Exhibit 10.15
DROP SHIP AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into this 14th day of May,
1999 by and between GLOBAL MEDIA CORP., a Nevada corporation having an address
at 83 Victoria Crescent, Nanaimo, British Columbia V9R5G9 ("Retailer") and BAKER
& TAYLOR, INC., ("B&T"), a Delaware corporation having an address at 1200
Highway 22 East, Bridgewater, New Jersey 08807.
WITNESSETH:
For valuable consideration, the receipt and legal sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
As used throughout this Agreement the following terms have the
following meanings:
1.1 "EDI" means electronic data interchange, using BISAC or X.12
formats.
1.2 "Effective Date" means May 14, 1999.
1.3 "Initial Expiration Date" means the day preceding the first
anniversary of the Effective Date.
1.4 "Expiration Date" means the day preceding an anniversary of the
Effective Date.
1.5 "Customers" means customers of Retailer within the United States
who order Products (hereinafter defined) from Retailer and to whom Retailer
wishes B&T to ship Products directly from B&T's distribution facilities.
1.6 "Products" means books, spoken word audio products and calendars.
2. SCOPE OF AGREEMENT. The services to be provided by B&T herein are also
subject to the terms and conditions set forth in the Methodology and
Requirements Documents attached to, and made a part of, this Agreement as
Exhibit A.
3. TERM
3.1 This Agreement will begin on the Effective Date and will expire on
the Initial Expiration Date, unless terminated on an earlier date pursuant to
the express terms of this Agreement or unless extended pursuant to the terms of
Section 3.2.
3.2 B&T will notify Retailer of any changes in the pricing and payment
terms hereunder by written notice (a "Pricing Notice") given not less than 60
days prior to the Initial Expiration Date or any subsequent Expiration Date
(hereinafter defined). If Retailer is not satisfied with any changes in the
pricing and payment terms set forth in the Pricing Notice,
Retailer's only option will be to notify B&T that it does not wish that this
Agreement be renewed pursuant to the following sentence. Unless one of the
parties (the "Notifying Party") to this Agreement notifies the other party not
less than 45 days prior to the Initial Expiration Date or any subsequent
Expiration Date that the Notifying Party wishes that this Agreement not be
renewed, and if this Agreement otherwise is in full force and effect and no
Event of Default (hereinafter defined) has occurred, this Agreement
automatically may be renewed for not more than five (5) consecutive periods of
one (1) year each (each such period, a "Renewal Term") without further action by
either party and on the same terms and conditions as set forth herein (except
for any changes in pricing and payment terms as set forth in the Pricing Notice.
If the Notifying Party notifies the other party before the 60-day period that it
does not wish that this Agreement be renewed, this Agreement automatically will
expire on the Initial Expiration Date or on the next succeeding Expiration. As
used herein, "Expiration Date" means the anniversary of the Initial Expiration
Date in a Renewal Term to which the same relates. As used herein, "Term" means
the period beginning on the date hereof and ending on the Initial Expiration
Date or on an Expiration Date, as the case may be.
4. ORDER FULFILLMENT
4.1 Upon receipt of an order for one or more Products from Customers,
Retailer will transmit the order to B&T's EDI mailbox location by means of a
mutually acceptable form of EDI. Each order transmitted by Retailer to B&T will
contain the following information: (a) the Customer's name and shipping address;
(b) the method by which Products ordered must be shipped to the Customer; (c)
whether or not the order may be fulfilled in multiple shipments of Products to
the customer or if the order may only be fulfilled when B&T has all Products
ordered in stock; (d) the text of any standard retail messages and/or special
messages to the Customer; (e) instructions concerning specific package inserts
to be included in the order; and (f) instructions concerning gift wrapping and
gift cards.
4.2 If Retailer wishes B&T to include package inserts with orders to
Customers, Retailer will deliver to B&T a quantity of package inserts to be
included with orders to Customers in sufficient quantity to supply Customers as
directed by Retailer to B&T. Within five (5) business days after inquiry from
Retailer, B&T will notify Retailer of the quantity of the various package
inserts on hand at B&T's facilities. B&T will use reasonable commercial efforts
to assure that an adequate quantity of package inserts is maintained at each B&T
facility from which Products are being shipped to Customers. Retailer will give
B&T not less than five (5) business days' prior notice to include, or to cease
inclusion of, a particular package insert in shipments of orders to Customers.
