Exhibit 99.1
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
FULFILLMENT SERVICES AGREEMENT
This FULFILLMENT SERVICES AGREEMENT (the "Agreement") is made and
entered into as of the 11th day of April, 2007, by and between FULFILLMENT
TECHNOLOGIES, LLC, an Ohio limited liability company (the "Company"), and
BLUEFLY, INC., a Delaware corporation (the "Client"). Company is in the business
of providing various fulfillment services on behalf of its clients, and Client
desires to engage Company to perform certain fulfillment services, all in
accordance with the terms and conditions of this Agreement. Company and Client
agree as follows:
SECTION 1. SERVICES
a. Fulfillment Services and Rates
During the term of this Agreement, Company agrees to provide Client
with the fulfillment services specified in Exhibit A (the "Services")
and Client will pay Company for the Services at the particular rates
and prices set forth in Exhibit C. Any services not listed on Exhibit A
which are provided by Company as requested by Client will be charged at
Company's then current rates and will be paid by Client on a timely
basis in accordance with Exhibit C. Company's performance of the
Services will be measured in accordance with the service levels (the
"Service Levels") as set forth in Exhibit B. The parties acknowledge
that the Company's performance of the Services will not be liable for
any penalties resulting from any failure to meet the Service Levels
until ninety (90) days following the live operation at Company's
location, provided that the Company shall make best efforts to meet the
Service Levels during such 90-day period. All of the terms of Exhibit
A, Exhibit B, and Exhibit C are hereby incorporated herein and made a
part hereof as if such terms were fully set forth in this Agreement.
b. [reserved]
c. Material Changes in Scope of Services
Client may request a material adjustment to the scope of Services
provided by Company to Client, or may add additional Services, by
submitting a proposed Update to Company. Provided that Company agrees
to provide such additional Services, the Update shall be signed by both
parties and attached to this Agreement. The Update shall provide for
reasonable price adjustments to compensate Company for any increases in
Services involving increased labor or other costs, provided such price
adjustments are agreed to by Client. If the parties are unable, in good
faith, to agree upon an adjustment to Services or Fees, then either
party may terminate this Agreement upon one hundred and twenty (120)
days prior written notice to the other party.
SECTION 2. TERM, TERMINATION AND EVENTS OF DEFAULT
a. The term of this Agreement will be effective as of the date of
the Agreement and will continue thereafter until:
i. the fifth (5th) anniversary of the effective date
(provided that, following such 5th anniversary this Agreement shall be
automatically renewed on month-to-month basis until either party shall have
given the other one hundred and twenty (120) days prior written notice of
non-renewal);
ii. one party provides written notice of termination to
the other party at least one hundred twenty (120) days prior to the date of such
termination, provided, however, that neither party may terminate this Agreement
prior to the second (2nd) anniversary of the effective date; or
iii. otherwise terminated as provided in this Agreement.
b. Any of the following shall constitute an event of default
hereunder ("Event of Default"):
i. either party is in default of its monetary obligations
under this Agreement and such default is not cured within seven (7) days of
written notice hereof;
ii. either party is in material default of any of its
obligations under this Agreement other than a monetary obligation and such
material default is not cured within thirty (30) days of written notice hereof;
iii. the Company shall consistently fail to meet the
Service Levels;
iv. the Client is notified that any of the representations
and warranties contained in the representation letter provided by the Company's
Chief Executive Officer on or about the date hereof are no longer true and
correct in all respects; or
v. either party files a petition in bankruptcy or files
for a reorganization or for the appointment of a receiver or trustee for all or
substantially all of its property, or makes an assignment or petitions for or
enters into an arrangement for the benefit of its creditors, or if a petition in
bankruptcy is filed against either party which is not discharged within sixty
(60) days thereafter.
c. Should any Event of Default occur, the non-defaulting party
may do one or more of the following, in addition to all other remedies available
to it at law, in equity, or otherwise:
i. by written notice to the other party, declare this
Agreement terminated (it being understood and agreed that, in the event of a
termination by the Client, it may specify an effective date for termination that
is up to 120 days after the date of delivery of such notice); and/or
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
ii. declare any amounts due and payable from the other
party to be immediately due and payable; and/or
iii. refuse to perform any of its obligations under this
Agreement until the default is cured.
d. Upon any termination or expiration of this Agreement, Company
shall perform Close Down Services (as hereinafter defined) for Client. Labor
shall be charged at Company's then prevailing labor rates. Materials shall be
charged at [***]. The sum of Labor and Materials are herein defined as the
"Close Down Fees." Close Down Fees will be due by wire transfer on each Monday
for the Labor supplied and Materials purchased through the previous Friday. For
purposes of this Agreement, "Close Down Services" shall mean all activities
necessary to remove Client's inventory from Company's facilities and ship it to
a replacement facility, transferring Client data from Company's computer systems
to replacement systems and such other activities as may be reasonably necessary
to transition the services provided by Company to Client and/or another third
party provider. Company and Client each acknowledge that the success of Client's
and Company's business will depend upon Client's obligation to make timely
payments and upon Company's ability to perform the Close Down Services in a
professional manner and in accordance with the schedule for completion agreed
upon by the parties in good faith, and that the failure to do so would have a
material adverse effect on the Company's business. Accordingly, time is of the
essence in the performance of all Close Down Services and payment for Close Down
Services.
