SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/ X / Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934,
For the quarterly period ended April 30, 1995 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 0-15995
MICROAGE, INC.
(Exact name of registrant as specified in its charter)
Delaware 86-0321346
(State of incorporation) (I. R. S. Employer
Identification No.)
2400 South MicroAge Way
Tempe, AZ 85282
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 804-2000
The registrant (1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
----- -----
The number of shares of the registrant's Common Stock (par value $.01 per
share) outstanding at May 31, 1995 was 14,277,815.
INDEX
MICROAGE, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets -- April 30, 1995 and October 30, 1994.
Consolidated statements of income -- Quarters ended April 30, 1995 and
May 1, 1994; 26 weeks ended April 30, 1995 and May 1, 1994.
Consolidated statements of cash flows -- 26 weeks ended April 30, 1995
and May 1, 1994.
Notes to consolidated financial statements -- April 30, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
MICROAGE, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
Assets
April 30, October 30,
1995 1994
--------- -----------
Current assets:
Cash and cash equivalents ......................... $ 19,852 $ 11,074
Accounts and notes receivable, net ................ 113,868 136,736
Inventory, net .................................... 318,402 306,584
Other ............................................. 1,567 1,478
--------- ---------
Total current assets ............................ 453,689 455,872
Property and equipment, net........................... 40,935 31,607
Intangible assets .................................... 14,908 9,377
Other ................................................ 14,778 13,343
--------- ---------
Total assets .................................... $ 524,310 $ 510,199
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable .................................. $ 328,771 $ 325,673
Accrued liabilities ............................... 10,978 12,206
Current portion of long-term obligations .......... 5,569 1,245
Other ............................................. 3,145 2,862
--------- ---------
Total current liabilities ....................... 348,463 341,986
Long-term obligations ................................ 3,287 2,054
Stockholders' equity:
Preferred stock, par value $1.00 per share;
Shares authorized: 5,000,000
Issued and outstanding: none ................... -- --
Common stock, par value $.01 per share;
Shares authorized: 40,000,000
Issued: April 30, 1995 - 14,426,748
October 30, 1994 - 14,267,700 .......... 144 143
Additional paid-in capital ........................ 122,031 121,249
Retained earnings ................................. 54,601 49,298
Loan to ESOT ...................................... (1,093) (1,408)
Note receivable-stock purchase agreement .......... (2,000) (2,000)
Treasury stock, at cost;
Shares: April 30, 1995 - 150,434
October 30, 1994 - 150,434 (1,123) (1,123)
--------- ---------
Total stockholders' equity ...................... 172,560 166,159
--------- ---------
Total liabilities and stockholders' equity ...... $ 524,310 $ 510,199
========= =========
The accompanying notes are an integral part of these financial statements.
MICROAGE, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
Quarter ended 26 weeks 26 weeks
-------------------- ended ended
April 30, May 1, April 30, May 1,
1995 1994 1995 1994
--------- --------- ---------- ----------
Revenue ........................ $ 743,460 $ 529,611 $1,417,779 $1,000,038
Cost of sales .................. 704,204 500,535 1,344,256 945,527
--------- --------- ---------- ----------
Gross profit ................... 39,256 29,076 73,523 54,511
Operating expenses ............. 30,393 19,482 56,254 36,916
--------- --------- ---------- ----------
Operating income ............... 8,863 9,594 17,269 17,595
Other expense - net ............ 4,593 1,056 8,036 1,459
--------- --------- ---------- ----------
Income before income taxes ..... 4,270 8,538 9,233 16,136
Provision for income taxes ..... 1,839 3,382 3,930 6,450
--------- --------- ---------- ----------
Net income ..................... $ 2,431 $ 5,156 $ 5,303 $ 9,686
========= ========= ========== ==========
Net income per common share .... $ 0.17 $ 0.41 $ 0.37 $ 0.76
========= ========= ========== ==========
Weighted average common and
common equivalent
shares outstanding ........... 14,270 12,730 14,269 12,672
The accompanying notes are an integral part of these financial statements.
MICROAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Increase (Decrease) in Cash and Cash Equivalents
(in thousands)
26 weeks ended
-----------------------
April 30, May 1,
1995 1994
-------- ---------
Cash flows from operating activities:
Net income ........................................... $ 5,303 $ 9,686
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization ...................... 6,919 4,090
Provision for losses on accounts and notes
receivable ...................................... 2,500 1,463
Changes in assets and liabilities, net of
business acquisitions:
Accounts and notes receivable ..................... 20,387 37,961
Inventory ......................................... (11,104) (108,777)
Other current assets .............................. (33) (750)
Other assets ...................................... (1,902) (2,479)
Accounts payable .................................. 2,969 61,311
Accrued liabilities ............................... (1,533) 4,601
Other liabilities ................................. 283 735
-------- ---------
Net cash provided by operating activities ........... 23,789 7,841
Cash flows from investing activities:
Purchases of property and equipment .................. (12,509) (4,936)
Purchases of businesses and investments
in unconsolidated companies ....................... (2,550) (4,545)
Increases in intangible assets ....................... -- (230)
-------- ---------
Net cash used in investing activities ............... (15,059) (9,711)
Cash flows from financing activities:
Amounts received from ESOT ........................... 315 293
Proceeds from issuance of stock, net of issuance costs 783 520
Principal payments on debt ........................... (1,050) (490)
-------- ---------
Net cash provided by financing activities ........... 48 323
-------- ---------
Net increase (decrease) in cash and cash equivalents .. 8,778 (1,547)
Cash and cash equivalents at beginning of period ...... 11,074 14,504
-------- ---------
Cash and cash equivalents at end of period ............ $ 19,852 $ 12,957
======== =========
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of MicroAge, Inc.
(the "Company") do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair statement of results for the periods
have been included. Operating results for the 26 weeks ended April 30, 1995 are
not necessarily indicative of the results that may be expected for the year
ending October 29, 1995. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended October 30, 1994.
NOTE B - OTHER EXPENSES - NET
Other expenses - net consists of the following:
Quarters ended 26 weeks ended
------------------- ---------------------
April 30, May 1, April 30, May 1,
1995 1994 1995 1994
-------- -------- ---------- ---------
Interest expense....... $1,156 $ 125 $2,226 $ 184
Expense from sale of
accounts receivable.. 2,628 814 4,764 1,132
Other.................. 809 117 1,046 143
------ ------ ------ ------
$4,593 $1,056 $8,036 $1,459
====== ====== ====== ======
NOTE C - FINANCING ARRANGEMENTS
In December 1994, the Company amended its February 1993 agreement (the
"Agreement") with a subsidiary of a major commercial lender to increase its
financing facility from $200 million to $250 million.
NOTE D - STOCKHOLDERS' EQUITY
Associate Stock Purchase Plan
In March 1995, the Board of Directors and stockholders approved an associate
stock purchase plan (the "Associate Plan"). The Associate Plan provides a means
for the Company's employees to authorize payroll deductions up to 10% of their
earnings to be used for the periodic purchase of the Company's common stock.
Under the Associate Plan, the Company will initially sell shares to participants
at a price equal to the lesser of 85% of the fair market value of the common
stock at the beginning of a six month subscription period or 85% of fair market
value at the end of the subscription period. The Associate Plan is intended to
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code of 1986, as amended. The maximum number of shares that may be
purchased under the Associate Plan is 500,000. The initial subscription period
will begin July 1, 1995.
Director Incentive Plan
In March 1995, the Board of Directors and stockholders approved an incentive
plan for those Directors who are not officers or employees of the Company or its
subsidiaries (the "1995 Director Plan"). Under the 1995 Director Plan, on
November 1 of each year, commencing in 1995 and ending in 2004, each eligible
Director will automatically be granted (i) 1,000 shares of the Company's common
stock subject to certain restrictions and (ii) options to purchase 1,000 shares
of the Company's common stock.
The aggregate number of shares of the Company's common stock available for
awards under the 1995 Director Plan is 80,000.
NOTE E - LITIGATION
On July 14 through July 19, 1994, seven class action complaints were filed in
the United States District Court for the District of Arizona against the
Company, certain of its officers and directors, and, in three of the lawsuits,
one of the underwriters of the Company's June 16, 1994 public offering of common
stock. On December 5, 1994, the Court consolidated the seven actions into a
single action. On February 16, 1995, the plaintiffs filed and served an amended,
consolidated complaint against the Company, certain officers and directors of
the Company, and three of the underwriters of the Company's June 16, 1994 public
offering of common stock ("the Complaint"). The Complaint purports to be brought
on behalf of a class of purchasers of the Company's common stock during the
period April 13, 1994 through July 14, 1994. The complaint alleges, among other
things, that the Company violated federal securities laws by making misleading
public statements and omitting material facts regarding the Company's operations
and financial results, which the plaintiffs contend to have artificially
inflated the price of the Company's common stock during the alleged class
period. The complaint seeks unspecified compensatory damages as well as fees and
costs. On April 28, 1995, the Company filed a motion to dismiss the Complaint in
its entirety. No discovery has yet been taken or served in the action. The
Company and the individual defendants deny the plaintiffs' allegations of
wrongdoing and intend to vigorously defend themselves in these actions. The
proceeding is in its early stages, however, and its outcome cannot be predicted
with certainty at this time.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
The following table sets forth, for the indicated periods, data as percentages
of total revenue:
<TABLE>
<CAPTION>
Quarter ended
------------------------------------------------------------------ 26 weeks 26 weeks
April 30, Jan. 29, Oct. 30, July 31, May 1, ended ended
1995 1995 1994 1994 1994 Apr. 30, 1995 May 1, 1994
--------- -------- -------- -------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue (in thousands)............ $743,460 $674,319 $637,403 $583,375 $529,611 $1,417,779 $1,000,038
Cost of sales .................... 94.7% 94.9% 94.9% 95.1% 94.5% 94.8% 94.5%
-------- -------- -------- -------- -------- ---------- ----------
Gross profit ..................... 5.3 5.1 5.1 4.9 5.5 5.2 5.5
Operating expenses ............... 4.1 3.8 3.8 3.8 3.7 4.0 3.7
-------- -------- -------- -------- -------- ---------- ----------
Operating income ................. 1.2 1.3 1.3 1.1 1.8 1.2 1.8
Other expenses - net ............. 0.6 0.6 0.4 0.3 0.2 0.5 0.1
-------- -------- -------- -------- -------- ---------- ----------
Income before income taxes........ 0.6 0.7 0.9 0.9 1.6 0.7 1.6
Provision for income taxes........ 0.3 0.3 0.3 0.3 0.6 0.3 0.6
-------- -------- -------- -------- -------- ---------- ----------
Net income ....................... 0.3% 0.4% 0.6% 0.5% 1.0% 0.4% 1.0%
======== ======== ======== ======== ======== ========== ==========
</TABLE>
Total Revenue. Total revenue increased $213.8 million, or 40%, to $743.5 million
for the quarter ended April 30, 1995 as compared to the quarter ended May 1,
1994. This revenue increase included a $92.6 million, or 49%, increase in sales
to large accounts (including Company-owned location revenue) and a $121.2
million, or 35%, increase in sales to resellers.
Total revenue increased $417.7 million, or 42%, to $1.4 billion for the 26 weeks
ended April 30, 1995 as compared to the 26 weeks ended May 1, 1994. This revenue
increase included a $185.7 million, or 54%, increase in sales to large accounts
and a $232.0 million, or 35%, increase in sales to resellers.
Revenue growth was primarily attributable to sales to resellers added since May
1, 1994, same location sales growth (including sales to large accounts), the
Company's focus on large account sales, increased demand for the Company's major
vendors' products and the Company's addition of new product lines.
Gross Profit Percentage. The Company's gross profit percentage decreased from
5.5% for the quarter ended May 1, 1994 to 5.3% for the quarter ended April 30,
1995. The gross profit percentage decreased from 5.5% for the 26 weeks ended May
1, 1994 to 5.2% for the 26 weeks ended April 30, 1995.
The gross profit percentage decrease from prior year amounts was primarily
attributable to general market pricing pressure as competition for sales of the
Company's largest vendors' products increased between the periods and to costs
related to capacity expansion in the Company's service capabilities. The effects
of the margin declines in these areas were partially offset by a change in
revenue mix, as the Company added a Company-owned location during the quarter
ended April 30, 1995, increased sales of higher margin product lines, and
increased utilization of early payment discount opportunities.
Market pricing pressures will continue to affect the Company's gross profit
percentages over at least the next several quarters. Future gross profit
percentages may also be affected by the introduction of new Company programs;
changes in revenue mix; the availability and the Company's utilization of early
payment discount opportunities; vendor pricing actions and other competitive and
economic factors.
Operating Expense Percentage. As a percentage of revenue, operating expenses
were 4.1% for the quarter ended April 30, 1995 compared to 3.7% for the quarter
ended May 1, 1994. Operating expenses increased $10.9 million to $30.4 million
for the quarter ended April 30, 1995, as compared to the quarter ended May 1,
1994.
As a percentage of revenue, operating expenses increased to 4.0% for the 26
weeks ended April 30, 1995 compared to 3.7% for the 26 weeks ended May 1, 1994.
Operating expenses increased $19.3 million to $56.3 million for the 26 weeks
ended April 30, 1995, as compared to the 26 weeks ended May 1, 1994.