4.3 After receipt of an order, B&T will (a) fill the order from
inventory of Products in stock at B&T's facilities; (b) gift wrap any Products
as instructed by Retailer; (c) print the text of any standard retailer message
and/or any special message requested by Retailer on the packing slip or on a
separate gift card included in the order; (d) include in the order up to three
(3) package inserts requested by Retailer; (e) pursuant to Retailer's
instructions and based upon availability of Products pursuant to Retailer's
instructions, and based upon availability of Products in stock, ship the order
to the Customer either as a multiple shipment or as one shipment; (f) pursuant
to Retailer's instructions, promptly place any Products ordered by Retailer
which B&T does not have in stock on a backorder report for review by B&T's
account manager,
2
after which time such Products will be promptly ordered by B&T (collectively,
"Backordered Products") and (g) ship any Backordered Products, when received by
B&T, pursuant to the terms of the preceding clauses (a)-(e) and the following
two sentences. For all Products which B&T then has in stock, B&T will use
commercially reasonable efforts to fulfill on the same day all orders received
from Retailer not later than 12:00 P.M. Central time for orders received Monday
through Friday. If B&T from time to time is unable to meet the schedule
specified in the preceding sentence, B&T promptly will notify Retailer of the
same. Any orders received by B&T after such times will be fulfilled on the
following business day. Notwithstanding the foregoing, if any orders are
received on a day which is not a business day will be fulfilled on the following
business day. As used in this Agreement, "business day" means any day which is
not a recognized holiday on which B&T and the approved carrier or shippers
providing services under this Agreement are open for business.
4.4 B&T will acknowledge receipt of orders to Retailer via EDI at
Retailer's EDI mailbox location. The first acknowledgement will be made promptly
after an order is received and will identify Products as being in stock and/or
backordered and/or as for which the order is being cancelled. The second
acknowledgement will be made at the time an order is ready to be shipped to a
Customer and will contain the shipper's tracking number if provided by the
shipper to B&T. Each such acknowledgement is referred to herein as an "ASN."
4.5 B&T will use commercially reasonable efforts to fulfill orders from
Retailer. Retailer acknowledges that it does not expect B&T to maintain in stock
a complete inventory of all Products that may be ordered by Customer.
4.6 B&T will transmit all invoices to Retailer via EDI to Retailer's
mailbox location.
4.7 B&T will not be liable for delays arising from the failure of any
freight carrier to meet its respective delivery standards.
5. RETURNS
5.1 Each shipment of Products to Customers will include Retailer's
return policy, including instructions that Customers are to make returns of
Products to Retailer at B&T's return center address. Within three (3) business
days of B&T's receipt of same, all returned Products will be received into B&T's
inventory, the Products will be logged as having been received, Retailer will be
issued a credit by B&T for the price paid by Retailer to B&T for the returned
Products and B&T will provide Retailer with information in reasonably sufficient
detail to allow Retailer to properly credit Customers for such returns. Retailer
will reimburse B&T for any freight costs incurred by Products except for returns
of Defective Products, Unmerchandisable Products and/or Products shipped
erroneously to Customers, in which case B&T promptly will issue a credit to
Retailer equal to the U.S. Postal Service charges for shipment from Customer to
B&T for such Products, and B&T will be responsible for any freight costs to ship
replacement Products. On not less than 30 days' prior notice to B&T, Retailer
may elect to process all returns of Products shipped from Customers after the
date specified in such notice.
3
5.2 As used in this Agreement:
(i) "Defective Products" means Products which
contain manufactured defects which prevent
them from being used for their intended
purpose;
(ii) "Damaged Products" means Products which are
damaged during shipment to Customers which
prevent them from being used for their
intended purpose; and
(iii) "Unmerchandisable Products" means Products
which are shopworn and/or soiled.
(b) Retailer promptly will reimburse B&T for any freight
costs incurred for Products returns, except for
returns of Defective Products, Unmerchandisable
Products (if shipped in that condition by B&T) and/or
Products shipped erroneously to Customers
(collectively, "Free Return Products"). B&T promptly
will issue a credit to Retailer equal to the U.S.
