understanding shall expire. Upon termination or expiration of this
letter agreement, NTT shall return to PW all confidential information and other
property of PW then in its possession or control.
Signatories:
Agreed and Accepted
National TechTeam, Inc. Price Waterhouse LLP
Jonathan D. Ahlbrand Mark D. Lutchen/CIO
- --------------------------- --------------------------
3-5-96 3-5-96
- --------------------------- --------------------------
Date Date
<PAGE> 4
HELP DESK
SUPPORT SERVICES AGREEMENT
This Agreement, made this ___________day of ____________________, 1995,
("Effective Date") by and between Price Waterhouse LLP (hereafter "Price
Waterhouse LLP") a registered limited liability partnership organization under
an agreement governed by the laws of the State of Delaware having an office at
3109 West Dr. M.L. King, Jr. Blvd,. Tampa, FL. 33607-6215 and National TechTeam,
Inc., hereafter "TechTeam," having its principal place of business at
22000 Garrison Avenue, Dearborn, Michigan 48124.
BACKGROUND
1. Price Waterhouse LLP wishes to provide a technical support "Help Desk" to
its end users for a certain set of computer equipment and software
products via a 1-800 number telephone support "hotline."
2. Price Waterhouse LLP issued a Request for Proposal ("RFP") soliciting bids
for the Help Desk Services and TechTeam responded with its Response to
Request for Proposal, dated August 31, 1995 ("Proposal").
3. Price Waterhouse LLP desires that TechTeam provide the Help Desk services
described in the Proposal in accordance with the capabilities attested to
in the RFP and of this Agreement.
4. TechTeam has warranted and represented to Price Waterhouse LLP that
TechTeam is capable of performing the Help Desk services described in the
Proposal on the terms and conditions set out herein and in the attached
TechTeam's Response to Price Waterhouse LLP's Request For Proposal which
is incorporated as an integral part of this agreement.
NOW THEREFORE, in consideration of the mutual promises, covenants and
obligations contained herein, the parties agree as follows:
1. INTERPRETATION
1.01 Definitions. As used herein:
1.01.1 "Agreement" means this Support Services Agreement including any
Schedules and Exhibits attached hereto.
1.01.2 "Product(s)" means the set of products listed in Schedule "A"
hereto.
1.01.3 "Support Services" means Help Desk services described in
Schedule "A" hereto to be provided by TechTeam hereunder.
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<PAGE> 5
1.02 Schedules. The following Schedules are appended to and from part of this
Agreement.
Schedule "A" Support Services to be performed (Products, Support Services
and Reports)
1.03 Exhibits. The following Exhibits are appended to and form an integral
part of this Agreement:
Exhibit "1" Staffing Worksheet
Exhibit "2" Call Monitoring Evaluation Form
Exhibit "3" Telecommunications and Start-up fees
Exhibit "4" Non-Disclosure Agreement
Exhibit "5" Changes to Support Services Form
2. SUPPORT SERVICES
2.01 Support Services. Commencing on the 28th day of February, 1996 and until
this Agreement is terminated in accordance with Section 11, TechTeam
shall provide the Support Services set forth in Schedule "A" for the
Products 24 hours a day, 7 days a week, all days of the year according to
the fee structure set forth in Schedule "A"
2.02 Changes to Support Services. During the term of this Agreement, Price
Waterhouse LLP may request changes in the type or delivery of Support
Services set forth in Schedule "A". All Price Waterhouse LLP's requests
for changes to Schedule "A" shall be submitted to TechTeam in writing
using the agreed upon "Changes to Support Services Form, Exhibit "5."
TechTeam shall use reasonable business and professional judgment to
determine if the change requested by Price Waterhouse LLP materially
increases or decreases the effort required by TechTeam to provide the
Support Services as outlined in Schedule "A" and, therefore, would
require an adjustment to the fees set forth in section 6. TechTeam shall
notify Price Waterhouse LLP in writing within ten (10) business days
after receipt of Price Waterhouse LLP's request if the change is material
and shall provide a quote of the fee adjustment associated with
implementing the change. If Price Waterhouse LLP does not receive such
notice with ten (10) working days, the requested change shall not be
considered material and shall be implemented by TechTeam with written
notice to Price Waterhouse LLP and TechTeam shall implement a material
change only if both parties agree and sign a written description of the
change in Support Services and its associated fee adjustment. Such a
writing shall become an integral part of this agreement and shall be
bound by all the terms then enforce of this agreement.
3. TERMS OF AGREEMENT
3.01 Initial Term. The initial term of this Agreement shall commence upon the
Effective Date and shall continue for a period of one (1) year subject to
Section 11.
3.02 Renewal Terms. Upon expiration of the initial term of this Agreement,
this Agreement shall
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<PAGE> 6
automatically be extended for a renewal term of one (1) year, subject
to Section 11, unless either Price Waterhouse LLP or TechTeam gives the
other written notice of intent not to renew at least ninety (90) days
prior to the end of the initial term. Thereafter, upon expiration of a
renewal term, this Agreement shall automatically be extended for a
subsequent renewal term of one (1) year, subject to Section 11, unless
either Price Waterhouse LLP or TechTeam gives the other written notice
of intent not to renew at least ninety (90) days prior to the end of
the then current renewal term.
4. RESPONSIBILITIES OF TECHTEAM
4.01 TechTeam Staff. TechTeam shall assign adequate staff to effectively
manage the call volumes defined in Schedule "A" and to the Service
Level Goals, therein. TechTeam will ensure that all staff have
adequate telephone skills and are given proper telephone and technical
training before they provide the Support Services for the Products.
4.02 Appointment of Representative. TechTeam agrees to assign a Project
Leader to act as a point of contact for the Support Services. The
Project Leader will receive updated information from Price Waterhouse
LLP and will pass this information to all employees of TechTeam who
perform Support Services for Price Waterhouse LLP.
4.03 Standards. TechTeam shall provide the Support Services in accordance
with the performance standards described in Schedule "A". TechTeam will
provide Price Waterhouse LLP, at no cost, with remote access dial-in so
that Price Waterhouse LLP can listen to TechTeam agents performing the
Support Services. This monitoring of calls will take place at Price
Waterhouse LLP's discretion. Price Waterhouse LLP agrees to use the
current Call Monitoring Evaluation Form, see Exhibit "2" and to assure
that Price Waterhouse LLP's representative will have sufficient
knowledge in the appropriate use and approved designation access codes
of such form. TechTeam will provide instructions for use. In the event
that Price Waterhouse LLP identifies a problem with any service
provided by TechTeam or its agents, TechTeam shall promptly respond to
Price Waterhouse LLP and resolve the problem.
4.04 Reports. Techteam agrees to maintain complete and accurate records
relating to the Support Services. Techteam shall report to Price
Waterhouse LLP as set out in Schedule "A" hereto.
4.05 Continuous Improvements. TechTeam agrees to use its best efforts to
continuously improve its performance of its obligations under this
Agreement. Such efforts shall include improving training provided
to support agents and reducing the waiting period of callers.
4.06 Communications. TechTeam will implement the communications as described
in Exhibit "3". Any changes to the communication technology described
in Exhibit "3" could constitute a change in scope and result in
additional fees to Price Waterhouse LLP. TechTeam will not implement
any changes in communications without prior written approval from Price
Waterhouse LLP.
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<PAGE> 7
4.07 Help Desk Personnel TechTeam agrees that in the event any Price
Waterhouse LLP personnel assigned to the Support Services expresses the
desire to pursue employment opportunities with TechTeam, TechTeam shall
provide those Price Waterhouse LLP personnel with the same degree of
consideration for employment as provided to other applications as part
of the its normal recruitment and employment practices.
5. RESPONSIBILITIES OF PRICE WATERHOUSE LLP
5.01 Support Materials. Price Waterhouse LLP will, at Price Waterhouse LLP
discretion, provide TechTeam with all information and data that is
normally and publicly available for products as set forth in Schedule
"A" and Products pursuant to Schedule "A" relevant to TechTeam's
provision of Support Services throughout the term of this Agreement.
5.02 Products. Price Waterhouse LLP will, at Price Waterhouse LLP
discretion, provide TechTeam with those Products for use by TechTeam's
support agents for which TechTeam supplies support as set forth in
Schedule "A". Price Waterhouse LLP agrees to make reasonable efforts
to be Software Publishers Association compliant with all rules and
regulations for Software and Hardware (if necessary) that is provided
to TechTeam.
6. PAYMENTS
6.01 Support Services. In consideration of the performance by TechTeam of
the Support Services, Price Waterhouse LLP shall pay to TechTeam a fee
for Support Services as set forth in Schedule "A". TechTeam will
invoice Price Waterhouse LLP monthly at the end of each month and Price
Waterhouse LLP shall pay such invoices net 30 days from receipt.
6.02 Adjustments to Support Services Fees. Fees for Support Services may be
reviewed quarterly by the parties to determine if Price Waterhouse
LLP's use of TechTeam Support Services has changed in scope from the
definition set forth in Schedule "A". Any resulting change in the fee
shall be effective on the first day of the calendar month following the
review, upon written agreement by Price Waterhouse LLP and TechTeam.
6.03 Communications Costs. Price Waterhouse LLP shall be responsible to pay
for all (inbound 800#, MCI enhanced 800 services, in/outbound MCI long
distance local and interlatta for all calling performed from the help
desk for both voice and modem communications) necessary monthly usage
and circuit costs required for TechTeam to provide the Support
Services.
In the event that TechTeam should identify communication services for
which are to be charged to Price Waterhouse LLP, TechTeam will inform
Price Waterhouse LLP in writing as to the nature and extent of those
charges prior to invoicing Price Waterhouse LLP for these communication
services.
7. CONFIDENTIALITY
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<PAGE> 8
7.01 Proprietary Information. In the normal course of doing business, the
employees of Price Waterhouse LLP have access to documentation
and information (materials) that are proprietary either to Price
Waterhouse LLP, to the clients of Price Waterhouse LLP or to the
vendors and suppliers of Price Waterhouse LLP even though such
materials may not be officially classified and designated as
proprietary. As a routine matter of course, the employees of Price
Waterhouse LLP are indoctrinated to treat all materials as proprietary
either to Price Waterhouse LLP, to the clients of Price Waterhouse LLP,
or to the vendors and suppliers of Price Waterhouse LLP. The employees
of TechTeam may,in the course of providing support services to Price
Waterhouse LLP, come in contact with such materials. As a routine
matter of course, all employees of TechTeam, who may in the course of
providing support services to Price Waterhouse LLP have access to such
materials, will be indoctrinated to treat all such materials as
proprietary either to Price Waterhouse LLP, to the clients of Price
Waterhouse LLP, or to the vendors and suppliers of Price Waterhouse
LLP. All such proprietary or confidential information (collectively,
"Proprietary Information") shall be treated confidentially by the
receiving party and its employees and shall not be disclosed by the
receiving party without the disclosing party's prior written consent.
Proprietary Information shall include (but is not limited to) the
names, addresses and telephone information of Price Waterhouse LLP's
clients as well as all technical information and documentation not
generally available to end users which Price Waterhouse LLP provides to
TechTeam hereunder.
7.02 Treatment or Proprietary Information. The receiving party shall not
duplicate all or any part of the disclosing party's Proprietary
Information, except in accordance with the terms and conditions of this
Agreement. Each party shall have an appropriate agreement with each of
its employees and agents having access to the other party's Proprietary
Information sufficient to enable that party to comply with all terms of
this Agreement. TechTeam shall require its employees and agents
providing Support services to sign the Nondisclosure Agreement set
forth in Exhibit "4". Each party agrees to protect the other's
Proprietary Information with the same standard of care and procedures
which it uses to protect its own trade secrets and confidential or
Proprietary Information of like importance and, in any event, shall
adopt or maintain reasonable procedures to protect such Proprietary
Information.
7.03 Further Treatment of Proprietary Information. Each party agrees to hold
all Proprietary Information of the other party in trust and
confidence for the other party and not use the same other than as
expressly authorized under this Agreement. The receiving party agrees
not to disclose any such proprietary information without the prior
written consent of the disclosing party, to anyone other than the
receiving party's employees who have a need to know same to carry out
the rights granted hereunder or to agents, or contractors who have a
need to know same to carry out the rights granted hereunder or to
agents, or contractors who have a need to know same to carry out the
rights granted hereunder and with whom the receiving party has a valid
non-disclosure agreement, or as required under any applicable law or
regulation.
7.04 Exceptions Any obligation in the confidentially provisions of Section
7 does not apply to any information which:
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<PAGE> 9
a) is or becomes known publicly through no fault of the receiving
party;
b) is already known to the receiving party, except as listed or
specified in writing by the receiving party as being the
subject of previous discussions between the disclosing party
and the receiving party regarding proprietary information, and
is so agreed by both parties.
7.05 Equitable Relief. In recognition of the unique and proprietary nature
of the information disclosed by each party, it is agreed that each
party's remedy for breach by the other party of its obligations under
this Section 7 shall be inadequate and the disclosing party shall, in
the event of such breach, be entitled to equitable relief, including
without limitation, injunctive relief and specific performance, in
addition to any other remedies provided hereunder or available at law.
7.06 Survival. The provisions of this Section 7 shall survive any expiration
or termination of this Agreement pursuant to Section 11.
8. DATA RIGHTS
8.01 Price Waterhouse LLP's Proprietary Information and Software. Price
Waterhouse LLP shall retain all rights, title and interest in and to
all Price Waterhouse LLP Proprietary Information and all software
developed by, owned by, and licensed by Price Waterhouse LLP and
delivered to TechTeam under this Agreement in conjunction with
TechTeam's provision of Support Services.
8.02 TechTeam Proprietary Information and Software. TechTeam shall retain
all rights, title and interest in and to all TechTeam Proprietary
Information and all software developed by TechTeam prior to the
Effective Date and used to provide Support Services for Price
Waterhouse LLP under this Agreement.
8.03 Assignment Developments. TechTeam hereby assigns to Price Waterhouse
LLP all rights, title and interest in, including all intellectual
property rights, to any and all reports, designs specifications
and other materials developed under this Agreement regarding Products,
whether prepared by Price Waterhouse LLP or TechTeam, during the
course of or as a result of this Agreement. TechTeam hereby assigns to
Price Waterhouse LLP all rights, title and interest, including all
intellectual proprietary rights, to any modification, enhancement,
solution, improvement, invention or work-around relating to Price
Waterhouse LLP Products, whether or not patentable, conceived in or
made in the course of or as a result of TechTeam's performance under
this Agreement. TechTeam shall cooperate fully with Price Watherhouse
LLP's efforts to obtain patent or copyright protection for any such
developments.
8.04 Use of Other Party's Proprietary Information Intellectual Property and
Software. Except as expressly set forth in this Agreement, neither
party grants the other party any right, title or interest in its
intellectual property, technology or Proprietary Information. Except as
specifically provided by this Agreement, neither party shall execute,
use, copy or modify the
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<PAGE> 10
technology, intellectual property or Proprietary Information of the
other party or take any action inconsistent with the other party's
intellectual property rights. Neither party shall decompile, reverse
assemble or reverse engineer the other party's technology, intellectual
property or Proprietary Information.
8.05 Survival. The provisions of this Section 8 shall survive any
termination of this Agreement pursuant to Section 11.
9. WARRANTIES AND OTHER REPRESENTATIONS
TechTeam warrants and represents to Price Waterhouse LLP that it shall
perform the Support Services in a professional manner in accordance with
generally accepted industry practice using only properly trained and
competent personnel. TechTeam further warrants that the Support
Services shall be provided in a manner that meets or exceeds the
performance criteria set forth in Schedule "A".
Except for any express warranties specifically provided in this
agreement, TechTeam makes no other warranties, either expressed or
implied, as to any matter whatsoever, including, without limitation,
warranties as to merchantability and fitness for a particular purpose.
10. INDEMNITY
10.01 Indemnification by TechTeam. TechTeam agrees to indemnify and save
Price Waterhouse LLP from and against any and all claims, demands, costs
and liabilities, (including all reasonable legal and attorney fees and
expenses) of any kind whatsoever, arising directly or indirectly out of
TechTeam's performance under this Agreement. Price Waterhouse LLP
agrees to promptly notify TechTeam if any such claims arise and offer
TechTeam reasonable assistance and information necessary in responding
to and defending against any such claims.
10.02 Indemnification by Price Waterhouse LLP. If notified in writing of any
such action (and all prior related claims) brought against TechTeam
alleging that TechTeam's use of the Product or any other materials
provided to TechTeam by Price Waterhouse LLP hereunder infringes any
valid United States patent or copyright, Price Waterhouse LLP will
defend that action at its expense and will pay the costs and damages
awarded against TechTeam in the action, provided: a) that Price
Waterhouse LLP shall have sole control of the defense of any such action
and all negotiations for its settlement or compromise; b) that TechTeam,
and where applicable, those for whom TechTeam is in law responsible,
cooperate fully with Price Waterhouse LLP in its defense of the action;
and c) Price Waterhouse LLP shall not, except with the consent of
TechTeam, consent to entry of any judgement or enter into any settlement
which does not include as an unconditional term thereof the complete
release from liability of TechTeam.
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<PAGE> 11
10.03 Limitation of Liability. Neither price Waterhouse LLP or TechTeam
shall be liable to the other for incidental, consequential, exemplary,
indirect or special damages of any kind including, without limitation,
loss of profits, savings, revenue, or other commercial loss or the
claims of third parties including end users whether or not advised of
the possibility of such loss, however caused and on any theory of
liability, arising out of this Agreement or the relationship of Price
Waterhouse LLP and TechTeam.
The liability of Price Waterhouse LLP with respect to any matter arising
under this agreement shall be limited to the assets of the Price
Waterhouse LLP partnership and no individual partner or principal shall
be liable.
11. TERMINATION
11.01 Termination. This Agreement will terminate in the event of any of the
following:
11.01.1 On the thirtieth (30) day after one party gives the other
written notice of breach by the other of any material term or
condition of this Agreement unless the breach is remedied before
that day;
11.01.2 Written notice of termination by Price Waterhouse LLP effective
immediately, if TechTeam shall cease to carry on the business of
providing the Support Services;
11.01.3 Written notice of termination by one party effective
immediately, after a receiver has been appointed in respect for
the whole or a substantial part of the other's assets or a
petition in bankruptcy or for liquidation is filled by or
against that other or if the other has been dissolved or
liquidated or its insolvent;
11.01.4 Written notice of termination of one party, effective
immediately, to the effect that either party has breached its
obligations under Section 7 or Section 8;
11.01.5 Upon the expiration of one hundred eighty (180) days following
receipt by either party of a notice, from the other, terminating
this Agreement for convenience.
11.02 Effect of Termination. In the event of termination and effective on
the date of execution of termination:
11.02.1 TechTeam shall immediately cease to perform the Support
Services;
11.02.2 TechTeam shall, at Price Waterhouse LLP's written notification
and option, destroy and certify that it has destroyed all
existing copies of all materials relating to the Support
Services, other than the Product, within its possession
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<PAGE> 12
or control, or deliver up all such materials and certify that
TechTeam has done so.
11.02.3 Price Waterhouse LLP shall perform all undisputed payment
obligations to TechTeam within thirty (30) days of receipt by
Price Waterhouse LLP of the final report of TechTeam in respect
of the Support Services.
11.02.4 TechTeam shall assist Price Waterhouse LLP in the transition
associated with the termination of this Agreement. Such
assistance shall include prompt transfer of all Price Waterhouse
LLP related material, Products and collateral to a new service
provider of Price Waterhouse LLP, including Price Waterhouse LLP
as the designated self service provider, as specified by Price
Waterhouse LLP.
12. DISCLOSURE
12.01 Each Party agrees not to issue any press releases or otherwise disclose
the terms and conditions or existence of this agreement without prior
written consent of the other.
13. MISCELLANEOUS
13.01 Entire Agreement. This Agreement constitutes the entire agreement
between the parties concerning the subject matter hereof and supersedes
all prior statements, representations, discussion, negotiations and
agreements, both oral and written.
13.02 Amendment or Waiver. This Agreement may not be amended or modified
except in writing signed by authorized officers of both parties.
13.03 Illegal or Unenforceable Provisions. In the event that any one or more
of the provisions of this Agreement shall be found to be illegal or
unenforceable, this Agreement shall nevertheless remain in full force
and effect, and such term or provision shall be deemed severed.
13.04 Independent Contractors. The parties to this Agreement are independent
contractors. No relationship of principal to agent, master to servant,
employer to employee or franchisor to franchisee is established hereby
between the parties. Neither party has the authority to bind the other
or incur any obligation on its behalf.
13.05 No Waiver. Neither of the party's rights to enforce provision of this
Agreement shall be affected by any prior course of dealing, waiver,
delay, omission or forbearance.
13.06 Assignment. This Agreement and the rights granted hereunder shall not
be assigned, encumbered by security interest or otherwise transferred by
TechTeam without the prior written consent of Price Waterhouse LLP.
