Master Services Agreement - NewRoads Inc. and Alloy Inc.
MASTER SERVICES AGREEMENT
This Master Services Agreement (the "AGREEMENT") dated as of FEBRUARY 1,
2002, by and between NEWROADS, Inc. ("NEWROADS"), a Delaware corporation with a
principal place of business at 75 Holly Hill Lane, Greenwich, CT 06830 and
ALLOY, INC. ("COMPANY"), a Delaware corporation with a principal place of
business at 151 West 26th Street, New York, NY 10001.
RECITALS
A. COMPANY has a variety of marketing programs for the sale and/or
distribution of various merchandise (the "MERCHANDISE"); and a variety of
promotional campaigns (the "CAMPAIGNS") to enhance such marketing programs;
and
B. NEWROADS is a provider of various services to the direct response industry
("SERVICES"), including, but not limited to, order entry; data processing;
rebate processing; sweepstakes processing; inbound telemarketing; customer
service; pick, pack and ship; order fulfillment; warehousing and storage;
and returns processing; and NEWROADS desires to provide some or all of
these Services to COMPANY as more particularly described herein; and
C. COMPANY desires that NEWROADS provide Services in connection with the sale
of certain Merchandise (the "PROGRAM") or processing for certain Promotion
Campaigns (the "CAMPAIGN") and NEWROADS desires to provide such services to
COMPANY.
NOW, THEREFORE, in consideration of the mutual promises and conditions
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. APPOINTMENT. COMPANY hereby appoints NEWROADS as its preferred third party
provider of Services upon the terms and conditions set forth in this
Agreement.
2. SERVICES. COMPANY hereby engages NewRoads to provide such Services as are
described in the attached STATEMENTS OF WORK (each a "STATEMENT OF WORK"),
and COMPANY shall pay for such Services as set forth in such STATEMENTS OF
WORK.
a. If there is any difference between the terms and conditions of any
Statement of Work attached hereto and any other portion of this
Agreement, the terms of the Statement of Work including any exhibits
thereto shall control.
b. CHANGE ORDERS; ADMINISTRATION. Any modifications to the specifications
in a Statement of Work shall require execution of a written change
order agreed to and executed by both parties to this Agreement.
3. SERVICE LEVELS. Certain of the Services set forth in the Statements of Work
are subject to the service levels set forth in the applicable Statement of
Work (the "SERVICE LEVELS"). Such Service Levels define certain standards
of performance, which NEWROADS shall maintain in the rendering of the
Services so long as COMPANY is not in Default (as defined in the Section of
this Agreement entitled, Other Defaults) hereunder. However, in
circumstances in which this Agreement does not stipulate a certain Service
Level to determine the standard of performance NEWROADS shall maintain with
respect to any particular Service, NEWROADS, and COMPANY shall jointly
agree upon the scope of NEWROADS' obligations regarding such Service, and,
in any event, NEWROADS shall use commercially reasonable efforts to provide
service levels not less than the industry norm for such Services.
a. The parties hereto agree and understand that for a period of 60 days
from the Commencement Date (as defined in applicable Statement of
Work) ("the Grace Period"), NEWROADS shall use commercially reasonable
efforts to maintain the Service Levels but may fail to meet some or
all of them due to usual and customary events involved in connection
with Company'S transition into the Facility and onto the System and,
as such, the parties hereto will not, during the Grace Period, deem
such failure (s) to constitute a material breach for purposes of the
Section of this Agreement entitled Other Defaults, so long as NEWROADS
uses commercially reasonable efforts to maintain the applicable
Service Levels.
4. PLACE OF PERFORMANCE. Services shall be performed at facilities maintained
by NEWROADS from time to time and specified in a Statement of Work;
provided, however, that NEWROADS shall not be precluded from out-sourcing
certain Services, if necessary and with the prior written consent of
COMPANY, which shall not be unreasonably withheld on a temporary basis to
providers which NEWROADS, in its sole judgments, determines to be
reasonably acceptable, so long as NEWROADS remains primarily responsible
for the providing of such out-sourced Services at reasonable Service
Levels. NEWROADS may change the place of performance only with the prior
written consent of the COMPANY.
