EXHIBIT 10(b)
FOURTH AMENDMENT TO MERCHANDISE AGREEMENT
FOURTH AMENDMENT TO MERCHANDISE AGREEMENT (this "Fourth Amendment") dated
as of July 1, 1996, by and among InterTAN Canada Ltd. ("ITC"), a corporation
organized under the laws of the Province of Alberta, Canada, InterTAN, Inc., a
Delaware corporation, InterTAN Australia Ltd. ("ITA"), a corporation organized
under the laws of the State of New South Wales, Australia, InterTAN U.K. Limited
("ITUK"), a corporation organized under the laws of England and Wales, and
Technotron Sales Corp. Pty. Ltd. ("TSC"), a corporation organized under the laws
of the State of New South Wales, Australia (along with their respective current
or future subsidiaries, being collectively referred to herein as the "ITI-
GROUP") and Tandy Corporation ("TANDY"), a Delaware corporation, and A&A
International, Inc. ("A&A"), a Nevada corporation.
WHEREAS, each of the parties hereto entered into that certain Merchandise
Agreement signed on or about October 8, 1993, and dated (or which is hereby
deemed to have been dated) as of October 15, 1993 (the "Agreement"); and
WHEREAS, Article One, Section 1.3 of the Agreement, entitled "Ordering of
Merchandise by Members of the ITI-GROUP", as amended by the First Amendment to
Merchandise Agreement (dated November 1, 1993), specifies the method by which
the ITI-GROUP members place orders with vendors through A&A for merchandise
described in Section 1.1 of the Agreement and furnish letters of credit in
respect of such purchase orders; and
WHEREAS, the parties hereto have agreed to, among other things, change the
procedures relating to letters of credit to be issued by ITC, ITA, and ITUK as
set out in Section 1.3 of the Agreement as previously amended; and
WHEREAS, in order to give affect to the parties' intentions, the parties
hereto desire to execute this Fourth Amendment;
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NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions. Terms used herein shall have the meanings set
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forth in the Agreement as amended by the First Amendment to Merchandise
Agreement, except as otherwise defined herein.
Section 2. Deletion of Second Amendment. The Second Amendment to
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Merchandise Agreement is hereby canceled, deleted in its entirety, and is
hereafter of no force and effect.
Section 3. Amendment to Section 1.3. Section 1.3 of Article I of the
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Agreement, as previously amended by the First Amendment to Merchandise
Agreement, is hereby further amended by adding a definition of Same SKU
Merchandise prior to Section 1.3(a) and by adding the following new provisions
to the end of subsections (d) and (e) thereof and by adding new Section 1.3(j)
as set out below:
Prior to Section 1.3(a), add--
"Definition: "Same SKU Merchandise" as used hereafter means ITI-Group-ordered
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merchandise which bears the same SKU designation as that ordered by A&A for sale
in Tandy's Radio Shack stores in the United States and is the same product
(allowing for differences in packaging and instructions) as that sold in the
Tandy-owned Radio Shack stores in the United States. Once a product is
identified as "Same SKU Merchandise" it shall remain "Same SKU Merchandise" for
so long as it is sold in Tandy-owned RadioShack stores in the United States,
even if either party changes its SKU number. Neither party may change an SKU
number of a product identified as Same SKU Merchandise without the consent of
the other party, which will not be unreasonably withheld."
Add the following to the end of Section 1.3(d)--
(d) "...; provided, however, that in the case of Open Orders for products
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intended for sale in Canada, the U.K., and Australia and placed after May 15,
1996, the L/C Notice shall specify instead of the above, the
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following: (i) the aggregate U.S. dollar amount of all Open Orders issued by and
relating to ITC, ITUK, or ITA, as appropriate, less the aggregate U.S. dollar
amount of Same SKU Merchandise as of the date of such notice and as reflected in
A&A's records; (ii) the percentage applicable to (i) above as set out in
subsection (e) below; (iii) the aggregate U.S. dollar amount of Same SKU
Merchandise on Open Orders issued by and relating to ITC, ITUK, or ITA, as
appropriate, as of the date of such notice and as reflected in A&A's records;
(iv) the percentage applicable to (iii) above as set out in subsection (e)
below; and (v) the U.S. dollar amount by which each L/C intended to cover Open
Orders shall be adjusted and the aggregate U.S. dollar amount of each L/C after
giving effect to such adjustment."