The operating expense increases were primarily due to costs associated with
increased revenue, capacity expansion and the addition of a Company-owned
location.
Other Expenses - Net. Other expenses - net increased to $4.6 million for the
quarter ended April 30, 1995 from $1.1 million for the quarter ended May 1,
1994. Other expenses - net increased to $8.0 million for the 26 weeks ended
April 30, 1995 from $1.5 million for the 26 weeks ended May 1, 1994. These
increases were primarily due to an increase in net financing costs.
These financing costs included expense from the sale of receivables under an
agreement with a commercial lender, increased interest expense due to higher
average borrowings and increased interest rates during the quarter and 26 weeks
ended April 30, 1995, and costs from financing subsidies provided to lenders who
finance product purchases from the Company's customers. The higher borrowings
were primarily a result of increased accounts receivable and inventory levels
during the period. If the Company is successful in achieving continued revenue
growth, its working capital requirements and related financing costs are likely
to continue to increase.
Income Before Income Taxes. As a percentage of revenue, income before income
taxes decreased from 1.6% for the quarter ended May 1, 1994 to 0.6% for the
quarter ended April 30, 1995. Income before income taxes decreased as a
percentage of revenue from 1.6% for the 26 weeks ended May 1, 1994 to 0.7% for
the 26 weeks ended April 30, 1995. The decreases from prior year amounts were
due to the margin pressures, operating expense increases and financing costs
described above. The factors discussed above will continue to have an impact on
the Company's income before income taxes during fiscal year 1995.
The Company receives funds from certain vendors which are earned through
marketing programs, meeting established purchasing objectives or meeting other
objectives determined by the vendor. There can be no assurance that these
programs will be continued by the vendors. A substantial reduction in the vendor
funds available to the Company would have an adverse effect on the Company's
results of operations.
Liquidity and Capital Resources
The Company has financed its growth and cash needs to date primarily through
working capital financing facilities, bank credit lines, common stock offerings
and cash generated from operations. The primary uses of cash have been to fund
increases in inventory and accounts receivable resulting from increased sales.
If the Company is successful in achieving continued revenue growth, its working
capital requirements are likely to increase.
In order to establish or solidify its presence in strategic markets or in
response to competitive pressures, the Company may make acquisitions of, or
investments in, reseller locations. These acquisitions or investments may be
made utilizing cash, stock or a combination of cash and stock.
For the 26 weeks ended April 30, 1995, $23.8 million of cash was provided by
operating activities. Net cash provided by operating activities included a
decrease in accounts receivable of $20.4 million, net income of $5.3 million,
non-cash depreciation, amortization and bad debt charges of $9.4 million, and an
increase in accounts payable of $3.0 million, offset by an increase in inventory
of $11.1 million. The Company's annualized inventory turnover rate increased
from 8 times at October 30, 1994 to 9 times at April 30, 1995. The number of
days cost of sales in ending accounts payable decreased from 47 days at October
30, 1994 to 42 days at April 30, 1995. The number of days sales in ending
accounts receivable decreased from 20 days at October 30, 1994 to 14 days at
April 30, 1995, primarily due to accounts receivable that were sold under a
financing facility (see discussion below). The receivables days adjusted for
sold receivables were 32 days at April 30, 1995 compared to 31 days at October
30, 1994. For the 26 weeks ended April 30, 1995, $15.1 million used in investing
activities consisted primarily of $12.5 million for the purchase of property and
equipment and $2.6 million for business purchases.
In December 1994, the Company amended its agreement with a subsidiary of a major
commercial lender (the "Lender") to increase its financing facility (the
"Agreement") from $200 million to $250 million. The Agreement includes two major
components: an accounts receivable facility (the "A/R Facility") and an
inventory facility (the "Inventory Facility"). The agreement expires in February
1997.
Under the amended A/R Facility, the Company has the right to sell certain
accounts receivable to the Lender from time to time, on a limited recourse
basis, up to an aggregate amount of $150 million sold at any given time. At
April 30, 1995, the net amount of sold accounts receivable was $146 million.
The Inventory Facility provides for borrowings up to $100 million. Within the
Inventory Facility, the Company has a line of credit for the purchase of
inventory from selected product suppliers ("Inventory Line of Credit") of $25
million and a line of credit for general working capital requirements
("Supplemental Line of Credit") of $75 million. The Supplemental Line of Credit
contains a $10 million term loan option ("Term Loan"), exercisable at the
Company's request. Payments for products purchased under the Inventory Line of
Credit vary depending upon the product supplier, but generally are due between
45 and 60 days from the date of the advance. No interest or finance charges are
payable on the Inventory Line of Credit if payments are made when due. At April
30, 1995, the Company had $19 million outstanding under the Inventory Line of
Credit (included in the accounts payable in the accompanying Balance Sheet), and
no amounts outstanding under the Supplemental Line of Credit or the Term Loan.
Of the $250 million of financing capacity represented by the Agreement, $85
million was unused as of April 30, 1995. Utilization of the unused $85 million
is dependent upon the Company's collateral availability at the time the funds
would be needed.
The Agreement is secured by substantially all of the Company's assets and
contains certain restrictive covenants, including working capital and tangible
net worth requirements, and ratios of debt to tangible net worth and current
assets to current liabilities. At April 30, 1995, the Company was in compliance
with these covenants.
The Company also maintains trade credit arrangements with its vendors and other
creditors to finance product purchases. Several major vendors maintain security
interests in their products sold to the Company.
The unavailability of a significant portion of, or the loss of, the Agreement or
trade credit from vendors would have a material adverse effect on the Company.
Inflation
The Company believes that inflation has generally not had a material impact on
its operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note E of Notes to Consolidated Financial Statements (Unaudited)
for information regarding a consolidated class action lawsuit against the
Company, its directors, certain of its officers, and three of the underwriters
of the Company's June 16, 1994 public offering of Common Stock.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders was held on March 15, 1995.
(b)(1) The following individuals were re-elected to the Board of
Directors as Class III Directors for three-year terms expiring
at the Company's Annual Meeting in 1998: Jeffrey D. McKeever
and Fred Israel.
(b)(2) The following individuals' terms continued after the Annual
Meeting as Class I Directors. Their terms will expire at the
Company's Annual Meeting in 1996: William H. Mallender and
Keiichi Eguchi.
(b)(3) The following individuals' terms continued after the Annual
Meeting as Class II Directors. Their terms will expire at the
Company's Annual Meeting in 1997: Alan P. Hald and Steven G.
Mihaylo.
(c)(1) Submitted for vote at the Annual Meeting was the re-election
of two Class III Directors for three-year terms expiring at
the Company's Annual Meeting in 1998. See Item 4 (b)(1)
hereof. The shares were voted as follows:
Nominee No. of Shares
------- -------------
Jeffrey D. McKeever For 11,488,689
Against 186,349
Abstentions 0
Broker Non-votes 0
Fred Israel For 11,457,079
Against 217,959
Abstentions 0
Broker Non-votes 0
(c)(2) Submitted for vote at the Annual Meeting was a proposal to
approve the MicroAge, Inc. 1995 Associate Stock Purchase Plan.
The shares were voted as follows:
For 11,457,210
Against 163,114
Abstentions 47,039
Broker Non-votes 7,675
(c)(3) Submitted for vote at the Annual Meeting was a proposal to
approve the MicroAge, Inc. 1995 Director Incentive Plan. The
shares were voted as follows:
For 10,919,031
Against 692,216
Abstentions 56,116
Broker Non-votes 7,675
(d) None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 First Amendment to the Amended and Restated MicroAge,
Inc. Retirement Savings and Employee Stock Ownership
Plan and Trust Agreement dated May 10, 1995
10.2 Hewlett-Packard Company U.S. Agreement for Authorized
Resellers effective March 1, 1995 by and between
Hewlett-Packard Company and MicroAge Computer
Centers, Inc.
10.3 8th Amendment to Lease dated September 15, 1992, by
and between AmberJack, Ltd. and MicroAge Computer
Centers, Inc. dated January 16, 1995
10.4 9th Amendment to Lease dated September 15, 1992, by
and between AmberJack, Ltd. and MicroAge Computer
Centers, Inc. dated January 16, 1995
10.5 MicroAge, Inc. 1995 Associate Stock Purchase Plan
(Incorporated by reference to Appendix B to the
Company's Proxy Statement for the Annual Meeting of
Stockholders of the Company held March 15, 1995, File
No. 0-15995)
10.6 First Amendment to the MicroAge, Inc. 1995 Associate
Stock Purchase Plan (Incorporated by reference to
Exhibit 99.1 to Registration Statement No. 33-58901)
10.7 MicroAge, Inc. 1995 Director Incentive Plan
(Incorporated by reference to Appendix C to the
Company's Proxy Statement for the Annual Meeting of
Stockholders of the Company held March 15, 1995, File
No. 0-15995)
11.1 Primary EPS Detail Calculation
11.2 Fully Diluted EPS Detail Calculation
27 Financial Data Schedule
(b) The Company did not file any Reports on Form 8-K during the
quarter ended April 30, 1995.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.*
10.1 First Amendment to the Amended and Restated
MicroAge, Inc. Retirement Savings and Employee Stock
Ownership Plan and Trust Agreement dated May 10,
1995
10.2 Hewlett-Packard Company U.S. Agreement for
Authorized Resellers effective March 1, 1995 by and
between Hewlett-Packard Company and MicroAge
Computer Centers, Inc.
10.3 8th Amendment to Lease dated September 15, 1992, by
and between AmberJack, Ltd. and MicroAge Computer
Centers, Inc. dated as of January 16, 1995
10.4 9th Amendment to Lease dated September 15, 1992, by
and between AmberJack, Ltd. and MicroAge Computer
Centers, Inc. dated as of January 16, 1995
10.5 MicroAge, Inc. 1995 Associate Stock Purchase Plan
(Incorporated by reference to Appendix B to the
Company's Proxy Statement for the Annual Meeting of
Stockholders of the Company held March 15, 1995,
File No. 0-15995)
10.6 First Amendment to the MicroAge, Inc. 1995 Associate
Stock Purchase Plan (Incorporated by reference to
Exhibit 99.1 to Registration Statement No. 33-58901)
10.7 MicroAge, Inc. 1995 Director Incentive Plan
(Incorporated by reference to Appendix C to the
Company's Proxy Statement for the Annual Meeting of
Stockholders of the Company held March 15, 1995,
File No. 0-15995)
11.1 Primary EPS Detail Calculation
11.2 Fully Diluted EPS Detail Calculation
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MICROAGE, INC.
(Registrant)
Date: June 13, 1995 By: /s/ Jeffrey D. McKeever
----------------------------
Jeffrey D. McKeever
Chairman of the Board and
Chief Executive Officer
Date: June 13, 1995 By: /s/ James R. Daniel
----------------------------
James R. Daniel
Senior Vice President and
Chief Financial Officer
FIRST AMENDMENT TO THE AMENDED AND RESTATED MICROAGE,INC. SAVINGS
AND EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST AGREEMENT
THIS AMENDMENT, made and entered into this 10th day of May, 1995, by
MICROAGE, INC., a Delaware corporation (hereinafter referred to as the
"Employer").
WITNESSETH:
WHEREAS, the Employer has heretofore entered into an employees'
retirement savings plan effective July 1, 1988, as amended to add a stock bonus
plan which included an employee stock ownership plan effective May 1, 1989, as
amended, and the most recent Amendment and Restatement thereof dated December
30, 1994 (the "Plan"); and
WHEREAS, the Employer has reserved the right to amend said Plan in
whole or in part; and
WHEREAS, the Employer now desires to amend said Plan.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants hereinafter contained, the Employer and Trustee agree as follows:
1. Section 2.46 of the Plan is amended in its entirety to read as
follows:
"2.46 Plan Year. The term `Plan Year' shall mean the twelve (12)
consecutive month period ending June 30; however a `short Plan Year' will begin
July 1, 1995 and end on October 29, 1995 (the last day of the Company's fiscal
year). After such short Plan Year, the Plan Year will end each year on the same
day as the Company's fiscal year, i.e., the last Sunday in October. The Plan
Year shall constitute the Plan's `limitation year' for the purpose of measuring
maximum allocations to Participants under the Plan."
2. Effective October 30, 1995, Section 3.01(a) of the Plan shall
read as follows:
"(a) Each Employee who has attained at least twenty-one years of age,
and has completed at least one (1) Year of Service with the Employer, shall
become a Participant on the first day of the Plan quarter (the first day of the
Plan Year, i.e., October 30 in 1995, February 1, May 1, or August 1) coincident
with or next following the date on which the Employee completes all of the
eligibility requirements of this Section."
3. Effective October 30, 1995, Sections 6.04(b)(i) and (ii) are
amended to change the term "calendar quarter" to "Plan quarter."
4. Effective July 1, 1995, Section 7.01 of the Plan is amended by
adding the following sentence thereto:
"Notwithstanding the above, if a Participant is fully vested under the
Plan, such Participant may make an election to invest all or any portion of his
Employer Matching Contribution Account which consists of Employer Stock in any
of the Plan's investment options. Subsequent elections to reinvest such amounts
in Employer Stock will not be permitted."