Postal Service charge for shipment from Customers to
B&T of Free Return Products and B&T will be
responsible for freight costs to ship replacement
Products to Customers for Free Return Products.
6. PRICING AND PAYMENT TERMS
6.1
(a) Retailer will pay B&T for all Products ordered by
Customers, and will pay all fees and reimbursables
payable to B&T herein, within 30 days from the date
of delivery of B&T's detailed invoice therefor. All
payments made to B&T will be in good funds and
delivered by check or wire transfer to the order of
B&T pursuant to B&T's instructions. Retailer may not
reduce and set off amounts payable hereunder against
any indebtedness or any other claim that it may have
against B&T, however or whenever arising.
(b) The price charged by B&T to Retailer for Products
purchased by B&T will be expressed on the basis of a
discount from the publishers' list prices for the
same as of the date of shipment of Products to
Customers, and as set forth on Schedule 6.2.
Publishers' list prices for Products are displayed on
B&T's title database of Products, which presently is
available for license by B&T to third parties
(including Retailer). Retailer acknowledges and
agrees that publishers' list prices for Products may
be subject to change without notice. Retailer
acknowledges and agrees that it is Retailer's
responsibility to determine the pricing of Products
to Customers and that B&T is not responsible if
Retailer sells Products at prices which result in a
lower selling margin than may be desired by Retailer.
4
6.2
(a) Each party will be responsible for payment of its EDI
transmissions to the other party.
(b) Retailer will pay the charges and fees to B&T as more
particularly set forth on Schedule 6.2 attached
hereto and made a part hereof.
6.3 Retailer will pay all freight costs for all Product shipments to,
and Product returns from, Customers. Freight costs will be at the carriers'
published rates.
7. WARRANTIES
7.1 B&T warrants that it has good title to the Products delivered to
Customers pursuant to this Agreement. EXCEPT FOR THE FOREGOING WARRANTY, THERE
ARE NO OTHER EXPRESS WARRANTIES, AND THERE ARE NO IMPLIED WARRANTIES. EXPRESSLY
EXCLUDED ARE ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY B&T OR ITS AGENTS OR
EMPLOYEES WILL CREATE A WARRANTY OR IN ANY WAY INCREASE THE SCOPE OF THE
FOREGOING WARRANTY.
7.2 B&T WILLNOT BE LIABLE FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, OR
INCIDENTIAL DAMAGES (INCLUDING DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS
INTERRUPTION, AND THE LIKE) ARISING OUT OF THE DELIVERY OF, USE OF, OR INABILITY
TO USE, ANY PRODUCTS, EVEN IF B&T HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. The only liability B&T will have with respect to any Defective
Products, Unmerchandisable Products and/or Damaged Products will be the return
rights of Customers described herein. Retailer will indemnify and hold harmless
B&T, its officers, employees and agents, for any loss, claim, cost or expense
(including reasonable attorneys' fees and expenses) incurred by reason of any
claim made by a Customer concerning any matter to which the preceding limitation
of liability may apply.
7.3 The provisions of this Section shall survive the termination or
expiration of this Agreement.
8. TERMINATION
8.1
(a) Either party may terminate this Agreement upon the
occurrence of an Event of Default by the other party.
An "Event of Default" is hereby defined to mean the
defaulting party's failure to cure, (a) after receipt
of 30 days' written notice from the non-defaulting
party, of any of the following: (i) failure of the
defaulting party to observe or perform any condition
or obligation imposed under this Agreement on the
defaulting party not relating to the payment of
money; (ii) breach of any warranty
5
made by the defaulting party under this Agreement;
(iii) filing of a voluntary petition in bankruptcy or
having an involuntary petition filed against it, the
appointment of a receiver or trustee, the execution
of an assignment for the benefit of creditors; and
(b) after receipt of 10 days' written notice from the
non-defaulting party of the failure of the defaulting
party to make any payments when due hereunder. The
option to terminate this Agreement shall be in
addition to, and not in lieu of, any other remedy
available to the terminating party under this
Agreement or at law or equity, all such remedies
being cumulative.