Section 3. Obligations
a. In addition to Client's other obligations set forth in this
Agreement, Client shall provide Company with all the information (collectively
the "Data") that Company reasonably believes is required to perform the Services
in a timely manner. Upon receipt of the Data, the parties shall agree upon a
mutually agreeable start date for each fulfillment project under this Agreement.
b. In performing its obligations under this Agreement, each party
understands that "time is of the essence" and that its performance under this
Agreement is necessary to enable the other party to perform under this
Agreement. Each party agrees that if it does not perform its obligations under
this Agreement, the other party will not be considered in default under this
Agreement or penalized therefore to the extent that such default is caused by
the other party's failure to perform, and the party that caused such default
will remain fully liable for all obligations under this Agreement regardless of
any failure by the other party to perform its obligations.
c. Client or its agents shall, during normal business hours and
upon reasonable
advance notice, have the right to inspect the Client inventory located at
Company's facility and audit the books and records of Company pertaining to such
merchandise and the Services. In addition, Client shall be permitted to station
employees at Company's facility in order to monitor the provision of the
Services.
SECTION 4. INCORPORATION OF STANDARD TERMS AND CONDITIONS
All of the terms, provisions and conditions of the Standard Terms and
Conditions attached hereto as Exhibit B are hereby incorporated herein and made
a part hereof as if such terms, provisions and conditions were fully set forth
in this Agreement.
SECTION 5. INDEPENDENT CONTRACTOR
Nothing contained in this Agreement shall be construed or interpreted
as creating a relationship of principal and agent, partnership, joint venture or
any other relationship between Client and Company other than that of independent
contractors contracting for the provision and acceptance of Services.
SECTION 6. MISCELLANEOUS
This Agreement will be interpreted, construed and enforced according
to, and governed by, the laws of the United States in the State of New York,
without giving effect to any conflicts of law provisions. Each party hereby
expressly submits to the exclusive jurisdiction of the federal and state courts
situated in New York City, New York with respect to any claims, demands or
causes of action asserted by any party in any way relating to or arising out of
this Agreement or the subject matter hereof This Agreement and the Exhibits
hereto constitute the entire understanding between the parties hereto with
respect to the subject matter hereof and supersede all negotiations and prior
agreements between the parties relating to the subject matter hereof.
The parties have duly executed and delivered this Agreement as of the
date first written above:
COMPANY:
FULFILLMENT TECHNOLOGIES, LLC
By: /s/ David H. Cook
------------------------
Name: Mr. David H. Cook
Title: Chief Executive Officer
CLIENT:
BLUEFLY, INC.
By: /s/ Patrick C. Barry
------------------------
Name: Patrick C. Barry
Title: COO and CFO
EXHIBIT A
EXHIBIT A
ORDER FULFILLMENT SERVICES
Order Fulfillment Tasks Order Fulfillment Description
o Web Order download/receipt o Order download review
o Web Order reject resolution o Order download resolution
o Refund Processing o Return to Vendor Processing, Picking and Routing
o Order Tracking and Prioritization
o Closeout Orders
o Return to Vendor
o Receiving o Warehouse Operations
o Putaway Process o Appointment Scheduling
o Backorder Management o Unloading Palletized Cartons
o Inbound Quality Assurance o Entry of Receipt
o Inventory Management o Quality Assurance Sampling
o Storage o Putaway into Active Bin Locations
o Cycle Counting Inventory o Storage
o Order Picking o Random, Periodic Cycle Count
o Packing Order for Shipment o Order Picking
o Shipping and Manifesting Order o Packing in Standard Carton
o Outbound Package Rate Shopping o Insertion of Packing Slip + Collateral
o Returns Receipt and Processing o Outbound Detailed Order Checking
o Custom Invoice Pack Slip o "Best Way" shipment processing
o Packaging Supplies o Returns receipt
o Outbound Quality Assurance o Returns entry
o Custom Invoice Pack Slip
o Issue Resolution o Client Services
o Account Management o Status reporting
o Respond to all Customer Service Inquiries o Liaison to Bluefly
o Support Marketing Activities o Issue Resolution
o Partner sales order confirmation
o Consumer/product data export
o Systems Support o Information Technology
o Standard reports o Integration Support
o Product Database Maintenance o Application Support
o Customer Database Extracts and Support o Database Management
o Training all Associates o Systems Training
o Standard Reports & Extracts
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
EXHIBIT B
PERFORMANCE MEASURES
1. INTRODUCTION
This Exhibit B is intended by the Parties to provide a description of
Performance Measures by which Company's performance of the Services will be
measured.