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5. FEES AND CHARGES. In consideration for performance of the Services during
the Term (as defined hereinafter), COMPANY shall pay to NEWROADS the fees
and charges delineated in the applicable STATEMENT OF WORK. These fees and
charges shall include:
a. INITIAL START-UP FEE. COMPANY shall pay NEWROADS an initial start-up
fee (the "INITIAL START-UP FEE") as consideration for the start-up
services agreed upon by the parties hereto as set forth in the
Statement of Work (the "START-UP SERVICES").
b. TRANSACTION FEES.
i. COMPANY shall pay to NEWROADS transaction fees ("TRANSACTION
FEES") as set forth in the Statement of Work; as such rates may
be adjusted from time to time by the C.P.I. Adjustment described
below (the "TRANSACTION RATES"). These fees may include any or
all of the following:
1. FIXED PER ORDER FEE. The Fixed Fee Per Order shall be
payable on such number of orders equal to the gross number
of orders processed into the System as indicated on System
Report SLS929 (or such other report containing similar
information), such orders being hereinafter referred to as
"Gross Orders"). Merchandise Exchange Orders shall not be
included in the calculation of Gross Orders to the extent
that they number fewer than three percent (3%) of Gross
Orders. Similarly, items released from backorder status
shall not be counted as orders for purposes of calculating
Gross Orders. Orders that have been cancelled for any
reason, in time to prevent such order from reaching the
warehouse floor, shall not be included in the count of Gross
Orders. The resulting product of the Fixed Fee Per Order
multiplied by the Gross Orders shall be hereinafter referred
to as the "Total Fixed Charge." In the event the Company
institutes a continuity program whereby goods are sent to
customers on a regular basis pursuant to a single order
processed into the System, the Fixed Fee Per Order for any
such order shall be agreed between the parties.
a. VOLUME DISCOUNTS. Based upon the aggregated Gross
Orders for all Statements of Work executed in
conjunction with this Master Services Agreement,
COMPANY shall be entitled to a discount of the
applicable Fixed Fees for any such Statement of Work,
on any subsequent order, according to the following
schedule. The Aggregated Gross Orders shall include the
total of the Gross Orders billed under any applicable
Statement of Work in the most recent 12 months for
which billing has been completed.
i. If the Aggregated Gross Orders exceeds 2,000,000
orders, COMPANY shall be entitled to a five
percent discount.
ii. If the Aggregated Gross Orders exceeds 2,500,000
orders, COMPANY shall be entitled to a ten percent
discount.
iii. If the Aggregated Gross Orders exceeds 3,000,000
orders, COMPANY shall be entitled to a 15 percent
discount.
iv. From January 1, 2003 to March 31, 2003; or at such
time as a Statement of Work under this Master
Services Agreement is executed on behalf of the
"Alloy Business", NewRoads agrees that, for the
purpose of calculating Aggregated Gross Orders,
NewRoads will include the most recent 12 months of
"Alloy" activity in such calculation.
v. Beginning February 1, 2006, the fifth year of this
Agreement, if Company passes for the first time
one of the discount thresholds defined in
sub-paragraphs i, ii, or iii in this section of
the Agreement, Company shall have the option, one
time, of applying the corresponding discount to
all orders received in the six months immediately
prior and including the month during which the
threshold was surpassed. This Option shall expire
60 days from the first day of the month following
the month during which the threshold was
surpassed.
2. STORAGE FEE. A monthly fee applied to the space utilized for
storage of Merchandise in a NewRoads warehouse. This fee may
be calculated based upon cubic feet utilized and/or pallets
utilized, varying by the nature of the Merchandise and
purpose of the storage. The applicable Storage Fee and the
Method of Calculation shall be specified in the Statement of
Work.
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3. ADJUSTED ACTUAL VARIABLE COST.
a. "Adjusted Actual Variable Costs" are a percentage, as
specified in the applicable Statement of Work, of those
costs, charges or expenses, not included in Fixed
Costs, which are incurred and paid by NEWROADS in
connection with its performance of the Services, and
may include:
i. all direct and indirect labor costs (including
employee and Social Security taxes, benefits and
fringe benefits) for employees engaged in the
performance of Services whose salaries and
benefits are not included in the calculation of
the Total Fixed Charge,
ii. supervisory personnel costs up to an amount that
does not exceed 8% of the costs referred to in
item (i) above (the "Supervisory Allocation"),
iii. inbound and outbound telephone call charges,
iv. packaging, and packaging supplies, office and
data processing supplies,
v. postage,
vi. common carrier, delivery, courier and other
charges for receiving and shipping Merchandise,
vii. costs in connection with outsourced services
referred to in Section 4 hereof, entitled "Place
of Performance."
viii. recurring costs incurred in connection with the
provision of an alternate redundant telephone
service into the Facility, installed or
maintained for back-up or disaster recovery
purposes,
ix. costs incurred to train employees and associates,
both prior to and after the Commencement Date, to
handle the Company's business pursuant to the
terms of this Agreement,
x. non-management labor costs incurred to perform
the Set-Up Tasks, such as in receiving and
unpacking Merchandise into the Facility, and
xi. all other items consumed in the rendering of
Services hereunder.