Price Waterhouse LLP may assign this
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<PAGE> 13
Agreement at any time upon notice to this effect to TechTeam.
13.07 Notices. Any notice or communication to the parties shall be sent to
the following address:
National TechTeam, Inc.
27345 W. Eleven Mile Rd.
Southfield, MI 48034 U.S.A.
Attention: SENIOR VICE PRESIDENT - CALL CENTER SERVICES
810-357-2866 (Telephone)
810-357-2570 (Facsimile)
or such other places as they may from time to time specify by notice
in writing to the other party. Any such notice or communication shall
be in writing, and, unless delivered to a responsible officer of the
addressee, shall be given by overnight courier, facsimile or telex and
shall be deemed to have been given when such notice should have reached
the addressee in the ordinary course.
13.08 Further Assurances. The parties agree to do all such things and to
execute such further documents as may reasonably be required to give
full effect to this Agreement.
13.09 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan without regard to its
choice of law rules.
13.10 Jurisdiction. Any dispute arising out of this Agreement shall
exclusively be brought in, and each of the parties consent to personal
and exclusive jurisdiction of and venue in, the state and federal courts
with Wayne County, Michigan
IN WITNESS WHEREOF, the duly authorized representatives of the parties
have executed this Agreement as of the Effective Date first above and
written.
PRICE WATERHOUSE LLP NATIONAL TECHTEAM, INC.
By: By:
---------------------------- ---------------------------
Name: Name
----------------------- ----------------------
(Print or Type) (Print or Type)
Title: Title:
------------------------ -----------------------
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<PAGE> 14
Date: Date:
---------------------------- ---------------------------
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<PAGE> 15
Schedule A
(Services to be Performed)
1. Nature of Services
1.1 TechTeam will provide the following telephone-based computer technical
support services to Price Waterhouse LLP:
- Fundamental and Intermediate support as defined on Page 2 of the
TechTeam response to Request for Proposal until such time as Price
Waterhouse LLP shall provide one or more formal written requests to
TechTeam upon which basis TechTeam will expand, reduce or cancel
these support services.
- Master Service Support to be provided at a rate of $19.00 per
incident until such time as Price Waterhouse LLP shall provide one
or more formal written requests to TechTeam upon which basis Master
Support is to be defined, expanded, reduced or canceled, and the
cost of delivery of said support shall be determined or adjusted by
TechTeam.
- All other services to be provided consistent with the terms of the
TechTeam response to the Price Waterhouse LLP Request for Proposal.
2. Hours of Operation
2.1 TechTeam will provide 24 hours a day, 7 days a week support for Price
Waterhouse LLP employees and authorized temporary employees and
sub-contractors.
2.2 TechTeam will provide "core hour" service for the hours of 6:00 AM EST
to 12 Mid EST Monday through Friday inclusive in the per technician per
day rate service.
2.3 TechTeam will provide service for all other hours on a per incident
basis (currently $19.00 per incident unlimited duration).
2.4 These hours of coverage at these rates will prevail until Price
Waterhouse LLP and TechTeam shall mutually agree in writing to change
the basis of service coverage and charges.
3. Authorized Callers
3.1 Price Waterhouse LLP has chosen to service everyone who calls the help
desk. Authorized Callers who are not in the database will be serviced
and then reported to Price Waterhouse LLP on an exception report. Price
Waterhouse LLP reserves the right to change the description of
Authorized Callers in the future.
4. Call Volume
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<PAGE> 16
4.1 TechTeam and Price Waterhouse LLP assume that each employee will call
an average of nine (9) times per year. TechTeam and Price Waterhouse
LLP also assume that each incident will be an average of 13 minutes.
5. Call Procedure
5.1 Authorized callers of the Price Waterhouse LLP help desk call
dedicated telephone number(s) established by Price Waterhouse LLP.
The TechTeam technician will determine the nature of the call. If the
TechTeam technician can solve the call according to the scope in
section 1.1, the technician will do so. If the technician determines
the call needs to be dispatched to a site technician, they will do so
according to the procedure manual.
6. Call Answer Procedures
6.1 Upon connection with the telephone support system, the caller will be
greeted by a TechTeam technician. If the call volume prevents an
TechTeam technician from answering the call, the caller will be greeted
with a recorded voice welcoming the caller to customer support. The
caller will then enter a queue for the next available TechTeam
technician. Callers will also be given the option to leave a voice mail
message if they chose not to wait on hold for a technician. TechTeam
will respond to voice mail messages in no more then two hours.
Each technician will greet the caller with "Thank you for calling the
TSS help desk". Price Waterhouse LLP will provide TechTeam with detailed
call response procedures prior to the commencement of service hereunder.
All recorded messages utilized by TechTeam in the provision of services
hereunder shall be approved in writing by Price Waterhouse LLP prior to
their use.
6.2 Price Waterhouse LLP authorized callers will also have the option to
send electronic mail to a help desk mail box. TechTeam will respond to
the mail in the mail box in no more then two hours.
Price Waterhouse LLP and TechTeam mutually agree that call answering
procedures may need to changed on occasion. Both parties will mutually
agree on any procedural changes.
7. Call Tracking Procedures
7.1 TechTeam will use the TracTeam at TechTeam's location.
7.2 For purposes of this agreement, the average accumulated time per
incident is defined as, and contains, the sum of all parts of the
incident including the initial contact, subsequent conversations and
related call backs, research time and call wrap-up time per problem or
question offered by the caller.
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<PAGE> 17
7.3 TechTeam and Price Waterhouse LLP will jointly develop an electronic
database for the purpose of dispatching and tracking dispatched calls
to Price Waterhouse LLP. The database design and usage are to be
jointly determined by TechTeam and Price Waterhouse LLP. Price
Waterhouse LLP shall not place unreasonable demands upon TechTeam
without reasonable compensation to TechTeam as set forth in the
TechTeam RFP response. Price Waterhouse LLP agrees to pay TechTeam on
a time and materials basis for any development that may fall outside
of the scope of the TechTeam RFP. TechTeam will obtain in writing
from Price Waterhouse LLP approval before beginning any services which
may result in additional charges.
8. Dispatch Procedures
8.1 Commencing February 28, 1996 TechTeam will begin providing support as
described in section 1.1 of this agreement for authorized callers of
the Price Waterhouse LLP help desk.
8.2 All fundamental, intermediate, and mastery calls will be retained
internally and handled by TechTeam. Calls that do not fall under the
definition of fundamental, intermediate or mastery will be dispatched to
Price Waterhouse LLP according to the procedure manual. TechTeam will
attempt to resolve hardware related calls. If a hardware related call
cannot be resolved over the phone by TechTeam, TechTeam will disptach to
specified contact at Price Waterhouse LLP for resolution. Price
Waterhouse LLP and TechTeam recognize that some callers will demand to
be exceptions to the agreed upon procedures.
8.3 Price Waterhouse LLP reserves the right to change its internal contacts
or to designate different individuals as the contacts for disptached
calls. It is the responsibility of Price Waterhouse LLP to keep
TechTeam fully informed of the identity of these contacts.
9. Service Level Goals
9.1 TechTearn will manage to the following Metrics:
Metric One - Calls To Be Answered
TechTeam will answer 100% of those calls handled (calls handled =
calls offered/received - calls abandoned) which can be answered
directly by TechTeam.
In the event that any such calls are dispatched to Price Waterhouse
LLP that are within the scope of TechTeam's support
responsibilities and the solution already resides in TechTeam's
knowledgebase as described in section 1.1 of this document, Price
Waterhouse LLP shall inform TechTeam. In all cases where TechTeam
shall subsequently dispatch a call for which the solution already
resides in TechTeam's knowledgebase, TechTeam will count and report
these calls as "inappropriately dispatched" calls.
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<PAGE> 18
In the event that the solution is not in TechTeam's knowledgebase and the
solution is not Price Waterhouse LLP specific, TechTeam will add the solution
to their knowledgebase within 48 hours. In all cases where TechTeam shall
subsequently dispatch a call which is a repeat of a call that is not Price
Waterhouse LLP specific and for which Price Waterhouse LLP has informed
TechTeam more then 3 business days previously, TechTeam will count and report
these calls as "inappropriately dispatched" calls.
In the event that the solution is not in TechTeam's knowledgebase and the
knowledge is Price Waterhouse LLP specific, Price Waterhouse LLP will
provide to TechTeam the correct solution for such calls. In cases where the
call is Price Waterhouse LLP specific, TechTeam will evaluate what steps are
necessary to sufficiently inform the agents with the appropriate information
(i.e., additional training). TechTeam will then provide Price Waterhouse LLP
with a time line of when the agents will be sufficiently prepared to answer the
calls. In all cases where TechTeam shall subsequently dispatch a call which is
a repeat of a call for which the agents have been sufficiently prepared,
TechTeam will count and report these calls as "inappropriately dispatched"
calls.
TechTeam reserves the right to perform an audit on all such "inappropriately
dispatched" calls to confirm that the conditions set forth herein are met.
In the event that the conditions are met, TechTeam shall credit Price
Waterhouse LLP at the rate of $19 for all such calls.
Metric Two - Service Level
TechTeam shall manage the staffing of agents such that the service level will
be 90% in 120 seconds for the 24 x 7 service. For every call within 90% of the
calls handled for a month that is not handled in 120 seconds, TechTeam will
credit PW $1 a call.
Example:
500 calls handled for the month
X90%
- ----
450
450 calls should be answered within 120 seconds. If only 400 calls were
answered within 120 seconds. 50 calls will be credited back at $1.
Metric Three - Managing Call Response
TechTeam shall manage the staffing agents such that all calls taken each month
or some other arbitrary time period greater than one month and agreed upon by
Price Waterhouse LLP and TechTeam will be answered with an average speed to
answer not to exceed 26 seconds.
Average speed to answer =
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<PAGE> 19
Total queue time for queued calls / calls handled
Metric Four - Managing Calls Abandoned
TechTeam will work with Price Waterhouse LLP to manage the staffing level of
agents such that no more than 10% of all calls offered/received will abandon
unless the average wait to abandon drops below 1 minute. For every call over
10% that abandons, TechTeam will credit PW $3 per call.
Example:
569 calls offered
500 calls handled
=
12% abandonment rate
(69 calls actually abandoned)
569 x 10% = 57 calls that can abandon
69 - 57 = 12 calls will be credited back at $3 per call.
10. Procedures
10.1
TechTeam will adhere to the following procedures unless Price Waterhouse LLP
requests changes in a procedure and informs TechTeam in writing:
Procedure One - Managing Dispatch Calls
TechTeam shall manage the dispatching of all calls to Price Waterhouse LLP by
transmitting a predefined Lotus Notes message to the appropriate location(s) in
addition to all other notifications set forth based upon the priorities and
procedures agreed upon by Price Waterhouse LLP and TechTeam.
Procedure Two - Managing Call Exceptions
For all calls billed to Price Waterhouse LLP at extra cost (those made during
non-core hours) name, staff id, work office, assigned office, current telephone
number, current location and call description must be collected and reported
before reconciliation occurs.
Procedure Three - Reporting
These metrics, and others to be determined will be reported weekly and
summarized monthly until one month after all Price Waterhouse LLP offices are
launched. Upon the event of one month after all Price Waterhouse LLP offices
are launched, these metrics, and others to be determined, will be reported
monthly. These metrics shall be organized, summarized and formatted in a form
agreed upon by both Price Waterhouse LLP and
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<PAGE> 20
TechTeam.
Procedure Four - Capacity Forecasting
Price Waterhouse LLP and TechTeam will work together and have joint
responsibility for the development of capacity forecasting (i.e. staffing
levels). On a monthly basis, reviewing a historical rolling three month
interval immediately proceeding the current month, Price Waterhouse LLP and
TechTeam will forecast potential changes in statistics that could affect
staffing levels. TechTeam will not adjust capacity without the prior written
consent of Price Waterhouse LLP. Any increase or decrease in staffing as a
result of capacity forecasting will follow the time of adjustment set forth in
Exhibit "1".
The Erlang method staffing model utilized by TechTeam will produce forecasting
values with 95% - 98% confidence + or - 5% error given that the input
forecasting factors used to produce the results are accurate with at least the
same degree of confidence and remain so throughout the forecasted interval.
11. Fees
11.1
Price Waterhouse LLP agrees to pay TechTeam the fee of $301 per technician per
day for Fundamental and Intermediate support during the hours of 6:00am and
12:00am Eastern Standard Time, Monday through Friday for those calls that are
handled by the Price Waterhouse LLP primary group. Should call volume exceed
the capacity of the Price Waterhouse LLP primary group of agents, Price
Waterhouse LLP will pay TechTeam $19 per call that is handled by the
Multi-Product support group.
Price Waterhouse LLP and TechTeam agree to evaluate a staffing deviation
mechanism 120 days after complete roll out of the Support Services to Price
Waterhouse LLP. The intended outcome is a mechanism to allow flexibility in
the staffing tied to forecast.
Price Waterhouse LLP and TechTeam agree that call volume may require changing
the hours that define "core hours", and thereby change when the primary staff
is scheduled.
11.2
Outside of the hours of 6:00am and 12:00am Eastern Standard Time, Monday
through Friday, Price Waterhouse agrees to pay TechTeam the fee of $19 per
incident for Intermediate and Fundamental support.
11.3
Price Waterhouse LLP agrees to pay TechTeam the fee of $19 per incident on the
following holidays:
New Year's Day
Easter
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<PAGE> 21
Memorial Day
Independence Day
Labor Day
Thanksgiving Day
Christmas Day
11.4
Price Waterhouse LLP agrees to pay TechTeam the fee of $19 per incident for
mastery support.
11.5
Price Waterhouse LLP agrees to pay TechTeam the one time fee of $48,000 for
start up costs.
12. List of products to be support
TechTeam will provide telephone-based support and routing for the following
products:
DOS
1-2-3
Release 3.4a
Release 3. 1 +
Release 2.4
CBT Systems - NetWare 3.x Training
Sept. '94
CBT systems - NOTES TRAINING
dBASE IV
Versions 2.0
Versions 1.5
Freelance
Release 4.0
IBM DOS
Version 3.x to current version
IBM AntiVirus
Version 2.1B
Paradox
Version 4.5
Version 4.02
Quattro Pro
Version 5.0
Version 4.0
Turbo Tax
WordPerfect
Version 5.1
Netware
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<PAGE> 1
EXHIBIT 10.35
JOINT VENTURE AGREEMENT
JOINT VENTURE AGREEMENT signed on July 26,1996 and entering into effect on
August 1, 1996
BY AND BETWEEN: NATIONAL TECHTEAM, INC., a company existing under and by virtue
of the laws of the State of Delaware, USA, having
its registered office at 22000 Garrison Avenue,
Dearborn Michigan, USA, or any newly and fully owned
subsidiary of NATIONAL TECHTEAM, INC.
hereby, validly represented by its Chief Executive
Officer Mr. William F. Coyro Jr.
hereinafter referred to as "TechTeam".
AND: PARATEL N.V., a company existing under and by
virtue of the laws of Belgium and having its
statutory office at Medialaan 1, 1800
Vilvoorde, Belgium.
hereby by virtue of article 18 and 21 of its
Articles of Incorporation validly represented by Mr.
Vic Haenen and Mr. Jan Lamers
hereinafter referred to as "Paratel"
RECITALS
R.1. TechTeam is a global provider of multi-function call center
services and has significant experience in the design, development,
implementation and operational management of multi-function call centers,
including computer and technical training related to call center activities.
TechTeam wishes to increase its customer base and ability to deliver those
services to the Pan-European market.
R.2. Paratel is an European provider of interactive voice response-based
application services including direct-response television, automated
consumer-orientated call centers (e.g. automated direct marketing, games and
information services). Paratel has also a significant experience in using
multi-lingual speech recognition tools in delivering those services.
Due to its significant experience and its technology Paratel is capable to
assist TechTeam in its program to increase its customer base and ability to
deliver their services, i.e. inbound and outbound and interactive
telemarketing and live operator orientated call centers with a substantial
added value, in the Pan-European market.
R.3. TechTeam and Paratel by a non-binding letter of intent dd. April 1,
1996 have indicated their intention to create a joint-venture company which
will operate a call center entity, which will deliver inbound and outbound
and interactive telemarketing and live operator orientated call centers with
a substantial added value in the Pan-European market. Both parties also agree
that the computer and technical training is a substantial part of those
<PAGE> 2
services.
R.4. A first step in the elaboration of their mutual intentions was the
implementation of a temporary operating agreement signed dd. June 6, 1996.
This operating agreement provides also that as of August 1, 1996 the
joint-venture agreement should take the form of a joint-venture legal entity.
R.5. Both parties now agree to set-up the final merger-type joint-venture
agreement which also includes the incorporation of a Belgian legal entity
having as statutory name NATIONAL TECHTEAM EUROPE N.V., which will be used as
the legal entity in which the activity of operating call centers, of which the
computer and technical training is a substantial part of those services, in the
Pan-European market will be implemented.
This legal entity will deliver inbound and outbound and interactive
telemarketing and live operator orientated call centers with a substantial
added value in the Pan-European market.
R.6. Both parties are aware that through the joint-venture entity the
activities of TechTeam and Paratel will interact more and more and therefore
TechTeam and Paratel in a spirit of consensus and partnership on a going-concern
continuous-growth basis could decide in a later stage to implement a full
integration through an exchange of shares. For the valuation rules linked to
this possible full integration TechTeam and Paratel agree that it will be based
upon a price/earnings ratio hereby fixed by the parties at 20. As far as
TechTeam or Paratel is concerned, the earnings considered will be the
accumulated net earnings during the last twelve months ending on the date of
full integration.
<PAGE> 3
THE FOLLOWING HAS BEEN AGREED:
In consideration of the mutual covenants contained in this JOINT VENTURE
AGREEMENT signed on July 26, 1996 and entering into effect on August 1, 1996,
between TechTeam and Paratel, the parties agree as follows:
ARTICLE 7: Incorporation of a Belgian legal entity having as statutory name
National TechTeam Europe N.V..
1.01 Purpose. The purpose of the joint venture company shall be to offer
inbound and outbound and interactive telemarketing and live operator orientated
call centers services with a substantial added value - of which the computer
and technical training is a substantial part of those services - in the Benelux
with a focus to the Pan-European market and to engage in all other aspects of
such business and to do all other things necessary, appropriate or advisable to
accomplish the purpose as set forth above.
Paratel agrees, however, that Ford Motor Company will not become a customer of
National TechTeam Europe N.V., but instead will be a National TechTeam customer
served in Europe exclusively by National TechTeam Inc. or one of its
subsidiaries or branches.
1.02 Name. The name of the joint venture company to be incorporated by
virtue of the laws of Belgium according to the terms of this Agreement shall be
NATIONAL TECHTEAM EUROPE N.V. or any other name if necessary to comply with
Belgian Law, as agreed on unanimously by the parties.
1.03 Form of Entity. The joint venture company shall be structured as a
naamloze vennootschap (a public limited liability company) by virtue of Belgian
law.
1.04 Commencement and Term. The joint venture company is incorporated for
an unlimited period of time.
1.05 Statutory Office. The statutory office of the joint venture company
shall be Medialaan 1, 1800 Vilvoorde, Belgium.
1.06 Statutory capital and shareholding structure: The statutory capital
will amount to 40,000,000 BEF, represented by 4,000 registered shares.
TechTeam will subscribe 3,001 registered shares and Paratel will subscribe 999
registered shares.
The contribution of TechTeam and Paratel shall be in cash.
However both parties agree that each shareholder at the occasion of the
incorporation only has to pay in 25% of each share subscribed which implies
that TechTeam has to transfer 7,502,500 BEF and Paratel 2,497,500 BEF to the
blocked bank account opened with a Belgian bank in the name of National
TechTeam Europe N.V. in formation.
The board of directors by a qualified majority, i.e. at least one of the
director appointed as a director on the list
<PAGE> 4
submitted by the class B shareholders should co-agree with the decision, can
decide to increase the statutory capital up to 100,000,000 BEF. The power of
the board to increase the statutory capital up to 100,000,000 BEF is, in
conformity with article 33bis Section 2 of the Belgian Commercial Company Code,
only valid for a period of five years.
Both parties will act as incorporators of the company and therefore will
co-sign the financial plan, enclosed as Appendix 1, which provides a forecast
covering the company's first two years of activity and which will be submitted
to the Notary in charge of the incorporation of National TechTeam Europe N.V.
in conformity with article 29ter of the Belgian Commercial Company Code.
1.07 Voting rights - dividend rights - classes of shares
Each registered share of National TechTeam Europe N.V. represents one vote.
However the 3,001 registered shares subscribed by TechTeam are qualified as
class A shares and the 999 registered shares subscribed by Paratel are
qualified as class B shares. The class to which the shares belongs has its
significance vis-a-vis the election of the directors (see article III) and
vis-a-vis the dividend rights and the rights on the liquidation-surplus (see
hereunder).