2. GENERAL DEFINITIONS:
2.1 GENERAL DEFINITIONS
For the purposes of this Exhibit B, the following definitions shall
apply:
"BUSINESS DAY" shall mean Monday through Friday except any day that is
a United States national holiday.
"NORMAL BUSINESS HOURS" shall mean Normal Office hours of 8:00 AM to
4:30 PM EST, Monday through Friday
"PRODUCTION HOURS" shall mean Normal Order Processing hours of 7:00 AM
to 7:30 PM EST, Monday through Saturday and 7:00 AM to 3:30 PM, Sunday.
"CUSTOMER SERVICE DAY" shall mean Monday through Sunday.
"CUSTOMER SERVICE HOURS" shall mean twenty-four (24) hours each day,
seven (7) days each week.
"WHOLESALE COST" shall mean Bluefly's Purchased Cost Price as stored in
the Warehouse Management System ("WMS").
3. DEFINITIONS OF PERFORMANCE MEASURES
The Services contemplated under the Agreement shall be performed in accordance
with the following Performance Measures during normal business hours (unless
otherwise provided below). [***]
3.1 Cycle Time Standard
Company will, averaged over each calendar month, meet the following
cycle time standards for all orders received:
o [***]
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
Orders that are consciously set on hold due to any inability to fulfill
the order (e.g. as a result of the absence of parts of the order), will
be excluded from the Cycle Time Standard provided such inability is not
due to a failure by Company to satisfy any other Performance Measure.
Except as set forth above or as otherwise directed by Client, orders
will be processed on a first-in first-out basis.
3.2 Order Accuracy
Company will, averaged over each calendar month, maintain a [***]
percent ([***]%) order accuracy standard for all orders received.
3.3 Returns Processing
Company will, averaged over each calendar month, fully process returns
(including quality assurance, refurbishment, put-away and all other
actions necessary to make such return available for sale) within [***]
of receipt of the returned parcel. Except as otherwise directed by
Client, returns will be processed on a first-in, first-out basis.
3.4 Incoming Inventory
Company will, averaged over each calendar month, make all incoming
inventory available for sale within [***] of the arrival of the
merchandise. Company will inspect incoming inventory for quality
assurance in accordance with Client business rules. Except as otherwise
directed by Client, inventory will be received on a first-in, first-out
basis.
3.5 [reserved]
3.6 [reserved]
3.7 Inventory Shrink
Company will maintain inventory shrink at less than [***] percent
([***]%) on a net annual cost basis.
All Performance Measures will be evaluated from Company's Business Systems
information or operational records. Client reserves the right to audit such
information and records from time to time.
4. MAINTAINING PERFORMANCE MEASURES
Company shall be excused from meeting Performance Measures for a reason
attributable to:
1. Client's responsibility For example, Company shall be excused form
meeting the INCOMING INVENTORY MEASURE for receiving inventory in
an untimely manner until such time as it has received a purchase
order with respect to such inventory.
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
2. Force Majeure as described in this Agreement.
In the event Company fails to maintain one or more of the Performance Measures
set forth in section 3.1 to 3.6 above, and such failure is unexcused, Client may
reduce the payment to Company as described in this Section 4 ("Reduction
Credit"). The Reduction Credit shall be calculated by multiplying the Service
Level Diversity Factor (as defined below) by the Service Level Deficiency (as
defined below) by to total amount invoiced to Client during that Period. For
each failed Performance Measure "Service Level Deficiency" is the difference
between Company's actual performance and the standard of performance specified
by the Performance Measure in percentages. The Service Level Diversity Factors
of the Performance Measures are as follows:
SERVICE LEVEL DIVERSITY FACTOR
(Percent of the Total Units
PERFORMANCE MEASURE Shipped during the Period)
- -------------------------------------- ------------------------------
3.1 Cycle Time Standard [***]%
3.2 Order Accuracy [***]%
3.3 Returns Processing [***]%
3.4 Incoming Inventory [***]%
Examples of calculation of the reduction of payments are set forth in
Exhibit B-1.
5. MAINTENANCE OF INVENTORY SHRINK
In the event Company fails to meet the Inventory Shrink Performance Measure set
forth in section 3.7 above and such failure is unexcused, Company shall pay
client a compensation for any Inventory Performance Deficiency at Wholesale
Cost. The Inventory Performance Deficiency is measured annually after the
physical inventory is performed and is calculated by multiplying the System
Inventory at Wholesale Cost (i.e. inventory reflected by Company records (not
including any inventory adjustments made during the course of the year as a
result of prior shrinkage)) by the Service Level Deficiency (i.e. the difference
between the actual Inventory Shrink and the Performance Measure in percentage).