5. Effective October 30, 1995, the last sentence of Section 7.02
of the Plan is amended to read as follows:
"Reallocations as permitted by this Section 7.02 shall be made no more
frequently than quarterly (the first day of the Plan Year, i.e., October 30 in
1995, February 1, May 1 or August 1) and only on such date(s) as may be
determined by the Advisory Committee."
6. Effective October 30, 1995, the second to the last sentence of
Section 7.03 of the Plan is hereby amended to read as follows:
"The elections described in Section 7.01 and 7.02 may be changed,
together or separately, quarterly (the first day of the Plan Year, i.e., October
30 in 1995, February 1, May 1, or August 1) (or more frequently if determined by
the Advisory Committee and announced to Participants) on such dates as may be
determined by the Advisory Committee."
7. Except as hereinabove amended, all of the terms and conditions
of the Plan, shall remain In full force and effect.
IN WITNESS WHEREOF, MICROAGE, INC., a Employer, has signed or caused
these presents to be signed by their duly qualified officers respectively
authorized to do so the date first above written.
MICROAGE, INC., a Delaware corporation
By__________________________________________
Jeffrey D. McKeever, Chairman of the Board
"Employer"
HEWLETT-PACKARD COMPANY
U.S. AGREEMENT FOR AUTHORIZED DISTRIBUTORS/FIRST TIER RESELLERS
SIGNATURE PAGE
ICN 829
LEGAL BUSINESS NAME MICROAGE COMPUTER CENTERS, INC.
ADDRESS 2308 S. 55TH STREET, MAILSTOP 16
CITY, STATE, ZIP TEMPE, AZ 85282-1824
PHONE, FAX (602)968-3168
DBA(S)
The documents below govern the relationship between HP and you for the purchase
and resale of HP Products.
AGREEMENTS: CERTIFICATION:
___U.S. Distributor _x_U.S. VAR Certification
_x_U.S. First Tier Reseller
___U.S. Reseller EXHIBITS:
_x_U.S. Second Tier Reseller
_x_EXHIBIT L Approved Locations
ADDENDA: _x_EXHIBIT UD Calculator Distributor
___EXHIBIT U11 Calculator and Palmtop
___U.S. CAD/Specialty VAR Products
Distributor
___U.S. Calculator Dealer ___*EXHIBIT U20D See Exhibit Election Below
_x_U.S. Calculator Distr. ___*EXHIBIT U20N See Exhibit Election Below
___U.S. Consumer Products ___EXHIBIT U20P Openview Products
Distributor ___EXHIBIT U25D Mass Storage Distributor
___U.S. Distributor Systems Products
Integrator _x_*EXHIBIT U30D See Exhibit Election Below
___U.S. Office Machine _x_EXHIBIT U40A Accessory Products
Distributor _x_EXHIBIT U40C Consumable Products
___U.S. Second Tier Reseller ___EXHIBIT U41A Supplies Reseller Accessory
___U.S. Software Distributor Products
___U.S. Supplies Reseller ___EXHIBIT U41C Supplies Reseller Consumable
___U.S. Wireless Data Products
Communications Distributor ___EXHIBIT U60 Office Machine Distributor
Products
AMENDMENTS: ___EXHIBIT U68 Mobile Computing Products
___EXHIBIT U70 CMS TDP Products
_x_HP Product Acquisition ___EXHIBIT U70D Distributor CMS Products
and Resale Categories ___EXHIBIT U71 CMS Bulk Pack Products
___EXHIBIT U71R Consumer Products Distributor
___U.S. International VAR Products
___EXHIBIT U80D CAD/Specialty VAR Distributor
APPLICATIONS: Products
___EXHIBIT UB00 Software Distributor Products
___U.S. Authorized
CAD/Specialty VAR
___U.S. Networking
Products QD
___U.S. Authorized VAR
EXHIBIT ELECTION
HP and Distributor/First Tier Reseller agree that its volume level, at net
Distributor/First Tier Reseller price, for HP Products on these Exhibits (noted
with a * above) for the term of this Agreement is:
EXHIBIT U20D COMPUTER-RELATED PRODUCTS I
___LEVEL I $50,000,000 - 199,999,999
_x_LEVEL II $200,000,000 - and up
EXHIBIT U30D DESKTOP PERSONAL COMPUTER AND SERVER PRODUCTS
___LEVEL I $1,000,000 - 34,999,999
_x_LEVEL II $35,000,000 - and up
EXHIBIT U20N DISTRIBUTOR COMPUTER-RELATED PRODUCTS II
___LEVEL I $50,000,000 - 199,999,999
___LEVEL II $200,000,000 - and up
STATEMENT OF OWNERSHIP:
Form of Organization: (i.e. Corporation, General Partnership, Limited
Partnership, Sole Proprietor): Corporation
For a Corporation, specify whether: Publicly Held: X Privately Held: State of
Incorporation/Organization: Delaware
Identify Company ownership and management structure as follows (attach
additional pages if necessary):
Sole Proprietor: Identify all owners, officers and ownership percentages held.
Trust: Identify Trustee(s): Administrators and Beneficiaries of Trust.
Partnership: Identify all General Partners, Limited Partners, Officers and
ownership percentages held. Specify dollar investment of limited partners.
Privately Held Corporation: Identify all shareholders with class and percentage
ownership, Officers and Board of Director Members.
Publicly Held Corporation: Identify owners of 20% or more of each class of
shares with class and percentage, ownership, Officers and Board of Director
Members.
NAMES TITLES OWNERSHIP INTEREST
Percentage Ownership Type of Ownership Interest
MicroAge, Inc. 100 Percent Common Stock
(See attached for Officers)
If Company is 100% owned by another corporation, identify the parent
corporation's ownership and management structure above and the identity of the
parent corporation below:
MicroAge, Inc.
2400 South MicroAge Way
Tempe, Arizona 85282
Telephone: (602) 804-2000
Fax: (602) 929-7005
State of Parent/Owner's Incorporation: Delaware
AUTHORIZED SIGNATURES HEWLETT-PACKARD COMPANY
- ------------------------ ------------------------
Kathleen S. Pushor Susan Weatherman
President, MicroAge Channel Reseller Contracts Manager
Services
Effective Date: 3/1/95 Expiration Date: 2/28/96
U.S. FIRST TIER RESELLER
TABLE OF CONTENTS
U.S. FIRST TIER RESELLER AGREEMENT
1. APPOINTMENT
2. STATUS CHANGE
3. FIRST TIER RESELLER RESPONSIBILITIES
4. MULTIPLE AGREEMENT DISCOUNTS
5. VOLUME COMMITMENT LEVELS
6. FIRST TIER RESELLER ORDER MILESTONES
7. PRICES
8. PAYMENT AND SECURITY TERMS
9. ORDERS, SHIPMENTS; CANCELLATIONS AND CHANGES
10. PRICE ADJUSTMENTS; PRICE PROTECTION
11. SOFTWARE
12. TRADEMARKS
13. WARRANTY
14. LIMITATION OF REMEDIES AND LIABILITY
15. INTELLECTUAL PROPERTY INDEMNITY
16. FIRST TIER RESELLER RECORD-KEEPING
17. AMENDMENTS
18. TERMINATION OF AGREEMENT
19. RELATIONSHIP
20. POLICIES & PROGRAMS
21. GENERAL CONDITIONS
22. NOTICES
U.S. VAR CERTIFICATION
1. APPOINTMENT
2. VAR RESPONSIBILITIES
3. MULTI/SINGLE SOURCE PRODUCTS
4. SPECIAL PRICING
5. SOFTWARE
6. TRADEMARKS
7. WARRANTY
8. LIMITATIONS OF REMEDIES & LIABILITY
9. INTELLECTUAL PROPERTY INDEMNITY
10. VAR RECORD-KEEPING
11. TERMINATION
12. RELATIONSHIP
13. POLICIES AND PROGRAMS
14. GENERAL CONDITIONS
15. SERVICE REQUIREMENTS
INTERNATIONAL AMENDMENT TO U.S. VAR CERTIFICATION
2. VAR RESPONSIBILITIES
7. WARRANTY
8. POLICIES AND PROGRAMS
9. VAR RECORD-KEEPING
U.S. FIRST TIER RESELLER AGREEMENT
1. APPOINTMENT
A. Hewlett-Packard Company ("HP") appoints First Tier Reseller as an
authorized, non-exclusive First Tier Reseller for marketing the HP Products
listed on the Product Exhibits. First Tier Resellers appointment is subject to
the terms and conditions set forth in this U.S. First Tier Reseller Agreement
and the associated Addenda, Product Exhibits, HP Product Acquisition and Resale
Categories ("Product Categories") and Operations Policy Manual (collectively,
"Agreement") for the period from the effective date through the expiration date
of this Agreement. First Tier Reseller accepts appointment on these terms.
B. First Tier Reseller is in the business of distributing products to
and supporting Selling Locations owned and operated by its independent Second
Tier Resellers, DVARs and resellers who are not authorized directly by HP but
who are permitted to resell HP Products as described in this Agreement. First
Tier Reseller may also operate company-owned Selling Locations. First Tier
Reseller desires to acquire HP Products for resale/distribution to approved
Second Tier Resellers, HP approved DVARs and resellers (collectively called
"Customers") and company-owned Selling Locations as permitted in the Product
Categories.
C. HP has attached to this Agreement the U.S. Second Tier Reseller
Agreement and VAR Certification which substantially represents the agreement HP
will use in appointing Second Tier Resellers and VARS, and authorizing First
Tier Reseller's company-owned locations to resell HP Products.
2. STATUS CHANGE
A. If First Tier Reseller wishes to:
1. Change its name or that of any approved location;
2. Add, close or change an approved location;
3. Undergo a merger, acquisition, consolidation or other
reorganization with the result that any entity controls 20% or more of First
Tier Reseller's capital stock or assets after such transaction; or
4. Undergo a significant change in control or management of
First Tier Reseller operations
then First Tier Reseller shall notify HP in writing prior to the intended date
of change.
B. HP agrees to promptly notify First Tier Reseller of its approval or
disapproval of any proposed change, provided that First Tier Reseller has given
HP all information and documents reasonably requested by HP.
C. HP must approve proposed First Tier Reseller changes prior to any
obligation of HP to perform under this Agreement with First Tier Reseller as
changed.
3. FIRST TIER RESELLER RESPONSIBILITIES
A. First Tier Reseller may sell HP Products only to those of its
Customers who have been appointed by HP under a U.S. Second Tier Reseller
Agreement, HP VAR Certification or to other resellers as permitted in the
Product Categories, and may resell HP Products directly through authorized
company-owned Selling Locations provided that they comply with all terms and
conditions of the U.S. Second Tier Reseller Agreement, associated Addenda,
Product Categories, Operations Policy Manual and Product Exhibits.
B. If the Product Categories permit sales to Customers only who have
been authorized by HP, then First Tier Reseller shall ensure that its Customers
and company-owned locations meet HP's qualifications and comply with the terms
and conditions for those Customers and with First Tier Reseller's standard
agreements and business policies. First Tier Reseller also agrees to report
violations of HP's terms and conditions to HP in a timely manner.
C. Shipments of HP Products to unauthorized Customers or end-users
shall constitute a breach of this Agreement and may result in the termination of
this Agreement. In addition, First Tier Reseller agrees to pay to HP an amount
equivalent to the discount received from HP for such shipments.
D. HP may prohibit First Tier Reseller from selling to terminated
Second Tier Resellers or VARS, or other identified Customers whom HP does not
wish to receive products.
E. First Tier Reseller agrees to:
1. Represent HP Products fairly to all Customers.
2. Forward promptly to Customers all technical sales and
promotional materials, suggested price lists and other information provided by
HP for the purpose of reshipment to Customers.
3. Provide pre-sales support and post-sales technical support
for HP Products to all Customers.
4. Provide authorized Second Tier Resellers and VARs access to
the HP designated service program or other HP approved service plan.
5. Ensure that no sale, advertising, promotion, display or
disclosure of any features, availability or price of any new HP Product takes
place before HP's public announcement of that product.
6. Respond promptly to all Customer inquiries or requests
related to HP Products.
7. Authorize HP's representatives to call on Customers for
product training and other objectives.
8. Report promptly to HP all suspected defects in HP Products.
9. Ensure that its employees complete any required training
courses designated by HP.
10. Identify and keep current a primary and secondary support
contact for both marketing communications and post-sales technical support at
each approved Selling Location.
11. Advise HP of all changes to Customer profile (such as
legal name, DBA, ownership and location) immediately upon notice from Customer
of such changes.
12. For Customers other than Second Tier Reseller's
company-owned locations, apply any Advantage Program Funds or other promotional
funds, facilities or services in conformity with HP guidelines and a mutually
agreed plan between First Tier Reseller and Customers.
F. At 6 months after the effective date of the Agreement, HP will send
to First Tier Reseller a listing of HP authorized Customers' names and
locations. First Tier Reseller must verify the accuracy of the listing, notify
HP of any discrepancies and comply with the listing by shipping only to HP
authorized Customers and other Resellers as permitted in the Product Categories.
G. Without HP's prior written consent, First Tier Reseller will not
export HP Products outside the U.S. nor will First Tier Reseller sell HP
Products for export outside the U.S.