(b) In addition to the preceding remedies, upon the
occurrence of an Event of Default by Retailer
hereunder at any time and from time to time, B&T may
require Retailer to reduce its account balance with
B&T to a level determined by B&T in its sole
discretion (up to and including an account balance of
$0).
8.2 Termination of this Agreement upon either party's default, or the
expiration of this Agreement will not affect:
(a) the rights of either party with respect to any breach
of this Agreement, or
(b) the obligations of either party already accrued prior
to the effective date of expiration or termination
(including obligations with respect to returned
Products), or
(c) those obligations of the parties that, by their
terms, survive termination or expiration of this
Agreement.
8.3 In the event of the expiration or a termination of this Agreement,
Retailer promptly will reconcile accounts payable and receivable with B&T and
bring the balance owed, if any, current and up-to-date.
9. CONFIDENTIALITY
The parties acknowledge that each may be exposed to confidential
information relating to the other party's business under this Agreement,
including, but not limited to, the terms of this Agreement, quantities of
Products, dollar volumes, revenues of Products, wholesale prices and similar
information. The parties agree that during the Term, and for a period of three
(3) years after the termination or expiration of this Agreement, neither party
will disclose to any third party any such confidential information without the
prior written consent of the other party, except to employees, agents, auditors,
contractors, directors and similar entities solely required to fulfill the terms
of this Agreement, and as long as such third parties agree to be bound by the
confidentiality provisions hereof. The confidential information which each party
may receive from the other party for the above period will be treated with the
same degree of care used to protect its own confidential information. The
confidentiality obligations between the parties will not apply to any
information (a) which is in the public domain or which becomes part of the
public domain through no fault of the receiving party; (b) which is known to the
receiving party prior to the disclosure thereof by the disclosing party (as
established by documentary evidence);
6
(c) which is lawfully received by the receiving party from a third party who
provided such information without breach of any separate confidentiality
obligation owed to the disclosing party; (d) which is disclosed by the
disclosing party to any third party without restriction on further disclosure;
or (e) which is independently developed by personnel having no access to the
disclosing party's confidential information (as established by documentary
evidence).
10. MISCELLANEOUS
10.1 The risk of parcel loss or damage shall pass from B&T to Retailer
when the parcels containing Products are tendered to Retailer's carriers for
shipment to Customers. Title to Products shall transfer from B&T to Retailer
when the parcels containing Products are tendered to Retailer's carriers for
shipment to Customers. Retailer will be liable for any Products for which
shipments are damaged, lost and/or misdirected by Retailer's carrier and/or
refused by Customers.
10.2 B&T will not be liable for any sales or related tax liability, if
any, associated with the sale to Customers of Products. Retailer will indemnify
and hold harmless B&T for any claim for payment of sales tax made upon B&T by
any state or other governmental authority for sales of Products to Customers
hereunder.
10.3 Neither party will be liable for any failure to perform, or delay
in the performance of, any of its obligations hereunder (nor will the same
constitute an Event of Default) if and to the extent the failure or delay is
caused, directly or indirectly, by events beyond its control, such as acts of
God, fires, floods, epidemics, quarantine restrictions, strikes or other labor
disputes (except strikes or labor disputes that are not industry wide but are
brought against Retailer or B&T solely), freight embargoes, and/or unusually
severe weather. Lack of funds by either party will not excuse its timely
performance of its obligations hereunder. In the event of an occurrence
described in the first sentence, the non-performing party affected will be
excused from further performance or observance of the obligation(s) so affected
as long as such circumstances prevail and if the party continues to use its best
efforts to recommence performance or observance whenever and to whatever extent
possible without delay.
10.4 Continued extension of credit to Retailer by B&T shall be subject
to Retailer paying B&T in a timely manner and to B&T's assessment of Retailer's
financial condition, which assessment shall be made in B&T's sole judgment.
Retailer will deliver B&T at its address at 501 South Gimdious St., Mormence,
IL, 60954-1799, Attn: Credit Manager, the following financial information:
(a) within seven (7) days of issuance but not later than
12 days after the end of each fiscal year of
Retailer, Retailer's audited financial statements
(including footnotes and accountant's opinion) as of
the last day of each of Retailer's fiscal year;
(b) within seven (7) days of issuance, but not later than
60 days after the end of each fiscal quarter,
Retailer's unaudited financial statements (including
comparative profit and loss and balance sheet
statements) dated as of the last day of each fiscal
quarter;
7
(c) other data that B&T may reasonably request to
establish and maintain a credit line for Retailer.
