Exhibit 10.2
THIRD AMENDMENT TO RECEIVING, WAREHOUSING AND PHYSICAL
DISTRIBUTION SERVICES AGREEMENT
This THIRD AMENDMENT (this "Third Amendment"), dated as of June 25,
2007, is to that certain RECEIVING, WAREHOUSING AND PHYSICAL DISTRIBUTION
SERVICES AGREEMENT, dated as of July 8, 2004, as amended by First Amendment To
Warehousing And Physical Distribution Services Agreement dated as of July 19,
2004 and a letter agreement between FMI International, LLC and Footstar
Corporation dated January 7, 2005 (collectively, the "Agreement") by and between
Footstar Corporation, a corporation organized under the laws of the State of
Texas, ("Customer"), and FMI International LLC, a limited liability company
organized under the laws of the State of Delaware ("Supplier").
WITNESSETH:
WHEREAS, a dispute has arisen among the parties concerning the
Agreement;
WHEREAS, the parties wish to resolve all disputes between the parties
relating to the Agreement by amending certain of the terms of the Agreement; and
WHEREAS, all capitalized terms not otherwise defined herein shall have
such meaning as ascribed to them in the Agreement;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other good and valuable consideration receipt of which
hereby is acknowledged, the parties hereto hereby agree as follows:
1. Section 4.1(c). Section 4.1(c) hereby is amended as follows:
(i) The word "Customer" on the sixteenth line of Section 4.1(c) is hereby
changed to "Supplier";
(ii) The last sentence of Section 4.1(c) hereby is deleted in its entirety
and the following sentence is inserted in its place: "Notwithstanding
anything to the contrary in this Section 4.1(c) or anywhere else in the
Agreement, during the period commencing January 1, 2007 and ending December
31, 2008, Supplier shall not, and shall have no right to, move the Customer
Parties' products and Services to a different facility."
2. Section 4.1(d). Section 4.1(d) hereby is amended by deleting in their
entirety the third, fourth and fifth sentences of Section 4.1(d).
3. Section 4.1(e). Section 4.1 hereby is amended by adding subsection (e)
as follows:
"(e) Commencing on January 1, 2007 and ending on December 31, 2008
(the "07/08 Period"), Customer agrees that Supplier's fees generated for the
Services provided hereunder to Customer (the "Revenue") shall be at least
$17,750,000 (Seventeen Million Seven Hundred Fifty Thousand Dollars) for the
07/08 Period (the "07/08 Minimum Revenue"). To the extent the actual amount
incurred for Services for the 07/08 Period pursuant to this Agreement is greater
than the 07/08 Minimum Revenue amounts paid by Customer, then the difference
between such actual amount incurred and the 07/08 Minimum Revenue amount (the
"07/08 Shortfall") shall be paid by Customer to Supplier by January 31, 2009.
Subject to Customer's Special Termination Right set forth in Section 13.5,
during each calendar year after the 07/08 Period, Customer agrees to the MQC as
established in accordance with Section 10.4 (the "Annual MQC"). Supplier
acknowledges and agrees that (i) there is no minimum quantity commitment for the
07/08 Period and (ii) Customer has no specified unit volume requirement under
the Agreement. Supplier acknowledges and agrees that any estimates of units
provided or to be provided by Customer for the 07/08 Period have been provided
for planning purposes only and do not and shall not create any minimum quantity
commitment whatsoever under the Agreement. The Annual MQC shall be trued-up
quarterly within thirty (30) days after the end of each calendar quarter to
determine the actual total units processed and/or received against the Annual
MQC for such quarter. If there is any quarterly shortfall to the Annual MQC,
Customer shall pay to Supplier an amount equal to such shortfall from the Annual
MQC multiplied by the billable transaction rate for the type of transaction
where such shortfall exists. If Customer has paid Supplier an aggregate amount
in excess of the Annual MQC multiplied by the billable transaction rate during
such calendar year, then at Customer's option, Supplier shall (a) pay the amount
of such excess to Customer within thirty (30) days after the end of such
calendar year or (b) apply as a credit against the first invoice for Services in
the immediately following calendar year an amount equal to such excess paid by
Customer (and to the extent that such excess exceeds the first invoice, then the
following invoice(s) shall be credited until Customer has been credited for the
entire amount of such excess)."