H. First Tier Reseller may advertise nationwide on behalf of its
Customers and company-owned locations if First Tier Reseller has approved
company-owned and Second Tier Reseller Selling Locations in 40 or more Major
Trading Areas (as defined by Rand McNally's Commercial Atlas and Marketing
Guide).
I. Company-owned Selling Locations may promote and sell to customers in
any Major Trading Area in which First Tier Reseller has an HP authorized Second
Tier Reseller or company-owned Selling Location, provided the company-owned
locations are working in conjunction with Second Tier Resellers and local
Selling Locations to provide pre-sale and post-sale support. Company-owned
Selling Locations must abide by all other trading area requirements in the
Product Categories.
4. MULTIPLE AGREEMENT DISCOUNTS
Unless otherwise specified by HP in writing, purchases of HP products under this
Agreement and purchases under any other HP Agreement are exclusive of each other
for the purpose of calculating volume commitment and discount levels.
5. VOLUME COMMITMENT LEVELS
A. First Tier Reseller volume commitment levels are described on the
attached Product Exhibits and are based upon 12 month purchase volume levels.
B. If the term of this Agreement or any Addendum or new Product Exhibit
is less than 12 months, an applicable 12 month volume commitment level will be
calculated for First Tier Reseller by projection over a full 12 month term.
6. FIRST TIER RESELLER ORDER MILESTONES
A. Unless otherwise specified in the Product Exhibits, as of 5 months after the
effective date of this Agreement, HP will review First Tier Resellers progress
towards its volume commitment.
1 . If First Tier Reseller's orders in those first 5 months
are less than 35% of its 12 month volume commitment level, then First Tier
Reseller's orders during the remaining term of this Agreement will be subject to
the lower First Tier Reseller discounts corresponding to the 12 month volume
commitment level projected by First Tier Reseller's orders in those first 5
months. If the projected orders are below HP's minimum volume commitment level,
HP may terminate all or any part of this Agreement.
2. If First Tier Reseller's orders in those first 5 months are
42% or more of the 12 month volume commitment level required for greater First
Tier Reseller discounts, then First Tier Resellers orders during the remaining
term of this Agreement will be subject to those greater discounts.
3. First Tier Reseller's discounts for orders during the first
5 months of this Agreement will not be affected by the milestone adjustments
above.
B. If First Tier Reseller later cancels any order that resulted in HP
granting First Tier Reseller a higher discount level, HP may reduce First Tier
Reseller's discount to the level which would have applied had all canceled
orders never been placed.
7. PRICES
A. HP's corporate price lists are internal data bases indicating
current List Prices for HP Products "List Prices"). HP reserves the right to
change List Prices and discounts upon reasonable notice to First Tier Reseller.
If First Tier Reseller is unsure of the List Price to use in calculating net
First Tier Reseller price for any HP Product, First Tier Reseller should contact
its HP sales representative.
B. Net First Tier Reseller price for HP Products purchased under this
Agreement will be the List Price at the time of First Tier Reseller's orders,
less the discounts based on First Tier Reseller's volume or other commitments or
elections specified in the Product Exhibits.
C. Net First Tier Reseller price includes shipment arranged by HP. HP
reserves the right to charge First Tier Reseller for any special routing,
handling or insurance requested by First Tier Reseller and agreed to by HP.
Orders shipped special routing will be F.O.B.
Origin.
D. Net First Tier Reseller price excludes State and local taxes. HP
will invoice First Tier Reseller for these taxes, based on point of delivery,
unless the appropriate resale exemption certificates are on file at HP's order
entry point, or HP agrees the sale is otherwise exempt.
E. Upon request from First Tier Reseller, at its discretion HP may
grant special pricing for particular end-user customer transactions. In good
faith, HP may retract the special pricing at any time before acceptance by the
end-user customer. HP may extend the pricing on an exclusive or non-exclusive
basis and may condition the pricing on a pass-through of all or part of the
non-standard offering extended by HP.
8. PAYMENT AND SECURITY TERMS
A. First Tier Reseller will pay invoices within 30 days from the date
of the invoice. HP reserves the right to change credit terms at any time when in
HP's opinion First Tier Resellers financial condition or previous payment record
so warrants.
B. Any First Tier Reseller claim for adjustment of an invoice is agreed
to be waived if First Tier Reseller fails to present it within 90 days from date
of HP invoice. No claims, credits, or offsets may be deducted from any invoice.
C. If First Tier Reseller fails to pay any sum due within 15 days of
HP's written notice of delinquency, HP may discontinue performance under this
Agreement and may revise credit terms for unshipped orders.
D. First Tier Reseller grants and HP reserves a purchase money security
interest in each Product purchased under this Agreement and in any proceeds
thereof for the amount of the purchase price from HP. Upon request by HP, First
Tier Reseller will sign any document required to perfect such security interest.
Payment in full of the purchase price of a Product purchased will release the
security interest in that Product.
9. ORDERS; SHIPMENTS; CANCELLATIONS AND CHANGES
A. First Tier Reseller's orders must comply with the minimum order,
release, ship-to and other requirements specified in this Agreement.
B. HP will honor written, fax and telephone orders from First Tier
Reseller's approved locations. First Tier Reseller is responsible for ensuring
that only authorized employees place, change or delete orders and that the
orders conform to all requirements of this Agreement.
C. First Tier Reseller's requested date for shipment must be within 90
days after order date. HP reserves the right to schedule and reschedule any
order, at HP's discretion, and to decline any order for credit reasons or
because the order specifies an unreasonably large quantity or makes an
unreasonable shipment request.
D. HP will use reasonable efforts to meet scheduled shipment dates.
However, HP will not be liable for delay in meeting a scheduled shipment date.
E. First Tier Reseller must own more than 50% of its business at each
approved location. HP will ship HP Products to First Tier Reseller under HP's
standard shipment terms and conditions but only to approved Shipment Locations
authorized by HP on Exhibit L. Shipment Locations may be the same as
company-owned Selling Locations. All First Tier Resellers sales, advertising and
promotional activities for HP Products must be conducted from Selling Locations
approved by HP. No sales, advertisement or promotion of HP Products may be
conducted from Shipment Locations which are not also approved company-owned
Selling Locations.
However, HP will ship to a maximum of six approved Shipment Locations and will
accept orders only from a single order point. An exception will be made where a
Product Exhibit indicates drop shipment is available for a specific HP Product
under a special program; drop shipment for those HP Products will be subject to
limitations indicated in the Product Exhibits.
F. Shipments are subject to availability. If HP products are in short
supply, HP will allocate them equitably, at HP's discretion.
G. Title to HP Products and risk of loss and damage will pass to First
Tier Reseller F.O.B. Destination.
10. PRICE ADJUSTMENTS; PRICE PROTECTION
A. If HP raises Net First Tier Reseller prices (either through List
Price increases or Product Exhibit discount reductions) HP will invoice First
Tier Reseller based an the old List Price or discount for affected HP Product
orders placed by First Tier Reseller within one month after the effective date
of the increase. Limited quantity restrictions may apply.
B. If HP reduces Net First Tier Reseller prices (either through a List
Price reduction or a combination of List Price and discount changes), HP will
invoice First Tier Reseller based on the reduced Net First Tier Reseller price
for affected HP Products shipped on or after the effective date of the
reduction.
C. If HP offers a limited time promotional HP Product discount to all
First Tier Resellers (excluding rebates and spiffs of all forms), HP will
invoice First Tier Reseller based on the Net First Tier Reseller price less the
promotional discount for orders conforming to and shipments made pursuant to the
terms and conditions of the promotion.
D. If HP reduces Net First Tier Reseller prices or offers a limited
time HP Product promotional discount to all First Tier Resellers and the HP
Products are eligible for price protection as designated on the Product
Exhibits, then HP will grant First Tier Reseller a price protection credit
calculated by the following methods at HP's discretion:
The credit will equal the total reduction in Net First Tier Reseller price (less
any previous promotional discount available from HP) for those HP Products which
are:
1 . In First Tier Reseller's corporate inventory and in
transit to First Tier Reseller on the effective date of the reduction using a
verification process determined by HP; and
2. In Second Tier Reseller's and First Tier Reseller's
company-owned Shipment Locations inventory and in transit to them on the
effective date of the reduction using a verification process determined by HP.
The amount of inventory to be price protected for the Second Tier Reseller will
be capped at the amount of HP Product shipped by First Tier Reseller to the
Second Tier Reseller 30 days prior to the date of the price decrease.
E. To receive a price protection credit, First Tier Reseller, upon
notification of a change in price from HP, will complete, sign and return to HP
two forms, showing, respectively, the total number of units (including serial
numbers) entitled to price protection per section D, above. The format for the
two forms may be defined by First Tier Reseller but must meet the approval of
HP. If First Tier Reseller fails to submit both forms within 30 days of the
effective date of the reduction, First Tier Reseller will receive no price
protection for eligible products.
F. In all cases, HP may require that First Tier Reseller accumulate a
minimum credit of $200 within a particular month before HP extends price
protection to First Tier Reseller for that month.
G. HP reserves the right to offer First Tier Reseller obsolete, used or
refurbished HP Products and to offer First Tier Reseller HP Products through
special promotions at discounts different from those in the Product Exhibits and
on terms which may not include rights to price protection, stock adjustment,
promotional funds allowance or count towards First Tier Resellers volume
commitment levels.
11. SOFTWARE
First Tier Reseller is granted the right to distribute software materials
supplied by HP only in accordance with the license terms supplied with these
materials. First Tier Reseller may alternatively acquire the software materials
from HP for its own demonstration purposes in accordance with the terms for use
in those license terms.
12. TRADEMARKS
A. From time to time, HP may authorize First Tier Reseller to display
one or more designated HP trademarks. First Tier Reseller may display the
trademarks solely to promote HP Products. Any display of the trademarks must be
in good taste, in a manner that preserves their value as HP trademarks, and in
accordance with standards provided by HP for their display. First Tier Reseller
will not use any name or symbol in a way which may imply that First Tier
Reseller is an agency or branch of HP; First Tier Reseller will discontinue any
such use of a name or mark as requested by HP. Any rights or purported rights in
any HP trademarks acquired through First Tier Reseller's use belong solely to
HP.
B. First Tier Reseller grants HP the non-exclusive, royalty free right
to display First Tier Reseller's trademarks in advertising and promotional
material solely for directing prospective purchasers of HP Products to First
Tier Reseller's and its Customers' Selling Locations. Any display of the
trademarks must be in good taste, in a manner that preserves their value as
First Tier Reseller trademarks, and in accordance with standards provided by
First Tier Reseller for their display. Any rights or purported rights in any
First Tier Reseller trademarks acquired through HP's use belong solely to First
Tier Reseller.
13. WARRANTY
A. USER WARRANTY
1. HP Product User Warranties are described on the Product
Exhibits and apply only to end-user purchasers of HP Products. HP revisions to
the User Warranties will be effective on the date specified by HP. Copies of
User Warranties will be supplied with HP Products. Distributor's VARs must
provide a copy of the associated User Warranty for an HP Product to each
end-user prior to sale.
2. HP Product Warranty begins upon purchase by the end-user
customer and shall be verified by proof of acquisition by the end user or via
HP's electronic warranty verification system.
3. HP does not extend Product User Warranties for Products
designated by HP as Mechanisms. These Products have a Mechanism Warranty as set
forth below.
B. MECHANISM WARRANTY
1 . HP hardware "Mechanism" Products are warranted against
defects in materials and workmanship.
2. HP software and firmware "Mechanism" Products are
designated by HP for use with a hardware Product when properly installed on that
hardware Product and are warranted not to fail to execute their programming
instructions due to defects during the warranty period. HP does not warrant that
the operation of the software, firmware, or hardware is uninterrupted or error
free.
3. If HP receives notice of defects during the warranty period
specified in each Product Exhibit, HP will at its option, either repair or
replace Products which prove to be defective.
4. If HP is unable, within a reasonable time, to repair or
replace any Mechanism Product to a condition as warranted, Distributor is
entitled to a refund of Distributor's net price less any credits extended by HP
for the Product, upon return of the Product to HP.
5. This warranty does not apply to damage resulting from
abuse, misuse (including improper storage), negligence, accident, or loss or
damage in transit, or unauthorized modification or repair.
6. Distributor may sell HP Mechanism Products to authorized
Customers and may authorize those Customers to sell the HP Products only with
warranty terms and conditions which obligate HP to no greater than the
following:
a. Warranty coverage for defective Product no greater
than that provided in this Warranty Section and any associated Product Exhibit.
b. Warranty exclusions and disclaimers no less than
those set forth in this Warranty Section and any associated Product Exhibit.
c. A duration of warranty expiring no later than the
date of expiration of HP's warranty to Distributor or end user as set forth in
the associated Product Exhibit; and
d. Limitations of remedies and liability no less than
those provided in the Limitation of Remedies and Liability Section of this
Agreement.
Distributor (or any Customer) may have more extensive warranty coverage for
customers only to the extent it remains solely responsible for fulfilling the
obligations.
7. Distributor must notify HP prior to the return of a
defective Mechanism Product. Freight expenses for return of defective HP
Products shall be paid by Distributor.
8. Distributor will reimburse HP for all freight expenses paid
by HP for any Mechanism Product returned to HP which is not eligible for repair
or replacement under the terms of HP's warranty or for any returned Product
which is determined by HP to be free from defect.