b. For purposes of billing the Company for Services,
Adjusted Actual Variable Costs shall not include any
amounts paid directly by the Company or through its
Disbursement Account, as defined below. The level or
amount of expenses to be incurred by NEWROADS, which
comprise Adjusted Actual Variable Costs includes costs,
charges, and expenses incurred as a result of NEWROADS'
errors in its provision of Services, so long as such
errors are not directly caused by NEWROADS' gross
negligence. In the event of material, non-negligent
errors caused by NEWROADS, the parties agree to
negotiate in good faith to arrive at equitable
financial resolution for such errors.
c. To the extent that the Adjusted Actual Variable Costs
incurred by NEWROADS in the provision of Services for
the Company pursuant to this Agreement are not
identifiable as the sole and unique responsibility of
the Company (for example, where the cost of labor has
to be allocated between the Company and other companies
in the facility for which NEWROADS provides services)
then, in calculating Adjusted Actual Variable Costs,
NEWROADS shall utilize the allocation systems and
procedures maintained from time to time by NewRoads
(the "Allocation System"), it being the parties'
intention that the Allocation System reflects, and
allocates as fairly and accurately as possible, the
Adjusted Actual Variable Costs payable by the Company
in respect of the Services performed by or on behalf of
NEWROADS. The calculation by NEWROADS of Adjusted
Actual Variable Costs shall be available for review by
the Company upon request therefore and with reasonable
notice. The Allocation System shall not be construed or
manipulated to work more in the favor of either of the
parties hereto and against or in favor of the interests
of any other company for whom NEWROADS is providing
services.
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ii. The Transaction Rates shall be subject to adjustment as follows:
1. The Fixed Fee Rates set forth in the Statement of Work shall
be adjusted annually, on January 1 of each year thereafter
during the Term, by an amount equal to 50 percent of the
percentage increase in the Urban Wage Earners and Clerical
Workers-All Items-South consumer price index published by
the U.S. Department of Labor for the most recent 12 month
period for which statistics are available on such dates
determined by comparing such index to the index quoted for
the immediately prior twelve month period (the "C.P.I.
ADJUSTMENT"). The index use for this adjustment shall be the
regional index, which includes the primary place of
performance, as specified in the appropriate Statement of
Work. Specifically, the index to be used is CPI-W,
historically published in Table 6 of the U.S. Department of
Labor's report on the Consumer Price Index.
iii. MINIMUM MONTHLY CHARGE - COMPANY agrees to pay a minimum monthly
charge to NEWROADS when the total of all transaction fees in a
particular calendar month fall below the amount of the minimum
charge. The amount of this minimum charge shall be specified in
the Statements of Work.
c. SPECIAL SERVICES. If Company requests that NEWROADS provide services
not already defined in the Statements of Work, COMPANY shall pay
NEWROADS at the hourly rates specified in the applicable Statement of
Work, or a fixed amount mutually agreed to in writing by the parties.
All such requests for services (Special Services) not defined the
Statements of Work shall be in writing and agreed to by both parties.
d. CLOSE DOWN EXPENSES. Upon expiration or any termination of this
Agreement for any reason, Company shall pay close-down charges
relating to all close-down activities and for all purging of the
NEWROADS computer system and for such other activities as shall be
agreed upon between NEWROADS and Company based on the prevailing
hourly rates in place at the time of such close down activity,
including but not limited to such activities as removal of Merchandise
from racks, packing for shipment (if necessary), preparing freight
documents for shipment to COMPANY'S designated destination and loading
on the trucks of COMPANY'S designated carrier, together with the cost
of any necessary supplies.
e. TERMINATION FEE. If COMPANY terminates this Agreement prior to the
expiration of the term, for reasons other than a material breach by
NEWROADS or force majeure, a termination fee shall be due. This
TERMINATION FEE, as specified in an applicable Statement of Work,
shall be prorated from the date of termination to the end of the Term.
At the end of the initial 36 months, the remaining prorated amount of
the Termination Fee shall be reduced by 50 percent.
f. PRODUCTIVITY SAVINGS. The parties agree to cooperate and collaborate
to identify new processes or changes to existing processes, which will
result in reductions to the Adjusted Actual Variable Cost. The parties
acknowledge such opportunities may require consideration of capital
expenditures or adjustments to existing fee schedules. The parties
agree to address each opportunity as they are identified.