4. Section 4.1(f). Section 4.1 of the Agreement is hereby amended by adding
subsection (f) as follows:
"Notwithstanding the foregoing to the contrary, on or before October
15, 2008, Customer and Supplier shall compare the actual amount incurred for
Services against the 07/08 Minimum Revenue payments using (i)(A) the actual
amount incurred for Services from January 1, 2007 through September 30, 2008
plus (B) the estimate of the amount to be incurred for Services for the period
October 1, 2008 through December 31, 2008 based on Customer's supplied unit
plans as compared to (ii)(A) the 07/08 Minimum Revenue amounts paid by Customer
to Supplier from January 1, 2007 through September 30, 2008 plus (B) the 07/08
Minimum Revenue amounts to be paid by Customer to Supplier from October 1, 2008
to December 31, 2008. If the amount of (i) under this subsection (f) exceeds the
amount of (ii) under this subsection (f) and such excess is greater than
$250,000 (the "Preliminary 07/08 Shortfall") then Customer shall pay Supplier
the amount of the Preliminary 07/08 Shortfall on or before October 31, 2008."
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5. Section 4.1(g). Section 4.1 of the Agreement is hereby amended by adding
subsection (g) as follows:
"(g) The 07/08 Minimum Revenue shall be paid in accordance with
Schedule 4.1(g) attached hereto and made a part hereof. Such payments shall be
made on or before the 15th day of each month commencing with July 2007 and,
subject to any 07/08 Shortfall, shall be the only payments made by Customer
during the 07/08 period. Notwithstanding the foregoing to the contrary, Customer
and Supplier shall reconcile (i) amounts actually paid to Supplier under the
Agreement from January 1, 2007 through the date of this Third Amendment against
(ii) payments for such period which would have been made under Schedule 4.1(g)
of this Third Amendment and if the amount of "(ii)" under this subsection (g) is
greater than the amount of "(i)" under this subsection (g), the difference shall
be paid by Customer to Supplier on or before June 29, 2007."
6. Section 11.1(b). Section 11.1(b) hereby is amended by adding the
following sentence at the end thereof: "This Section 11.1(b) shall not be
applicable during the 07/08 Period."
7. Section 13.3(b). Section 13.3(b) hereby is amended as follows:
(i) The word "Customer" is substituted for the word "Supplier" on the
seventh line of Section 13.3(b); and
(ii) The following sentence is added at the end of Section 13.3(b): "If
Supplier signs a contract with another customer to provide Services at the
Facility and the dollar amount of Services to be rendered under that
contract in any given year exceeds the dollar amount of Services to be
rendered under this Agreement during that same year, Customer agrees to
relinquish its rights under Section 13.3(b) of the Agreement provided
Customer receives assurances (as reasonably determined by Customer in good
faith) it will continue to receive all Services under the Agreement at the
Facility and subject to mutually agreeable documentation."
8. Section 13.5. Section 13 hereby is amended by renumbering Section 13.5
as Section 13.6, Section 13.6 as Section 13.7, Section 13.7 as 13.8 and
inserting as the new Section 13.5 the following:
"13.5 Customer Special Termination Right. Customer shall have the
right to terminate this Agreement effective as of January 1, 2009 or such later
date as specified in a termination notice from Customer to Supplier (the
"Special Termination Right"). The Special Termination Right may be exercised by
Customer, (a) upon ninety (90) days prior written notice to Supplier and (b)
only if Customer ceases, or decides to cease, its business of importing or
distribution of footwear into the United States or selling such footwear on a
retail or wholesale basis. As of the termination date specified in the
above-mentioned notice, Customer shall have no obligations whatsoever to
Supplier other than for fees under this Agreement incurred prior to the date of
termination."