9. Mechanism Products repaired by local HP repair personnel
may be repaired with remanufactured parts.
C. ALL WARRANTIES
THE ABOVE WARRANTIES ARE THE EXCLUSIVE WARRANTIES COVERING HP PRODUCTS AND ARE
IN LIEU OF ANY OTHER WARRANTIES, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING
BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
D. Some HP Products may contain selected remanufactured parts
equivalent to new in performance.
14. LIMITATION OF REMEDIES AND LIABILITY
A. The remedies provided in this Agreement are First Tier Reseller's
sole and exclusive remedies against HP.
B. HP will be liable for damage to tangible property, bodily injury or
death to the extent a court of competent jurisdiction determines that an HP
Product sold under this Agreement is defective and has directly caused such
damage, injury or death, provided that HP's liability for damage to tangible
property will be limited to $300,000 per incident.
C. HP will be liable to First Tier Reseller for any net credits due
from HP pursuant to the express provisions of this Agreement. In no event will
HP be liable for loss of data, for indirect, special, incidental or
consequential damages (including lost profits) or for any other damages whether
based on contract, tort, or to other legal theory.
15. INTELLECTUAL PROPERTY INDEMNITY
A. HP will defend any claim against First Tier Reseller that any HP
Product infringes a patent, utility model, industrial design, copyright, mask
work or trademark in the country where First Tier Reseller acquires or sells the
Product from HP, provided that First Tier Reseller
1. Promptly notifies HP in writing of the claim; and
2. Cooperates with HP in and grants HP sole authority to
control the defense and any related settlement.
HP will pay the cost of such defense or settlement and any costs and damages
finally awarded by a court against First Tier Reseller.
B. HP's indemnity shall extend to First Tier Reseller's Customers and
end-users under this Agreement provided they comply with the obligations above.
C. HP may procure for First Tier Reseller, its customers and end-users
the right to continued sale or use, as appropriate, of the Product or HP may
modify or replace the Product. If a court enjoins the sale or use of the Product
and HP determines that none of the above alternatives is reasonably available,
HP will accept return of the Product and refund its depreciated value.
D. HP has no obligation for any claim of infringement arising from:
1. HP's compliance with any designs, specifications or
instructions of First Tier Reseller;
2. Modification of the Product by First Tier Reseller or a
third party;
3. Use of the Product in a way not specified by HP; or
4. Use of the Product with products not supplied by HP.
E. This Section states HP's entire liability to First Tier Reseller and
its Customers and end-users for infringement.
16. FIRST TIER RESELLER RECORD-KEEPING
A. For contract compliance verification, product safety information,
operational problem correction and the like, First Tier Reseller must maintain
records of customer purchases of printers, plotters, faxes, scanners and
computers for one year. Records must include customer name, address, phone
number, ship-to address, serial number and date of sale of the above products.
HP may require monthly reporting incorporating the previous month's data for
each approved location.
B. HP may require First Tier Reseller to provide HP or HP's designate
with HP Product inventory and sales data including, but not limited to,
information such as total units of selected HP Products sold and held in all
inventory by month for each approved location, in a format specified by HP. HP
may require monthly reporting incorporating the previous month's data for each
approved location.
C. In addition, First Tier Reseller must comply with any reporting
requirements for HP programs.
D. At HP's discretion and upon notice to First Tier Reseller, HP or
HP's designate will be given prompt access, either on site or through other
means specified by HP, to First Tier Reseller's customer records, inventory
records and other books and records of account as HP believes are reasonably
necessary to verify and audit First Tier Reseller's compliance with this
Agreement.
E. Failure to promptly comply with HP's request will be considered a
repudiation of this Agreement justifying HP's termination of this Agreement on
30 days' notice without further cause.
F. HP may recover all reasonable actual costs associated with
compliance verification procedures from any promotional funds, rebate funds or
any other HP accrued funds due First Tier Reseller.
G. HP may debit First Tier Reseller for all wrongfully claimed
discounts, rebates, promotional allowances or other amounts determined as a
result of HP's audit.
H. HP may, from time to time, send First Tier Reseller a list of serial
numbers of designated Products (HP plotters, printers, scanners and computers)
for which HP tracks unauthorized sales. First Tier Reseller agrees to identify
to which reseller each serial number was shipped and to forward this information
to its HP representative within a period of not more than 21 days from the date
of HP's notice.
I. HP may, from time to time, find it necessary to audit one of First
Tier Resellers Customers for the purpose of determining Its HP Second Tier
Reseller Agreement/VAR Certification. HP will identify for First Tier Reseller:
1. The Customer(s) to be audited;
2. A list, by part number, of "designated products" of
concern;
3. The period of time the audit will cover; and
4. A deadline by which HP must receive associated sell-through
data from First Tier Reseller.
First Tier Reseller agrees to help HP by providing HP, within a designated
period of time not to be more than 10 days from the date of HP's notice, a list
of the quantities and serial numbers of "designated products" that have been
shipped to the Customer(s) during the audit period.
J. First Tier Reseller agrees that HP may recover all reasonable actual
costs associated with Customer compliance verification procedures from the
reseller(s)' Advantage Program funds, rebate funds or any other HP accrued funds
for the reseller(s).
17. AMENDMENTS
A. From time to time, HP may add products to or delete them from the
Product Exhibits or implement or change HP policies or programs at HP's
discretion, after reasonable notice to First Tier Reseller.
Additionally, HP may give First Tier Reseller written notice of any other
amendment to this Agreement upon at least 30 days' advance notice.
B. Any amendment will automatically become a part of this Agreement on
the effective date specified in the notice.
C. Each party agrees that the other has made no commitments regarding
the duration or renewal of this Agreement beyond those expressly stated in this
Agreement.
18. TERMINATION OF AGREEMENT
A. Either party may terminate this Agreement without cause at any time
upon 60 days' written notice or with cause at any time upon 30 days' written
notice to the other party.
B. If either party gives the other notice of termination or advises the
other of its intent not to renew this Agreement, HP may require that First Tier
Reseller pay cash in advance for additional shipments during the remaining term,
regardless of First Tier Resellers previous credit status, and may withhold all
such shipments until First Tier Reseller pays its outstanding balance.
C. Upon termination or expiration of this Agreement for any reason,
First Tier Reseller will immediately cease to be an authorized HP First Tier
Reseller and will refrain from representing itself as such and from using any HP
trademark or trade name.
D. Upon any termination or expiration, either party may require that HP
purchase from First Tier Reseller any HP products purchased under this Agreement
that are on HP's then current Product Exhibits, which are in their unopened,
original packaging and marketable as new merchandise. The repurchase price shall
be the lower of either the Net First Tier Reseller price on the date of
termination or expiration or First Tier Resellers original purchase price, in
each case less any promotional or other discounts or price protection or other
credits extended by HP to First Tier Reseller for the HP Product. First Tier
Reseller should contact its HP sales representative for information about the
items eligible for repurchase and instructions for their return at HP's expense.
E. Upon termination of this Agreement, or expiration without renewal,
all rights to any accrued Advantage Program or other promotional funds will
automatically lapse.
F. The indemnities provided in this Agreement will survive termination
or expiration of this Agreement.
19. RELATIONSHIP
A. First Tier Resellers relationship with HP will be that of an
independent contractor. Nothing stated in this Agreement shall be construed as
making First Tier Reseller and HP a franchise, joint venture, or partnership. HP
shall not be deemed a party to any agreement between First Tier Reseller and any
Customer.
B. Unless expressly authorized by HP in writing in advance, any
commitment made by First Tier Reseller to its Customers with respect to price,
quantities, delivery, specifications, warranties, modifications, interfacing
capability or suitability will be First Tier Reseller's sole responsibility, and
First Tier Reseller will indemnify HP from liability for any such commitment by
First Tier Reseller.
C. List Prices are suggested prices for resale to end-user customers
and a basis for calculating net First Tier Reseller price. First Tier Reseller
has the right to determine its own resale prices, and no HP representative will
require that any particular resale price be charged by First Tier Reseller or
grant or withhold any treatment to First Tier Reseller based on First Tier
Reseller's resale pricing policies. First Tier Reseller agrees that it will
promptly report any effort by HP personnel to interfere with its pricing
policies directly to an HP officer or manager.
D. This Agreement applies only to the HP Products listed on the Product
Exhibits (U.S. versions only). First Tier Reseller acknowledges that HP may
market other products, including products in competition with those listed on
the Product Exhibits without making them available to First Tier Reseller. HP
reserves the right to advertise, promote and sell any product, including HP
Products on the Product Exhibits, in competition with First Tier Reseller.
E. Nothing contained in this Agreement shall prevent a Customer from
purchasing individually, on its own credit and account directly from HP should
it elect to do so, but nothing shall obligate HP to sell directly to any
Customer. HP agrees to notify First Tier Reseller of any request by a Second
Tier Reseller or HP VAR to purchase directly from HP in advance of approving
such a change in status.
20. POLICIES & PROGRAMS
From time to time, HP may offer or change HP policies and programs, such as but
not limited to the Advantage Program, Premier Support program and other programs
and policies in HP's Operations Policy Manual, participation in which will be on
the current terms and conditions of the policies & programs.
21. GENERAL CONDITIONS
A. Neither party may assign any rights or obligations in this Agreement
without the prior written consent of the other party. Any attempted assignment
will be deemed void.
B. Neither party's failure to enforce any provision of this Agreement
will be deemed a waiver of that provision or of the right to enforce it in the
future.
C. This Agreement, including the attached Addenda, associated Product
Exhibits, Product Categories and Operations Policy Manual contains the entire
understanding between the parties relating to its subject matter. HP hereby
gives notice of objection to any additional or inconsistent terms set forth in
any purchase order or other document issued by First Tier Reseller. Except as
provided in paragraphs 17A and 17B of this Agreement, no modification of this
Agreement will be binding on either party unless made in writing and signed by
both parties.
D. No U.S. Government procurement regulations will be deemed included
in this Agreement or binding on either party unless specifically accepted in
writing and signed by both parties.
E. This Agreement will be governed by the laws of the State of
California.
F. If any clause of this Agreement is held invalid, the remainder of
this Agreement will continue unaffected.
22. NOTICES
All notices and demands issued under the terms of this Agreement shall be in
writing, delivered by fax, personal service, first class mail, postage prepaid
or by registered mail to a location set forth in this Agreement or to HP at 5301
Stevens Creek Boulevard, PO Box 58059, Santa Clara, California 95052-8059 or
to the assigned local HP sales representative.
U.S. SECOND TIER RESELLER
TABLE OF CONTENTS
U.S. SECOND TIER RESELLER AGREEMENT
1. APPOINTMENT
2. STATUS CHANGE
3. INTENTIONALLY OMITTED
4. INTENTIONALLY OMITTED
5. INTENTIONALLY OMITTED
6. INTENTIONALLY OMITTED
7. PRICES
8. INTENTIONALLY OMITTED
9. INTENTIONALLY OMITTED
10. INTENTIONALLY OMITTED
11. SOFTWARE
12. TRADEMARKS
13. WARRANTY
14. LIMITATION OF REMEDIES AND LIABILITY
15. INTELLECTUAL PROPERTY INDEMNITY
16. SECOND TIER RESELLER RECORD-KEEPING
17. AMENDMENTS
18. TERMINATION OF AGREEMENT
19. RELATIONSHIP
20. POLICIES & PROGRAMS
21. GENERAL CONDITIONS
22. NOTICES
U.S. SECOND TIER RESELLER ADDENDUM
1. APPOINTMENT
3. SECOND TIER RESELLER RESPONSIBILITIES
9. ORDERS; SHIPMENTS; CANCELLATIONS AND CHANGES
23. DEFECTIVE UNITS AND CUSTOMER SATISFACTION RETURNS
U.S. SECOND TIER RESELLER AGREEMENT
1. APPOINTMENT
Hewlett-Packard Company ("HP") appoints Second Tier Reseller as an authorized,
non-exclusive Second Tier Reseller for marketing the HP Products listed on the
Product Exhibits and purchased from the First Tier Reseller of record. Second
Tier Reseller's appointment is subject to the terms of this U.S. Second Tier
Reseller Agreement and the associated Addenda, Product Exhibits and HP Product
Acquisition and Resale Categories ("Product Categories") (collectively,
"Agreement") for the period from the effective date through the expiration date
of this Agreement. Second Tier Reseller accepts appointment on these terms.
2. STATUS CHANGE
A. If Second Tier Reseller wishes to:
1. Change its name or that of any approved location;
2. Add, close or change an approved location;
3. Undergo a merger, acquisition, consolidation or other
reorganization with the result that any entity controls 20% or more of Second
Tier Reseller's capital stock or assets after such transaction; or
4. Undergo a significant change in control or management of
Second Tier Reseller operations;
then Second Tier Reseller shall notify HP in writing prior to the intended date
of change.
B. HP agrees to promptly notify Second Tier Reseller of its approval or
disapproval of any proposed change, provided that Second Tier Reseller has given
HP all information and documents reasonably requested by HP.
C. HP must approve proposed Second Tier Reseller changes prior to any
obligation of HP to perform under this Agreement with Second Tier Reseller as
changed.