An example of calculation of the Inventory Performance Deficiency and the
compensation is set forth in Exhibit B-2.
6. CAPACITIES AND DAILY VOLUME PROJECTIONS
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
Client shall provide Company with a monthly estimate of its Daily Volume
Projection thirty (30) days prior to the start of the month. Client shall use
commercially reasonable efforts to provide Company with updated estimates of its
daily volume.
If the actual average daily order volume for any calendar month is greater than
[***] percent ([***]%) of Client's Daily Volume Projection, then Company is
excused from meeting the Cycle Time Standard described herein for all orders
that exceed these limits. Those orders that exceed these limits shall be
combined with the orders to be packed the following day.
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
EXHIBIT B-1
EXAMPLE 1 - ORDER ACCURACY
In the following examples, Performance Measure Examples are calculated using the
Catalog Flat Rate Pricing.
1. DATA RELATING PERFORMANCE MEASURE
ORDER ORDERS SERVICE LEVEL
RECEIVED PERFORMANCE MEASURE ACCURATELY SHIPPED DIVERSITY
[***] [***]% [***] [***]%
Acceptable Standard is [***] accurately-shipped orders ([***]% of [***])
Company correctly shipped [***] or [***]% ([***] x [***] / [***])
2. CALCULATION OF THE SERVICE DEFICIENCY
PERFORMANCE MEASURE ORDER ACCURACY SERVICE LEVEL DEFICIENCY
[***]% - [***]% = [***]%
3. CALCULATION OF THE GROSS INVOICE
ORDERS SHIPPED COST PER ORDER GROSS INVOICE
[***] $[***] $[***]
4. CALCULATION OF THE REDUCTION OF PAYMENTS
FILLTEK GROSS SERVICE LEVEL SERVICE LEVEL
INVOICE DEFICIENCY DIVERSITY CREDIT
$[***] x [***] x [***] $[***]
------------------------------
NET INVOICE: $[***]
------------------------------
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
EXAMPLE 2 - RETURNS PROCESSING
1. DATA RELATING PERFORMANCE MEASURE
RETURNS PROCESSED SERVICE LEVEL
RETURNS PERFORMANCE MEASURE WITHIN 1 BUSINESS DAY DIVERSITY
[***] [***]% [***] [***]%
Company is responsible for fully processing [***] returns within [***] ([***]%
of [***])
Company fully processed [***] returns within [***] or [***]% ([***] x [***]
/ [***])
2. CALCULATION OF THE SERVICE DEFICIENCY
RETURNS PROCESSED
PERFORMANCE MEASURE WITHIN 2 BUSINESS DAYS SERVICE LEVEL DEFICIENCY
[***]% - [***]% = [***]%
3. CALCULATION OF THE GROSS INVOICE
ORDERS SHIPPED COST PER ORDER FULFILLMENT INVOICED
[***] $[***] $[***]
4. CALCULATION OF THE REDUCTION OF PAYMENTS
SERVICE LEVEL SERVICE LEVEL
GROSS INVOICE DEFICIENCY DIVERSITY CREDIT
$[***] x [***] x [***] $[***]
------------------------------
NET INVOICE: $[***]
------------------------------
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
EXAMPLE 3 - CYCLE TIME STANDARD
1. DATA RELATING PERFORMANCE MEASURE
ORDERS FILLED SERVICE LEVEL
ORDERS DURING THE MONTH PERFORMANCE MEASURE TIMELY DIVERSITY
[***] [***]% [***] [***]%
2. CALCULATION OF THE SERVICE DEFICIENCY
PERFORMANCE MEASURE SERVICE LEVEL ACHIEVED SERVICE LEVEL DEFICIENCY
[***]% - [***]% = [***]%
3. CALCULATION OF THE FILLTEK GROSS INVOICE
ORDERS SHIPPED COST PER ORDER FULFILLMENT INVOICED
[***] $[***] $[***]
4. CALCULATION OF THE REDUCTION OF PAYMENTS
FILLTEK GROSS SERVICE LEVEL SERVICE LEVEL
INVOICE DEFICIENCY DIVERSITY CREDIT
$[***] x [***] x [***] $[***]
------------------------------
NET INVOICE: $[***]
------------------------------
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
EXAMPLE 4 - INCOMING INVENTORY
1. DATA RELATING PERFORMANCE MEASURE
RECEIPTS PROCESSED SERVICE LEVEL
RECEIPTS PERFORMANCE MEASURE WITHIN 1 BUSINESS DAY DIVERSITY
[***] [***]% [***] [***]%
Company is responsible for fully processing [***] receipts within [***] ([***]%
of [***])
Company fully processed [***] receipts within [***] or [***]% ([***] x [***]
/ [***])
2. CALCULATION OF THE SERVICE DEFICIENCY
RECEIPTS PROCESSED
PERFORMANCE MEASURE OVER 1 BUSINESS DAY SERVICE LEVEL DEFICIENCY
[***]% - [***]% = [***]%