Add the following to the end of Section 1.3(e)--
(e) "...; and provided further, that, in the case of Open Orders for products
--- -------- -------
intended for sale in Canada, the U.K., and Australia and placed after May 15,
1996, the percentage of the aggregate U.S. dollar amount of Open Orders
specified in each L/C Notice to be covered by ITC, ITUK, or ITA, as appropriate,
with respect to such Open Orders shall be adjusted as follows for Same SKU
Merchandise:
(x) Aggregate U.S. dollar amount of Open Orders less the aggregate U.S.
dollar amount of Same SKU Merchandise, the resulting amount then
multiplied by the applicable percentage stated in Section 1.3(e)(i),
(ii), (iii), (iv), (v) and (vi) above AND
---
(y) The aggregate U.S. dollar amount of Same SKU Merchandise, multiplied
by 60%, the result of which shall be multiplied by the applicable
percentage stated in Section 1.3(e)(i), (ii), (iii), (iv), (v), and
(vi) above."
Add the following new Section 1.3(j)--
(j) "The parties agree that beginning January 1, 1997, the ITI-Group, as an
alternative procedure to that stated in Section 1.3(a) through (h) above, may
post one or more standby letters of credit ("SL/C's") in an amount or amounts
acceptable to A&A at banks acceptable to A&A. The ITI-Group shall notify A&A in
writing of their intent to use this alternative procedure at least 60 days prior
to implementation of this alternative procedure. Each SL/C shall (i) be
irrevocable in form, (ii) valid for a full calendar year, (iii) specify the ITI-
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Group member or members sending the Bookings, (iv) specify A&A International,
Inc., 0000 Xxx Xxxxx Xxxxxx, Xxxx Xxxxx, Xxxxx 00000, X.X.X. as the beneficiary,
(v) provide for payment to A&A in United States dollars, and (vi) provide for
payment to A&A upon the delivery of an original letter, or telecopy or facsimile
transmission thereof signed by Xxxxx Xxxxx of A&A or the President or any Vice-
President or the Controller of A&A, which letter shall provide (1) the SL/C
number (if any), and (2) the amount, in U.S. dollars, that the ITI-Group has
failed to pay and which is past due. The ITI-Group and the banks shall agree
that no affidavit or sworn certification shall be required from A&A in order for
A&A to draw on the SL/C. The ITI-Group agrees to pay A&A all amounts due within
five (5) days from the date of the payment request and agrees that upon its
failure to do so, A&A shall be entitled to immediately present the letter
described above to the bank and draw upon the SL/C for payment. Further, if for
any reason A&A is unable to draw upon the SL/C for payment, A&A may declare the
ITI-Group in default of this Agreement, terminate same, and enforce its rights
hereunder."
Section 4. Amendment to Section 1.4. Section 1.4 of Article I of the
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Agreement is amended by deleting the introductory paragraph in its entirety up
through the word "...commission:" and replacing the paragraph with the
following: "A&A will perform the export agent's services described above for
the purchasing agent's commission described below:".
Section 5. Addition of Section 1.12. Article I of the Agreement is
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amended by adding the following New Section 1.12:
"1.12 Fee and Credit Renegotiation.
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Each of the Purchasing Agent's Commission set out in Section 1.4 above, the
Purchasing Agent/Exporter Fee set out in Section 1.5 above, and the Merchandise
Credit set out in Section 1.6 above may be renegotiated by the parties at any
time upon the request of either party. The parties agree to meet to discuss each
of the Purchasing Agent's Commission, the Purchasing Agent/Exporter Fee, and the
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Merchandise Credit (collectively herein the "A&A Payments", or individually, an
"A&A Payment") in the six month period beginning January 1, 2000 and ending June
30, 2000; and agree, assuming that this Agreement is still in effect, to meet
again for the same purpose in the six month period beginning January 1, 2005 and
ending June 30, 2005. However, neither A&A nor Tandy shall have any duty or
obligation with regard to the meeting(s), either express or implied, to do
anything beyond discussing these matters. In the event the parties hereto are
unable to mutually agree upon the amount of or formula relating to the aggregate
of the A&A Payments or any A&A Payment, then any party hereto may, upon one
hundred eighty (180) days prior written notice to the other parties, terminate
this Agreement, or any portion hereof, or any services provided hereunder."