7. PRICES
Upon request from Second Tier Reseller, at its discretion HP may grant special
pricing for particular end-user customer transactions. In good faith, HP may
retract the special pricing at any time before acceptance by the end-user
customer. HP may extend the pricing on an exclusive or non-exclusive basis and
may condition the pricing on a pass-through of all or part of the non-standard
offering extended by HP.
11. SOFTWARE
Second Tier Reseller is granted the right to distribute software materials
supplied by HP only in accordance with the license terms supplied with these
materials. Second Tier Reseller may alternatively acquire the software materials
from HP for its own demonstration purposes in accordance with the terms for use
in those license terms.
12. TRADEMARKS
A. From time to time, HP may authorize Second Tier Reseller to display
one or more designated HP trademarks. Second Tier Reseller may display the
trademarks. Second Tier Reseller may display the trademarks solely to promote HP
Products. Any display of the trademarks must be in good taste, in a manner that
preserves their value as HP trademarks, and in accordance with standards
provided by HP for their display. Second Tier Reseller will not use any name or
symbol in a way which may imply that Second Tier Reseller is an agency or branch
of HP; Second Tier Reseller will discontinue any such use of a name or mark as
requested by HP. Any rights or purported rights in any HP trademarks acquired
through Second Tier Reseller's use belong solely to HP.
B. Second Tier Reseller grants HP the on-exclusive, royalty free right
to display Second Tier Reseller's trademarks in advertising and promotional
material solely for directing prospective purchasers of HP Products to Second
Tier Reseller's Selling Locations. Any display of the trademarks must be in good
taste, in a manner that preserves their value as Second Tier Reseller's
trademarks, and in accordance with standards provided by Second Tier Reseller
for their display. Any rights or purported rights in any Second Tier Reseller
trademarks acquired through HP's use belong solely to Second Tier Reseller.
13. WARRANTY
A. HP Product User Warranties are described on the Product Exhibits and
apply only to end-user purchasers of HP Products. HP revisions to the User
Warranties will be effective on the date specified by HP. Copies of User
Warranties will be supplied with HP Products. Second Tier Reseller must provide
a copy of the associated User Warranty for an HP Product to each end-user prior
to sale.
B. HP Product Warranty begins upon purchase by the Reseller's end-user
customer and shall be verified by proof of acquisition by the end-user or via
HP's electronic warranty verification system.
C. HP PRODUCT USER WARRANTIES ARE THE EXCLUSIVE WARRANTIES COVERING HP
PRODUCTS AND ARE IN LIEU OF ANY OTHER WARRANTIES, WRITTEN OR ORAL, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.
D. Some HP Products may contain selected remanufactured parts
equivalent to new in performance.
14. LIMITATION OF REMEDIES AND LIABILITY
A. The remedies provided in this Agreement are Second Tier Reseller's
sole and exclusive remedies against HP.
B. HP will be liable for damage to tangible property, bodily injury or
death to the extent a court of competent jurisdiction determines that an HP
Product sold under this Agreement is defective and has directly caused such
damage, injury or death, provided that HP's liability for damage to tangible
property will be limited to $300,000 per incident.
C. HP will be liable to Second Tier Reseller for any net credits due
from HP pursuant to the express provisions of this Agreement. In no event will
HP be liable for loss of data, for indirect, special, incidental or
consequential damages(including lost profits) or for any other damages whether
based on contract, tort, or to other legal theory.
15. INTELLECTUAL PROPERTY INDEMNITY
A. HP will defend any claim against Second Tier Reseller that any HP
Product infringes a patent, utility model, industrial design, copyright, mask
work or trademark in the country where Second Tier Reseller acquires or sells
the Product from HP, provided that Second Tier Reseller.
1. Promptly notifies HP in writing of the claim; and
2. Cooperates with HP in and grants HP sole authority to
control the defense and any related settlement.
HP will pay the cost of such defense or settlement and any costs and damages
finally awarded by a court against Second Tier Reseller.
B. HP's indemnity shall extend to Second Tier Reseller's customers and
end-users under this Agreement provided they comply with the obligations above.
C. HP may procure for Second Tier Reseller, its customers and end-users
the right to continued sale or use, as appropriate, of the Product or HP may
modify or replace the Product. If a court enjoins the sale or use of the Product
and HP determines that none of the above alternatives is reasonably available,
HP will accept return of the Product and refund its depreciated value.
D. HP has no obligation for any claim of infringement arising from:
1. HP's compliance with any designs, specifications or
instructions of Second Tier Reseller;
2. Modification of the Product by Second Tier Reseller or a
third party;
3. Use of the Product in a way not specified by HP; or
4. Use of the Product with products not supplied by HP.
E. This Section states HP's entire liability to Second Tier Reseller
and its customers and end-users for infringement.
16. SECOND TIER RESELLER RECORD-KEEPING
A. For contract compliance verification, product safety information,
operational problem correction and the like, Second Tier Reseller must maintain
records of customer purchases of printers, faxes, plotters, scanners and
computers for one year. Records must include customer name, address, phone
number, ship-to address, serial number and date of sale of the above products.
HP may require monthly reporting incorporating the previous month's data for
each approved location.
B. HP may require Second Tier Reseller to provide HP or HP's designate
with HP Product inventory and sales data including, but not limited to,
information such as total units of selected HP Products sold and held in all
inventory by month for each approved location, in a format specified by HP. HP
may require monthly reporting incorporating the previous month's data for each
approved location.
C. In addition, Second Tier Reseller must comply with any reporting
requirements for HP programs.
D. At HP's discretion and upon notice to Second Tier Reseller, HP or
HP's designate will be given prompt access, either on site or through other
means specified by HP, to Second Tier Reseller's customer records, inventory
records and other books and records of account as HP believes are reasonably
necessary to verify and audit Second Tier Resellers compliance with this
Agreement.
E. Failure to promptly comply with HP's request will be considered a
repudiation of this Agreement justifying HP's termination of this Agreement on
15 days' notice without further cause.
F. HP may recover all reasonable actual costs associated with
compliance verification procedures from Second Tier Reseller's Advantage Program
Funds, rebate funds or any other HP accrued funds due Second Tier Reseller by
HP.
G. HP may debit First Tier Reseller and/or Second Tier Reseller for all
wrongfully claimed discounts, rebates, promotional allowances or other amounts
determined as a result of HP's audit.
17. AMENDMENTS
A. From time to time, HP may add products to or delete them from the
Product Exhibits, or implement or change HP policies or programs, at HP's
discretion, after reasonable notice to Second Tier Reseller.
Additionally, HP may give Second Tier Reseller written notice of any other
amendment to this Agreement upon at least 30 days' advance notice.
B. Any amendment will automatically become a part of this Agreement on
the effective date specified in the notice.
C. Each party agrees that the other has made no commitments regarding
the duration or renewal of this Agreement beyond those expressly stated in this
Agreement.
18. TERMINATION OF AGREEMENT
A. Either party may terminate this Agreement without cause at any time
upon 30 days' written notice with cause at any time upon 15 days' written notice
to the other party.
B. This Agreement shall terminate immediately if Second Tier Reseller
ceases to have a buying relationship with First Tier Reseller or if First Tier
Reseller undergoes any of the types of status changes described in Section 2 of
this Agreement which are not approved by HP.
C. This Agreement shall terminate immediately if HP's Agreement with
First Tier Reseller terminates.
D. Upon termination or expiration of this Agreement for any reason,
Second Tier Reseller will immediately cease to be an authorized HP Reseller and
will refrain from representing itself as such and from using any HP trademark or
trade name.
E. Upon any termination or expiration, either party may require that HP
purchase and Second Tier Reseller sell to HP any HP Products sold to Second Tier
Reseller by First Tier Reseller under this Agreement that are on HP's then
current Product Exhibits and which are in their unopened, original packaging and
marketable as new merchandise. HP will pay Second Tier Reseller the lower of
HP's then current net First Tier Reseller price or First Tier Resellers original
purchase price less any promotional or other discounts or credit extended to
First Tier Reseller for the Product, whichever is lower. Second Tier Reseller
should contact its HP sales representative for information about the items
eligible for repurchase and instructions for their return at HP's expense.
F. Upon termination of this Agreement or expiration without renewal all
rights to any accrued Advantage Program or other promotional funds will
automatically lapse.
G. The indemnities provided in this Agreement will survive termination
or expiration of this Agreement
19. RELATIONSHIP
A. Second Tier Reseller's relationship to HP will be that of an
independent contractor. Second Tier Reseller and HP agree that this Agreement
does not establish a franchise, joint venture or partnership. HP shall not be
deemed a party to any agreement between First Tier Reseller and Second Tier
Reseller.
B. Unless expressly authorized by HP in writing in advance, any
commitment made by Second Tier Reseller to its customers with respect to price,
quantities, delivery, specifications, warranties, modifications, interfacing
capability or suitability will be Second Tier Reseller's sole responsibility,
and Second Tier Reseller will indemnify HP from liability for any such
commitment by Second Tier Reseller.
C. List prices are suggested prices for resale to end user customers.
Second Tier Reseller has the right to determine its own resale prices, and no HP
representative will require that any particular resale price be charged by
Second Tier Reseller or grant or withhold any treatment to Second Tier Reseller
based on Second Tier Resellers resale pricing policies. Second Tier Reseller
agrees that it will promptly report any effort by HP personnel to interfere with
its pricing policies directly to an HP officer or manager.
D. This Agreement applies only to the HP Products listed on the Product
Exhibits (U.S. versions only). Second Tier Reseller acknowledges that HP may
market other products, including products in competition with those listed on
the Product Exhibits without making them available to Second Tier Reseller. HP
reserves the right to advertise, promote and sell any product, including HP
Products on the Product Exhibits, in competition with Second Tier Reseller.
E. Nothing contained in this Agreement shall prevent a Second Tier
Reseller from purchasing individually, on its own credit and account directly
from HP should it elect to do so, but nothing shall obligate HP to sell directly
to Second Tier Reseller or any DAVAR.
20. POLICIES & PROGRAMS
From time to time, HP may offer or change HP policies and programs, such as but
not limited to the Advantage Program and Premier Support program, participation
in which will be on the current terms and conditions of the policies & programs.
21. GENERAL CONDITIONS
A. Neither party may assign any rights or obligation in this Agreement
without the prior written consent of the other party. Any attempted assignment
will be deemed void.
B. Neither party's failure to enforce any provision of this Agreement
will be deemed a waiver of that provision or of the right to enforce it in the
future.
C. This Agreement, including the attached Addenda, associated Product
Exhibits and Product Categories contains the entire understanding between the
parties relating to Its subject matter. HP hereby gives notice of objection to
any additional or inconsistent terms set forth in any purchase order or other
document issued by Second Tier Reseller. Except as provided in paragraphs 17A
and 17B of this Agreement, no modification of this Agreement will be binding on
either party unless made in writing and signed by both parties.
D. No U.S. Government procurement regulations will be deemed included
in this Agreement or binding on either party unless specifically accepted in
writing and signed by both parties.
E. This Agreement will be governed by the laws of the State of
California.
F. If any clause of this Agreement is held invalid, the remainder of
the Agreement will continue unaffected.
22. NOTICES
All notices and demands issued under the terms of this Agreement shall be in
writing, delivered by fax, personal service, first class mail postage prepaid or
by registered mail to a location set forth in this Agreement or to HP at 5301
Stevens Creek Boulevard, P.O. Box 58059, Santa Clara, California 95052-8059 or
to the assigned local HP Sales Representative.
U.S. SECOND TIER RESELLER ADDENDUM
1. APPOINTMENT
HP appoints Reseller as a Second Tier Reseller.
3. SECOND TIER RESELLER RESPONSIBILITIES
A. Second Tier Reseller will advertise, promote and sell HP Products
only through the company name(s) and approved Selling Locations listed on
Exhibit L and only to end-users or to resellers as permitted in the Product
Categories.
B. Second Tier Reseller agrees to:
1. Advertise, promote, demonstrate and sell HP Products on a
face-to-face basis and provide pre-sales support and post-sales technical
support to all customers.
2. Maintain at each approved Selling Location, a facility in
which HP Products are displayed or demonstrated on a regular basis to end-user
customers.
3. Use catalogs and telemarketing sales techniques only in
conformity with current HP policies and only as a complement to face-to-face
sales activity unless nationwide advertising for the HP Product is permitted in
the Product Categories.
4. Ensure that no sale, advertising, promotion, display or
disclosure of any features, availability or price of any new HP product takes
place before HP's public announcement of that Product.
5. Identify and keep current a primary and secondary support
contact for both marketing communications and post-sales technical support at
each approved Selling Location.
6. Report promptly to HP all suspected defects in HP Products.
7. Assist its customers in obtaining warranty repairs for HP
Products by either referring the customer to HP or an approved HP repair
provider, or returning the HP Product to HP if the Second Tier Reseller elects
to provide warranty repair services to its customers, the Second Tier Reseller
will comply with the terms and conditions outlined in the HP Premier Support
Program Guide.
8. Ensure that its employees complete any required training
courses and certification programs designated by HP.
C. Without HP's prior written consent, Second Tier Reseller will not
export HP Products to any customer outside the U.S., nor will Second Tier
Reseller sell HP Products for export outside the U.S.
D. Except for sales to resellers as permitted in the Product
Categories, Second Tier Reseller may not sell HP Products to or buy them from
other Resellers for stock balancing or any other reason.