3. CALCULATION OF THE GROSS INVOICE
ORDERS SHIPPED COST PER ORDER FULFILLMENT INVOICED
[***] $[***] $[***]
4. CALCULATION OF THE REDUCTION OF PAYMENTS
SERVICE LEVEL SERVICE LEVEL
GROSS INVOICE DEFICIENCY DIVERSITY CREDIT
$[***] x [***] x [***] $[***]
------------------------------
NET INVOICE: $[***]
------------------------------
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
EXHIBIT B-2
EXAMPLE OF CALCULATION OF THE INVENTORY PERFORMANCE DEFICIENCY AND
COMPENSATION
1. DATA RELATING PERFORMANCE MEASURE
Total System Inventory
handled for period at Actual Inventory Service Level
Wholesale Cost Performance Measure Shrink Diversity
$[***] [***]% $[***] [***]%
Total System Inventory handled for Period at Client's Wholesale Cost = Total
Cycle Count Adjustments for the Period /[Beginning Inventory Balance + Total
Receipts for the Period]
Note: Total Cycle Count adjustment(s) for the Period include cycle count
adjustments plus any adjustments made during the physical inventory. Inventory
count changes dues to scrap (non-saleable merchandise), supplier shortages, and
other reasons that are not the responsibility of Company shall not be included
in the Cycle Count Adjustments
Company is responsible for maintaining inventory shrink of less than [***]% or
$[***] ([***]% of [***]).
Physical inventory results in a physical inventory accuracy of [***]% or an
actual inventory shrink of [***]% ($[***] x [***] / $[***] = [***]%)
2. CALCULATION OF THE SERVICE DEFICIENCY
Actual Inventory Shrink Performance Measure Service Level Deficiency
[***]% - [***]% = [***]%
3. CALCULATION OF THE INVENTORY PERFORMANCE DEFICIENCY AND COMPENSATION
Compensation (Less than Zero,
Inventory Shrink Actual Inventory Credit due Client; Greater than
Allowance Shrink Zero No Compensation due)
$[***] - $[***] ($[***])
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
EXHIBIT C
RATES AND PRICES
FLAT RATE PRICING FOR BLUEFLY ORDER FULFILLMENT
ORDER FULFILLMENT PRICING: ORDER FULFILLMENT ASSUMPTIONS: FLAT RATE PRICING:
- --------------------------------------- --------------------------------------- ------------------------------
Order Fulfillment Pricing includes: o 2007 Estimated Order Volume: Flat Rate = $[***]per Order
o Order download/receipt o Orders = [***]
o Order reject resolution o Average Order = Approximately
o Order Tracking [***]Units/Order
o Payment Processor Interface o Returns/Exchanges = [***]%
o Receiving (including tagging, o Backorders = [***]%
poly-bagging, hangars, etc.) o Order Configuration
o Inbound marking where required o [***]
o Inbound Quality Assurance o Total Number of SKU's = [***]
o Return Processing and o Total Active SKU's = [***] ([***]%
Re-Processing active at any given time)
o Putaway o Storage <[***]Pallets
o Inventory Management o Bluefly to provide the following
o Storage supplies:
o Cycle Counting o Gift Boxes
o Pick, Pack and Ship Units o Shopping bags
o Outbound Packaging including: o Storage bags
o Corrugated Carton o Tissue
o Outbound label o Security Seals
o Customer Invoice o Other branded Bluefly
o Void Fill, where required Supplies
o Outbound Quality Assurance o Customer Service by Bluefly
o Rate Shopping
o Gift Box processing
o Backorder Processing
o FTC Notices
o Issue Resolution
o Account Management
o Systems Support
o Standard reports
Integration and Information Conversion FillTek to provide Standard Integration Fixed Price = $[***]pursuant
Services Pricing and Custom Pack Slip Development to to S.O.W.
Bluefly's business systems
Initial Inventory Build-up One-time charge to receive, locate and Estimated Price = $[***]per
putaway first time inventory shipped labor hour
from Client's current third party
fulfillment center
Flat Rate Order Fulfillment Pricing is Guaranteed within [***]% of Forecast by
Bluefly. If actual Assumptions differ from Plan by more than [***]%, FillTek may
elect to Review the Fixed Capital Investment and Variable Costs with Bluefly as
set forth in note 1 below.