Paratel and TechTeam agree that class A shares have a right to claim 70% of the
dividends attributed and to claim 70% of the liquidation-surplus and class B
shares have a right to claim 30% of the dividends attributed and to claim 30%
of the liquidation-surplus.
Parties agree that in the bylaws of National TechTeam Europe N.V. a provision
will be inserted upon first request of National TechTeam, either upon
incorporation or at a later stage, which is in conformity with the Belgian
company law, to the effect that the profits to be attributed to the class A
shares will be systematically reserved on a special reserve account, which is
preserved exclusively for the class A shares and which can only be distributed
to the shareholders keeping the class A shares, upon their mere request.
Parties agree that they will grant their collaboration and will give the
required approval in the required meetings of the different corporate bodies of
National TechTeam Europe N.V. to have such provision inserted in the bylaws.
ARTICLE II : Shareholders' Agreement
2.01 Transfer of shares to a third party. Paratel or TechTeam undertake in
case they want to transfer their shares in the joint venture entity to a third
party to offer those shares to the other shareholder before transferring them
to a third party (the so-called right of first refusal).
In order that this right is valid vis-a-vis third parties, Paratel and TechTeam
agree that the shares remain alway registered shares and that the right of
first refusal will be inserted in the Deed of Incorporation and bylaws and in
the abstract of the Deed of Incorporation and bylaws to be published in the
Annex to the Belgian State Gazette. The modalities of the right of first
refusal or preemption clause is further specified in Appendix 2, i.e. the Deed
of Incorporation and the bylaws of National TechTeam Europe N.V..
<PAGE> 5
2.02 Transfer of shares to a related company
In case the shares would be transferred by Paratel or TechTeam to a related
company the board of directors by a qualified majority, i.e. at least one of
the director appointed as a director on the list submitted by the class B
shareholders should co-agree with the decision to approve the transfer, has to
approve the transfer before any transfer can take place. The board may only
refuse to approve in case the related character of the acquiror of the shares
vis-a-vis the transferor is doubtful or not proven. In case the board refuses
to approve the transfer the potential acquiror will qualify as a third party
which implies that the preemption clause (see clause 2.01) will become
applicable.
This approval clause will not be applicable to a possible transfer by TechTeam
of its participation in National TechTeam Europe N.V. to a new and fully owned
subsidiary.
2.03 An effective transfer of shares to a third party or to a related company
In case of an effective transfer of shares to a third party or a related
company in compliance with the preemption clause or the approval clause the
transferor guarantees that the acquiror agrees with all the terms and
modalities of this joint-venture agreement. Sufficient written evidence of such
agreement will be submitted to the other party in writing prior to an effective
transfer. In case the transferor has failed to fulfill one or more of these
commitments he will be due to the other party an indemnity fixed at an amount
of 20,000,000 BEF.
2.04 Transfer of shares between shareholders
If within this framework one shareholder informs in writing the other
shareholder that he desires to terminate this agreement by application of
article VI of this agreement, each of the shareholders has the right as from
that moment either to offer to buy all the shares of National TechTeam Europe
N.V., owned by the other shareholder or to offer to sell all its shares of
National TechTeam Europe N.V. to the other shareholder.
Both shareholders are completely free to exercise this right or not, and in the
affirmative, to either offer to sell their shares or to offer to buy the shares
of the other shareholder (hereafter referred to as the "Offer to sell or to
buy").
The price for the shares under this Offer to sell or to buy (hereafter referred
to as "Price") will be based upon a price/earning ratio hereby fixed by the
parties at 20.
As far as National TechTeam Europe N.V. is concerned, the earnings considered
will be its accumulated net earnings during the last twelve months ending on
July 31st of the year in which the one shareholder informs the other in writing
the other shareholder that it wants to terminate the joint-venture agreement.
However in the event National TechTeam Europe N.V. presents an accumulated loss
over the period of the last four quarters ending on July 31st of the year in
which the one shareholder informs in writing the other shareholder that it
wants to terminate the joint-venture agreement, the Price will be equal to the
accounting value of those shares.
<PAGE> 6
The accounting value of one share is equal to the sum which results from the
following calculation: The accounting net-asset value, resulting from the
addition of the figures mentioned under chapter I, II, III, IV, V and VI of the
liability-side of the balance sheet, which result is also mentioned under code
10/15 of the liability-side of the balance sheet, divided with the number of
registered shares of National TechTeam Europe N.V.. In the determination of the
Price of one share, i.e. the calculation of its accounting value, only the
figures mentioned in the interim balance sheet closed on July 31st of the year
in which the one shareholder informs in writing the other shareholder that it
wants to terminate the joint-venture agreement, to be certified by the
statutory auditor(s) of National TechTeam Europe N.V., will be taken into
account.
This offer may be exercised by notice in writing given by any shareholder to
the other shareholder until one month after the Price per share has been
determined.
If both shareholders exercise the right to offer to buy the shares of the other
shareholder, or if both shareholders exercise the right to offer to sell their
shares to the other shareholder, or if none of the shareholders exercise any of
those rights, then parties will have to sit together within two weeks as from
the expiration of the one month period referred to in the preceding paragraph
to come to a solution.
If no solution acceptable to both parties can be reached, Paratel and TechTeam
agree that the event implies that it is considered that the shareholders by
unanimous vote have decided to liquidate National TechTeam Europe N.V..
2.05 Change of the bylaws and Participation into the capital through a
contribution in kind or in cash by another legal entity than Paratel and
TechTeam
TechTeam and Paratel agree that the change of the articles 1, 2, 4, 8, 9bis,
10, 11, 12, 16, 20, 28, 34, 34bis and 36 of the bylaws of National TechTeam
Europe N.V. requires the unanimous vote of the existing shareholders.
In the same field both parties agree that it may be advantageous and in the
interest of the joint-venture partners to allow in the future another partner
to become a participant in the joint venture company through a contribution in
kind or in cash. However Paratel and TechTeam agree that the decision that a
third party may participate into the statutory capital of National TechTeam
Europe N.V. can only be taken with the unanimous vote of the existing
shareholders.
2.06 Distribution of dividends
The shareholders' meeting can decide by majority of votes cast to distribute
dividends and the board of directors has the power to distribute
interim-dividends. The amount of dividend declared will be distributed as
follows: 70% will be paid out to the class A shares. 30% will be paid out to the
class B shares.
2.07 Nomination of a certified public accountant
The audit of the financial situation, of the annual accounts and the regularity
in accordance with Belgian accounting law and company law of the transactions
to be reflected in the annual accounts is charged to a
<PAGE> 7
statutory auditor (bedrijfsrevisor).
The nomination of the statutory auditor requires the unanimous vote of the
existing shareholders. In case no unanimity can be reached, each shareholder
may design one statutory auditor and the statutory auditors thus designated
will audit the financial situation as a college.
For the first two financial years, TechTeam and Paratel agree unanimously that
Arthur Andersen/Marcel Asselberghs & Co bedrijfsrevisoren will be appointed as
statutory auditor.
Parties agree that, notwithstanding the appointment of a statutory auditor,
each of them in their capacity as shareholders of National TechTeam Europe N.V.
has an individual right of investigation and of control similar to that of a
statutory auditor, in the sense of article 64 Section 2, al. 2 of the Belgian
Commercial Company Code.
ARTICLE III: Management of National TechTeam Europe N.V.
Management of National TechTeam Europe N.V. is implemented by the board of
directors. The overall management and control of the business and affairs of
National TechTeam Europe N.V. is vested solely in its Board of Directors and
National TechTeam Europe N.V. is managed by board of directors consisting -as
a rule- of eight directors.
The directors are appointed by the shareholders at a general shareholders'
meeting for a maximum period of six years. The shareholders can revoke the
mandates at any time. The directors may be re-elected.
Among the eight members of the board of directors, five directors will always
be elected upon proposal of the class A shareholders; three directors will
always be elected upon proposal of the class B shareholders. To that end, the
class A shareholders will submit to the shareholders at a shareholders'
meeting a list of at least ten candidates, from which the meeting will elect
five directors. The class B shareholders will submit to the shareholders at a
shareholders' meeting a list of at least six candidates, from which the annual
meeting will elect three directors.
The board of directors may not deliberate and decide unless the majority of its
members are present or represented and if at least one of them has been
appointed as a director on the list submitted by the class B shareholders.
If said presence-quorum is not obtained (absenteeism), a new invitation of
meeting shall be necessary. The deliberation and decisions of the new meeting
shall be valid, whatever the number of the directors present or represented at
that meeting may be, and the decisions made at those meeting of the board can
be made by simple majority of votes cast, including those decisions referred to
hereunder from 1 through 10.
The decisions of the board are made by majority of votes cast, except for the
decisions listed hereunder where at least one of the directors appointed as a
director on the list submitted by the class B shareholders (the so-called
qualified majority) should also co-approve the decision:
<PAGE> 8
1) The decision to increase the statutory capital within the framework of
the authorized capital.
2) The decision to approve the transfer of the shares to a company related
to the existing shareholders.
3) Agreements to be concluded between the company and its shareholders,
except for agreements concluded in the ordinary course of business and at
market conditions.
4) Long-term financing of the company through third parties.
5) Opening of branches of the company and incorporation of subsidiaries of
the company.
6) Transfer of know-how and technology newly developed or generated by the
company, to third parties and entering into license agreements.
7) Signing employment agreement with employees which will qualify as executive
(i.e. an employee who receives a gross annual remuneration above 3,000,000
BEF).
8) Nomination of the managing-director from the list of candidates as
proposed by the class A shareholders.
9) Transfer of the statutory office.
IO) Granting the prior written consent to Paratel or TechTeam not to comply
with the non-competition clause inserted in article 6.02 of the joint-venture
agreement.
3.02 Rights and Powers of Paratel and TechTeam in its capacity as shareholders
The powers granted to the shareholders are only those powers which are granted
to the shareholders' meeting by law.
The shareholders at the meeting may deliberate and decide validly provided
shareholders holding 76% of the voting rights are present or represented.
If this presence quorum is not obtained (absenteeism), a new notice of meeting
shall be necessary. The deliberations and decisions of this new
shareholders'meeting shall be validly made provided that a majority of the
shareholders holding 5 1 % of the voting rights is present or represented.
The decision at the shareholders' meeting are made by majority of votes cast,
except for the decisions listed hereunder where the shareholders present or
represented can only take the decision with the unanimous vote of the
shareholders present or represented. This unanimity will not be required for a
new meeting following absenteeism as aforementioned. In that case
deliberations and decisions can be made at a simple majority, including those
relating to I through six mentioned hereunder.
1) Capital increase through a contribution in kind
2) Capital decrease by way of reimbursement to the shareholders
3) Nomination of a statutory auditor which would act alone
4) Decision to take part in a merger/split or in a contribution of a branch
of activity or universality of goods
5) Decision to liquidate the company
6) Changing articles 1, 2, 4, 8, 9bis, 10, 11, 12, 16, 20, 28, 34, 34bis and
36 of the Articles of Incorporation.
<PAGE> 9
Article IV: The Articles of Incorporation
The Articles of Incorporation of National TechTeam Europe N.V., based on the
above terms and modalities, which have been approved by Paratel and TechTeam is
enclosed as ApRendix 2.
Paratel and TechTeam will be present or represented at the incorporation
meeting before a Belgian Notary which will be held at the latest on August 30,
1996 at the occasion of which Paratel and TechTeam will approve those Articles
of Incorporation and they will also instruct the Notary to deposit those
Articles of Incorporation with the Commercial Court of Brussels in order that
National TechTeam. Europe N.V. would acquire the legal personality.
ARTICLE V: Operational Issues
Paratel and TechTeam will take all actions required or useful to take care that
National TechTeam Europe N.V. can start and continue its business activity.
Paratel and TechTeam will therefore invest substantial resources in the
joint-venture company and give it all assistance such as the necessary
technical know-how and confidential information, lobbying market and call
center management expertise, which is required in order that National TechTeam
Europe N.V. can conduct its business in a successful way.
Paratel and TechTeam will also provide necessary support to National TechTeam
Europe N.V. in order that the latter is able to employ employees which have
significant experience in operating call centers and they will support in a
constructive way, even through letters of assignment, any action executed by
National TechTeam Europe N.V. in order that employees of Paratel or TechTeam
would become employees of National TechTeam Europe N.V..
Paratel will take care that National TechTeam Europe N.V. may conclude with VTM
N.V. a service agreement as defined under article 18 Section 1 6 degree of the
Belgian V.A.T.-Code, by which National TechTeam Europe N.V. acquires the right
to use the premises located at Medialaan 1, 1800 Vilvoorde in order to execute
its professional activity. The service agreement to be concluded with VTM N.V.
is enclosed as Appendix 3.
Paratel also guarantees that VTM N.V. will conclude -at a later stage- with
National TechTeam Europe N.V. a so-called framework-infrastructure agreement by
which VTM N.V. will be charged to provide to National TechTeam Europe N.V. at
market conditions the following day-today support services: accounting, human
resources, legal and computer services.
Paratel will also conclude a service agreement with National TechTeam Europe
N.V. by which the latter acquires the right to use the Paratel technology,
including but not limited to interactive voice response services, advanced
application development tools, voice digitalization, systems programming,
access to Belgacom network. The service agreement to be concluded with Paratel
is enclosed as Appendix 4.
<PAGE> 10
ARTICLE VI: Term and Termination of the joint-venture agreement
The term of the joint venture agreement shall commence on August 1, 1996 and
shall end on July 31, 1998 provided Paratel. or TechTeam has given written
notice prior to May 1, 1998 to the other party that this Agreement expires on
July 31, 1998.
In case such notice will not have been given to the other party, this Agreement
will be subject to successive renewals of one year, with the understanding that
each party has the right to terminate this Agreement provided a written notice
of termination will be sent to the other party at least 90 days before each
anniversary date of this Agreement (i.e. August 1).
ARTICLE VII: Confidentiality and noncompetition
7.01 Confidentiality. Each of the parties hereto agrees that it will, during
the term of the joint venture contemplated hereby, and following its
termination hold in strictest confidence and not disclose to any person, firm
or organization any information, business or customer information, trade secret
or other secret or confidential matter relating to any of the services,
products or business of the other party or of National TechTeam Europe N.V.,
except as such disclosure may be required by law or authorized in connection
with the performance of this Agreement or agreements contemplated in this
Agreement.
7.02 Non competition.
(a) During any such time as Paratel and TechTeam (or any of its related
companies) owns an equity interest in National TechTeam Europe N.V., Paratel
and TechTeam shall not in the Benelux, without the prior written consent of
National TechTeam Europe N.V.:
- - establish a call center entity which will deliver inbound, outbound,
and/or interactive telemarketing and live operator orientated call centers with
a substantial added value, or participate directly in such call center entity
established within the Benelux.
- - solicit customers in the Benelux for call center services with a substantial
added value as referred to in this agreement.
The foregoing two prohibitions will not apply to the party that proposes to
pursue business opportunities within the Benelux, but is unable to obtain a
qualified majority in the board of directors (article 3.01 hereof) or unanimity
in the shareholders meeting (article 3.02) of National TechTeam Europe N.V. for
decisions which would allow the joint venture to pursue these opportunities.
- - solicit any employee of National TechTeam Europe N.V. or of any of the
parties to terminate his/her employment with National TechTeam Europe N.V. or
with any of the parties or otherwise.
This non competition clause remains binding for 6 months within the Benelux
upon any party as from the moment this party ceases to be a party to this
Agreement and/or to be a shareholder in National TechTeam Europe N.V. for
whatever reason (hereafter referred to as "Survival clause"). This Survival
clause does not apply
<PAGE> 11
in case the collaboration between the parties ends due to the liquidation of
National TechTeam Europe N.V.
Paratel agrees however to exclude Ford Motor Company as a customer of National
TechTeam Europe N.V. and therefore this non-competition clause is not
applicable on all services in the business range of TechTeam which would be
operated by TechTeam in the Benelux or elsewhere in Europe in the name and for
the account of Ford Motor Company or alternatively to serve the latter.
7.03 Remedy for Breach. In the event that the parties or any of their related
companies perform any activity in competition with National TechTeam Europe
N.V., which violates the provisions of this Article in any material respect and
such activities continues for 10 days after the other party to this Agreement
has given written notice to the party performing such competitive activity to
cease such activity, the non competing party shall have the right to elect to
either (i) seek enforcement of the provisions of this Article against the
competing party or (ii) have all parties released from the provisions of this
Article provided, however, that no election under this clause shall limit any
rights or claims for damages which National TechTeam Europe N.V. or the non
competing party may have against the competing party arising from violation of
the provisions of this Article occurring prior to such election.
ARTICLE VIII: REPRESENTATIONS AND WARRANTIES
8.01 Representations and Warranties of TechTeam. TechTeam hereby represents
and warrants to Paratel as follows:
a. Good Standing. TechTeam is a corporation duly organized, validly existing
and in good standing under the laws of Delaware, has the power and authority to
own its assets and to transact the business in which it is now engaged and is
duly qualified and authorized to do business, and is in good standing under the
laws of each jurisdiction in which it operates, except where the failure to do
so would not have a material adverse affect on its business or properties.
b. Corporate Power and Authority. TechTeam has all requisite power and
authority to enter into this Agreement and the agreements referenced in this
Agreement as applicable, and full power and authority to take all actions
required of it pursuant to such agreements. This Agreement and the applicable
agreements referenced in this Agreement constitute valid and binding
obligations of TechTeam, and the execution delivery and performance of this
Agreement and the applicable agreements referenced in this Agreement have been
duly authorized by all necessary corporate action.
c. Lack of Conflicts. The execution and delivery of this Agreement and the
applicable agreements referenced in this Agreement by TechTeam and the
performance of its obligations under this Agreement: (i) do not result in a
violation or breach of, do not conflict with or constitute a fault under, and
will not accelerate or permit the acceleration of performance required by, any
of the terms and provisions of its certificate of incorporation or bylaws, any
note, debt, instrument or other agreement to which TechTeam is a party or to
which any of its assets or properties are subject and will not be an event
after which notice of or lapse or time or both will result in any such
violation, breach, conflict, default or acceleration; (ii) do not result in a
violation or breach of any law, judgment, decree, order, rule or regulation of
any governmental authority; (iii) will not result in the
<PAGE> 12
creation of any lien of any third person upon or affecting any asset or
property of TechTeam, or create any rights or powers in any third person that
could materially or adversely affect TechTeam or the transactions contemplated
by this Agreement.
d. Authorizations. All authorizations, permits, approvals or consents required
to be obtained, and all modifications and filings, if any, required to have
been made have been made.
e. Litigation. There is no action, suit or proceeding pending, or to the best
of TechTeam's knowledge, threatened against or affecting TechTeam or any of its
property that, if adversely determined, would have a material adverse affect on
the financial condition, business or operations of TechTeam or the transactions
contemplated by this Agreement and the applicable agreements referenced in this
Agreement.
f. Shareholders' structure of TechTeam TechTeam will inform Paratel of any
substantial change in the legal or factual power of control of TechTearn.
8.02 Representations and Warranties of Paratel. Paratel hereby represents and
warrants to TechTeam. as follows:
a. Good Standing. Paratel is ajoint stock company duly organized, validly
existing and in good standing under the laws of Belgium, has the power and
authority to own its assets and to transact the business in which it is now
engaged and is duly qualified and authorized to do business, and is in good
standing under the laws of each jurisdiction in which it operates, except where
the failure to do so would not have a material adverse affect on its business
or properties.
b. Corporate Power and Authority. Paratel has all requisite power and
authority to enter into this Agreement and the agreements referenced in this
Agreement as applicable, and full power and authority to take all actions
required of it pursuant to such agreements. This Agreement and the applicable
agreements referenced in this Agreement constitute valid and binding
obligations of Paratel, and the execution, delivery and performance of this
Agreement and the applicable agreements referenced in this Agreement have been
duly authorized by all necessary corporate action.
c. Lack of Conflicts. The execution and delivery of this Agreement and the
applicable agreements referenced in this Agreement by Paratel and the
performance of its obligations under this Agreement: (i) do not result in a
violation or breach of, do not conflict with or constitute a fault under, and
will not accelerate or permit the acceleration of performance required by, any
of the terms and provisions of its certificate of incorporation or bylaws, any
note, debt, instrument or other agreement to which Paratel is a party or to
which any of its assets or properties are subject and will not be an event
after which notice of or lapse of time of both will result in any such
violation, breach, conflict, default or acceleration, (ii) do not result in a
violation or breach of any law, judgment, decree, order, rule or regulation of
any governmental authority; (iii) will not result in the creation of any lien
of any third person upon or affecting any asset or property of Paratel, or
create any rights or powers in any third person that could materially or
adversely affect Paratel or the transactions contemplated by this Agreement.