E. Second Tier Reseller may not sell, rent or lease HP Products to
rental companies or leasing companies for their subsequent rental or lease.
9. ORDERS; SHIPMENTS; CANCELLATIONS AND CHANGES
A. Minimum resale shipments for 12 months from each selling location
are $100,000 of HP Products measured by First Tier Reseller's net price from HP.
B. As of 5 months after the effective date of this Addendum, minimum
resale shipments for each selling location are $35,000.
C. Second Tier Reseller's approved locations are listed on Exhibit L.
All Second Tier Reseller's sales, advertising and promotional activities for HP
Products must be conducted from approved Selling Locations. Second Tier Reseller
must own more than 50% of its business at each approved location.
23. DEFECTIVE UNITS AND CUSTOMER SATISFACTION RETURNS
A. Second Tier Reseller must return all defective and customer
satisfaction Products through First Tier Reseller.
U.S. RESELLER AGREEMENT
1. APPOINTMENT
Hewlett-Packard Company ("HP") appoints Reseller as an authorized, non-exclusive
Reseller for marketing the HP Products listed on the Product Exhibits.
Reseller's appointment is subject to the terms and conditions set forth in this
U.S. Reseller Agreement and the associated Addenda, Product Exhibits, HP Product
Acquisition and Resale Categories ("Product Categories") and Operations Policy
Manual (collectively, "Agreement") for the period from the effective date
through the expiration date of this Agreement. Reseller accepts appointment on
these terms.
2. STATUS CHANGE
A. If Reseller wishes to:
1. Change its name or that of any approved location;
2. Add, close or change an approved location;
3. Undergo a merger, acquisition, consolidation or other
reorganization with the result that any entity controls 20% or more of
Reseller's capital stock or assets after such transaction; or
4. Undergo a significant change in control or management of
Reseller operations
then Reseller shall notify HP in writing prior to the intended date of change.
B. HP agrees to promptly notify Reseller of its approval or disapproval
of any proposed change, provided that Reseller has given HP all information and
documents reasonably
requested by HP.
C. HP must approve proposed Reseller changes prior to any obligation of
HP to perform under this Agreement with Reseller as changed.
4. MULTIPLE AGREEMENT DISCOUNTS
Unless otherwise specified by HP in writing, purchases of HP Products under this
Agreement and purchases under any other HP Agreement are exclusive of each other
for the purpose of calculating volume commitment and discount levels.
7. PRICES
A. HP's corporate price lists are internal data bases indicating
current List Prices for HP Products ("List Prices"). HP reserves the right to
change List Prices and discounts upon reasonable notice to Reseller. If Reseller
is unsure of the List Price to use in calculating net Reseller price for any HP
Product, Reseller should contact its HP sales representative.
B. Net Reseller price for HP Products purchased under this Agreement
will be the List Price at the time of Reseller's orders, less the discounts
based on Reseller's volume or other commitments or elections specified in the
Product Exhibits.
C. Net Reseller price includes shipment arranged by HP. HP reserves the
right to charge Reseller for any special routing, handling or insurance
requested by Reseller and agreed to by HP. Orders shipped special routing will
be F.O.B. Origin.
D. Net Reseller price excludes State and local taxes. HP will invoice
Reseller for these taxes, based on point of delivery, unless the appropriate
resale exemption certificates are on file at HP's order-entry point or HP agrees
the sale is otherwise exempt.
E. Upon request from Reseller, at its discretion HP may grant special
pricing for particular end-user customer transactions. In good faith, HP may
retract the special pricing at any time before acceptance by the end-user
customer. HP may extend the pricing on an exclusive or non-exclusive basis and
may condition the pricing on a pass-through of all or part of the non-standard
offering extended by HP.
8. PAYMENT AND SECURITY TERMS
A. Reseller will pay invoices within 30 days from the date of the
invoice. HP reserves the right to change credit terms at anytime when in HP's
opinion Reseller's financial condition or previous payment record so warrants.
B. Any Reseller claim for adjustment of an invoice is agreed to be
waived if Reseller fails to present it within 90 days from date of HP invoice.
No claims, credits, or offsets may be deducted from any invoice.
C. If Reseller fails to pay any sum due within 15 days of HP's written
notice of delinquency, HP may discontinue performance under this Agreement and
may revise credit terms for unshipped orders.
D. Reseller grants and HP reserves a purchase money security interest
in each Product purchased under this Agreement and in any proceeds thereof for
the amount of the purchase price from HP. Upon request by HP, Reseller will sign
any document required to perfect such security interest. Payment in full of the
purchase price of a Product purchased will release the security interest in that
Product.
9. ORDERS; SHIPMENTS; CANCELLATIONS AND CHANGES
A. Reseller's orders must comply with the minimum order, release,
ship-to and other requirements specified in this Agreement.
B. HP will honor written, fax and telephone orders from Reseller's
approved locations. Reseller is responsible for ensuring that only authorized
employees place, change or delete orders and that the orders conform to all
requirements of this Agreement.
C. Reseller's requested date for shipment must be within 90 days after
order date. HP reserves the right to schedule and reschedule any order, at HP's
discretion, and to decline any order for credit reasons or because the order
specifies an unreasonably large quantity or makes an unreasonable shipment
request.
D. HP will use reasonable efforts to meet scheduled shipment dates.
However, HP will not be liable for delay in meeting a scheduled shipment date.
E. Reseller must own more than 50% of Its business at each approved
location. HP will ship HP Products to Reseller under HP's standard shipment
terms and conditions but only to approved Shipment Locations authorized by HP on
Exhibit L. Shipment Locations may be the same as company-owned Selling
Locations. All Reseller's sales, advertising and promotional activities for HP
Products must be conducted from Selling Locations approved by HP. No sales,
advertisement or promotion of HP Products may be conducted from Shipment
Locations which are not also approved company-owned Selling Locations.
However, HP will ship to a maximum of six approved Shipment Locations and will
accept orders only from a single order point. An exception will be made where a
Product Exhibit indicates drop shipment is available for a specific HP Product
under a special program; drop shipment for those HP Products will be subject to
limitations indicated in the Product Exhibits.
F. Shipments are subject to availability. If HP Products are in short
supply, HP will allocate them equitably, at HP's discretion.
G. Title to HP Products and risk of loss and damage will pass to
Reseller F.O.B. Destination.
10. PRICE ADJUSTMENTS; PRICE PROTECTION
A. If HP raises Net Reseller prices (either through List Price
increases or Product Exhibit discount reductions) HP will invoice Reseller based
on the old List Price or discount for affected HP Product orders placed by
Reseller within one month after the effective date of the increase. Limited
quantity restrictions may apply.
B. If HP reduces Net Reseller prices (either through a List Price
reduction or a combination of List Price and discount changes), HP will invoice
Reseller based on the reduced Net Reseller price for affected HP Products
shipped on or after the effective date of the reduction.
C. If HP offers a limited time promotional HP Product discount to all
Resellers (excluding rebates and spiffs of all forms), HP will invoice Reseller
based on the Net Reseller price less the promotional discount for orders
conforming to and shipments made pursuant to the terms and conditions of the
promotion.
D. If HP reduces Net Reseller prices or offers a limited time HP
Product promotional discount to all Resellers and the HP Products are eligible
for price protection as designated on the Product Exhibits, then HP will grant
Reseller a price protection credit calculated by one of the two following
methods at HP's discretion:
1 . The credit will equal the total reduction in Net Reseller
price (less any previous promotional discount available from HP) for those HP
Products in Reseller's inventory and in transit to Reseller on the effective
date of the reduction, using a verification process determined by HP; or
2. The credit will equal 100% of the total reduction in Net
Reseller price (less any previous promotional discount available from HP) for
those HP Products shipped within 30 days before the effective date of the
reduction, or 75% of the reduction for those HP Products shipped within 60 days
before that date, whichever is greater.
E. To receive a price protection credit by the inventory method,
Reseller upon notification of a change in price from HP and upon request, will
complete, sign and return to HP a form showing the number of units (including
serial numbers) in inventory and in transit to Reseller on the effective date of
the reduction. The format for the form may be defined by Reseller but must meet
the approval of HP. If Reseller fails to submit the form within 30 days of the
effective date of the reduction, Reseller will receive no price protection for
eligible products.
F. In all cases, HP may require that Reseller accumulate a minimum
credit of $200 within a particular month before HP extends price protection to
Reseller for that month.
G. HP reserves the right to offer Reseller obsolete, used or
refurbished HP Products and to offer Reseller HP Products through special
promotions at discounts different from those in the Product Exhibits and on
terms which may not include rights to price protection, stock adjustment,
promotional funds allowance or count towards Reseller's volume commitment
levels.
11. SOFTWARE
Reseller is granted the right to distribute software materials supplied by HP
only in accordance with the license terms supplied with these materials.
Reseller may alternatively acquire the software materials from HP for its own
demonstration purposes in accordance with the terms for use in those license
terms.
12. TRADEMARKS
A. From time to time, HP may authorize Reseller to display one or more
designated HP trademarks. Reseller may display the trademarks solely to promote
HP Products. Any display of the trademarks must be in good taste, in a manner
that preserves their value as HP trademarks, and in accordance with standards
provided by HP for their display. Reseller will not use any name or symbol in a
way which may imply that Reseller is an agency or branch of HP; Reseller will
discontinue any such use of a name or mark as requested by HP. Any rights or
purported rights in any HP trademarks acquired through Reseller's use belong
solely to HP.
B. Reseller grants HP the non-exclusive, royalty free right to display
Reseller's trademarks in advertising and promotional material solely for
directing prospective purchasers of HP Products to Reseller's Selling Locations.
Any display of the trademarks must be in good taste, in a manner that preserves
their value as Reseller's trademarks, and in accordance with standards provided
by Reseller for their display. Any rights or purported rights in any Reseller
trademarks acquired through HP's use belong solely to Reseller.
13. WARRANTY
A. HP Product User Warranties are described on the Product Exhibits and
apply only to end-user purchasers of HP Products. HP revisions to the User
Warranties will be effective on the date specified by HP. Copies of User
Warranties will be supplied with HP Products. Reseller must provide a copy of
the associated User Warranty for an HP Product to each end-user prior to sale.
B. HP Product Warranty begins upon purchase by the end-user customer
and shall be verified by proof of acquisition by the end-user or via HP's
electronic warranty verification system.
C. HP PRODUCT USER WARRANTIES ARE THE EXCLUSIVE WARRANTIES COVERING HP
PRODUCTS AND ARE IN LIEU OF ANY OTHER WARRANTIES, WRITTEN OR ORAL, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.
D. Some HP Products may contain selected remanufactured parts
equivalent to new in performance.
14. LIMITATION OF REMEDIES AND LIABILITY
A. The remedies provided in this Agreement are Resellers sole and
exclusive remedies against HP.
B. HP will be liable for damage to tangible property, bodily injury or
death to the extent a court of competent jurisdiction determines that an HP
Products sold under this Agreement is defective and has directly caused such
damage, injury or death, provided that HP's liability for damage to tangible
property will be limited to $300,000 per incident.
C. HP will be liable to Reseller for any net credits due from HP
pursuant to the express provisions of this Agreement. In no event will HP be
liable for loss of data, for indirect, special, incidental or consequential
damages (including lost profits) or for any other damages whether based on
contract, tort, or other legal theory.
15. INTELLECTUAL PROPERTY INDEMNITY
A. HP will defend any claim against Reseller that any HP Product
infringes a patent, utility model, industrial design, copyright, mask work or
trademark in the country where Reseller acquires or sells the Product from HP,
provided that Reseller:
1. Promptly notifies HP in writing of the claim; and
2. Cooperates with HP in and grants HP sole authority to
control the defense and any related settlement.
HP will pay the cost of such defense or settlement and any costs and damages
finally awarded by a court against Reseller.
B. HP's indemnity shall extend to Resellers customers and end-users
under this Agreement provided they comply with the obligations above.
C. HP may procure for Reseller, its customers and end-users the right
to continued sale or use, as appropriate, of the Product or HP may modify or
replace the Product. If a court enjoins the sale or use of the Product and HP
determines that none of the above alternatives is reasonably available, HP will
accept return of the Product and refund its depreciated value.
D. HP has no obligation for any claim of infringement arising from:
1. HP's compliance with any designs, specifications or
instructions of Reseller;
2. Modification of the Product by Reseller or a third party;
3. Use of the Product in a way not specified by HP; or
4. Use of the Product with products not supplied by HP.
E. This Section states HP's entire liability to Reseller and its
customers and end- users for infringement.
16. RESELLER RECORD-KEEPING
A. For contract compliance verification, product safety information,
operational problem correction and the like, Reseller must maintain records of
customer purchases of printers, plotters, taxes, scanners and computers for one
year. Records must include customer name, address, phone number, ship-to
address, serial number and date of sale of the above products.
B. HP may require Reseller to provide HP or HP's designate with HP
Product inventory and sales data including, but not limited to, information such
as total units of selected HP Products sold and held in inventory by month for
each approved location, in a format specified by HP. HP may require monthly
reporting incorporating the previous month's data for each approved location.
C. In addition, Reseller must comply with any reporting requirements
for HP programs.