6. PAYMENTS.
a. INITIAL START-UP FEE. The initial start-up fee shall be paid
concurrently with the execution of the initial STATEMENT OF WORK by
Company.
b. TRANSACTION FEES. NEWROADS shall, on a weekly basis, issue to COMPANY
an invoice for the Transaction Fees. Each invoice shall be due and
payable within 15 days after the date that the invoice is received by
COMPANY.
i. The Company shall also pay to NEWROADS the Total Variable Charge
in accordance with the terms of this Agreement. The "Total
Variable Charge" is calculated by multiplying (x) the Estimated
Variable Cost Per Order (as defined below) in respect of any Week
during the Term hereof, by (v) the total number of Gross Orders
for such Week.
ii. The "Estimated Variable Cost Per Order" for each Week during the
Term hereof shall be such amount as equals (x) the Adjusted
Actual Variable Costs (as defined below) of the preceding Month
divided by (y) the total number of Gross Orders for such
preceding Month. The parties agree that the Estimated Variable
Cost for the first Month only of this Agreement shall be
specified in the applicable Statement of Work. For purposes of
calculation of Adjusted Actual Variable Costs pursuant to this
Section, any amounts paid from the Disbursement Account (as
defined in this Agreement) shall be excluded.
iii. Within twenty (20) Business Days following the end of each Month
during the Term hereof, NEWROADS shall
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reconcile Adjusted Actual Variable Costs against the Total
Variable Charge for such Month, and:
1. In the event that Adjusted Actual Variable Costs are higher
than the Total Variable Charge, then, the Company shall pay
the difference between Adjusted Actual Variable Costs and
the Total Variable Charge to NEWROADS within fifteen (15)
Business Days of a demand therefore; or
2. If the Total Variable Charge is higher than Adjusted Actual
Variable Costs, then NEWROADS shall credit the difference
between the Total Variable Charge and Adjusted Actual
Variable Costs against amounts owed by the Company to
NEWROADS, except with respect to any credit arising out of
the final Monthly reconciliation which shall be paid in cash
unless the Company owes other amounts to NEWROADS at such
time, in which case such amount shall be credited against
the amount owed.
iv. NEWROADS shall, on a Weekly basis, issue to the Company an
invoice in the amount equal to the Total Fixed Charge plus the
Total Variable Charge for such Week. Such invoice shall be due
and payable within 15 days of the date of faxed receipt of such
invoice and will be subject to any credit balance in favor of the
Company as a result of this Section.
c. SPECIAL SERVICES FEES. Special Services charges, for work not included
in a Statement of Work and mutually agreed to by the parties, both in
terms of scope and associated fees, shall be invoiced not more than
weekly nor less than monthly. Such invoices shall be due and payable
within 15 days of the date that the invoice is received by COMPANY.
d. CLOSE DOWN EXPENSES. Upon the expiration or any termination of this
Agreement, NEWROADS will issue to COMPANY an invoice for the
reasonably estimated Close Down Expenses (except for that portion of
the Close Down Expenses relating to telecommunication charges and
costs addressed hereinbelow), and such invoice shall be due and
payable no later than 15 days after the date of such invoice. Promptly
after completion of the close-down activities, NEWROADS shall submit a
final adjusted bill to COMPANY reflecting charges pursuant to the
Section of this Agreement entitled Fees and Charges, Close Down
Expenses and an appropriate credit or charge with respect to any
difference from the previously invoiced amount, and NEWROADS or
COMPANY, as applicable, shall pay within 15 Business Days any
resulting amount owing to the other that is not otherwise credited.
The portion of the Close Down Expenses relating to the transfer of
portable 800 numbers and estimated cost for calls not billed will be
reconciled and billed monthly until all such telephone activity has
been billed and paid.
e. TERMINATION FEE. If applicable, the Termination Fee shall be due
within 15 days after notification of termination by COMPANY to
NEWROADS.
7. DISBURSEMENT ACCOUNT. At all times during the term of this Agreement,
COMPANY shall maintain with NEWROADS a Disbursement Account (the
"DISBURSEMENT ACCOUNT") sufficient to cover certain reasonable expenses
paid by NEWROADS on behalf of COMPANY, including all common carrier and
other delivery service shipping costs, packing materials, stationery and
other similar expenses, and NEWROADS shall pay such expenses therefrom so
long as and to the extent that a balance remains therein. COMPANY and
NEWROADS shall agree in advance upon which costs and charges are to be paid
from the Disbursement Account, it being understood that such list of
charges may change from time to time according to COMPANY'S business needs
and NEWROADS' operations. The Disbursement Account shall (at a minimum) be
funded by COMPANY from time to time as needed to bring the balance of the
fund to an amount, which would cover forecasted expenses for the ensuing
two week period after taking into consideration such factors as forecasted
order volume, seasonality and other applicable factors. If the Disbursement
Account is insufficient to cover such expenses, NEWROADS may, in its sole
discretion: (a) upon request of COMPANY, pay the expenses and immediately
invoice Company for the amount of expenses incurred plus a 15 percent
mark-up, and such invoice amount shall be payable within five Business Days
after receipt; or (b) following five Business Days after providing COMPANY
with written notice of insufficient funds in the Disbursement Account (and
the Disbursement Account has not during such time been restored in full),
elect not to pay the expenses, and if NEWROADS so elects not to pay the
expenses, it shall have no liability whatsoever for any losses or
liabilities incurred by COMPANY for such nonpayment. NEWROADS shall provide
COMPANY with a weekly statement setting forth the balance of, and
accounting for disbursements from, the Disbursement Account.