<PAGE> 13
d. Authorizations. All authorizations, permits, approvals or consents required
to be obtained, and all modifications and filings, if any, required to have
been made have been made.
e. Litigation. There is no action, suit or proceeding pending, or to the best
of Paratel's knowledge, threatened against or affecting Paratel or any of its
property that, if adversely determined, would have a material adverse affect on
the financial condition, business or operations of Paratel or the transactions
contemplated by this Agreement and the applicable agreements referenced in this
Agreement.
f. Shareholders' structure of Paratel
Paratel will inform TechTeam of any substantial change in the legal or factual
power of control of Paratel.
Article XI: Termination and dissolution of the Joint-venture company
The joint-venture company shall be terminated and dissolved upon the earliest
of the following:
(a) the unanimous decision of the shareholder to dissolve and put the company
into liquidation on a voluntary basis.
(b) the deemed liquidation decision as mentioned under the last paragraph of
article 2.04 of this Agreement.
(c) the occurrence of an event which makes it unlawful for the business of
the joint-venture company to be carried on or for Paratel and TechTeam to
carry it on in a joint-venture form;
(d) a decree of a court of competent jurisdiction ordering dissolution;
(e) an adjudication by a court of competent jurisdiction that the
joint-venture company is bankrupt or equitably insolvent; or
The termination of the joint-venture company implies also that the
joint-venture agreement is terminated.
ARTICLE X: Dispute resolution
10.01 General. The parties shall use their best efforts to settle any claimed
breach of this Agreement, making a good-faith effort to reach a just and
equitable settlement satisfactory to both parties. Any such claim, and any
claim arising out of a dispute concerning the existence or validity of this
Agreement, shall be considered at a meeting of authorized representatives of
TechTeam and Paratel.
10.02 Arbitration. If the claim is not settled at that meeting, then, unless
the parties otherwise agree in writing or foreseen by law, the dispute shall be
finally settled by arbitration in Brussels in accordance with the rules of
arbitration as applied by the International Chamber of Commerce. Such
arbitration shall be the sole and exclusive remedy between the parties with
respect to such claim.
<PAGE> 14
ARTICLE XI: Governing Law
This Agreement is to be governed by and construed in accordance with the Laws
of the Kingdom of Belgium.
ARTICLE XII: Miscellaneous
12.01 Notices. Any and all notices, elections or demands that are required to
be made under this Agreement shall be in writing, signed by the party giving
such notices, election or demand and shall be receipt requested, to the other
parties, at the following addresses or any such other addresses as the parties
may furnish to the others in writing for such purpose.
If to TechTeam:
Mr. William F. Coyro, Jr.
Chief Executive Officer
National TechTeam, Inc.
22000 Garrison Avenue
Dearborn, Michigan 48124
With a copy to:
Robert A. Hudson, Esquire
Berry, Moorman, King & Hudson, P.C.
600 Woodbridge Place
Detroit, Michigan 48226
If to Paratel N.V.:
Mr. Paul Huybrechts
President of the executive committee
Mr. Johan Tielemans
general manager
Paratel N.V.
Medialaan I
1800 Vilvoorde
Belgium
12.02 Successors and Assigns. Subject to the restrictions on transfer set
forth in this Agreement, each provision of this Agreement shall be binding upon
and shall inure to the benefit of the parties, and their respective successors
and assigns, whether such successor acquires such interest by way of purchase,
foreclosure, merger or by any other method.
<PAGE> 15
Paratel hereby agrees that all rights and obligations under this agreement will
be transferred from TechTeam to a newly incorporated and fully owned subsidiary
which will accept these rights and obligations, thus releasing TechTeam from
all obligations under this agreement upon the subsidiary's incorporation.
TechTeam can effectuate this clause by its mere written notice to Paratel.
12.03 Amendments. This Agreement may be amended only by the execution of a
writing to that effect, signed by Paratel and TechTeam.
12.04 Entire Agreement. This Agreement constitutes the full and complete
Agreement of the parties with respect to the subject matter contained herein.
The non-binding letter of intent dd. April 1, 1996 and the temporary operating
agreement signed dd. June 6, 1996 are canceled as result of this agreement.
12.05 Captions. Titles or captions of Articles, sections and paragraphs
contained in this Agreement are inserted only as a matter of conveniences and
for reference and in no way are intended to define, limit, extend or describe
the scope of this Agreement or the intent of any provision.
12.06 Counterparts. This Agreement may be executed in a number of
counterparts, all of which together shall for all purposes constitutes one
Agreement, binding upon all parties notwithstanding that those parties may not
have signed the same counterpart.
12.07 Severability. In the event any parts of this Agreement are found to be
void, the remaining provisions of this Agreement shall nevertheless be binding
with the same effect as though the void parts were deleted.
<PAGE> 16
12.08 Superiority-clause. In case of any conflict or inconsistency in
terminology or content of this Agreement on the one hand and the Deed of
Incorporation and the bylaws of National Techteam Europe N.V., enclosed as
Appendix 2, on the other hand, this Agreement will prevail. The parties agree
that they will grant their collaboration and will give the required approvals
at the required meetings of the different corporate bodies of National TechTeam
Europe N.V. to bring its bylaws in line with this Agreement.
12.09 Waiver. The waiver of any provisions in this Agreement shall not be
valid unless in writing and signed by the party to whom charged.
Signed on July 26, 1996
in two originals, of which each party signs for receipt of one.
Paratel SIGNATURE
PARATEL N.V.
represented by Mr. Vic Haenen
and Mr. Jan Lamers Jan Lamers & Vic Haenen
------------------------
TechTeam
NATIONAL TECHTEAM, INC.
represented by its Chief Executive Officer
Mr. William F. Coyro Jr William F. Coyro Jr.
------------------------
<PAGE> 17
APPENDIX 2
DEED OF INCORPORATION AND BYLAWS
of NATIONAL TECHTEAM EUROPE N.V.
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ENGLISH TRANSLATION
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PART I: INCORPORATION - APPEARANCE OF PARTIES
The year nineteen hundred ninety-six
On August 1
Before Us, * , Notary having his office at *.
HAVE APPEARED
1. National TechTeam Inc., a company existing under and by virtue of the laws
of the State of Delaware, USA, having its registered office at 22000 Garrison
Avenue, Dearborn Michigan, USA
2. Paratel N.V., a company existing under and by virtue of the laws of Belgium
and having its statutory office at Medialaan 1, 1800 Vilvoorde, Belgium.
PROXIES
Those appearing sub * are here represented by *, by virtue of * proxies under
private form, that will remain attached hereto so as to be registered together
with this deed.
<PAGE> 18
The proxy holders and the incorporators acknowledge that the undersigned Notary
has drawn their attention to the consequences of invalid mandates.
Those present or represented as mentioned, request Us, Notary, to enact in an
official deed the formation among themselves of a corporation limited by shares
("naamloze vennootschap"), with the name NATIONAL TECHTEAM EUROPE, having its
registered office at Medialaan 1, 1800 Vilvoorde, of which the share capital is
fixed at BEF 40,000,000, represented by 4,000 registered shares each
representing one/4,000 of the share capital.
These 4,000 shares are subscribed to as follows:
1. National TechTeam Inc. 3,001 shares
class A
2. Paratel N.V. 999 shares
class B
------------
Total: 4,000 shares
----- ============
Those appearing declare and recognize the following:
1) Financial Plan
That they have submitted to Us, prior to the passing of this deed, the
financial plan in which they account for the share capital of the corporation
to be formed. It was immediately signed by all incorporators or their proxy
holders and by Us, Notary, for receipt dated and initialed. This document
shall be kept by Us, Notary, in accordance with Article 29ter of the Belgian
Commercial Companies' Code (hereinafter B.C.C.C.).
That the notary has informed them of the contents of Article 35 sexto of the
B.C.C.C. This provision refers to the liability of the incorporators in case of
bankruptcy, declared within three years of the formation, in the event the
share capital at the formation was clearly insufficient for the normal carrying
on of the foreseen activity for at least two years.
2) Special Account
That each share is only paid in up to an amount of 2,500 BEF. That the amount
equal to the paid-in part was deposited at a Belgian bank, on a special account
no. *, opened in the name of the corporation in formation.
Evidence of this deposit, issued by the above-mentioned bank, will remain
attached to this deed.
That at present the corporation has at its disposal an amount of 10,000,000
BEF.
<PAGE> 19
3) Quasi - Contribution
That the undersigned notary has informed them of the provisions of Article 29
quater B.C.C.C.
4) Undertaking in the Name of the Corporation in Formation
That the undersigned notary has informed them of the provisions of Article
l3bis B.C.C.C.
5) Beginning of Activities
That the corporation will begin its activities as of today.
6) Legal Requirements concerning the use of Languages
That the undersigned Notary has informed them of the legal provisions in force
concerning the use of languages in the field of corporations.
7) Workers' Council
That the undersigned Notary has informed them on the Law of 20th September 1948
concerning the organization of the life in an enterprise.
8) Authorized Capital
That the undersigned Notary has informed them of the possibility of providing
the board of directors with the power to increase the share capital in one or
more times up to a certain amount. They declare that they chose to make use of
this possibility provided by the Law.
9) Redemption of Capital
That the undersigned notary has informed them of the possibility of providing
in the articles of incorporation the possibility of repaying the issued
capital, without decreasing it, by the withholding of a certain amount of the
profits. They declare that they choose not to make use of this possibility at
the present.
10) Special authorization
That the undersigned Notary has drawn their attention to the fact that, in the
performing of its activities, the corporation could need to obtain preliminary
authorization and licenses.
11) Name of the Company
That the undersigned Notary has informed them of the contents of Article 28
B.C.C.C.
<PAGE> 20
COST OF INCORPORATION
The amount of the fees, costs, expenses, indemnities and duties of whatever
nature, which are to be borne by the corporation, or that are levied upon it
because of the incorporation, is 300,000 BEF.
PART II: ARTICLES OF INCORPORATION
The Belgian Commercial Companies' Code is hereafter referred to as "B.C.C.C.".
TITLE I: Memorandum of Association - Name - Registered Office - Purpose -
Duration
Article 1 : Form - Name
The incorporation of the corporation is the result of the joint-venture
agreement signed on July 26, 1996 and entering into effect on August 1, 1996
between TechTeam Inc. and Paratel N.V. and the company is incorporated as a
public limited liability company (naamloze vennootschap) under the name
"National TechTeam Europe N.V.".
Article 2 : Statutory Office
The statutory office of the corporation is located at Medialaan 1, 1800
Vilvoorde.
The statutory office may be transferred to any other place in Belgium by
decision of the board of directors by qualified majority, i.e. at least one of
the director appointed as a director on the list submitted by the class B
shareholders should co-agree with the decision.
The board of directors can decide by qualified majority, i.e. at least one of
the director appointed as a director on the list submitted by the class B
shareholders should co-agree with the decision, to establish where it so deems
useful, whether in Belgium or abroad, administration offices, seats of
operation, agencies, branches or subsidiaries.
Article 3 : Object clause
The object of the company is to provide in Belgium and Europe call centers
services through the creation, implementation and development of call centers,
by using, including but not limited to, interactive voice response, advanced
application development tools, voice digitalization, systems programming,
interactive application development, call tracking, computer telephony
integration, multi-lingual speech recognition tools and all other useful tools
and systems.
The company may also render any kind of services relating to the research, the
control and the management of all financial, commercial, industrial, technical,
scientific or organizational operations.
The company may carry out all commercial, industrial and financial activities
and all real and personal property operations, directly or indirectly connected
with its corporate purpose.
<PAGE> 21
It can obtain an interest in all companies or enterprises, existing or which
may be created in Belgium or in foreign countries, the purpose of which is
analogous to or connected with, or of a nature to promote development of its
own purpose.
The statutory goal may be extended or restricted by way of modification of the
statutes at the conditions required by article 70bis of the B.C.C.C.
Article 4: Duration
The corporation is formed for an unlimited period of time.
TITLE II: CAPITAL - SHARES - DEBENTURES
Article 5.: Capital
The share capital of the corporation is fixed at BEF 40,000,000, represented by
4,000 registered shares, with voting power, each representing one/4,000 of the
capital. numbers 1 through 3,001 are class A shares and the shares numbered
3,002 through 4,000 are class B shares.
In case of transfer of shares from a certain class to the shareholder of
another class those shares are automatically modified in the class of shares of
the shareholder which acquires the shares.
Article 6: Payment on Shares
The obligation to pay up a share is unconditional and indivisible.
Payments due on shares that are not entirely paid up at the time of their
subscription have to be made at the time and in the amounts as determined by
the board of directors.
Any shareholder who, after having been requested by registered letter, sent by
the board of directors, to pay the remaining amount, does not do so within the
time limit provided in the notice, has to pay interest to the corporation equal
to the legal interest rate increased by 2% per year as of the date payment
should have been made.
Pursuant to this corporate charter, all rights attached to the shares are
suspended for as long as payments have not been made by the end of the period
mentioned in the preceding paragraph.
Article 7: Indivisibility of Shares
The corporation recognizes only one owner per share with respect to the
exercising of the rights attached to such shares, pursuant to this corporate
charter.
<PAGE> 22
Registered shares in which a beneficial interest is vested will be registered
in the name of the legal owner and in the name of the beneficial owner.
This article also applies to the debentures issued by the corporation.
Article 8: Type of Shares
All shares are registered shares. They can not be converted in bearer shares.
The property of the registered shares results from an annotation in the
register of shares, which will be kept at the statutory office. Certificates
of registration in the Register of Shares may be issued to the registered
shareholders.
Article 9: Transfer of Shares
Each transfer of registered shares shall take place by noting the transfer,
made in the Register of Shares, dated and signed by the transferor and
transferee or by their respective delegates or by any other means permitted by
law.
Article 9bis: Limitations on the transfer of the shares
9bis.1: Limitation
The shares as well as all rights attached to it can only be transferred to
third parties and related companies in conformity with the dispositions
described hereinafter.
"Transfer" of shares covers each form of transfer in exchange of consideration,
however not including the transfer of shares as a result de jure of a merger or
a split in which the shareholder is the absorbed company or split company.
9bis.2: Transfer of shares to a third party subject to a preemption clause
The shares of class A or class B or the rights attached to it, of a shareholder
who wishes to transfer his shares to a third party who is not related to the
transferor must be offered for sale primarily to the other shareholder.
Is also to be considered as a transfer to a third party, the transfer of a
majority of voting rights to a third party which is not related to the owner of
these voting rights.
Procedure
In case that shares are transferred pursuant to this article, the transferor
has to inform the other shareholder, entitled with a right of preemption,
(hereinafter referred to as "Beneficiary Shareholder"), by registered letter,
mailed to the address of the shareholder as stated in the shareholders'
register, by which he informs the other shareholder of his intention to
transfer his shares. A copy of this letter is to be addressed to the board of
<PAGE> 23
directors of the company.
This letter must contain the following information:
a) name and address of the person to whom the transferor wishes to transfer
his shares and/or the rights attached to it.
b) the number of shares or rights attached to it that the transferor wishes
to transfer.
c) the price the transferor wishes to obtain for the transfer of his shares.
d) the name of the Beneficiary Shareholder to whom the letter is addressed.
A copy of the agreement concluded with the candidate transferee (which at least
mentions the purchase price) or a statement of the latter by which he agrees to
take over the shares of the transferor and/or the rights attached to it at the
price as proposed by the transferor, should be annexed to this letter.
The registered letter is an irrevocable invitation to the addressed Beneficiary
Shareholder to exercise his right of preemption on the shares pursuant to the
forgoing alinea's of this article.
The Beneficiary Shareholder must exercise his right of preemption by registered
letter addressed to the transferor at the latest within two months as of the
date on which the registered letter of the transferor has been sent to the
Beneficiary Shareholder.
A copy of the letter of the Beneficiary Shareholder must be addressed to the
board of directors of the company.
In this letter, the Beneficiary Shareholder has to mention the number of shares
and/or the rights attached to it, for which he is willing to exercise his right
of preemption.
Price
The price proposed to the Beneficiary Shareholder may not be superior than the
price proposed to the candidate transferee.
The offer of the transferor is only valid, and the procedure of right of
preemption can only be implemented as far as, exception made for the price as
stated here below, there has been complied with the dispositions as stated in
this article.
Should no copy of the agreement concluded with the candidate transferee or no
statement of the latter by which he agrees to take over the shares of the
transferor and/or the rights attached to it at the price as proposed by the
transferor be enclosed in the registered letter of the transferor, the shares
are supposed to be offered by the transferor to the beneficiary shareholder at
a price per share equal to the net equity of the company as it results from the
last annual accounts which were approved by the annual shareholders' meeting,
divided by the number of existing shares.
<PAGE> 24
In case of transfer of some rights attached to the shares, should the price not
be mentioned, those rights will be considered to be offered by the transferor
at a price equal to one BEF per transferred right.
The transferor can thus only transfer its shares to a third party after a
waiting period of two months as of the date on which the registered letter of
the transferor has been sent to the Beneficiary Shareholder and provided the
Beneficiary Shareholder within this waiting period has not informed the
transferor and the board that he wishes to acquire those shares.
The waiting period of two months can be prolongated with one month in case of
combination of article 9bis.2 and 9bis.3.
9bis.3: Transfer of shares to companies related with the existing shareholders,
subject to approval by the board of directors
Are considered as companies related with the shareholders, companies which have
a common legal or factual power of control ("in rechte" or "in feite"; these
terms to be understood in the sense of article 1 of the Royal Decree of March
6, 1990) and therefore are considered as members of a body of undertakings,
however not including an associated undertaking.
The shares of class A or class B or the rights attached to it, of a shareholder
who wishes to transfer his shares to a related company requires the approval of
the board before any transfer of shares can be taken place.
Procedure
In case that shares are transferred pursuant to this article, the transferor
has to inform the board of directors by registered letter, mailed to the
statutory seat of the company. This letter must contain the following
information:
a) name and address of the related company to whom the transferor wishes to
transfer his shares and/or the rights attached to it.
b) the number of shares or rights attached to it that the transferor wishes
to transfer.
c) a statement from the transferor and the related company that they are both
members of a body of undertakings.
The board must decide by qualified majority (i.e. at least one of the director
appointed as a director on the list submitted by the class B shareholders
should co-agree with the decision) whether or not it will approve the transfer
at the latest within one month as of the date on which the registered letter of
the transferor has been sent to the board of directors.
In case of refusal to approve the transfer, article 9bis 2 becomes applicable.
9bis.4. Sanction
A transfer of shares in non-compliance with the dispositions of this article is
null and void.
<PAGE> 25
However even in case the transfer to a third party in non-compliance with the
dispositions of this article should be considered as valid as the third party
has acted in good faith, the shareholders, to whom the transferor had to offer
the shares or the rights attached to it by virtue of the preemption clause,
have during a period of 60 days after transcription of the transfer into the
shareholders' register an option of acquisition at a price which is equal to
the price paid by the third party. This option is validly lifted and the
ownership of the shares or the rights attached to it are automatically
transferred by sending a registered letter in conformity with this article
Article 10: Capital Increase - Right of First Refusal
The general shareholders' meetings, as well as the board of directors within
the framework of the authorized capital, may decide to increase the capital of
the corporation by contribution in cash.
However in the event of a capital increase by contribution in cash, the new
shares to be issued as a result of this capital increase by contribution in
cash must be offered first to the existing shareholders pro rata to their
shareholding in the capital of the corporation immediately prior to the
issuance of the new shares.
If the ownership of the concerned shares is divided between an usufructuary and
a bear-owner, the first refusal right will be exercised by the bear-owner.
The decision to increase the statutory capital by a contribution in kind can
only be decided by the general shareholders' meetings with an unanimous vote of
all the shareholders present or represented.
Article 10 bis: Authorized capital
The board of directors has the power to increase the capital up to 100,000,000
BEF by a contribution in cash. The board is obliged to offer the new shares to
be issued as a result of this capital increase by contribution in cash first to
the existing shareholders' pro rata to their shareholding in the capital of the
corporation immediately prior to the issuance of the new shares. The board can
only decided to make use of this power by a qualified majority, i.e. at least
one of the director appointed as a director on the list submitted by the class
B shareholders should co-agree with the decision.
The power of the board to increase the statutory capital is, in conformity with
article 33bis Section 2 of the Belgian Commercial Company Code, only valid for
a period of five years.
Article 11
By a qualified majority, i.e. at least one of the director appointed as a
director on the list submitted by the class B shareholders should co-agree
with the decision, the board of directors may create or issue debenture or
bounds, whether mortgaged or not.
These debenture or bounds are signed by at two directors, one of which has been
elected upon proposal of the class A shareholders and the other upon proposal
of the class B shareholders. The board of director shall determine their
nature, the time and conditions of their issuance, their interest rate, the way
and time of their reimbursement, as well as all guaranteed that might be linked
to them.
Convertible debentures or debentures with warrants can only be issued in
accordance with the B.C.C.C.
<PAGE> 26
T1TLE III: MANAGEMENT
Article 12: Board of Directors - Composition
The corporation is managed by a board of directors always consisting of eight
directors.
The directors are appointed by the shareholders at a general shareholders'
meeting for a maximum period of six years. The shareholders can revoke the
mandates at any time. The directors may be re-elected.