NOTES:
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
1. Client recognizes that Company's pricing covers substantial fixed costs
and variable costs that are sensitive with should actual activity vary
from the Assumed Working Parameters above. Accordingly, if the actual
Working Parameters taken as a whole materially vary from the Assumed
Order Fulfillment Assumptions, then this shall constitute a Material
Change in Scope of Services, and Client and Company agree to negotiate
in good faith equitable compensation adjustments in the above table(s).
The parties agree to engage in such good faith negotiations for at
least 60 days following Company's notification that a material change
has occurred. If the parties are unable to reach agreement by the end
of such period, either party shall thereafter have the right to
terminate this Agreement on 120 days written notice to the other.
2. Overtime: Company shall provide the appropriate number of employees
necessary to meet Client's volume projection activity during Company's
normal production hours without incurring overtime billable to Client.
However, Client may, from time to time, request Company to operate the
Distribution Center at times other than normal production hours, which
may result in Company working overtime. Company shall receive
authorization from Client in advance prior to working any billable
overtime. Client shall not be responsible for, or pay, any overtime
charges resulting from Company's inefficiencies in providing the
Services. Approved overtime shall be paid at the rate of $[***]per
overtime hour in addition to the rates listed in the chart above.
EXHIBIT D
STANDARD TERMS AND CONDITIONS
The Fulfillment Services Agreement (the "Agreement") between Company and Client
will incorporate and be subject to the following standard terms and conditions:
1. [Reserved]
2. PAYMENT TERMS: Client shall be invoiced for the Services on the first
(1st) and fifteenth (15th) days of each month. Payment of invoices is
due fifteen (15) calendar days from the receipt of the invoice.
Invoices remaining unpaid after the due date shall bear interest
thereafter at the rate of one and one half percent (1 1/2 %) per month.
Client will pay all costs incurred by Company in collecting delinquent
invoices, including attorney's fees.
3. TAXES: Client agrees to pay all invoices without offset, withholding,
or other reduction of any kind. Client shall pay all service, sales,
use and value-added taxes, duties, assessments and any other taxes or
fees (except for any income taxes payable by Company) which may be
assessed or levied by any governmental authority with respect to the
Services provided by Company to Client pursuant to this Agreement.
4. POSTAGE/FREIGHT COSTS: Company shall not, at any time, be caused to
expend its own funds to pay for postage, shipping, or similar expenses
on behalf of Client. Company will assist in establishing accounts with
freight carriers on behalf of Client to ensure direct invoicing to
Client for packages shipped from or to Company's warehouse.
5. ACCEPTANCE OF ORDER: Company may refuse at any time to mail any copy,
photographs, illustrations or products of any kind that in Company's
sole judgment is believed not to be in compliance with specific terms
of the order.
6. MAILING LISTS: Client's mailing list(s) in Company's possession, for
storage or otherwise, is the exclusive property of Client and will be
used only at Client's instructions. Company will provide reasonable
protection against the loss of Client's list, including adequate backup
procedures for all files and programs. Company will pay for the cost of
reentering such lists in the database in the event of systems failure,
loss by fire, vandalism, theft, or such other causes (excluding
destruction of the list due to Client's negligence or willful
misconduct), provided that Client has and makes available to Company a
duplicate list or has and makes available to Company the source
material from which the list was compiled. Company will not be liable
or responsible for compiling such lists nor for an intangible or
special value attached thereto. Client will maintain a back-up copy of
all lists. Company is not responsible for the accuracy of lists
supplied by Client, a list broker or a third party designated by Client
or for removing duplicate names or addresses from any list. Company
will provide reasonable options and means, upon Client's approval, for
individuals to remove their names from any call or mailing list.
7. MATERIALS: Client shall provide Company with sufficient inventory or
adequate resources of supply to meet anticipated demand. Cost for
backorders, delay notices, canceled orders and increased Client service
resulting from out of stock conditions will be billed as an additional
cost to Client.
8. SPOILAGE, COUNTS, SHRINKAGE AND LOSSES: Client understands that all
fulfillment, printing, assembly, shipment and direct mail handling and
processing involves spoilage. Allowances for spoilage shall be taken
into consideration in ordering material. Company will use reasonable
efforts to handle Client's material with frugality and to lessen undue
spoilage. Nevertheless, Company will not be responsible for shortages
of material as a result of spoilage or shrinkage in the process, except
as set forth in Exhibit B. In all instances, Company's liability for
any losses will be limited to the cost of materials, and will not
include incidental or consequential costs, such as loss of sales.
Company will not be liable for any loss or injury to products or
materials stored however caused unless the loss or injury resulted from
the failure by Company to exercise reasonable care, and Company is not
liable for damages which could not have been avoided by exercise of
such care. In no event will Company be liable for the loss of products
or materials due to inventory shortage or unexplained or mysterious
disappearance unless Client establishes such loss occurred directly as
a result of Company's failure to exercise reasonable care. Any
presumption of conversion imposed by law will not apply to such a loss,
and a claim of conversion shall be established only by affirmative
evidence that Company converted the products or materials to its own
use. Company will use commercially reasonable efforts to ensure all
Client inventory will be maintained in a segregated area, and Company
will use best efforts to limit access to such area to Client and
Company personnel.