D. At HP's discretion and upon notice to Reseller, HP or HP's designate
will be given prompt access, either on site or through other means specified by
HP, to Reseller's customer records, inventory records and other books and
records of account as HP believes are reasonably necessary to verify and audit
Reseller's compliance with this Agreement.
E. Failure to promptly comply with HP's request will be considered a
repudiation of this Agreement justifying HP's termination of this Agreement on
30 days' notice without further cause.
F. HP may recover all reasonable actual costs associated with
compliance verification procedures from any promotional funds, rebate funds or
any other HP accrued funds due Reseller.
G. HP may debit Reseller for all wrongfully claimed discounts, rebates,
promotional allowances or other amounts determined as a result of HP's audit.
17. AMENDMENTS
A. From time to time, HP may add products to or delete them from the
Product Exhibits, or implement or change HP policies or programs at HP's
discretion, after reasonable notice to Reseller.
Additionally, HP may give Reseller written notice of any other amendment to this
Agreement upon at least 30 days' advance notice.
B. Any amendment will automatically become a part of this Agreement on
the effective date specified in the notice.
C. Each party agrees that the other has made no commitments regarding
the duration or renewal of this Agreement beyond those expressly stated in this
Agreement.
18. TERMINATION OF AGREEMENT
A. Either party may terminate this Agreement without cause at any time
upon 30 days' written notice or with cause at any time upon 15 days' written
notice to the other party.
B. If either party gives the other notice of termination or advises the
other of its intent not to renew this Agreement, HP may require that Reseller
pay cash in advance for additional shipments during the remaining term,
regardless of Reseller's previous credit status, and may withhold all such
shipments until Reseller pays its outstanding balance.
C. Upon termination or expiration of this Agreement for any reason,
Reseller will immediately cease to be an authorized HP Reseller and will refrain
from representing itself as such and from using any HP trademark or trade name.
D. Upon any termination or expiration, either party may require that HP
purchase from Reseller any HP Products purchased under this Agreement that are
on HP's then current Product Exhibits, which are in their unopened, original
packaging and marketable as new merchandise. The repurchase price shall be the
lower of either the Net Reseller Price on the date of termination or expiration
or Reseller's original purchase price, in each case less any promotional or
other discounts or price protection or other credit extended by HP to Reseller
for the HP Product. Reseller should contact its HP sales representative for
information about the items eligible for repurchase and instructions for their
return at HP's expense.
E. Upon termination of this Agreement or expiration without renewal all
rights to any accrued Advantage Program or other promotional funds will
automatically lapse.
F. The indemnities provided in this Agreement will survive termination
or expiration of this Agreement.
19. RELATIONSHIP
A. Reseller's relationship with HP will be that of an independent
contractor. Nothing stated in this Agreement shall be construed as making
Reseller and HP a franchise, joint venture or partnership.
B. Unless expressly authorized by HP in writing in advance, any
commitment made by Reseller to its customers with respect to price, quantities,
delivery, specifications, warranties, modifications, interfacing capability or
suitability will be Reseller's sole responsibility, and Reseller will indemnity
HP from liability for any such commitment by Reseller.
C. List Prices are suggested prices for resale to end-user customers
and a basis for calculating Net Reseller price. Reseller has the right to
determine its own resale prices, and no HP representative will require that any
particular resale price be charged by Reseller or grant or withhold any
treatment to Reseller based on Reseller's resale pricing policies. Reseller
agrees that it will promptly report any effort by HP personnel to interfere with
its pricing policies directly to an HP officer or manager.
D. This Agreement applies only to the HP Products listed on the Product
Exhibits (U.S. versions only). Reseller acknowledges that HP may market other
products, including products in competition with those listed on the Product
Exhibits without making them available to Reseller. HP reserves the right to
advertise, promote and sell any product, including HP Products on the Product
Exhibits, in competition with Reseller.
20. POLICIES & PROGRAMS
From time to time, HP may offer or change HP policies and programs, such as but
not limited to the Advantage Program, Premier Support program and other programs
and policies in HP's Operations Policy Manual, participation in which will be on
the current terms and conditions of the policies & programs.
21. GENERAL CONDITIONS
A. Neither party may assign any rights or obligations in this Agreement
without the prior written consent of the other party. Any attempted assignment
will be deemed void.
B. Neither party's failure to enforce any provision of this Agreement
will be deemed a waiver of that provision or of the right to enforce it in the
future.
C. This Agreement, including the attached Addenda, associated Product
Exhibits and Product Categories contains the entire understanding between the
parties relating to its subject matter. HP hereby gives notice of objection to
any additional or inconsistent terms set forth in any purchase order or other
document issued by Reseller. Except as provided in paragraphs 17A and 17B of
this Agreement, no modification of this Agreement will be binding on either
party unless made in writing and signed by both parties.
D. No U.S. Government procurement regulations will be deemed included
in this Agreement or binding on either party unless specifically accepted in
writing and signed by both parties.
E. This Agreement will be governed by the laws of the State of
California.
F. If any clause of this Agreement is held invalid, the remainder of
this Agreement will continue unaffected.
22. NOTICES
All notices and demands issued under the terms of this Agreement shall be in
writing, delivered by fax, personal service, first class mail postage prepaid,
or by registered mail to a location set forth in this Agreement or to HP at 5301
Stevens Creek Boulevard, P.O. Box 58059, Santa Clara, California 95052-8059 or
to the assigned local HP sales representative.
8TH AMENDMENT TO LEASE
That certain lease dated September 15, 1992, by and between AmberJack, Ltd.,
Landlord, and MicroAge Computer Centers, Inc., Tenant, for the premises located
at 1620 W. Fountainhead Parkway, Tempe, Az 85282, is amended this 16th day of
January, 1995 solely as hereinafter described:
2. Rent
Effective May l, 1995; Tenant agrees to pay as Base Monthly Rent the sum of
thirty nine thousand two hundred forty & 41/100 dollars ($39,240.41) per month
for each and every month of this lease (the "Base Monthly Rent"), subject to
adjustment, as provided in Paragraph 3 and 4 of the Lease Agreement, payable in
advance on the first day of the month without offset, except as expressly
provided for herein, commencing with the effective date of this Amendment.
The Base Monthly Rent has been calculated on the basis of 12,211 square feet of
rentable area of Leased Premises (Suite 200/300) leased at the annual rate of
thirteen and no/100 dollars ($13.00) per square foot of such rentable area;
4,152 square feet of rentable area of Leased Premises (Suite 200A) leased at the
annual rate of eleven and no/100 dollars ($11.00) per square foot of such
rentable area; 3,173 square feet of Leased Premises (Suite 190) leased at the
annual rate of twelve and 50/100 dollars ($12.50) per square foot of such
rentable area; 7,124 square feet of Leased Premises (Suite 330) leased at the
annual rate of eleven and 25/100 ($11.25) per square foot of such rentable area;
6,669 square feet of Leased Premises (Suite 310) leased at the annual rate of
twelve and 50/100 dollars ($12.50) per square foot of such rentable area; 2,932
square feet of Leased Premises (Suite 360) leased at the annual rate of twelve
and 50/100 per square foot of such rentable area; and 2,132 square feet of
Leased Premises (Suite 170) leased at the annual rate of twelve and 50/100
dollars ($12.50) per square foot of such rentable area. See Exhibit A-8.
4. Operating Expenses.
Effective May 1, 1995; (b)(iii) for the purpose of this Lease, the Tenant's
Percentage is deemed to be thirty-one point one nine percent (31.191%).
5. Parking.
Effective May 1, 1995; Landlord shall provide 57 covered reserved parking spaces
and 39 covered unreserved spaces, free of charge, for the duration of the lease
term.
Except as modified in this Amendment #8, the terms and conditions of the Lease
shall remain in full force and effect. All defined terms used herein shall have
the meanings attributed to them in the Lease.
TENANT
MicroAge Computer Centers, Inc.
By:____________________________
Its:___________________________
Date:__________________________
LANDLORD
Interwestern Management Corporation Managers for AmberJack, Ltd.
By:____________________________
Its:___________________________
Date:__________________________
9TH AMENDMENT TO LEASE
That certain lease dated September 15, 1992, by and between AmberJack Ltd.,
Landlord, and MicroAge Computer Centers, Inc., Tenant, for the premises located
at 1620 W. Fountainhead Parkway, Tempe, Az 85282, is amended this 16th day of
January, 1995 solely as hereinafter described:
2. Rent
Effective March 1, 1995; Tenant agrees to pay as Base Monthly Rent the sum of
forty thousand eight hundred eighty-two & 08/100 dollars ($40,882.08) per month
for each and every month of this lease (the "Base Monthly Rent"), subject to
adjustment, as provided in Paragraph 3 and 4 of the Lease Agreement, payable in
advance on the first day of the month without offset, except as expressly
provided for herein, commencing with the effective date of this Amendment.
The Base Monthly Rent has been calculated on the basis of 12,211 square feet of
rentable area of Leased Premises (Suite 200/300) leased at the annual rate of
thirteen and no/100 dollars ($13.00) per square foot of such rentable area;
4,152 square feet of rentable area of Leased Premises (Suite 200A) leased at the
annual rate of eleven and no/100 dollars ($11.00) per square foot of such
rentable area; 3,173 square feet of Leased Premises (Suite 190) leased at the
annual rate of twelve and 50/100 dollars ($12.50) per square foot of such
rentable area; 7,124 square feet of Leased Premises (Suite 330) leased at the
annual rate of eleven and 25/100 ($11.25) per square foot of such rentable area;
6,669 square feet of Leased Premises (Suite 310) leased at the annual rate of
twelve and 50/100 dollars ($12.50) per square foot of such rentable area; 2,932
square feet of Leased Premises (Suite 360) leased at the annual rate of twelve
and 50/100 per square foot of such rentable area; 2,132 square feet of Leased
Premises (Suite 170) leased at the annual rate of twelve and 50/100 dollars
($12.50) per square foot of such rentable area; and 1,576 square feet of Leased
Premises (Suite 160) leased at the annual rate of twelve & 50/100 dollars
($12.50) per square foot of such rentable area. See Exhibit A-9.
4. Operating Expenses.
Effective March 1, 1995; (b)(iii) for the purpose of this Lease, the Tenant's
Percentage is deemed to by thirty-two point four eight percent (32.48%).
5. Parking.
Effective March 1,1995; Landlord shall provide 61 covered reserved parking
spaces and 40 covered unreserved spaces, free of charge, for the duration of the
lease term.
Except as modified in this Amendment #9, the terms and conditions of the Lease
shall remain in full force and effect. All defined terms used herein shall have
the meanings attributed to them in the Lease.
TENANT
MicroAge Computer Centers, Inc.
By:____________________________
Its:___________________________
Date:__________________________
LANDLORD
Interwestern Management Corporation Managers for AmberJack, Ltd.
By:_____________________________
Its:____________________________
Date:___________________________
EXHIBIT 11.1
MICROAGE, INC.
PRIMARY EPS DETAIL CALCULATION
26 weeks ended
---------------------------
April 30, May 1,
1995 1994
----------- -----------
Common stock
- ------------------------------
Weighted average common shares ................. 14,072,853 11,925,853
Common stock equivalents
- -------------------------------------
Weighted average warrants and options .......... 196,046 745,991
----------- -----------
Total weighted average common and
common equivalent shares outstanding ........ 14,268,899 12,671,844
=========== ===========
Net income available for EPS ................... $ 5,303,000 $ 9,686,000
Primary EPS .................................... $ 0.37 $ 0.76
EXHIBIT 11.2
MICROAGE, INC.
FULLY DILUTED EPS DETAIL CALCULATION
26 weeks ended
---------------------------
April 30, May 1,
1995 1994
----------- -----------
Net income available for primary EPS ......... $ 5,303,000 $ 9,686,000
=========== ===========
Shares per primary EPS ....................... 14,268,899 12,671,844
additional shares issuable ............. 30 13,698
----------- -----------
14,268,929 12,685,542
=========== ===========
Fully diluted EPS ............................ $ 0.37 $ 0.76
=========== ===========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets (Unaudited) as of April 30, 1995 and October 30,
1994 and the Consolidated Statements of Income (Unaudited) for the quarters and
26 weeks ended April 30, 1995 and May 1, 1994 contained in the Form 10-Q for the
quarterly and 26 week periods ended April 30, 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000814249
<NAME> MICROAGE, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-30-1994
<PERIOD-START> JAN-30-1995
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<CASH> 19,852
<SECURITIES> 0
<RECEIVABLES> 122,752
<ALLOWANCES> (8,884)
<INVENTORY> 318,402
<CURRENT-ASSETS> 453,689
<PP&E> 74,720
<DEPRECIATION> (33,785)
<TOTAL-ASSETS> 524,310
<CURRENT-LIABILITIES> 348,463
<BONDS> 0
0
0
<COMMON> 144
<OTHER-SE> 172,416
<TOTAL-LIABILITY-AND-EQUITY> 524,310
<SALES> 743,460
<TOTAL-REVENUES> 743,460
<CGS> 704,204
<TOTAL-COSTS> 704,204
<OTHER-EXPENSES> 30,393
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,156
<INCOME-PRETAX> 4,270
<INCOME-TAX> 1,839
<INCOME-CONTINUING> 2,431
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,431
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