Among the eight members of the board of directors, five directors will always
be elected upon proposal of the class A shareholders and three directors will
always be elected upon proposal of the class B shareholders. To that end, the
class A shareholders will submit to the shareholders at a shareholders' meeting
a list of at least ten candidates, from which the meeting will elect five
directors. The class B shareholders will submit to the shareholders at a
shareholders' meeting a list of at least six candidates, from which the annual
meeting will elect three directors.
The mandates of the retiring or not re-elected directors expire immediately
after the annual shareholders' meeting.
The board of directors can elect from among its members a chairman and one or
more vice-chairmen.
Article 13: Vacancy
Whenever one or more vacancies on the board of directors occur, the remaining
directors can temporarily fill these vacancies in respect of the division rules
mentioned in article 12. The next general shareholders' meeting will elect the
new directors.
A director who is appointed in replacement of a director whose mandate had not
ended, continues this mandate until its expiration.
Article 14: Liability
The directors do not assume any personal liability as to the obligations of the
corporation, but they are liable for the good performance of their office and
for management errors committed, pursuant to civil law and the B.C.C.C.
Article 15: Board of Directors' meetings
The board of directors meets at least once per 3 months.
Furthermore, the board of directors meets whenever the interests of the
corporation so require and when a meeting is requested by at least two
directors or one director in case of urgency to be motivated in the minutes of
the meeting.
<PAGE> 27
Notice letters are sent at least seven days prior to the meeting, except in
case of urgency, which has to be explained in the minutes of the meeting. The
notices contain the agenda, place and time of the meeting and are sent by
letter, airmail, cable, telex, or telefax or any other written means. The
notices are presumed made when dispatched.
A director present at a meeting may not anymore invoke the irregularity of the
notices.
The meetings are held at the statutory office.
The meetings are presided over by the chairman or, in his absence, by the
vice-chairman, or, if both are prevented from doing so, by a director
designated by the other directors.
A document dated and signed by all directors and inserted in the minutes' book
of the corporation is considered equivalent to a decision of the board of
directors.
In addition as foreseen in article 67 Section 2 of the Belgian Commercial
Company Code the decisions of the board of directors, however not including the
approval of the annual accounts and the use of the authorized capital, can also
be made in writing (including by way of telefax), without the necessity to hold
effectively a meeting, in case of urgency and in the interest of the company.
Article 16: Decisions - Representation of Absent Members
Except on account of force majeure resulting from war, disorder or other
disasters, the board of directors may not deliberate and decide unless the
majority of its members are present or represented and if at least one of them
has been appointed as a director on the list submitted by the class B
shareholders.
If said presence-quorum is not obtained ("Absenteeism"), a new invitation of
meeting shall be necessary. The deliberation and decisions of the new meeting
shall be validly made by simple majority of votes cast, including those
mentioned hereunder.
The decisions of the board are made by majority of votes cast, except for the
decisions listed hereunder where at least one of the director appointed as a
director on the list submitted by the class B shareholders (the so-called
qualified majority) should also co-approve the decision:
1) The decision to increase the statutory capital within the framework of
the authorized capital.
2) The decision to approve the transfer of the shares to a company
related to the existing shareholders.
3) Agreements to be concluded between the company and its shareholders,
except for agreements concluded in the ordinary course of business and at
market conditions
4) Long-term Financing of the company through third parties.
5) Opening of branches of the company and incorporation of subsidiaries
of the company.
6) Transfer of know-how and technology, developed or generated, to third
parties and entering into license agreements.
7) Signing employment agreement with employees which will qualify as
executive (i.e. an employee who
<PAGE> 28
receives a gross annual remuneration above 3,000,000 BEF).
8)nomination of the managing-director who is nominated from the list of
candidates as proposed by the class A shareholders.
9)Transfer of the statutory office.
10)Granting the prior written consent to Paratel or TechTeam not to comply with
the non-competition clause inserted in article 6.02 of the joint-venture
agreement.
This exception necessitating a qualified majority will not apply to
deliberations and decisions made in a second meeting convened following
absenteeism as referred to in this provision.
The directors appointed as a director on the list submitted by the class A
shareholders may be represented by another director also appointed as a
director on the list submitted by the class A shareholders.
The directors appointed as a director on the list submitted by the class B
shareholders may be represented by another director also appointed as a
director on the list submitted by the class B shareholders.
Article 17:Powers
a)Principle
The overall management and control of the business and affairs of National
TechTeam Europe N.V. is vested solely in its Board of Directors
The directors may divide the management tasks among themselves, but this must
diminish however their obligations resulting from joint management.
b)Day-to-day management
The board of directors shall delegate day-to-day management of the corporation
to one person chosen from among the members of the board or a third person;
said person shall act alone.
The board may specify his powers. Such division of powers can, however, not be
enforced vis-a-vis third parties. The person to whom these powers are delegated
will bear the title of "Managing Director" in case he is a director or
"General manager" in case he is not a director.
c)Delegation of powers
The board of directors as well as those to whom power of day-to-day management
are delegated, in the execution of these management powers, may also delegate
limited special powers to one or more persons of their choice.
These mandates can bind the corporation within the limits of the powers
received. The mandator remains, however, liable in case a power is too broadly
delegated.
<PAGE> 29
Article 18: Representation
The board of directors as a whole represents the corporation in all legal and
other matters.
In addition to the general powers of representation of the board as a whole,
the corporation is validly represented in its acts which have been approved by
the board, including those where the participation of a third person or a
ministerial officer is required, (e.g. guardian of mortgages), and in court,
by :
* either two directors, one of which has been elected upon proposal of
the class A shareholders and the other upon proposal of the class B
shareholders;
* or, within the limits of the powers of day-to-day management, by the
managing director.
They do not have to submit proof vis-a-vis third parties of a prior decision of
the board of directors.
The corporation can also be validly bound by special mandatories, acting
within the limits of their mandates.
Article 19: Minutes
The decisions of the board of directors are recorded in minutes, signed by the
majority of the members present. These minutes are inserted in a special
minute book and bound. Copies or abstracts of these minutes, that have to be
submitted in court or otherwise, are signed by one director.
TITLE IV: AUDIT
Article 20: Audit
The audit of the financial situation, of the annual accounts and the
regularity, in accordance with Belgian accounting law, the B.C.C.C. and the
corporate charter of the transactions to be reflected in the annual accounts,
is charged to one or more statutory auditors. The statutory auditors are
appointed by the shareholders at the general shareholders' meeting, if
applicable, upon approval by the works' council, from among the members,
individual persons or bodies corporate, of the Institute of Certified Public
Accountants, for a term of office of three years.
The nomination of the statutory auditor requires the unanimous vote of the
existing shareholders. In case no unanimity can be reached, each shareholder
may design one statutory auditor and the statutory auditors thus designated
will audit the financial situation as a college.
Notwithstanding the appointment of a statutory auditor, each shareholders of
National TechTeam Europe N.V. has an individual right of investigation and of
control similar to that of a statutory auditor, in the sense of article 64
Section 2, al. 2 of the Belgian Commercial Company Code.
<PAGE> 30
TITLE V: REMUNERATION OF DIRECTORS AND STATUTORY AUDITOR(S)
Article 21
Unless otherwise decided by the shareholders at a general shareholders'
meeting, the mandates of the directors are performed free of charge. No
advantage whatsoever may therefore be given to them with relation to said
mandates. The normal and justified expenses which will be incurred by the
directors in the exercise of their mandate will be reimbursed to them and
passed to the "general costs" account. The fees of the statutory auditor(s)
consist of a lump sum amount, fixed by the general shareholders' meeting at the
beginning of their mandate. It can only be changed by mutual agreement of both
parties. The performance by the statutory auditors of exceptional assignments
or special tasks can only be remunerated separately, provided these assignments
and remunerations are detailed in the management report. Except for these
remunerations, the statutory auditor(s) may not receive any other benefits of
any kind from the company.
The remuneration for the managing-director or the general manager to whom, by
virtue of article 17 b of the Articles of Incorporation, the day-to-day
management is attributed, will be determined by the board of directors.
TITLE VI: GENERAL MEETING OF SHAREHOLDERS
Article 22: Annual Shareholders' meeting
The annual shareholders' meeting is held on the third Thursday of the month
April at 3 p.m. In the event this day is a legal holiday, the meeting will take
place the next business day.
The shareholders at this meeting hear the management report and the report of
the statutory auditor(s), discuss and approve the annual accounts, release - by
separate vote - the directors and the statutory auditors, proceed to the
re-election or replacement of the retiring or retired directors and statutory
auditor(s) and make all decisions with respect to other items on the agenda.
Article 23: Special Shareholders' meeting
A special shareholders' meeting can be convened at any time in order to enable
the shareholders to discuss and decide upon any issue within their powers.
A special shareholders' meeting may be called by a group of shareholders
representing one/fifth of the statutory capital or at the request of one
director or the statutory auditor(s), each time the interests of the
corporation require such meeting.
<PAGE> 31
Article 24: Place
The general shareholders' meetings are held at the statutory office.
Article 25: Convocation - Form
The notices containing the agenda will be sent by registered letter or by
registered airmail at least eight days prior to the meeting, addressed to each
registered shareholder.
The notices are presumed made when sent.
The general meetings are convoked by the board of directors or, in the event
the board fails to convene the above-mentioned meetings, by the statutory
auditor(s).
Article 26: Attendance List
Before entering the general meeting, the shareholders are required to sign the
attendance list indicating their identity and the number of shares each
represents. The shareholders may be represented at the shareholders' meetings
by a proxyholder.
Article 27: Office
The general meetings are conducted by the chairman of the board of directors or
in his absence, by the vicechairman or, in his absence by the oldest director
present, or by a person designated by the shareholders. The chairman of the
meeting appoints a secretary and one or more tellers, who do not have to be
shareholders.
Article 28: Deliberations - Decisions
a) quorum.
The shareholders at the meeting may deliberate and decide validly provided
shareholders holding 76% of the voting rights are present or represented. If
this presence quorum is not obtained ("Absenteeism"), a new notice of meeting
shall be necessary. The deliberations and decisions of this new shareholders'
meeting shall be validly made provided that a majority of the shareholders,
holding 51% of the voting rights is present.
b) decisions
The decision at the shareholders' meeting are made by a normal majority, except
for the decisions listed hereunder where the shareholders present or
represented can only take the decision with the unanimous vote of the
shareholders present or represented. This unanimity will not be required for
the second meeting following absenteeism as aforementioned. In that case
deliberations and decisions can be made at a simple majority of votes cast,
including those mentioned hereunder.
<PAGE> 32
1) capital increase through a contribution in kind
2) capital decrease by way of reimbursement to the shareholders
3) nomination of a statutory auditor which would act alone
4) decision to take part in a merger or in a contribution of a branch of
activity or universality of goods
5) decision to liquidate the company
6) changing articles 1, 2, 4, 8, 9bis, 10, 11, 12, 16, 20, 28, 34, 34bis and
36 of the Articles of Incorporation.
Article 29: Right and Power of Vote
Each share of stock represents one vote.
Article 30: Suspension of Voting Right - Pledge of Shares Life Interests
a) The voting rights are suspended for the shares in relation to which no
further payment has been made although such further payment has been requested
by the directors and has become due.
b) The voting rights which are held in co-ownership can only be exercised by
the person who has been empowered thereto by all the co-proprietors.
c) In the event that a life interest is granted in relation to shares,
the voting rights of these shares are exercised by the beneficiary of the life
interest, unless there is opposition thereto by the holder of the remainder
interest. If the holder of the life interest and the holder of the remainder
interest cannot agree, the court, at the request of the party first filing the
request, may appoint a temporary proxy holder to exercise the right in the
joint interest of both parties involved.
d) The votes of the shares that have been pledged are exercised by the
owner-pledgor.
Article 31: Decisions Made Outside the Agenda
The shareholders at a general shareholders' meeting can only decide on issues
not on the agenda of the meeting in the event that all shareholders are present
at such meeting and provided the decision is taken unanimously. The required
approval is established if no opposition is recorded in the minutes of the
meeting.
Article 32: Minutes
Minutes are kept of each meeting. The minutes are signed by the chairman, the
secretary, the teller(s) and by the shareholders who request that they do so.
Copies or abstracts that have to be used in legal proceedings or otherwise,
have to be signed by one director.
TITLE VII: ANNUAL ACCOUNTS - ANNUAL REPORT - AUDIT REPORT
Article 33: Financial year - Annual Accounts
The financial year of the corporation starts on January 1 of each year and ends
on December 31. At the end of each financial year, the board of directors
prepares an inventory as well as the annual accounts pursuant to the provisions
of the B.C.C.C.
<PAGE> 33
The annual accounts are composed of the balance sheet, the profit and loss
statement and the annexes thereto, which all form one single document.
The board of directors furthermore proposes a report, called "management
report", in which it explains its management. This report contains the
commentaries, information and explanations required by the B.C.C.C. At the
latest one month prior to the annual shareholders' meeting, the board of
directors submits the documents mentioned in the B.C.C.C., together with its
management report, to the statutory auditor(s). The statutory auditors draft,
in view of the general meeting, a written and detailed report called "audit
report". Not later than fifteen days prior to the annual shareholders'
meeting, the shareholders can consult, at the registered office of the
corporation, the documents listed in the B.C.C.C. The board of directors files
within the thirty days following the approval of the annual accounts by the
annual shareholders' meeting, the documents required in the B.C.C.C. with the
National Bank of Belgium.
TITLE VIII: DECISIONS CONCERNING PROFITS
Article 34
Each year from the net profit of the corporation, there shall be deducted five
percent to constitute the legal reserve. This deduction ceases to be mandatory
when this reserve reaches a sum equal to ten percent of the statutory capital.
The surplus is put at the disposal of the shareholders at a shareholders'
meeting and the shareholders shall decide on the distribution of this profit as
dividend, upon a proposal of the board of directors.
The total amount of dividend declared by the shareholders at a shareholders'
meeting will be distributed as follows:
70% will be paid out to the class A shares.
30% will be paid out to the class B shares.
Article 34 bis: Interim Dividends
The board of directors is granted the power to distribute interim dividends,
subject to the relevant legal provisions contained in the B.C.C.C.
The total amount of the interim-dividend declared by the board of directors
will be distributed as follows:
70% will be paid out to the class A shares.
30% will be paid out to the class B shares.
TITLE IX: DISSOLUTION - LIQUIDATION
Article 35: Ownership of all Shares by One Shareholder
The ownership of all shares by one shareholder does not result in the automatic
or judicial liquidation of the corporation.
<PAGE> 34
In the event no new shareholder has been found within a one year period, and
the corporation has not been dissolved in the meantime, the sole shareholder is
presumed to be the guarantor of the obligations of the corporation which came
into effect after such shareholder became the sole shareholder until a new
shareholder has been found or until the publication of the corporation's
dissolution.
Article 36: Causes for Dissolution
Except in the event of a judicial liquidation, the corporation can only be
dissolved by a unanimous decision of the shareholders present or represent at a
general meeting.
In the event, as a result of losses suffered, the net assets value of the
corporation has decreased below half of the statutory capital, the general
meeting has to be convoked within a period of not more than two months as of
the date the losses are established or should have been established pursuant to
legal requirements, in order to deliberate and decide, as the case may be, in
the forms laid down for an amendment to the articles of incorporation, on the
matter of the liquidation of the corporation and on all other measures
mentioned on the agenda of the meeting. The details hereof are laid down in
the B.C.C.C. The shareholders shall proceed in the same manner in the event
the net assets value is reduced as a result of losses suffered, below
one/fourth of the statutory capital, with the exception that the dissolution
will take place if adopted by one/fourth of the shares voted at the meeting.
In the event the net assets value has decreased below the minimum amount
determined by the B.C.C.C., any interested third party can request the court to
order the dissolution of the corporation. In this case, the court can allow
the corporation a grace period to regularize its situation.
Article 37: A Appointment of Liquidator(s)
In the event no liquidators are appointed, the directors in office at the date
of the dissolution will automatically become liquidators. The shareholders at
a general meeting of the company in liquidation can, at any time and by simple
majority of votes, appoint or dismiss one or more liquidators. The
shareholders determine the liquidator's powers, their compensation, as well as
the method of liquidation. The appointment of the liquidators terminates the
powers of the directors.
Article 38: Distribution
Except in the case of a merger, and after the settlement of all debts, the net
assets of the corporation shall be distributed as follows :
a) the shares shall be reimbursed, by priority, subject to a deduction for
the amount of any unpaid subscription on the shares, in proportion to the part
of the capital they represent;
b) any balance shall be divided among all of the shares in the following
proportion: 70% will be paid out to the class A shares.
30% will be paid out to the class B shares.
<PAGE> 35
TITLE X: GENERAL PROVISIONS
Article 39: Disputes - Jurisdiction
All disputes between the corporation, and its shareholders, bondholders,
directors, statutory auditor(s) and liquidators relating to the affairs of the
corporation and to the execution of this corporate charter shall be finally
settled by arbitration in Brussels in accordance with the rules of arbitration
as applied by the International Chamber of Commerce. Such arbitration shall be
the sole and exclusive remedy between the parties with respect to such claim.
PART III.: TRANSITIONAL PROVISIONS
1. Closing of the First Financial Year
The first financial year starts on the day of the formation of the corporation
and will close on December 31, 1997
2. First Annual Shareholders' meeting
The first annual shareholders' meeting will be held in 1998.
3. Offices of Directors
Those attending declare that the undersigned notary has drawn their attention
to:
a) The provisions of the Act of February 19,1965 relating to the
performance by foreigners of independent professional activities, as amended by
the Act of January 10, 1977.
b) The provisions of Article 1 of Royal Decree No. 22 of October 24, 1934,
as amended by the Acts of March 14, 1962 and August 4, 1978 prohibiting the
holding of certain offices.
c) The various incompatibilities in holding a mandate in other commercial
corporations.
SPECIAL SHAREHOLDERS' MEETING
Immediately pursuant to the formation of the corporation, the shareholders,
present or represented as mentioned above, have declared that they shall meet
in a special shareholders' meeting.
This meeting has made the following decisions:
1) The class A shareholders proposes to appoint as directors the following
persons ____________ (ten persons) _______________________ and the class B
shareholders propose to appoint as directors the following persons ___________
(six persons)___________________________
<PAGE> 36
Upon deliberation, the following are hereby appointed to the office of
director, for a term of office that expires immediately after the annual
shareholders' meeting of 2000:
As directors appointed as a director on the list submitted by the class A
shareholders
-*
-*
-*
-*
-*
As directors appointed as a director on the list submitted by the class B
shareholders
-*
-*
-*
They hereby accept their mandate.
Their mandate will not be remunerated.
2) The number of statutory auditors is hereby fixed at one. The following
is/are hereby appointed to the office of statutory auditor, for a term of
office that expires immediately after the annual shareholders' meeting of 2000:
He hereby accept(s) his mandate.
The remuneration of the statutory auditor is hereby fixed at *.
OF WHICH THIS DEED.
Taken and passed on the date and at the place above mentioned. The persons
appearing, present or represented as mentioned, have signed with Us, Notary.
<PAGE> 37
APPENDIX 3
AGREEMENT BY WHICH IS GRANTED A RIGHT TO EXERCISE
A PROFESSIONAL ACTIVITY
Between the undersigned:
The limited liability company "Vlaamse Televisiemaatschappij N.V.", HAVING ITS
STATUTORY office at Medialaan 1, 1800 Vilvoorde, represented by two directors
on the one hand.
Hereinafter referred to as the grantor.
And
The limited liability company National TechTeam Europe N.V., having its
statutory office at Medialaan 1, 1800 Vilvoorde, represented by two directors
at the other hand.
Hereinafter referred to as the beneficiary.
THE FOLLOWING HAS BEEN AGREED
Article 1
The grantor will put at the disposal of the beneficiary up to 250 square meters
of readily available office space located at Medialaan 1, 1800 Vilvoorde, which
is accepted by the beneficiary.
Since this office space is a part of the building which is already used by the
grantor and other beneficiaries, the beneficiary will not have an exclusive
right of access, neither will it be entitled to any exclusive right of use. In
this respect, the beneficiary will therefore have to comply with the directives
of the grantor in relation to the opening hours and the way of access to the
office space put at its disposal. Grantor in determining its directives have
to take into account the working scheme of the beneficiary.
The grantor reserves its right to modify at any time the opening hours, as far
as they are reasonable and do not endanger the purpose of the present
agreement, i.e. granting the right to the beneficiary to execute its
professional activities in the premises used by the grantor according to the
working scheme of the beneficiary.
The beneficiary has the right to make use of the different facilities which are
put at its disposal by the grantor,
<PAGE> 38
like reception, access to Belgacom network, telephone switch board, computers,
meeting rooms, kitchen and restaurant, sanitary installations or any present or
future installations which are common to the entire building.
Article 2
The present agreement is concluded for an unlimited period of time which enters
into effect on August 1, 1996.