8. FORECASTS. The parties acknowledge that orders for Merchandise may not be
uniform from month to month as a result of various factors, including the
seasonal nature of the demand for Merchandise and advertising and marketing
schedules which are subject to constant changes, and that the inability of
COMPANY to accurately predict the volume of orders to be processed, receipt
of phone calls, receipt of electronic mail messages or the inventory to be
received and warehoused on a weekly basis may have a detrimental effect on
NEWROADS' ability to provide the Services in accordance with the Service
Levels. COMPANY recognizes and understands the importance of keeping
NEWROADS informed at all times of forecasted order volumes, schedule
changes, fast and slow selling items, Merchandise or vendor problems and
all other material business issues which might have an effect upon the
performance by NEWROADS of its obligations hereunder and shall
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provide NEWROADS with reasonable notice after COMPANY is aware of any
changes in any such forecasted items. Specifically, but without limiting
the generality of the foregoing, Company agrees as follows:
a. COMPANY shall use commercially reasonable efforts to deliver to
NEWROADS a complete set of projections at least two months prior to
the beginning of each successive calendar year, during the Term
hereof, in respect of such calendar year, covering the operation of
its business for such calendar year, including, by month and quarter,
the forecasted number of orders; forecasted number of emails and
telephone calls; the forecasted number of units received and shipped;
and the forecasted returns (each projections being hereinafter
referred to as an "ANNUAL FORECASTS").
b. Four weeks prior to the first day of each calendar quarter, COMPANY
shall use commercially reasonable efforts deliver to NEWROADS a
complete set of projections covering the operation of its business and
demand for merchandise for the next succeeding two calendar quarters,
including, by week, the forecasted number of orders; forecasted number
of emails and telephone calls; and the forecasted number of units
received and shipped each week; and the forecasted returns (each
quarterly projections being hereinafter referred to as a "QUARTERLY
FORECAST").
c. COMPANY shall use commercially reasonable efforts to deliver to
NEWROADS a revised Quarterly Forecast (a "REVISED QUARTERLY FORECAST")
whenever it believes that any business condition of which it is aware
may have the effect of changing any item of the previous Quarterly
Forecast furnished to NEWROADS. In the event that COMPANY experiences
an actual increase in any forecast part of its business in respect of
any week of more than 15 percent over that projected for such activity
for such week, as set forth in any applicable Quarterly Forecast (or a
Revised Quarterly Forecast which has been delivered to NEWROADS at
least four weeks prior to such week) and has not advised NEWROADS in
writing at least four weeks prior to such week that such increase is
forecasted, then NEWROADS shall use commercially reasonable efforts
but be under no obligation to meet those Service Levels directly or
indirectly impacted by the increased level of activity for so long as
Company's volume exceeds by more than 15 percent the volume projected
in the most recent Quarterly Forecast or Revised Quarterly Forecast
for such activity
d. The information contained in Quarterly Forecasts, Revised Quarterly
Forecasts and Annual Forecasts provided by COMPANY to NEWROADS shall
be reasonably related to and consistent with the actual operating
history of COMPANY, subject to deviations therefrom as reasonably
required by changes in circumstances.
9. INVENTORY. Merchandise inventory shall be handled and processed as follows:
a. COMPANY shall, at its own expense, supply NEWROADS at the NEWROADS
facilities specified in the applicable Statement of Work, and maintain
with NEWROADS an inventory of Merchandise, which COMPANY reasonably
believes is adequate in the ordinary course of business to fill orders
received for its Merchandise in line with its Quarterly Forecasts or
Revised Quarterly Forecasts. NEWROADS shall use commercially
reasonable efforts to preserve and maintain Merchandise received for
COMPANY in good and marketable condition.
b. NEWROADS shall use its best commercial efforts but is under no
obligation to receive Merchandise on behalf of COMPANY unless COMPANY
has transmitted to NEWROADS, within two Business Days prior to the
receipt of such Merchandise, a copy of the purchase order by which
COMPANY ordered such Merchandise, or all requisite details of the
purchase order to permit NEWROADS to identify the Merchandise as that
of Company.
c. For inbound shipments, COMPANY shall advise its vendors that motor
carriers must contact NEWROADS at least two Business Days prior to
delivery and make a delivery appointment prior to arrival. Inbound
shipments arriving at a NEWROADS warehouse without one Business Day's
prior notice may be refused or delayed by NEWROADS depending on the
space and manpower available at the time of arrival. Each inbound
shipment must have a packing slip and each carton must be marked with
the purchase order number and SKU number.