Unless otherwise agreed upon, prices quoted assume usage of Company's
standard cartons, envelopes, and packaging materials. Custom or
specified materials may involve additional materials and handling
charges and longer lead times.
9. OVERAGES: Client shall advise Company, in advance of a job, with
respect to the disposition of overages. Overages may be returned to
Client, stored or destroyed, as determined by Company. If items are
stored or returned, separate applicable storage and delivery charges
will be added. Material may be automatically destroyed after thirty
(30) days following Client's failure to respond to dispositions request
or to pay for storage.
10. DELIVERY SCHEDULES: Company will make all reasonable efforts to meet
scheduled delivery dates, but because of the many factors outside of
its control, Company accepts no liability, except as set forth in
Exhibit B, for failure to meet scheduled dates if reasonable efforts
are undertaken. Company is not responsible for delays in mail/shipment
dates due to delays in receipt of Client materials (e.g., data, films,
printed matter, postage, etc.). In addition, Company has no control
over routine U. S. Postal Service, United Parcel or common carriers'
delivery schedules and cannot guarantee when mail or shipments released
will be delivered by such carriers. All orders are accepted subject to
delays caused by fire, accident, act of God, mechanical breakdown or
other causes beyond Company's control. Since the time element is an
integral part of the fulfillment business, quoted prices are based upon
a specific set of time schedules for completion. Any requested
deviation from the schedules described or agreed upon by both parties
at commencement of the assignment may alter the quoted price. Materials
delivered late may affect the completion date of the order by a greater
degree than the actual elapsed time that the material is late.
11. INSURANCE: Client retains title to and the insurable interest in its
materials. Company is not required to insure materials against loss or
injury however caused; however, Company agrees to exercise reasonable
care in protecting Client's materials and to comply with any reasonable
requests made by Client's insurance carriers with respect to the
protection of Client's materials.
12. INDEMNIFICATION: Each party (the "Indemnifying Party") agrees to
indemnify and hold harmless the other party, its officers, directors,
members, shareholders, employees, or agents (the "Indemnified Parties")
from and against any and all liabilities, losses, damages, claims,
suits, judgments, costs, and expenses (including reasonable attorney's
fees and the costs of any investigation or action related thereto)
("Losses") suffered or incurred by the Indemnified Parties (i) as a
result of the Indemnifying Party's failure to perform or its improper
performance under this Agreement, or (ii) from the breach or
incorrectness of any representation or warranty made herein by the
Indemnifying Party. Nothing in this Section shall be deemed to act as a
waiver of any right or remedy at law or equity of either party. In
addition: (a) Client shall indemnify and hold harmless Company and its
Indemnified Parties from and against any and all liabilities, losses,
damages, claims, suits, judgments, costs, and expenses (including
reasonable attorney's fees and the costs of any investigation or action
related thereto) suffered or incurred directly or indirectly by Company
as a result of personal injury or property damage caused by any
products or materials delivered by Client or received by Company on
behalf of Client; and (b) Company shall indemnify and hold harmless
Client and its Indemnified Parties from and against any and all
liabilities, losses, damages, claims, suits, judgments, costs, and
expenses (including reasonable attorney's fees and the costs of any
investigation or action related thereto) suffered or incurred directly
or indirectly by Client as a result of any failure to comply with any
applicable federal, state or international laws, rules or regulations
(collectively, "Laws") in performing the Services, including without
limitation any failure to comply with any Laws relating to employment
and/or building codes.
13. CALLER INFORMATION: Company acknowledges that all call data and all
customer information that Client provides is valuable to Client and
will remain the property of Client, except as it may be used under the
terms of this Agreement. This Section 13 shall remain in effect after
the termination of this Agreement.
14. ERRORS IN FULFILLMENT: If any error in fulfillment occurs, except as
set forth in Exhibit B, Company will be liable only to the extent of
re-mailing a correction to the affected addresses as soon as reasonably
possible to rectify the mistake, and damages due by Company to Client
will be limited to the value of the work performed.
15. LIMIT ON DAMAGES: NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO
THE CONTRARY AND EXCEPT AS OTHERWISE STATED IN THIS AGREEMENT,
COMPANY'S ENTIRE LIABILITY TO CLIENT FOR DAMAGES IN CONNECTION WITH THE
SERVICES PROVIDED TO CLIENT OR PROVIDED BY CLIENT TO ITS CLIENTS SHALL
NOT EXCEED FIFTY PERCENT (50%) OF COMPANY'S INVOICES SENT TO CLIENT
DURING THE LAST TWELVE (12) MONTHS, LESS PASS-THROUGH EXPENSES (E.G.,
FREIGHT, POSTAGE, AND SO FORTH), IN CASE THERE HAVE NOT BEEN TWELVE
(12) MONTHS OF INVOICES SENT, THEN THE DAMAGES SHALL BE LIMITED TO
FIFTY PERCENT (50%) OF THE TOTAL AMOUNT OF ALL OF THE INVOICES SENT.