However, taking into account the special circumstances the beneficiary commits
itself to leave the building within a period of 6 months as from the
notification by registered letter from the grantor. He will restore the state
of the building in its original condition.
Article 3
It is explicitly agreed that the present agreement is to be considered as a
granting of a right to exercise a professional activity in a building as
defined by article 18 Section 1, 6 degrees of the Belgian VAT-Code.
The present agreement is not a lease agreement nor a commercial lease and is by
consequence not subjected to the application field of the Articles 1702 till
1762 of the Civil Code and the Law of April 30, 1951 relating to commercial
leases.
Article 4
The amount of the consideration is fixed at 8.000 BEF, per square meter office
space put at the disposal of the beneficiary, VAT not included, and is to be
paid on a quarterly base within 60 days after the invoice date. The VAT at a
rate of 21% is due pursuant to article 18 Section 1, 6 degrees of the Belgian
VAT-Code.
The consideration is claimable by the only fact that the period has expired
which constitutes a notice of default.
The parties agree that, should the services rendered be modified, the amount of
the consideration can be modified at any time in mutual agreement
Article 5
All taxes, which are levied by the State, the province, the municipality or any
public authority on the office space will remain at the charge of the grantor.
Article 6
All costs resulting from telephone connections will be charged to the
beneficiary at real cost price.
Article 7
The costs of reparation and maintenance of the office space and the
installations are at the charge of the grantor, except in case of personal
liability of the beneficiary.
<PAGE> 39
The grantor will also take care that the installations which are put at the
disposal of the beneficiary are in good order.
However the beneficiary waives its right to hold the grantor liable for
interruption in the supply of electricity, heating and other services mentioned
in this agreement
Article 8
The beneficiary will only use the places and installations which were put at
its disposal for its professional purposes and will in no case use the office
space for other purposes.
The beneficiary commits himself to comply with the internal rules of the
building (see annex 2), and to have its employees respect it. This implies that
he will also respect the eventual modifications, to those internal rules made
by the grantor in the interest of all users of the entire building.
Article 9
The grantor declares in his capacity as owner to have insured the premises and
installations.
Article 10
The beneficiary may not transfer or put at the disposal of another company or a
physical person, the spaces and installations put at its disposal.
Article 11
The beneficiary commits itself to respect the security orders as applicable for
the grantor and other beneficiaries.
The beneficiary will grant permission of free access in the places put at its
disposal to the maintenance and security staff of the grantor.
In case of dispute arising out of or in connection with the performance or
interpretation of this agreement, only the Law Courts of Brussels are
competent.
<PAGE> 40
Drawn up at 26 July 1996 on
in two originals of which each party signs for receipt of one.
Signed on
in two originals, of which each party signs for receipt of one.
VTM SIGNATURE
- --- ---------
VTM N.V.
represented by Mr. Vic Haenen Vic Haenen
--------------------------
TechTeam
- --------
NATIONAL TECHTEAM EUROPE N.V.
represented by William F. Coyro Jr. William F. Coyro, Jr.
--------------------------
<PAGE> 41
APPENDIX 4
SERVICE AGREEMENT BETWEEN PARATEL AND NATIONAL TECHTEAM EUROPE N.V.
BY AND BETWEEN:
PARATEL N.V., having its statutory office at Medialaan 1, 1800 Vilvoorde,
Belgium, hereby validly represented by Mr. Johan Tielemans,
AND:
NATIONAL TECHTEAM EUROPE N.V., having its statutory office also at Medialaan 1,
1800 Vilvoorde, Belgium, hereby, validly represented by
1. Delivery of services
Paratel N.V. grants to National TechTeam Europe N.V. the right to make
non-exclusive use of Paratel technology, including but not limited to
interactive voice response services, advanced application development tools,
voice digitalization, systems programming, access to Belgacom Network.
2. Consideration
National TechTeam Europe N.V. will as consideration for the delivery of
services mentioned under article 1 pay the following fees:
<TABLE>
<CAPTION>
for the period August 1996 - December 31, 1997
<S> <C>
Programming resources: 1,800 BEF per hour, plus V.A.T.
Digitalization: 1,800 BEF per hour, plus V.A.T.
System Usage (IVR + Switch) 1.98 BEF per minute, plus V.A.T.
(billed in 6 second increments).
for the period as of January 1, 1998
highly qualified programming: 3,000 BEF per hour, plus V.A.T.
resources
basic programming resources: 1,960 BEF per hour, plus V.A.T.
System Usage (IVR + Switch) market price
(billed in 6 second increments).
</TABLE>
<PAGE> 42
Signed on 26th of July 1996
in two originals, of which each party signs for receipt of one.
Paratel SIGNATURE
- ------- ---------
PARATEL N.V.
represented by Johan Tielemans Vic Haenen
----------------------------
TechTeam
- --------
NATIONAL TECHTEAM EUrOPE N.V.
represented by William F. Coyro, Jr. William F. Coyro, Jr.
----------------------------
<PAGE> 43
BUSINESS PLAN
EUROPEAN CALL CENTER EXPANSION
NATIONAL TECHTEAM
DRAFT #1
JULY 8TH, 1996
CREATED BY:
MICHAEL PETRENA
BUSINESS REVIEW
<PAGE> 44
I. TECHTEAM OF EUROPE-THE ENTITY
This joint venture will consist of a new company called TechTeam of Europe. It
will be owned and capitalized in the following manner: 75% TechTeam and 25%
Paratel. A board of directors will be created for this new venture and will
consist of our members representing National TechTeam and ___________________
members representing Paratel. All other legal information regarding this
agreement is encompassed in the operating agreement and contract for the new
entity between NTT and Paratel.
STRENGTHS OF JOINT VENTURE PARTNERS:
Each owner in this joint venture brings certain strengths to this agreement and
expects certain advantages out this venture. These include the following:
NTT Strengths: NTT brings strong management know how regarding the operation of
call centers, from recruiting and training to ongoing delivery and improvement.
They also have the capital available for a 75% capitalization capability of
this new entity. NTT brings a strong customer base and reputation to the call
center support market and is largely the reason for the continuation of the
TechTeam name in Europe. Finally, NTT is heavily experienced in the "live
agent" portion of call center support with a focus on high tech support.
Finally, NTT can offer operations management in the short term to assist in the
successful launch of this new venture. Finally, NTT can offer Paratel the
opportunity to move up the value path to higher service offerings.
NTT Advantages: NTT can use this relationship as a lower risk vehicle to enter
the European market and utilize expertise in the European market In addition,
NTT can have the use of Paratel's existing switch equipment and VRU
capabilities.
Paratel Strengths: Paratel brings a strong understanding of the Belgium and
international marketplace, especially on the technical side, Paratel can offer
the immediate ability to enter into the European market through site assistance
(through VTM) and consultant assistance through existing Paratel management
Paratel's owners, which include VTM and Belgacom, can offer a potential
customer base to the entity. Finally, Paratel offers immediate infrastructure,
including PBX & VRU access, technical support, purchasing support, line of
credit, etc.
Paratel advantages: Paratel can offer a fuller product delivery capability
through the ability to offer live agent response in addition to the their
current VRU capabilities. In addition, Paratel can offer the entity strong
telecom rates through their relationship with Belgacom and strong VRU
capabilities through their current business offerings.
<PAGE> 45
TECHTEAM EUROPE'S MISSION STATEMENT
To profitably deliver quality call center services that leverage the technology
and management experience of Paratel and the experience in the U.S. of National
TechTeam. These call center services will be delivered from Europe and
marketed to organizations with European corporate and consumer requirements.
TechTeam's objective is to earn 25% or higher ROE for it's partners.
The following is a structure of services offered by joint venture partner's to
the entity on an ongoing basis:
TECHTEAM SERVICE STRUCTURE
NTT TECHTEAM OF EUROPE PARATEL
1. Training 1. VRU
2. Call Center Management 2. Sales
3. Sales
<PAGE> 46
TechTeam Europe (Belgium)
Vision Statement
Outline of April 26, 1996
<TABLE>
<CAPTION>
Area of Focus Description Measure of Achievement
<S> <C> <C>
Characteristics of the Company Revenues Year One: 2.9 million, Year Two: 11 million,
Year three: million
Employees Year One: 59 employees, Year Two: 131 employees,
Year Three: 200 employees
Structure Joint Venture with all operations, sales and
administration centralized in Belgium.
Focus of Operations A robust supplier of call center services (all
levels through marketing cycle-presale to postsale)
Geographical Presence Pan-European
How to Accomplish Growth Through aggressive focus on a premium customer base
Customer Profile Major International & European Corporations
Driving Force Customer Focused Customers are surveyed annually
Service Lines Humanistic and technological call handling
Flexibility to expand/contract Responding to market demands
Strategic Alliances Alliances meeting the following criteria:
Partners Key joint venture partner
Vendors Key customer partners
Resellers Provide opportunity for European expansion
Supports Call Center Services
Provides opportunity & benefits to NTT/Paratel
Products leverage NTT's Call Center capability and
Parate technology
Customer Perception Call Center Solution Integrator Customers consume call center services
European capabilities Extent of Pan-European geographical presence
Provide Services that Customer retention/increase with call center business
improve customer
competitiveness
Core Competency Continued growth with current business and
new business
Employees Trained to service customer Customer satisfaction with employee's services is
measure conjunction with employees' performance
evaluations
Trained to functionally perform Employees' performance is evaluated regularly
their job Managers are trained Managers' performance is evaluated regularly
to manage Retention Better than industry standards on a Pan-European
basis
Compensation Paid for performance
Motivation Goal oriented
Career Pathing/Employee Internal transfers
Development
Employees' satisfaction Employees are surveyed and have the ability to
discuss go etc. at evaluation
Business Practice Continuous improvement of Benchmark to exceed industry standards
processes
Technology as a cost effective Benchmark to exceed competition
weapon
Quality program ISO-9000 Audits
Cost Effectiveness Benchmark against competition/industry
Financial Profile ROE
Gross Margin Percentage
Investment Recovery Within 24 months of start of operation
</TABLE>
<PAGE> 47
II. THE MARKET
SERVICE OFFERINGS DEFINITION (PRODUCTIZATION)
1. Post Sales Support (specifically technical support):
The delivery post-sale, installed user base software, hardware, networking and
telecommunications infrastructure within the corporate small business and home
user markets. National TechTeam has significant experience in the design,
development and management of hardware and software support programs. The
following is a partial list of products currently supported by NTT:
2. Order Processing
Management of inbound order processing and point of sale information processing
services. This product/service as a pool of specialists/agents interfacing
with customers using a homogenous trained skill set. Order processing covers a
vast array of markets that encompass business to business and business to
consumer point of sale and post sale order processing. NTT currently operates
sophisticated remote host interfaced order processing with cash management
systems that operate in both business to business and business to consumer
markets.
3. Entitlement:
Inbound customer service handling that focuses on servicing the new and
installed user base of the product marketer. Working with business-to-
business and business to consumer product managers, this service will allow the
customer management and integration of marketing within the customer service
department.
4. Presales Support
Presales support consists of all information flow to the potential consumer
base. This includes all questions from basic to highly technical. It also
includes any information needed by the consumer before purchase (spec sheets,
etc.).
5. Sales & Fulfillment
This formation will allow TechTeam to leverage into customer service operations
within existing organizations, Pan European. As customer service becomes a
more critical piece of brand equity and brand loyalty, entitlement will
increasingly become more crucial in managing customer service costs.
<PAGE> 48
THE FIVE FORCES MODEL-APPLIED TO THE EUROPEAN CALL CENTER MARKET
THREATS OF NEW ENTRANTS
The threat of new entrants into the call center market in Europe is high.
There are few barriers to entry. Since the European market is considered
relatively immature, there is an expectation that more competitors will be
continuously entering the market. However, it is expected that margins will be
able to support such entry for a significant amount of time. Also, it is
important that TechTeam be one of the first few to strongly enter this market
and create a strong name in the European Market. A more in depth study of the
competitive arena will be accomplished through a consultancy study in the next
two months.
Currently, it is known that the following service bureaus have call centers in
Europe:
1. McQueen (subsidiary of Adobe)
2. Decision Group (owns Merit)
3. Sykes (based in the Netherlands)
In addition to the aforementioned, the following are rumored to be entering the
European call center market:
1. Stream
2. UC&L
This information needs more substantiation, but does indicate that major
players are either in, or entering the European market.
BARGAINING POWER OF CUSTOMERS
Currently customers have very little bargaining power due to the lack of strong
competitors currently in the market. Our focus markets often are in need of our
expertise in customer support and our U.S. international customers are in need
of our expertise in offering European support solutions. Therefore, we should
expect higher margins during this time in the market life cycle. As stated
earlier, however, we expect this to change fairly quickly, as more competitors
(especially U.S. based competitors) enter the European market.
Another important item to note however, is the ability of the customer base to
offer support solutions "in house" verses outsourcing. While not a major
threat, it is relatively easy for customers to "in source", just not at the
same efficiency or the same results as service bureaus such as TechTeam.
TechTeam can offer both economies, technical expertise and call center
expertise.
THREAT OF SUBSTITUTES
The threat of substitutes is very low. The tendency towards increased customer
service will ensure a need for a support solution. One substitute that exists
is a technical (VRU/IVR) and On line/Web services support solution. This would
not be a problem for TechTeam, however, since we can support both of these
substitute offerings. The next potential substitute is a knowledge base
solution such as TechNet, which is a CD based support solution. Finally,
<PAGE> 49
documented solutions shipped with the support products can substitute for live
agent support. The latter two are small and unlikely substitutes to effect
this, however.
THREAT OF SUPPLIERS
The threat of suppliers is high. ACD companies and call center software
companies could also enter the market with strong technical and call center
efficiency knowledge. However, there has been very little of this to date,
with these companies choosing to focus on their core competencies. Telecom
companies, on the other hand, have the ability to enter this market. Due to
the deregulation of this industry, competition is expected to increase.
Telecommunications providers may look for higher profit margin alternatives to
enhance their position. Belgacom, a partial owner of Paratel, may very well be
utilizing their position to learn the call center business. They have many
contacts through their current customer base and would be very aware of new
entrants into this market or outsourcing bids.
LIFE CYCLE
Europe is just entering the growth portion of the market life cycle. It should
be expected that this market will approach maturity much faster than the U.S.,
due to learning curves in the U.S. applied to Europe and the number of entires
into the European market compared to the U.S.
SEGMENTS
More to be added here
POSITIONING
The obvious factors which make up the positioning of companies in this market
are service/support level, quality and price. TechTeam of Europe should
continue to position itself differently depending on which "product" it wishes
to pursue. In post sales support for instance, TechTeam would tend toward a
high service level, high quality and high price position (yet competitive). In
entitlement, the more competitive environment caused by the level of support
would indicate a more competitive pricing stance from TechTeam.
Note here that a study to attain more market information, including the
position of competitors relative to us will be performed
PENETRATION
Penetration into the European Market is very low. In many countries, there is
very little penetration for many reasons. One reason is the fact that toll
free service is in it's infancy stages. The complication of "cross border"
toll free calls has enhanced this state. Also, Europe culturally seems to be
less customer service intensive, therefore needing less support services.
Therefore, Europe should be viewed as a market with a high growth potential.
POLITICAL/LEGAL ENVIRONMENT
The political and legal environment in Europe is extremely complex.
Specifically, tax laws and labor laws are very different from country to
country. Deregulation of the telecommunications industry is an example of the
dynamic legal environment as it applies to
<PAGE> 50
business. Paratel can act as a guide for operating in Belgium, but it is
suggested that a consultant (Price Waterhouse) be hired to keep us apprised of
the changes in each country we operate in on an ongoing basis.
<PAGE> 51
III. INFRASTRUCTURE
Infrastructure, from a technical persepctive, will include much of the advanced
technolgy that we are in the process of incorporating in the U.S. When growth
dictates, we will buy our own switch, very likely an Aspect switch verses the
current Definety TechTeam is using at VTM's site. Call tracking will be
installed as needed. TCS will very likely be implemented and will be
especially important due to the dependance on super groups and the difficulty
of scheduling multi-lingual projects. Other technolgy, such as Web access,
etc. will very likely not be needed short term, since the penetyration of this
technolgy is much lower in Europe, due largely to the smaller penetraion of
personal computers and the cost assocvuiated with Web access from an end user
perspective.
From a facuilities perspective, we have the ability to expand in small
increments on VTM's site at a fairly reasonable rate (needs to be quantified).
VTM has a large unbuilt area ready for call center expansion on the third floor
of their site. After a certain techncian growth is reached, we will need to
either build out this section or find suitable facilities elsewhere.
Finally, from a organizational chart persepctive, the proposed heirarchy is
listed below:
TECHTEAM OF EUROPE
<TABLE>
<S><C>
Board
Marketing Pro & Post Operation
Director Sales Director
consultancy
Sales Sales Technical Program Recruiting Human Accounting
Managers Engineer Managers Resources
Team
Leaders
Technicians
</TABLE>
This organizatioanl chart represents a Director of Operations and a Director of
Marketing which report directly to the board. Also, an account management
person (defined as a pre and post sales support person) would report to the
Director of Operations. This organization chart can change as the business
needs suit, mimicking our U.S. plan where feasible and deviating where good
European business practice dictates.
<PAGE> 52
IV. THE PLAN
In the short term, it is important to implement a "tactical" operations and
sales and marketing plan to respond to the immediate market and business
needs. The plan is encompassed in the following:
OPERATIONAL PLAN (SHORT TERM)
a) Management in Europe
i) Hire a Marketing Manager-local manager with the
responsibility to set and implement marketing
tactics and be responsible or the sales staff.
ii) Director-U.S. based for six months and mentor a local
replacement. Also, will be responsible for putting in
place line management infrastructure (Project Managers
and Team Leaders).
iii) Pre & Post Sales consultancy person (equivalent to a
National Account Manager in U.S.)-Long term assignment
for a U.S. based person knowledgeable of the "TechTeam
way". Another option for this role would be a short term
assignment for a U.S. person in Belgium, while a local
person simultaneously has assignment in the U.S. to learn
the TechTeam way. The latter seems more likely, since
the pool o resources in the U.S. that would fit this
role is limited.
iv) Active directors committee (board). This group of six
members should meet every two weeks and include Johan
Tielemans, Mike Darby and four other members,
2. TACTICAL SALES PLAN (SHORT TERM)
a) Fill immediate need for up to two TechTeam Europe sales
personnel, for focus on UK, Belgium and Corporate
markets with headquarters and decision making in Europe.
b) Define responsibility for a TechTeam sales representative in
U.S. as a marketing focus and corporate interface for
Corporate accounts headquarters in the U.S. who:
i) Expanding into Europe
ii) Intending to offer call center service to a current
European existence
<PAGE> 53
SERVICE OFFERING
The service focus for the entity will start with the following:
1. POST SALES SUPPORT (SPECIFICALLY TECHNICAL SUPPORT):
National TechTeam has significant experience in the design, development and
management of hardware and software support programs. The following is a
partial list of products currently supported by NTT:
Objective: TechTeam will undoubtedly see at least 75% of new business in the
first 12 calendar months of this sector. As the business matures this
concentration will become reduced yet grows as the penetration of sales and
marketing improves.
Conclusion: In the first 12 months of operations the company will obtain a
minimum of 7 support contract. Each contract will have a minimum annual
contract value of $500,000. The sale of technical support will be driven by
non-dedicated (for the most part) and highly trained virtual technicians.
2. ENTITLEMENT:
Objective: Leverage the voice recognition that Paratel offers and the
language capabilities of the live agent to maximize customer handling,
firmographic and demographic information from the customer contact. This
should account for at least 15% of the market share that the new company
operates.
Conclusion: In the first twelve months of operations, TechTeam will manage over
5 million inquiries and route a like amount of calls to other in those service
providers.
3. ORDER PROCESSING
NTT currently operates sophisticated remote host interfaced order processing
with cash management systems that operate in both business to business and
business to consumer markets.
Objective: TechTeam will develop a standard service that incorporates
Interactive Voice Response, CTI, Internet and Live Agent Services to deliver a
product management service solution. This service will operate with an open
architecture that allows for a short application cycle of time and rapid
expansion.
Conclusion: In the first 12 months of operations TechTeam will establish a 40
second order processing network dedicated to this product / service. This
service will maximize the utilization of each agent and leverage the technology
of Paratel and NTT.
4. IVR
It is assumed that approximately 10% of revenues will come from IVR technolgy.
<PAGE> 54
SEGMENTATION & TARGETING
The intention is to focus on the following markets:
1. International customers for Pan-European applications (U.S. based)
2. United Kingdom
3. Belgium
4. International customers for Pan-European applications (Mostly
London & Brussels based)
Specific industry targets will include the following:
1. Telecommunications companies
2. Financial Institutions
3. VARs
4. Government and EC institutions
5. Automotive Industry
6. Large multinationals
7. High technology companies (software & hardware manufacturers)
8. Others to be defined
MARKET STUDY FOCUS (to be accomplished in two months in order to create
stronger long term strategic plan)
1. Market-total market potential in stated areas (identify growth, current
size, etc.)