Section 6. Addition of Section 1.13. Article I of the Agreement shall be
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amended by inserting after Section 1.12, the following new section:
"1.13 ITUK and ITA Contact Employee Cost Sharing.
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(a) The ITI-Group plans to employ two persons to act as a focal point for
operational and planning issues that develop between A&A and the ITI-Group,
including providing A&A with local market analysis and coordinating product
development and marketing between the ITI-Group and A&A (the "contact person").
Tandy agrees to share the Reasonable and Necessary costs of the ITI-Group to
maintain one ITUK employee in the U.K. and one ITA employee in Australia to act
as a contact person with A&A on the following basis. If either ITUK or ITA,
respectively, purchases through A&A as purchasing agent the amount of
merchandise specified below as a Purchase Level for each of ITUK and ITA below
for the corresponding fiscal year for each indicated below, then Tandy will
reimburse either ITUK or ITA, or both of them, the percentage(s) stated below of
the undisputed costs of maintaining the contact person for each fiscal year in
which either ITUK or ITA, or both of them, achieve(s) such Purchase Levels, up
to a maximum of U.S. $150,000 in any one fiscal year for each of the two contact
employees:
(in thousands -- U.S. Dollars)
YEAR PURCHASE LEVEL TANDY'S COST
---- -------------- ------------
-ITUK SHARING %-
----- ----------
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ITUK
----
FY'97 29,858 50%
FY'98 35,830 50%
FY'99 36,000/*/ 100%
/*/ If ITUK purchases from A&A for any FY equal or exceed 36,000,
Tandy will reimburse the ITI-Group 100% of the costs that are not in
dispute, up to a maximum of U.S. $150 in any fiscal year.
(in thousands-U.S. Dollars)
YEAR PURCHASE LEVEL TANDY'S COST
---- -------------- ------------
-ITA SHARING %-
--- ----------
ITA
---
FY'97 19,661 50%
FY'98 23,593 50%
FY'99 24,000/*/ 100%
/*/ If ITA purchases from A&A for any FY equal or exceed 24,000, Tandy
will reimburse the ITI-Group 100% of the costs that are not in
dispute, up to a maximum of U.S. $150 in any fiscal year.
By August 30 of each year, beginning in 1997, ITI-Group purchases will be
calculated for the most recently completed fiscal year ended June 30 to
determine Tandy's share of costs, if any.
(b) Expatriate Costs. An "expatriate employee" is an employee who has worked
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for A&A, who is hired by ITA or ITUK, and who moves to a country that is not his
or her country of permanent residence to act as the contact employee for ITA or
ITUK. Unless otherwise agreed by the parties in writing at the time of
submission of the costs to Tandy for payment, the Reasonable and Necessary costs
for an expatriate employee ("expatriate costs") are agreed to be the following:
1. Salary and related costs of the customary benefit plans for
employees at the same or similar salary level;
2. Automobile allowance;
3. Cost of living allowance;
4. Housing allowance;
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5. Income tax equalization payments and reasonable tax
return preparation costs; and
6. Initial relocation costs of the original expatriate
employee only.
In no event shall Tandy pay or share in paying expatriate costs past the fiscal
year ending June 30, 2002. In no event shall Tandy pay or share in paying
expatriate costs in excess of U.S. $150,000 in any fiscal year.
(c) Permanent Resident Costs. The reasonable and necessary costs for a
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permanent resident employee ("permanent resident costs") are agreed to be the
salary, related employee benefit costs, and initial relocation costs only,
unless otherwise agreed by the parties in writing. In no event shall Tandy pay
or share in paying permanent resident costs in excess of U.S.$150,000.