16. CONFIDENTIALITY: Client acknowledges that in the course of dealing
between the parties, it may acquire confidential material and
information about Company, including, but not limited to, its business
activities and operations, technical and non-technical information,
intellectual property, and trade secrets ("Company's Confidential
Information"). Client agrees that all of Company's Confidential
Information shall be held in strict confidence and that Client shall
not reveal any such Company's Confidential Information without
Company's prior written consent, unless required by applicable law.
Client shall not disclose Company's Confidential Information to others
except to Client's employees who have a reasonable need to know and who
are rendering services for Client in connection with the performance of
this Agreement. Client shall cause each of its employees to comply with
the terms of this provision.
Company acknowledges that in the course of dealing between the parties,
it may acquire confidential material and information about Client,
including, but not limited to, its business activities and operations,
its call data and customer lists, source documents, technical and
non-technical information, intellectual property, and trade secrets
("Client's Confidential Information"). Company agrees that all of
Client's Confidential Information shall be held in strict confidence
and that Company shall not reveal any such Client's Confidential
Information without Client's prior written consent, unless required by
applicable law. Company shall not disclose Client's Confidential
Information to others except to Company's employees who have a
reasonable need to know and who are rendering services for Company in
connection with the performance of this Agreement. Company shall cause
each of its employees to comply with the terms of this provision.
17. DEVELOPMENTS: Anything created or developed in whole or in part by
Company (whether or not created or developed while providing
fulfillment services to Client), including without limitation, all
custom programming, information databases, software, or business
methods or processes, and any and all copies thereof are and will
remain the sole and exclusive property of Company. At the request of
Company, Client will deliver to Company any of the foregoing in its
possession.
18. COMPLIANCE WITH LAW: Client represents and warrants to Company that all
goods and services of Client, and all materials provided to Company,
will comply with all
applicable Laws. Client will be responsible to make certain that
Company, on behalf of Client, is authorized under all applicable laws
and regulations to offer, sell or deliver, as the case may be, all of
Client's products and services in jurisdictions in which services are
provided by Company hereunder. Company represents and warrants to
Client that all Services will comply with all applicable Laws.
19. ORAL ORDERS: Written orders are strongly recommended. Oral orders may
be accepted provided, however, that the final specifications will be
those understood by Company at the time the work is completed. The
terms of this Agreement supersede any inconsistent terms in any
purchase order submitted by Client.
20. MISCELLANEOUS: This Agreement may not be modified except by a written
instrument signed by Client and by Company's President or its signatory
to this Agreement. All warranties, representations, indemnities,
covenants, and other agreements of the parties hereto will survive the
execution, delivery, and termination of this Agreement. This Agreement
will inure to and bind the successors and assigns of the respective
parties hereto. Neither party hereto may sell, assign, transfer, pledge
or encumber any of its rights or delegate any of its duties or
obligations under the terms of this Agreement without the prior written
consent of the other party, which consent will not be unreasonably
withheld, provided that if a party sells substantially all of its
assets or merges with another entity, it may assign this Agreement in
connection with such sale or merger. No such permitted assignment will
relieve the assigning party of its liabilities under this Agreement,
including all payment obligations. Any waiver by any party hereto of
any breach of any kind or character whatsoever by any other party,
whether such waiver be direct or implied, will not be construed as a
continuing waiver of, or consent to, any subsequent breach of this
Agreement on the part of the other party or parties. No course of
dealing or performance between the parties hereto, nor any delay in
exercising any rights or remedies hereunder or otherwise, will operate
as a waiver of any of the rights or remedies of any party hereto. The
provisions of this Agreement will be severable.
21. MAJEURE: Notwithstanding anything to the contrary in this Agreement,
neither party shall be deemed to have violated this Agreement on
account of any delay or other failure (except for payment of monies) to
the extent such failure is due to forces beyond the reasonable control
of the party obligated to perform such as by reason of any act of God,
labor dispute, non-delivery by suppliers or others, breakdown of
facilities, legal enactment, governmental order or regulation or any
other cause beyond their respective control. In the case of any such
event of Force Majeure, the party whose performance has been affected
shall use all reasonable efforts to fulfill its obligation as soon as
practicable. However, should the delay or other failure be material and
continue for more than thirty (30) days, the party entitled to
performance may elect to declare this Agreement terminated, effective
upon delivery of written notice of early termination to the other
party.