d. For purposes of this Agreement, "PROBLEM MERCHANDISE" means
Merchandise shipped to NEWROADS, which in NEWROADS sole reasonable
discretion cannot be processed by NEWROADS without imposing an
unreasonable hardship on NEWROADS. For illustrative purposes and
without limiting the definition thereof, Problem Merchandise shall
include all Merchandise which (i) arrives with insufficient paperwork,
(ii) is delivered to NEWROADS in the absence of a delivery appointment
or (iii) is faulty or damaged. NEWROADS shall use its commercially
reasonable efforts to comply with COMPANY'S written instructions
regarding handling and disposing of Problem Merchandise and shall
submit to COMPANY a report of Problem Merchandise as soon as
practicable after having received it. NEWROADS shall not include
Problem Merchandise in the inventory of items available for shipment
to customers but in a separate inventory stored at storage rates as
specified in the applicable Statement of Work for the first 30 days
and thereafter at a storage rate of one and one-half times such
applicable storage rates (the "PROBLEM MERCHANDISE RATE"). COMPANY
acknowledges that Problem Merchandise cannot be stored indefinitely
and that all Problem Merchandise shall be removed at COMPANY'S expense
within 30 days after NEWROADS notifies COMPANY of specific details
relevant to the reasons for the
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classification of the Merchandise as Problem Merchandise. NEWROADS has
the right to dispose of the Problem Merchandise by returning the
Merchandise to COMPANY on a freight collect basis or taking any other
actions which are reasonable under the circumstances; provided,
however, that NEWROADS shall follow COMPANY'S reasonable directions
with respect to any other disposition (at COMPANY'S expense) of the
Problem Merchandise. Once Merchandise has been adequately repaired or
reconstituted so that its processing no longer imposes an unreasonable
hardship on NEWROADS, NEWROADS agrees to promptly remove such
Merchandise from its Problem Merchandise status and to so notify
COMPANY in writing within two Business Days.
e. NEWROADS acknowledges and COMPANY agrees that COMPANY shall be solely
responsible for selecting, purchasing, paying for and arranging for
the shipment to NEWROADS of Merchandise, and NEWROADS agrees that it
shall not have and shall not represent that it has any authority to
undertake any of such activities on COMPANY'S behalf.
f. In the event that any Merchandise shipped by NEWROADS to customers is
damaged (or lost in shipment), NEWROADS agrees to notify COMPANY,
store damaged and returned Merchandise at the Problem Merchandise Rate
pending inspection by the carrier, file tracers for the lost shipments
and claims for damaged and lost shipments which originated from
NEWROADS, and reimburse COMPANY for any money paid or credited to
NEWROADS by the common carrier as a result of such claims within
thirty (30) days after receipt.
g. NEWROADS reserves the right to refuse, without liability of any kind,
acceptance of Merchandise which, because of its condition, might
cause, in NEWROADS' reasonable sole judgment, infestation,
contamination, or damage to the warehouse facility or to other goods
in the custody of NEWROADS. NEWROADS shall notify COMPANY of its
refusal to accept any such Merchandise and the reason for its refusal
within two Business Days after such refusal. If NEWROADS believes that
any Merchandise has caused or may cause damage to the warehouse
facility or to any other goods in the custody of NEWROADS or has
characteristics which make its storage illegal, NEWROADS, after giving
reasonable notice to COMPANY, may dispose of the Merchandise in any
lawful manner and will incur no liability by reason of such disposal,
and COMPANY shall pay NEWROADS any reasonable costs incurred by
NewRoads in connection with such disposal as well as storage at the
Problem Merchandise Rate from the date NEWROADS notifies COMPANY of
such belief.
h. All Merchandise in the possession of NEWROADS shall be and remain the
exclusive property of COMPANY, and NEWROADS acknowledges and agrees
that it shall acquire no right, title or interest in or to any
Merchandise by reason of this Agreement. NEWROADS shall not transfer,
assign, exchange, lease, encumber, pledge, or create a security
interest in or otherwise dispose of the Merchandise and shall not
subject the Merchandise to attachment, levy, or seizure by or on
behalf of any creditor of NEWROADS.