2. Competition-identify who currently exists, their market share
and growth aspirations
3. Key operating efficiencies of competitiors (wage
due to location, etc.)
4. Identify which companies are considering entering
this market
5. Market pricing & margin expectations
6. Risks associated with a European strategy
V. FINANCIAL SUMMARY
See three year business plan attached
<PAGE> 1
Exhibit 10.36
[NBD LOGO] MASTER DEMAND BUSINESS LOAN NOTE
- --------------------------------------------------------------------------------
Due on Demand $6,000,000.00
No. ___________________________________ Date June 17, 1996
PROMISE TO PAY: For value received, the undersigned (the "Borrower") promises to
pay ON DEMAND to NBD BANK (the "Bank"), or order, at any office of the Bank in
the State of Michigan, the sum of Six Million and 00/100 ******** DOLLARS
($6,000,000.00), or such lesser sum as is indicated on Bank records, plus
interest computed on the basis of the actual number of days elapsed in a year
of 360 days at the rate of:
______% per annum until demand or maturity, whether by acceleration or
otherwise (the "Note Rate") and at the rate of 3% per annum
above the Note Rate on overdue principal from the date when
due until paid; or
0 % per annum above the rate announced from time to time by the
Bank as its "prime" rate (the "Note Rate"), which Rate may
not be the lowest rate charged by the Bank to any of its
customers, until maturity, whether by demand, acceleration or
otherwise, and at the rate of 3% per annum above the Note Rate
on overdue principal from the date when due until paid. Each
change in the "prime" rate will immediately change the Note
Rate.
In no event shall the interest rate exceed the maximum rate allowed by law; any
interest payment which would for any reason be deemed unlawful under applicable
law shall be applied to principal.
Interest will be computed on the unpaid principal balance from the date of
each borrowing.
The Borrower will pay this sum on demand. Until demand, the Borrower will pay
consecutive monthly installments of interest only commencing July 4, 1996.
MASTER DEMAND NOTE: The Bank has authorized an uncommitted credit facility to
the Borrower in a principal amount not to exceed the face amount of this note.
The credit facility is in the form of loans made from time to time by the Bank
to the Borrower at the Bank's sole discretion. This note evidences the
Borrower's obligation to repay those loans. The aggregate principal amount of
debt evidenced by this note shall be the amount reflected from time to time in
the records of the Bank but shall not exceed the face amount of this note. The
Borrower acknowledges and agrees that no provision of this note and no course
of dealing by the Bank shall commit the Bank to make loans to the Borrower and
that notwithstanding any provision of this note or any other instrument or
document, all loans evidenced by this note are due and payable on demand, which
may be made by the Bank at any time, whether or not any event of acceleration
then exists.
CREDIT AGREEMENT: This note evidences a debt under the terms of a Credit
Authorization Agreement between the Bank and the Borrower dated June, 1996 and
any amendments.
SECURITY: To secure the payment of this note and any other present or future
liability of the Borrower, whether several, joint, or joint and several, the
Borrower pledges and grants to the Bank a continuing security interest in the
following described property and all of its additions, substitutions,
increments, proceeds and products, whether now owned or later acquired
("Collateral"):
1. All securities and other property of the Borrower in the custody, possession
or control of the Bank (other than property held by the Bank solely in a
fiduciary capacity);
3. All balances of deposit accounts of the Borrower with the Bank;
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
BANK'S RIGHT TO SETOFF: The Bank shall have the right at any time to apply its
own debt or liability to the Borrower or to any other party liable on this note
in whole or partial payment of this note or other present or future
liabilities, without any requirement of mutual maturity.
REPRESENTATIONS BY BORROWER: Each Borrower represents that: (a) the execution
and delivery of this note and the performance of the obligations it imposes do
not violate any law, conflict with any agreement by which it is bound, or
require the consent or approval of any governmental authority or any third
party; (b) this note is a valid and binding agreement, enforceable according to
its terms; and (c) all balance sheets, income statements, and other financial
statements furnished to the Bank are accurate and fairly reflect the financial
condition of the organizations and persons to which they apply on their
effective dates, including contingent liabilities of every type, which
financial condition has not changed materially and adversely since those dates.
Each Borrower, if other than a natural person, further represents that: (a) it
is duly organized, existing and in good standing under the laws where it is
organized; and (b) the execution and delivery of this note and the performance
of the obligations it imposes (i) are within its powers; (ii) have been duly
authorized by all necessary action of its governing body; and (iii) do not
contravene the terms of its articles of incorporation or organization, its
bylaws, or any agreement governing its affairs.
WAIVER OF JURY TRIAL: The Bank and the Borrower, after consulting or having had
the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this note or any related instrument or
agreement or any of the transactions contemplated by this note or any course of
conduct, dealing, statements (whether oral or written), or actions of either of
them. Neither the Bank nor the Borrower shall seek to consolidate, by
counterclaim or otherwise, any action in which a jury trial has been waived
with any other action in which a jury trial cannot be or has not been waived.
These provisions shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Borrower except by a written instrument
executed by both of them.
SEE REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS INCLUDING EVENTS OF DEFAULT
BORROWER:
22000 Garrison Ave. National TechTeam, Inc.
----------------------------- --------------------------------
Address: Dearborn, MI 48124
-----------------------------
Tax ID: 38-2774613 By: Lawrence A. Miller, C.F.O.
----------------------------- --------------------------------
Address:
----------------------------- --------------------------------
<PAGE> 2
ADDITIONAL TERMS AND CONDITIONS
EVENTS OF DEFAULT/ACCELERATION: If any of the following events occurs, this
note shall be due immediately without notice at the Bank's option whether or
not the Bank has made demand.
1. The Borrower or any guarantor of this note ("Guarantor") fails to pay when
due any amount payable under this note or under any agreement or instrument
evidencing debt to any creditor;
2. The Borrower or any Guarantor (a) fails to observe or perform any other
term of this note; (b) makes any materially incorrect or misleading
representation, warranty, or certificate to the Bank; (c) makes any
materially incorrect or misleading representation in any financial
statement or other information delivered to the Bank; or (d) defaults under
the terms of any agreement or instrument relating to any debt for borrowed
money (other than the debt evidenced by this note) such that the creditor
declares the debt due before its maturity;
3. There is a default under the terms of any loan agreement, mortgage,
security agreement, or any other document executed as part of the loan
evidenced by this note, or any guaranty of the loan evidenced by this note
becomes unenforceable in whole or in part, or any Guarantor fails to
promptly perform under its guaranty;
4. A "reportable event" (as defined in the Employee Retirement Income Security
Act of 1974 as amended) occurs that would permit the Pension Benefit
Guaranty Corporation to terminate any employee benefit plan of the Borrower
or any affiliate of the Borrower;
5. The Borrower or any Guarantor becomes insolvent or unable to pay its debts
as they become due;
6. The Borrower or any Guarantor (a) makes an assignment for the benefit of
creditors; (b) consents to the appointment of a custodian, receiver, or
trustee for itself or for a substantial part of its assets; or (c)
commences any proceeding under any bankruptcy, reorganization, liquidation,
insolvency or similar laws of any jurisdiction;
7. A custodian, receiver, or trustee is appointed for the Borrower or any
Guarantor or for a substantial part of its assets without its consent and
is not removed within 60 days after such appointment;
8. Proceedings are commenced against the Borrower or any Guarantor under any
bankruptcy, reorganization, liquidation, or similar laws of any
jurisdiction, and such proceedings remain undismissed for 60 days after
commencement; or the Borrower or Guarantor consents to the commencement of
such proceedings;
9. Any judgment is entered against the Borrower or any Guarantor, or any
attachment, levy, or garnishment is issued against any property of the
Borrower or any Guarantor;
10. The Borrower or any Guarantor dies;
11. The Borrower or any Guarantor, without the Bank's written consent, (a) is
dissolved, (b) merges or consolidates with any third party, (c) leases,
sells or otherwise conveys a material part of its assets or business
outside the ordinary course of business, (d) leases, purchases or otherwise
acquires a material part of the assets of any other corporation or business
entity except in the ordinary course of business, or (e) agrees to do any
of the foregoing (notwithstanding the foregoing, any subsidiary may merge
or consolidate with any other subsidiary, or with the Borrower so long as
the Borrower is the survivor);
12. The loan-to-value ratio of any pledged securities at any time exceeds
___________%, and such excess continues for five (5) days after notice from
the Bank to Borrower;
13. There is a substantial change in the existing or prospective financial
condition of the Borrower or any Guarantor which the Bank in good faith
determines to be materially adverse;
14. The Bank in good faith deems itself insecure.
REMEDIES: If this note is not paid at maturity, whether by demand, acceleration
or otherwise, the Bank shall have all of the rights and remedies provided by
any law or agreement. Any requirement of reasonable notice shall be met if the
Bank sends the notice to the Borrower at least seven (7) days prior to the date
of sale, disposition or other event giving rise to the required notice. The
Bank is authorized to cause all or any part of the Collateral to be transferred
to or registered in its name or in the name of any other person, firm or
corporation, with or without designation of the capacity of such nominee. The
Borrower shall be liable for any deficiency remaining after disposition of any
Collateral. The Borrower is liable to the Bank for all reasonable costs and
expenses of every kind incurred in the making or collection of this note,
including, without limitation, reasonable attorneys' fees and court costs.
These costs and expenses shall include, without limitation, any costs or
expenses incurred by the Bank in any bankruptcy, reorganization, insolvency or
other similar proceeding.
WAIVER: Each endorser and any other party liable on this note severally waives
demand, presentment, notice of dishonor and protest, and consents to any
extension or postponement of time of its payment without limit as to the number
or period, to any substitution, exchange or release of all or part of the
Collateral, to the addition of any party, and to the release or discharge of,
or suspension of any rights and remedies against, any person who may be liable
for the payment of this note. No delay on the part of the Bank in the exercise
of any right or remedy shall operate as a waiver. No single or partial exercise
by the Bank of any right or remedy shall preclude any other future exercise of
it or the exercise of any other right or remedy. No waiver or indulgence by the
Bank of any default shall be effective unless in writing and signed by the
Bank, nor shall a waiver on one occasion be construed as a bar to or waiver of
that right on any future occasion.
MISCELLANEOUS: The Borrower, if more than one, shall be jointly and severally
liable, and the term "Borrower" shall mean any one or more of them. This note
shall be binding on the Borrower and its successors, and shall benefit the
Bank, its successors and assigns. Any reference to the Bank shall include any
holder of this note. This note is delivered in the State of Michigan and
governed by Michigan law. Section headings are for convenience of reference
only and shall not affect the interpretation of this note.
<TABLE>
<S><C>
- --------------------------------------------------------------------------------------------------------------------------------
PAYMENT GUARANTEED BY:
- --------------------------------------------------------------------------------------------------------------------------------
(Signature) Address
- --------------------------------------------------------------------------------------------------------------------------------
(Signature) Address
- --------------------------------------------------------------------------------------------------------------------------------
(Signature) Address
- --------------------------------------------------------------------------------------------------------------------------------
FOR BANK USE ONLY
- --------------------------------------------------------------------------------------------------------------------------------
FACILITY AUTHORIZED TO LEND UNDER
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
METHOD OF DISBURSEMENT
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
LOAN CLASSIFICATION
- --------------------------------------------------------------------------------------------------------------------------------
ORC ADDRESS
COUNTRY CODE ------------------------------------------- SIC CODE BORR. BRANCH NUMBER SECIAL SECURITY NUMBER
DIV REG GRP SECT ORC CODE
-------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MAXIMUM ACCOUNT LIMIT SPECIAL ID LN. OFFICER LOAN PROFIT TX. PR. YR. MAIN COLL. REG U/
TM. FRB CODE INITIALS PURPOSE CENTER EX REL BA TYPE
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
[NBD LOGO] CREDIT AUTHORIZATION AGREEMENT
- -------------------------------------------------------------------------
NBD BANK (the "Bank"), 611 Woodward Avenue, Detroit, Michigan 48226-3947, has
approved the credit facilities listed below (collectively, the "Credit
Facilities," and, individually, as designated below) to:
National TechTeam, Inc. (the "Borrower"),
- ----------------------------------------------------------
(Borrower's Name)
22000 Garrison Avenue, Dearborn, MI 48124 ,
- ---------------------------------------------------------------------------
(Borrower's Address)
subject to the terms and conditions set forth in this agreement.
1.0 CREDIT FACILITIES. (Check and complete applicable sections)
1.1 UNCOMMITTED CREDIT AUTHORIZATIONS. The Bank has approved the
uncommitted credit authorizations listed below (collectively, the "Credit
Authorizations," and, individually, as designated below) subject to the terms
and conditions of this Agreement and the Bank's continuing satisfaction with
the Borrower's financial status. Disbursements under the Credit Authorizations
are solely at the Bank's discretion. Any disbursement on one or more occasions
shall not commit the Bank to make any subsequent disbursement.
/x/ A. FACILITY A. The Bank has approved an uncommitted Credit
Authorization to the Borrower in the principal sum not to exceed
$6,000,000.00 in the aggregate at any one time outstanding
("Facility A"). Credit under Facility A shall be in the form of
disbursements evidenced by credits to the Borrower's account and
shall be repayable as set forth in a Master Demand Note executed
concurrently (referred to in this agreement both singularly and
together with any other promissory notes referenced in this Section
1 as the "Notes"). The proceeds of Facility A shall be used for
the following purpose: working capital. Facility A shall expire on
May 31, 1997 unless earlier withdrawn.
/x/ B. FACILITY B (INCLUDING LETTERS OF CREDIT). The Bank has approved
an uncommitted Credit Authorization to the Borrower in the
principal sum not to exceed $50,000.00 in the aggregate at any one
time outstanding ("Facility B"). Facility B shall include the
issuance of [commercial/standby] letters of credit not exceeding
$50,000.00 in the aggregate at any one time outstanding, expiring
not later than November 31, 1997. (Strike bracketed words if
inapplicable.) Each Letter of Credit shall be in form acceptable to
the Bank and shall bear a fee of % per year of the face amount
of each standby Letter of Credit plus an issuance fee of $ upon
issuance of each Letter of Credit. (If no fee is listed, the Letters
of Credit shall bear a fee to be agreed upon by the Bank and the
Borrower). Credit under Facility B shall be in the form of
disbursements evidenced by credits to the Borrower's account and
shall be repayable as set forth in a Master Demand Note executed
concurrently (referred to in this agreement both singularly and
together with any other promissory notes referenced in this Section
1 as the "Notes") or by issuance of a Letter of Credit upon
completion of an application acceptable to the Bank. The proceeds
of Facility B shall be used for the following purpose: in lieu of
deposits. Facility B shall expire on May 31, 1997 unless earlier
withdrawn.
/x/ C. FACILITY C (PURCHASE MONEY TERM LOANS). The Bank has approved an
uncommitted credit authorization to the Borrower in the principal
sum not to exceed $2,000,000.00 in the aggregate at any one time
outstanding ("Facility C"). Facility C shall be in the form of loans
evidenced by the Borrower's notes on the Bank's form (referred to
in this agreement both singularly and together with any other
promissory notes referenced in this Section 1 as the "Notes"),
the proceeds of which shall be used to purchase the following
equipment computer equipment/furniture/leasehold improvements.
Interest on each loan shall accrue at a rate to be agreed upon by
the Bank and the Borrower at the time the loan is made. The
maturity of each note shall not exceed 60 months from the note
date. Notwithstanding the aggregate amount of Facility C stated
above, the original principal amount of each loan shall not exceed
the lesser of 100% of the cost of the equipment purchased with loan
proceeds or $2,000,000.00. Facility C shall expire on May 31, 1997
unless earlier withdrawn.
/ / 1.2 TERM LOANS. The Bank agrees to extend credit to the Borrower in the
form of term loan(s) (whether one or more, the "Term Loans") in the principal
sum(s) of _______________________________________________________ respectively,
bearing interest and payable as set forth in the Term Note(s) executed
concurrently (referred to in this agreement both singularly and together with
any other promissory notes referenced in this Section 1 as the "Notes"). The
proceeds of the Term Loans shall be used for the following purpose: ___________
______________________________________________________________________________.
2.0 CONDITIONS PRECEDENT.
2.1 CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT. Before the first
extension of credit under this agreement, whether by disbursement of a loan,
issuance of a letter of credit, or otherwise, the Borrower shall deliver to the
Bank, in form and substance satisfactory to the Bank:
NBD 1012 Rev. 12/94
<PAGE> 4
A. LOAN DOCUMENTS. The Notes; the letter of credit applications required by
Section 1.2; the security agreements, financing statements, mortgages and
other documents required by Section 5.1; the guaranties required by Section
6.0; the subordination agreements required by Section 7.0; and any other
loan documents which the Bank may reasonably require to give effect to the
transactions contemplated by this agreement;
B. EVIDENCE OF DUE ORGANIZATION AND GOOD STANDING. Evidence satisfactory to
the Bank of the due organization and good standing of the Borrower and
every other business entity that is a party to this agreement or any other
loan document required by this agreement; and
C. EVIDENCE OF AUTHORITY TO ENTER INTO LOAN DOCUMENTS. Evidence
satisfactory to the Bank that (i) each party to this agreement or any other
loan document required by this agreement is authorized to enter into the
transactions contemplated by this agreement and the other loan documents,
and (ii) the person signing on behalf of each such party is authorized to
do so.
2.2 CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT. Before any extension
of credit under this agreement, whether by disbursement of a loan, issuance of
a letter of credit, or otherwise, the following conditions shall have been
satisfied:
A. REPRESENTATIONS. The representations contained in Section 10 shall be
true on and as of the date of the extension of credit;
B. NO EVENT OF ACCELERATION. No event of acceleration shall have occurred
and be continuing or would result from the extension of credit.
C. CONTINUED SATISFACTION. The Bank shall have remained satisfied with the
Borrower's managerial and financial status;
D. ADDITIONAL APPROVALS, OPINIONS, AND DOCUMENTS. The Bank shall have
received such other approvals, opinions and documents as it may reasonably
request; and
E. OTHER CONDITIONS. _____________________________________________________
__________________________________________________________________________
_________________________________________________________________________.
3.0 BORROWING BASE/ANNUAL PAY DOWN.
3.1 BORROWING BASE. (complete if applicable) Notwithstanding any other
provision of this agreement, the aggregate principal amount outstanding at any
one time under (check applicable clauses)
[ ] Facility A
[ ] Facility B
shall not exceed the lesser of the Borrowing Base or $_______________.
Borrowing Base means:
(Check and complete applicable clauses)
[ ] A. ______% of the Borrower's trade accounts receivable in which the
Bank has a perfected, first priority, security interest, excluding
accounts more than 90 days past due from the date of invoice, accounts
subject to offset or defense, government, bonded, affiliate and foreign
accounts, accounts from trade debtors of which more than _____% of the
aggregate amount owing from the trade debtor to the Borrower is more
than ____ days past due, and accounts otherwise unacceptable to the
Bank, plus
[ ] B. Inventory of the Borrower in which the Bank has a perfected, first
priority, security interest, valued at the lower of cost or market, but
not exceeding $__________ in aggregate, as follows:
[] (1)__________% of aggregate inventory; or
[] (1)__________% of raw material inventory; and
[] (2)__________% of work-in-process inventory; and
[] (3)__________% of finished goods inventory; plus
[ ] C. _____% of the __________ value of the Borrower's machinery and
equipment in which the Bank has a perfected, first priority, security
interest, but not exceeding $__________, plus
[ ] D. Additional Borrowing Base provisions are contained in the attached
addendum.
3.2 ANNUAL PAY DOWN. (complete if applicable) Notwithstanding any other
provision of this agreement, there shall be no debt outstanding under
______________________________ for a period of ______________________________
(Facility A, Facility B, etc.)
consecutive months during each fiscal year of the Borrower.
4.0 FEES AND EXPENSES. (complete if applicable)
4.1 FEES. Upon execution of this agreement, the Borrower shall pay the
Bank the following fees, all of which the Borrower acknowledges have been
earned by the Bank: 1% of amount borrowed under Facility C only.
4.2 OUT-OF-POCKET EXPENSES. In addition to any fee set forth in Section
4.1 above, the Borrower shall reimburse the Bank for its out-of-pocket expenses
and reasonable attorney's fees (including the fees of in-house counsel)
allocated to the Credit Facilities.
5.0 SECURITY.
5.1 Payment of all amounts owing under the Credit Facilities shall be
secured by the Borrower's grant of a continuing first security interest and/or
real estate mortgage, as the case may be, covering its interest in the
following property and all its additions, substitutions, increments, proceeds
and products, present and future, whether now owned or later acquired, (the
"Collateral"):
<PAGE> 5
(check and complete applicable clauses)
[ ] A. ACCOUNTS RECEIVABLE. All of the Borrower's accounts, chattel
paper, general intangibles, instruments, and documents (as those terms are
defined in the Uniform Commercial Code), rights to refunds of taxes paid at any
time to any governmental entity, and any letters of credit and drafts under
them given in support of the foregoing, wherever located. The Borrower shall
deliver to the Bank executed security agreements and financing statements in
form and substance satisfactory to the Bank.