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9. Exhibit C. Exhibit C to the Agreement is hereby deleted in its entirety
and replaced with the Exhibit C attached hereto.
10. Miscellaneous. The provisions of Article 20 ("General") of the
Agreement shall apply to this Third Amendment as if such provisions were set out
herein in full and as if each reference therein to "this Agreement" included a
reference to this Amendment.
11. Survival. Except as amended by this Third Amendment, all other terms
and conditions of the Agreement shall survive, remain unmodified and remain in
full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Third Amendment to
the Agreement as of the date first written above.
FMI INTERNATIONAL LLC
By: /s/ Xxxxxx X'Xxxxx
------------------------------------
Name: Xxxxxx X'Xxxxx
Title: President
FOOTSTAR CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO
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CASH PAYMENTS SCHEDULE
EXHIBIT 4.1(G)
2 Year Total (2007-2008) 17,750,000
2007 2008
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Payment
Jan 866,667 612,500
Feb 866,667 612,500
Mar 866,666 612,500
Q1 2,600,000 1,837,500
Apr 866,667 612,500
May 866,667 612,500
Jun 866,666 612,500
Q2 2,600,000 1,837,500
Jul 866,667 612,500
Aug 866,667 612,500
Sep 866,666 612,500
Q3 2,600,000 1,837,500
Oct 866,667 612,500
Nov 866,667 612,500
Dec 866,666 612,500
Q4 2,600,000 1,837,500
Year 10,400,000 7,350,000
EXHIBIT C
RATES*
Yard Xxxxxxx $5,651 per week
Receiving
0 - 20 skus $ 0.518 per carton
21 - 30 skus $ 0.621 per carton
31 - 40 skus $ 0.725 per carton
41 - greater skus $ 0.828 per carton
Crossdock In $ 0.259 per carton
Storage $13.600 per pallet per month**
Floor rate Storage $ 20.00 per pallet per month
Excess Storage (If Available) $ 13.60 per pallet per month**
Crossdock Out $ 0.259 per carton
Solids processing (Tilt Tray) $ 0.414 per pair
Solids processing (Findings) $ 1.760 per shipped carton
Solids Processing in Units (Shoecare) $ 0.265 per selling unit
Full Case Processing (Pre-Packs) $ 1.604 per carton
Manual Footwear Processing (Occupational) $ 1.553 per pair
Labor Charge Ad Hoc Special Processing $22.770 per hour
Processing Surcharge (10% Cap) $ 0.066 per pair***
Solids Receiving Surcharge (10% Cap) $ 0.102 per carton****
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* One hundred percent (100%) of all items/Services on this Exhibit C shall be
included toward calculation of the 07/08 Revenue requirement.
** For purposes of the 07/08 Minimum Revenue and during the 07/08 Period only,
Customer has committed to utilize 7,500 pallet positions per month. Pallet
position utilization for calculation of billable amounts for Storage and
Excess Storage (if available) shall be measured by adding (a) the total
number of cartons stored in the pallet locations in the Facility divided by
fourteen (14) plus (b) the total number of cartons stored in the single
case storage locations in the Facility (currently portions of aisles 15 and
19) divided by three (3) plus (c) the number of rack locations utilized for
storage of non-inventory (findings) materials. In addition, the billable
amount for each month shall be calculated by using the highest point of the
amount calculated as set forth in the immediately preceding sentence.
Supplier agrees to promptly notify Customer when total rack locations being
utilized for Customer exceed 7,000.
*** The Processing Surcharge shall only apply if pairs processed are greater
than 110% of the Customer provided Unit Pick & Tilt Tray requirement plan
(the "Processing Surcharge Base") on an annual basis and shall only apply
to pairs which exceed the Processing Surcharge Base.
**** The Solids Receiving Surcharge shall only apply if solids cartons received
are greater than 110% of the Customer provided unit plan (the "Receiving
Surcharge Base") on an annual basis and shall only apply to solids cartons
received which exceed the Receiving Surcharge Base.