i. Company hereby grants to NEWROADS a security interest in the
MERCHANDISE held from time to time by NEWROADS to secure the
obligations of Company hereunder; provided, however, that NEWROADS
agrees to release such security interest upon the reasonable request
of Company in the event that Company provides NEWROADS security in
substitution therefore which is acceptable to NEWROADS in NEWROADS'
sole discretion. COMPANY shall execute all documents reasonably
requested by NEWROADS for the perfection of any such security
interest. COMPANY shall not grant any Lien to any third party, with
the exception of general revolving credit arrangements maintained by
COMPANY in the ordinary and usual course of business with its banks
and purchase money liens, which shall have priority to the Lien of
NEWROADS hereunder on any MERCHANDISE inventory without the prior
written consent of NEWROADS, which agreement shall not be unreasonably
withheld, provided that any such Lien shall only be in the form of a
security interest to a financial institution securing a revolving
working capital credit facility, and further provided that COMPANY is
not delinquent in the payment of any amounts owing to NEWROADS under
this Agreement and COMPANY has proved to NEWROADS with reasonable
assurances that it will be ab1e to meet its future payment obligations
to NEWROADS as and when they come due under this Agreement.
10. RISK OF LOSS.
a. All risk of loss and damage to Merchandise from any cause prior to
receipt by NEWROADS into, and from and after the removal by common
carrier from, the inventory at the NEWROADS facility shall be borne by
COMPANY. Any loss or damage by fire or casualty to Merchandise on the
premises of NEWROADS shall be borne by COMPANY. NEWROADS shall
reimburse COMPANY at COMPANY'S net Merchandise cost (i) 0 percent of
all Inventory Shrinkage which is equal to or less than 1.0 percent,
(ii) 100 percent of all Inventory Shrinkage which exceeds 1.0 percent.
For purposes of this Agreement "INVENTORY SHRINKAGE" means the
quotient which results from dividing (A) the cumulative Variance (as
defined below) between the value of the Merchandise inventory as
determined from the perpetual inventory report on the requisite Count
Date (as defined below) and the value of the Merchandise inventory
based upon a physical inventory or cycle count (exclusive of markdowns
and price adjustments) on such Count Date by (B) the total Merchandise
inventory receipts processed by NEWROADS during the prior 12 months.
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b. All risk of loss and damage to COMPANY materials other than
Merchandise, such as literature or package inserts, from any cause
prior to receipt by NEWROADS into, and from and after the removal by
common carrier from, the inventory at the NEWROADS facility shall be
borne by COMPANY. Any loss or damage by fire or casualty to
Non-Merchandise materials on the premises of NEWROADS shall be borne
by COMPANY. NEWROADS shall reimburse COMPANY at Company's net cost (i)
0 percent of all Inventory Shrinkage which is equal to or less than
10.0 percent, (ii) 50 percent of all Inventory Shrinkage which exceeds
10.0 percent but is equal to or less than 20.0 percent, and (iii) 100
percent of all Inventory Shrinkage which exceeds 20.0 percent. For
purposes of this Agreement "INVENTORY Shrinkage" means the quotient
which results from dividing (A) the cumulative Variance (as defined
below) between the value of the Non-Merchandise material inventory as
determined from the perpetual inventory report on the requisite Count
Date (as defined below) and the value of the Non-Merchandise material
inventory based upon a physical inventory or cycle count (exclusive of
markdowns and price adjustments) on such Count Date by (B) the total
Non-Merchandise material inventory receipts processed by NEWROADS
during the prior 12 months.
c. For purposes of this Section 11, "VARIANCE" shall mean the difference
between the value of the Merchandise inventory as determined from the
perpetual inventory report on any Count Date and the value of the
Merchandise inventory established by a cycle count or physical
inventory on such date (the "COUNT DATE"); provided, however, that for
purposes of determining the Variance, Merchandise prices shall be
deemed to be constant regardless of any intermittent price changes.
The value of any adjustment made at any time to the perpetual
inventory report shall be added to or subtracted from, as the case may
be, the Variance for the purpose of calculating Inventory Shrinkage.
Physical inventory and cycle counts may be requested in writing by
COMPANY on a semiannual basis for Count Dates occurring within 180
days prior to the date of such request. Such requests for physical
inventory or cycle counts shall be deemed a request for Special
Services and are billable activities under section 9 of this
agreement.
11. COLLECTIONS. Notwithstanding anything contained herein to the contrary, the
parties acknowledge that NEWROADS shall not be required to make any
collection efforts on COMPANY's behalf and shall share no risk with respect
to any failure of COMPANY to collect payment for any customer order.
12. TAXES. All fees, costs, charges and other amounts payable to NEWROADS
hereunder for Services rendered by NEWROADS to Company are exclusive of
applicable taxes, if any, which (other than income taxes of NEWROADS) are
the responsibility of COMPANY. In addition, NEWROADS shall calculate for
each customer sale all applicable sales taxes based on information supplied
by COMPANY. NEWROADS shall collect such sales tax in accordance with
instructions provided by the COMPANY. A list of all the jurisdictions in
which COMPANY is required to collect sales taxes shall be included in the
Statement of Work, which COMPANY shall promptly update as required to keep
such information current during the Term of this Agreement, and COMPANY
shall be solely responsible for the accuracy of such information. COMPANY
shall be responsible for the collection and payment of all sales taxes, the
preparation and filing of all sales tax documentation and the compliance
with all sales tax laws. NEWROADS shall have no such responsibilities for
payment or collection of any such taxes unless otherwise required by law.