(d) Billing and Audit Right. Beginning in September, 1997, by September 30 of
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each year, the ITI-Group shall present detailed billing to Tandy for any costs
in which Tandy is to share for the most recently completed fiscal year. The
billing shall be in U.S. dollars based on the average exchange rate for the
applicable fiscal year and by October 31 of each year Tandy shall pay any amount
not in dispute. Payment shall be due in U.S. Dollars to InterTAN, Xxx.xx Fort
Worth, Tarrant County,Texas. The ITI-Group shall have a fiduciary duty to Tandy
to control the costs of the contact employee so that such costs are at a level
consistent with employees of the ITI-Group at the same or similar employment
levels. Within 30 days after the end of each quarter, ITUK and ITA each shall
submit to Tandy quarterly reports of all reimbursable costs related to the
contact employee for the quarter and all purchases for the quarter from A&A.
Tandy, at its sole cost, shall have the right to audit the records of the ITI-
Group concerning the contact employee, and comparable employees of the ITI-Group
at the same or similar employment levels, upon reasonable notice and during
regular business hours."
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Section 7. Amendment to Section 3.1. Section 3.1, subsection (a), of
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Article III of the Agreement is amended by deleting from the ninth line of the
first sentence the words "principle offices at Barrie, Ontario" and substituting
therefor the words "principal offices at Fort Worth, Texas."
Section 8. Amendment to Section 6.4. Section 6.4 of the Agreement is
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hereby amended by deleting ITC member address and substituting in its place the
following:
"InterTAN, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: President and/or General Counsel
Fax No. (000)000-0000"
Section 9. Amendment to Section 7.1. Section 7.1 of the Agreement is
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hereby amended by deleting the penultimate sentence thereof and substituting in
its place the following: "EACH MEMBER OF THE ITIGROUP (EXCEPT FOR ITI) HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCEEDS ON IT AND IRREVOCABLY APPOINTS
ITI AS ITS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE
STATE OF TEXAS."
Section 10. Ratification of Merchandise Agreement, the First Amendment to
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Merchandise Agreement, and the Third Amendment to Merchandise Agreement. The
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Agreement as amended by the First Amendment to Merchandise Agreement and the
Third Amendment to Merchandise Agreement is in all other respects hereby
ratified and confirmed, and all of its provisions, as hereby amended, continue
in full force and effect.
Section 11. Governing Law. THIS FOURTH AMENDMENT SHALL BE SUBJECT TO
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ARTICLE 7, SECTION 7.1 OF THE AGREEMENT ENTITLED "Texas Law Applicable;
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Submission to Jurisdiction".
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SECTION 7.1 OF THE AGREEMENT, AS AMENDED HEREIN, IS HEREBY ADOPTED BY REFERENCE
AND INCORPORATED HEREIN FOR ALL PURPOSES AS IF SET OUT AT LENGTH.
Section 12. Execution in Counterparts. This Fourth Amendment may be
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executed in any number of counterparts and by different parties hereto and
separate counterparts, each of which when so executed shall be deemed to be an
original, and all of which taken together shall constitute one and the same
Fourth Amendment. Delivery of an executed counterpart of a signature page to
this Fourth Amendment by telecopy shall be effective as delivery as a manually
executed counterpart of this Fourth Amendment.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Parties hereto have caused this Fourth Amendment to
Merchandise Agreement to be executed by their duly authorized representatives or
officers, all as of the day and year of the first above written.
TANDY CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Its: Senior Vice President and CFO
A&A INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxxx
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Its: Vice President
InterTAN CANADA LTD.
By: /s/ Xxxxx X. Xxxxxxx
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Its: President
InterTAN, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Its: President & CEO
InterTAN AUSTRALIA LTD.
By: /s/ Xxxxx X. Xxxxxxx
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Its: Director
InterTAN U.K. LIMITED
By: /s/ Xxxxx X. Xxxxxxx
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Its: Director
TECHNOTRON SALES CORP. PTY. LTD.
By: /s/ Xxxxx X. Xxxxxxx
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Its: Director
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