At any time and from time to time during the Term, B&T may require Retailer to
reduce its account balance with B&T to a level determined by B&T in its sole
discretion (up to and including an account balance of $0), based upon B&T's
determination that Retailer's financial condition warrants the same.
10.5 This Agreement shall be construed in accordance with the laws of
the State of New Jersey, without giving effect to the conflict of laws provision
thereof.
10.6 No representation, promise, inducement or agreement relating to
the transactions contemplated by this Agreement has been made by either party
that is not set forth in this Agreement, and neither party shall be bound by or
liable for any representation, promise, inducement or agreement not so set
forth.
10.7 All notices, demands, consents, approvals and requests given by
either party hereunder shall be in writing and shall be sent by a nationally
recognized overnight courier with receipt acknowledged and provision for payment
made, by telecopy, or by registered or certified mail (return receipt
requested), return postage pre-paid, to the parties at the following addresses:
If to B&T: Baker & Taylor, Inc.
2709 Water Ridge Parkway
Suite 500
Charlotte, NC 28217
Attn: Director, Sales Administration
If to Retailer: Global Media Corp.
83 Victoria Crescent
Nanaimo, BC
Canada V9R 5B9
Attn: L. James Porter
Chief Financial Officer
All notices given by courier or telecopy will be deemed received at the
notice address and all notices given by registered or certified mail will be
deemed delivered five (5) days after deposit with the U.S. Postal Service.
Either party may change its notice address from time to time by notification in
writing to the other party; however, any such notification will not be deemed
given until actually received by the recipient party.
10.8 The waiver or failure of either party to exercise in any respect
any right provided for herein will not be deemed a waiver of any further right
hereunder.
8
10.9 The provisions of this Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and each of their respective
successors and assigns.
10.10 Nothing contained in this Agreement shall be deemed or construed
to create a partnership or joint venture of or between [sic] and B&T, or to
create any other relationship between the parties other than that of independent
contractors.
10.11 The captions used herein are for convenience of reference only
and are not part of this Agreement, and shall in no way be deemed to define,
limit, describe, or modify the meaning of any provision of this Agreement.
10.12 If any term or provision of this Agreement or applications
thereof to any person or circumstances is, to any extent, held to be invalid or
unenforceable, the remaining terms and provisions of this Agreement or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, will not be affected
thereby, and each term and provision of this Agreement will be valid and
enforced to the fullest extent permitted by law.
10.13 If Retailer fails to make any payment due hereunder to B&T within
30 days after receipt of B&T's invoice therefor, then Retailer will pay B&T the
amount due, together with interest thereon until paid, calculated at the rate of
eighteen percent (18%) per annum.
10.14 This Agreement contains and embodies the entire agreement of the
parties hereto, and no representations, inducements, or agreements, oral or
otherwise between the parties not contained in this Agreement, if any, will be
of any force or effect. This Agreement may not be modified, changed or
terminated in whole or in part in any manner other by an agreement in writing
duly signed by both parties.
10.15 This Agreement may be signed in counterparts both of which taken
together shall be deemed one original. Telecopied facsimiles of a signed
counterpart of this Agreement from one party to the other will be deemed to be
delivery of a signed counterpart by the party sending the telecopied facsimile.
IN WITNESS WHEREOF, the parties have signed and delivered this
Agreement on the date first above written.
BAKER & TAYLOR, INC.
By Baker & Taylor Brooks
By: /s/
-------------------------------
Name:
-----------------------------
Title: VP Business Development
----------------------------
9
[RETAILER]:
By: /s/
-------------------------------
Name: L. James Porter
-----------------------------
Title: Chief Financial Officer
----------------------------
10
EXHIBIT A - 1
EXHIBIT A
METHODOLOGY AND REQUIREMENTS DOCUMENT
[TO BE PROVIDED]
EXHIBIT A - 1
SCHEDULE 6.2
DROP SHIP SERVICE PRICING
[Subject to request for confidential treatment
filed with the SEC on July 30, 1999]
SCHEDULE 6.2 - 1