[ ] B. INVENTORY. All of the Borrower's inventory, wherever located.
The Borrower shall deliver to the Bank executed security agreements and
financing statements in form and substance satisfactory to the Bank.
[ ] C. EQUIPMENT. All of the Borrower's equipment, wherever located.
The Borrower shall deliver to the Bank executed security agreements and
financing statements in form and substance satisfactory to the Bank.
[ ] D. REAL ESTATE. The real property, including improvements, located
at ______________________________________________________________________. The
Borrower shall deliver to the Bank an executed mortgage ALTA mortgage title
insurance policy without exceptions with mortgage survey certified to the Bank
and the title company, and, where applicable, an assignment of rents,
subordinations of leases and assignments of land contracts, all in form and
substance satisfactory to the Bank.
[ ] E. _______________________________________________________________
______________________________________________________________________________
5.2 No forbearance or extension of time granted any subsequent owner of
the Collateral shall release the Borrower from liability.
5.3 ADDITIONAL COLLATERAL/SETOFF. To further secure payment of all
amounts owing under the Credit Facilities and all of the Borrower's other
liabilities to the Bank, the Borrower grants to the Bank a continuing security
interest in: (i) all securities and other property of the Borrower in the
custody, possession or control of the Bank (other than property held by the Bank
solely in a fiduciary capacity), and (ii) all balances of deposit accounts of
the Borrower with the Bank. The Bank shall have the right at any time to apply
its own debt or liability to the Borrower, or to any other party liable for
payment of the Credit Facilities, in whole or in partial payment of the Credit
Facilities or other present or future liabilities, without any requirement of
mutual maturity.
5.4 CROSS LIEN. Any of the Borrower's other property in which the Bank
has a security interest to secure payment of any other debt, whether absolute,
contingent, direct or indirect, including the Borrower's guaranties of the
debts of others, shall also secure payment of and be part of the Collateral for
the Credit Facilities.
6.0 GUARANTIES. (complete if applicable)
Payment of the Borrower's liabilities under the Credit Facilities shall
be guaranteed by _____________________________________________________________,
by execution of the Bank's form of guaranty agreement. The liability of the
guarantors, if more than one, shall be joint and several.
7.0 SUBORDINATION. (complete if applicable)
The Credit Facilities shall be supported by the subordination of debt
owing from the Borrower to _________________________________________________,
including without limitation debt currently owing in the amount of $____________
in manner and by agreement satisfactory to the Bank.
8.0 AFFIRMATIVE COVENANTS. So long as any debt remains outstanding
under the Credit Facilities, the Borrower, and each of its subsidiaries, if
any, shall:
8.1 INSURANCE. Maintain insurance with financially sound and reputable
insurers covering its properties and business against those casualties and
contingencies and in the types and amounts as shall be in accordance with sound
business and industry practices.
8.2 EXISTENCE. Maintain its existence and business operations as
presently in effect in accordance with all applicable laws and regulations, pay
its debts and obligations when due under normal terms, and pay on or before
their due date all taxes, assessments, fees and other governmental monetary
obligations, except as they may be contested in good faith if they have been
properly reflected on its books and, at the Bank's request, adequate funds or
security has been pledged to insure payment.
8.3 FINANCIAL RECORDS. Maintain proper books and records of account, in
accordance with generally accepted accounting principles where applicable,
and consistent with financial statements previously submitted to the Bank.
8.4 NOTICE. Give prompt notice to the Bank of the occurance of (i) any
event of acceleration, and (ii) any other development, financial or otherwise,
which would affect the Borrower's business, properties or affairs in a
materially adverse manner.
8.5 COLLATERAL AUDITS. (complete if applicable) Permit the Bank or its
agents to perform __________________________________________
(monthly, annual, etc.)
audits of the Collateral. The Borrower shall compensate the Bank for those
audits in accordance with the Bank's schedule of fees as may be amended from
time to time. Whether or not this section has been completed, the Bank shall
retain the right to inspect the Collateral and business records related to it
at such times and at such intervals as the Bank may reasonably require.
<PAGE> 6
8.6 MANAGEMENT. (complete if applicable) Maintain ___________________ as
_______________________________________________________________________________.
8.7 FINANCIAL REPORTS. Furnish to the Bank whatever information, books
and records the Bank may reasonably request, including at a minimum: (Check and
complete applicable clauses. If the Borrower has subsidiaries, all financial
statements required will be provided on a consolidated and on a separate
basis.)
/X/ A. Within 45 days after each quarterly period, a balance sheet as
(Monthly/quarterly)
of the end of that period and statements of income, retained earnings,
and cash flows from the beginning of that fiscal year to the end of that
period.
/X/ B. Within 90 days after and as of the end of each of its fiscal
years, a detailed financial statement, including a balance sheet and
(audit/financial statement)
statements of income, retained earnings, and cash flows audited by an
(reviewed/compiled/certified)
independent certified public accountant of recognized standing.
/X/ C. Within 30 days after and as of the end of each calendar month,
the following lists, (check applicable clauses)
/X/ (1) a list of accounts receivable, aged from date of
invoice;
/X/ (2) a list of accounts payable, aged from date of receipt;
/ / (3) a list of inventory, valued at the lower of cost or
market.
/ / D. Within _____ days after and as of the end of each calendar
year, the signed personal financial statement of
________________________________________________________________________
(Borrower/Guarantor/other)
/ / E. Within 5 days after filing, a signed copy of the annual tax
return, with exhibits, of ______________________________________________
_______________________________________________________________________.
(Borrower/Guarantor/other)
/ / F. An Environmental Certificate on the Bank's form on and as of
the date of this agreement, and thereafter as required by the
Environmental Certificate.
/ / G. _______________________________________________________________
________________________________________________________________________
________________________________________________________________________
9.0 NEGATIVE COVENANTS.
9.1 DEFINITIONS. As used in this agreement, the following terms have
the following respective meanings:
A. "Subordinated Debt" means debt subordinated to the Bank in manner
and by agreement satisfactory to the Bank.
B. "Tangible Net Worth" means total assets less intangible assets and
total liabilities. Intangible assets include goodwill, patents,
copyrights, mailing lists, catalogs, trademarks, bond discount and
underwriting expenses, organization expenses, and all other
intangibles.
9.2 Unless otherwise noted, the financial requirements set forth in
this section shall be computed in accordance with generally accepted accounting
principles applied on a basis consistent with financial statements previously
submitted by the Borrower to the Bank.
9.3 Without the written consent of the Bank, so long as any debt
remains outstanding under the Credit Facilities, the Borrower shall not: (where
appropriate, covenants shall apply on a consolidated basis - clauses H-O apply
only if completed.)
A. DIVIDENDS. Acquire or retire any of its shares of capital
stock, or declare or pay dividends or make any other distributions upon
any of its shares of capital stock, except dividends payable in its
capital stock, and dividends payable to "Subchapter S" corporation
shareholders, in amounts sufficient to pay the shareholder(s) income tax
obligations related to the Borrower's taxable income.
B. SALE OF SHARES. Issue, sell or otherwise dispose of any
shares of its capital stock or other securities, or rights, warrants or
options to purchase or acquire any such shares or securities.
C. DEBT. Incur, or permit to remain outstanding, debt for
borrowed money or installment obligations, except debt reflected in the
latest financial statement of the Borrower furnished to the Bank prior
to execution of this agreement and not to be paid with proceeds of
borrowings under the Credit Facilities. For purposes of this covenant,
the sale of any accounts receivable shall be deemed the incurring of
debt for borrowed money.
D. GUARANTIES. Guarantee or otherwise become or remain
secondarily liable on the undertaking of another, except for endorsement
of drafts for deposit and collection in the ordinary course of
business.
E. LIENS. Create or permit to exist any lien on any of its
property, real or personal, except: existing liens known to the Bank;
liens to the Bank; liens incurred in the ordinary course of business
securing current nondelinquent liabilities for taxes, worker's
compensation, unemployment insurance, social security and pension
liabilities; and liens for taxes being contested in good faith.
F. ADVANCES AND INVESTMENTS. Purchase or acquire any securities
of, or make any loans or advances to, or investments in, any person,
firm or corporation, except obligations of the United States Government,
open market commercial paper rated one of the top two ratings by a
rating agency of recognized standing, or certificates of deposit in
insured financial institutions.
<PAGE> 7
G. USE OF PROCEEDS. Use, or permit any proceeds of the Credit
Facilities to be used, directly or indirectly, for the purpose of
"purchasing or carrying any margin stock" within the meaning of Federal
Reserve Board Regulation U. At the Banks request, the Borrower shall
furnish to the Bank a completed Federal Reserve Board Form U-1.
H. WORKING CAPITAL. Permit the difference between its current assets
[less all sums owing from stockholders, members or partners, as the case
may be, and from officers, managers and directors] and current liabilities
[plus all sums (other than Subordinated Debt) owing to stockholders,
members or partners, as the case may be, and to officers, managers and
directors] to be less than $______________________. (Strike bracketed words
if not applicable.)
I. TANGIBLE NET WORTH [PLUS SUBORDINATED DEBT]. Permit its Tangible
Net Worth [plus Subordinated Debt] to be less than $15,000,000. (Strike
bracketed words if not applicable).
J. CURRENT RATIO. Permit the ratio of its current assets to its
current liabilities to be less than _________ to 1.00.
K. LEVERAGE RATIO. Permit the ratio of its total liabilities to its
Tangible Net Worth [plus Subordinated Debt] to exceed 1.00 to 1.00. (Strike
bracketed words if not applicable).
L. FIXED ASSETS. Expend for, contract for, lease, rent, or otherwise
acquire fixed assets, if the expense to the Borrower, and all subsidiaries,
if any, shall exceed $_____________________ in the aggregate in any one
fiscal year.
M. LEASES. Contract for or assume in any manner, lease obligations if
the aggregate of all payments shall exceed $___________________________ in
any one fiscal year.
N. COMPENSATION. Pay, or award compensation of any kind, in any one
fiscal year, to _____________________ exceeding
$____________________________.
O. _________________________________________________________________
________________________________________________________________________.
________________________________________________________________________.
10.0 REPRESENTATIONS BY BORROWER. Each Borrower represents that: (a) the
execution and delivery of this agreement and the Notes and the performance of
the obligations they impose do not violate any law, conflict with any agreement
by which it is bound, or require the consent or approval of any governmental
authority or any third party; (b) this agreement and the Notes are valid and
binding agreements, enforceable according to their terms; and (c) all balance
sheets, income statements, and other financial statements furnished to the Bank
are accurate and fairly reflect the financial condition of the organizations
and persons to which they apply on their effective dates, including contingent
liabilities of every type, which financial condition has not changed materially
and adversely since those dates. Each Borrower, if other than a natural person,
further represents that: (a) it is duly organized, existing and in good
standing under the laws of the jurisdiction under which it was organized; and
(b) the execution and delivery of this agreement and the Notes and the
performance of the obligations they impose (i) are within its powers; (ii) and
have been duly authorized by all necessary action of its governing body, and
(iii) do not contravene the terms of its articles of incorporation or
organization, its by laws, or any partnership, operating or other agreements
governing its affairs.
11.0 ACCELERATION.
11.1 EVENTS OF ACCELERATION. If any of the following events occur, the
Credit Facilities shall terminate and all borrowings under them shall become
due immediately, without notice, at the Bank's option, whether or not the Bank
has made demand.
A. The Borrower or any guarantor of any of the Credit Facilities
("Guarantor") fails to pay when due any amount payable under the Credit
Facilities or under any agreement or instrument evidencing debt to any
creditor.
B. The Borrower or any Guarantor (a) fails to observe or perform any
other term of this agreement or the Notes; (b) makes any materially incorrect
or misleading representation, warranty or certificate to the Bank; (c) makes
any materially incorrect or misleading representation in any financial
statement or other information delivered to the Bank; or (d) defaults under the
terms of any agreement or instrument relating to any debt for borrowed money
(other than borrowings under the Credit Facilities) such that the creditor
declares the debt due before its maturity.
C. There is a default under the terms of any loan agreement,
mortgage, security agreement or any other document executed as part of the
Credit Facilities, or any guaranty of the liabilities under the Credit
Facilities becomes unenforceable in whole or in part, or any Guarantor fails to
promptly perform under its guaranty.
D. A "reportable event" (as defined in the Employee Retirement Income
Security Act of 1974 as amended) occurs that would permit the Pension Benefit
Guaranty Corporation to terminate any employee benefit plan of the Borrower or
any affiliate of the Borrower.
E. The Borrower or any Guarantor becomes insolvent or unable to pay
its debts as they become due.
F. The Borrower or any Guarantor (a) makes an assignment for the
benefit of creditors; (b) consents to the appointment of a custodian, receiver
or trustee for it or for a substantial part of its assets; or (c) commences any
proceeding under any bankruptcy, reorganization, liquidation or similar laws of
any jurisdiction.
G. A custodian, receiver or trustee is appointed for the Borrower or
any Guarantor or for a substantial part of its assets without its consent and
is not removed within 60 days after the appointment.
H. Proceedings are commenced against the Borrower or any Guarantor
under any bankruptcy, reorganization, liquidation, or similar laws of any
jurisdiction, and those proceedings remain undismissed for 60 days after
commencement; or the Borrower or Guarantor consents to the commencement of the
proceedings.
I. Any judgment is entered against the Borrower or any Guarantor, or
any attachment, levy or garnishment is issued against any property of the
Borrower or any Guarantor.
J. The Borrower or any Guarantor dies.
<PAGE> 8
K. The Borrower or any Guarantor, without the Bank's written
consent, (a) is dissolved, (b) merges or consolidates with any third party,
(c) leases, sells or otherwise conveys a material part of its assets or
business outside the ordinary course of business, (d) leases, purchases, or
otherwise acquires a material part of the assets of any other corporation
or business entity, except in the ordinary course of business, or
(e) agrees to do any of the foregoing (notwithstanding the foregoing, any
subsidiary may merge or consolidate with any other subsidiary, or with the
Borrower, so long as the Borrower is the survivor).
L. The loan-to-value ratio of any pledged securities at any
time exceeds ____%, and such excess continues for five (5) days after
notice from the Bank to the Borrower.
M. There is a substantial change in the existing or
prospective financial condition of the Borrower or any Guarantor which the
Bank in good faith determines to be materially adverse.
N. The Bank in good faith shall deem itself insecure.
11.2 REMEDIES. If the amounts owing under the Credit Facilities
are not paid at maturity, whether by demand, acceleration, or otherwise,
the Bank shall have all of the rights and remedies provided by any law or
agreement. Any requirement of reasonable notice shall be met if the Bank
sends the notice to the Borrower at least seven (7) days prior to the date
of sale, disposition or other event giving rise to the required notice.
The Bank is authorized to cause all or any part of the Collateral to be
transferred to or registered in its name or in the name of any other
person, firm or corporation, with or without designation of the capacity
of such nominee. The Borrower shall be liable for any deficiency remaining
after disposition of any Collateral. The Borrower is liable to the Bank
for all reasonable costs and expenses of every kind incurred in the making
or collection of the Credit Facilities, including, without limitation,
reasonable attorneys' fees and court costs (whether attributable to the
Bank's in-house or outside counsel.) These costs and expenses shall
include, without limitation, any costs or expenses incurred by the Bank in
any bankruptcy, reorganization, insolvency or other similar proceeding.
12.0 MISCELLANEOUS.
12.1 Notice from one party to another relating to this agreement
shall be deemed effective if made in writing (including
telecommunications) and delivered to the recipient's address, telex number
or fax number set forth under its name below by any of the following
means: (a) hand delivery, (b) registered or certified mail, postage
prepaid, with return receipt requested, (c) first class or express mail,
postage prepaid, (d) Federal Express, or like overnight courier service,
or (e) fax, telex or other wire transmission with request for assurance of
receipt in a manner typical with respect to communication of that type.
Notice made in accordance with this section shall be deemed delivered upon
receipt if delivered by hand or wire transmission, three (3) business days
after mailing if mailed by first class, registered or certified mail, or
one business day after mailing or deposit with an overnight courier
service if delivered by express mail or overnight courier.
12.2 No delay on the part of the Bank in the exercise of any right
or remedy shall operate as a waiver. No single or partial exercise by the
Bank of any right or remedy shall preclude any other future exercise of it
or the exercise of any other right or remedy. No waiver or indulgence by
the Bank of any default shall be effective unless in writing and signed by
the Bank, nor shall a waiver on one occasion be construed as a bar to or
waiver of that right on any future occasion.
12.3 This agreement, the Notes, and any related loan documents
embody the entire agreement and understanding between the Borrower and the
Bank and supersede all prior agreements and understandings relating to
their subject matter. If any one or more of the obligations of the
Borrower under this agreement or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining obligations of the Borrower shall not in
anyway be affected or impaired, and such validity, illegality or
unenforceability in one jurisdiction shall not affect the validity,
legality or enforceability of the obligations of the Borrower under this
agreement or the Notes in any other jurisdiction.
12.4 The Borrower, if more than one, shall be jointly and severally
liable.
12.5 This agreement is delivered in the State of Michigan and
governed by Michigan law. This agreement is binding on the Borrower and its
successors, and shall inure to the benefit of the Bank, its successors and
assigns.
12.6 Section headings are for convenience of reference only and
shall not affect the interpretation of this agreement.
13.0 WAIVER OF JURY TRIAL. The Bank and the Borrower, after
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right either of them may have to a
trial by jury in any litigation based upon or arising out of this
agreement or any related instrument or agreement, or any of the
transactions contemplated by this agreement, or any course or conduct,
dealing, statements (whether oral or written), or actions of either of
them. Neither the Bank nor the Borrower shall seek to consolidate, by
counterclaim or otherwise, any action in which a jury trial has been
waived with any other action in which a jury trial cannot be or has not
been waived. These provisions shall not be deemed to have been modified
in any respect or relinquished by either the Bank or the Borrower except
by a written instrument executed by both of them.
Executed by the parties on: June 17, 1996.
-------------
(Date)
"BANK": "BORROWER":
NBD Bank National TechTeam, Inc.
----------------------------------- ----------------------------------
By: ----------------------------------- By: Lawrence A. Mills, CFO
Michael C. Kulwicki, Vice President ----------------------------------
----------------------------------- ----------------------------------
----------------------------------- ----------------------------------
ADDRESS FOR NOTICES: ADDRESS FOR NOTICES:
18800 Hubbard Dr. 22000 Garrison Avenue
----------------------------------- ----------------------------------
Dearborn, MI 48126 Dearborn, MI 48124
----------------------------------- ----------------------------------
----------------------------------- ----------------------------------
Fax/Telex No. Fax/Telex No. 313-277-6409
---------------------- ---------------------
<PAGE> 1
EXHIBIT 11
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 SIX MONTHS ENDED JUNE 30
---------------------------------------- --------------------------
1993 1994 1995 1995 1996
---------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
PRIMARY
Average shares
outstanding.......... 7,987,800 10,339,072 11,204,971 11,204,710 11,295,692
Net effect of dilutive
stock options and
warrants -- based on
the treasury stock
method using average
market price......... 1,318,455 642,111 155,797 334,940 235,377
---------- ----------- ----------- ----------- -----------
Total.................. 9,306,255 10,981,183 11,360,768 11,539,650 11,531,069
---------- ----------- ----------- ----------- -----------
Net income............. $1,672,413 $ 1,971,049 $ 2,399,067 $ 1,314,340 $ 1,909,887
========== =========== =========== =========== ===========
Per share amount....... $0.18 $0.18 $0.21 $0.11 $0.17
========== =========== =========== =========== ===========
FULLY DILUTED
Average shares
outstanding.......... 7,987,800 10,339,072 11,204,971 11,204,710 11,295,692
Net effect of dilutive
stock options and
warrants -- based on
the treasury stock
method using the
quarter-end market
price, if higher than
average market
price................ 1,535,140 740,064 155,797 471,444 246,169
---------- ----------- ----------- ----------- -----------
Total.................. 9,522,940 11,079,136 11,360,768 11,676,154 11,541,861
---------- ----------- ----------- ----------- -----------
Net income............. $1,672,413 $ 1,971,049 $ 2,399,067 $ 1,314,340 $ 1,909,887
========== =========== =========== =========== ===========
Per share amount....... $0.18 $0.18 $0.21 $0.11 $0.17
========== =========== =========== =========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts",
"Summary Financial and Operating Data" and "Selected Consolidated Financial
Data" and to the use of our report dated February 23, 1996, in the Registration
Statement (Form S-3) and related Prospectus of National TechTeam, Inc. for the
registration of 3,450,000 shares of its common stock.
/s/ ERNST & YOUNG LLP
Detroit, Michigan
August 23, 1996