COMPANY shall indemnify NEWROADS for all claims, suits, actions, debts,
damages, costs, charges and expenses, including court costs and reasonable
attorneys' fees, incurred by NEWROADS due to COMPANY's failure to properly
and timely file and pay applicable taxes.]
13. MONETARY DEFAULT. If the COMPANY defaults on the payment of any fees,
charges, invoices or other amounts due to NEWROADS pursuant to this
Agreement (hereinafter a "Monetary Obligation"), and such Monetary
Obligation is not subject to a Dispute Notice (defined below) NEWROADS
shall (i) charge a finance charge of 1.5% per month of the amount of a
Monetary Obligation and (ii) upon 20 Business Days prior written notice of
such default stop providing Services and performing its obligations under
this Agreement and/or terminate this Agreement. In the event that the
COMPANY reasonably in good faith disputes the amount or payment of such
Monetary Obligation (a "Monetary Dispute") and reports its reasons
therefore to NEWROADS in writing (a "Dispute Notice"), NEWROADS agrees to
work diligently and in good faith with the COMPANY to resolve the dispute
for a period of up to ten Business Days from the date of the Dispute
Notice, provided, however, that (i) during such period NEWROADS shall
continue to perform Services, (ii) the COMPANY shall be current in and
shall continue to make payments to NEWROADS relating to all Actual Variable
Costs hereunder, other than such amount that is subject to the Dispute
Notice and (iii) the COMPANY shall make all other payments required
hereunder to NEWROADS (e.g. Fixed Fee Per Order and Special Services Costs)
other than those payments subject to the Dispute Notice. In the event that
NEWROADS and the COMPANY are unable to resolve the Monetary Dispute, then
the amount in dispute shall be deposited into escrow with an escrow agent
mutually acceptable to both NEWROADS and the COMPANY until such dispute is
resolved in accordance with the Section of this Agreement entitled,
Arbitration. In the event such dispute is resolved and to the extent the
COMPANY owes any amount to NEWROADS, the COMPANY shall pay such amount to
NEWROADS within ten Business Days of the resolution of such dispute. In the
event such dispute is not resolved pursuant to the Section of this
Agreement entitled, Arbitration, or the COMPANY has not deposited into
escrow such amount in dispute, or the parties are unable to agree upon an
acceptable escrow agent, NEWROADS shall have the right to stop providing
Services and/or terminate this Agreement without further notice. The
COMPANY shall not set-off any amount against invoices submitted by NEWROADS
in respect of the Services performed hereunder against any claim, damage,
action, cost or expense which may be asserted against NEWROADS at any time.
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14. OTHER DEFAULTS. If either COMPANY or NEWROADS believes the other party is
in breach of any of its non-monetary obligations under this Agreement due
to any reason other than force majeure, the party believing that such a
breach by the other party has occurred shall, within 15 days of discovery
of alleged breach, give written notice to the other party declaring a
breach of this Agreement and specifying the nature of the breach (any such
breach and any default in payment under MONETARY DEFAULT hereof are
sometimes referred to herein as a "DEFAULT"). If the alleging party fails
to give written notice of an alleged breach within 15 days, such alleging
party shall lose any rights to terminate this agreement based upon the
alleged breach. Such breaching party shall have 15 Business Days in which
to cure such breach or, if such breach cannot be completely cured within 15
Business Days, a reasonable time to cure such breach as long as the
breaching party is diligently pursuing the cure of the breach; provided,
however, that with respect to a material breach relating to the taking of
telephone calls, emails, the processing of orders, the receiving of
Merchandise into inventory or timely delivery of Merchandise to common
carriers for shipment, NEWROADS shall have seven Business Days to cure such
breach or, if such breach cannot be completely cured within five Business
Days, a reasonable time to cure such breach so long as the NEWROADS is
diligently pursuing the cure of the breach.
15. FORCE MAJEURE. Neither NEWROADS nor COMPANY shall be liable for any delay
or failure in performance under this Agreement or interruption of service
resulting, directly or indirectly, from acts of God, civil or military
authority, acts of public enemies, acts of terrorism, war, accidents, fire,
explosions, earthquakes, floods, the elements or any similar cause beyond
the reasonable control of such party (a "FORCE MAJEURE"), so long as,
following the cessation of such cause, such party uses its reasonable
efforts to resume its performance hereunder. If NEWROADS is unable to
perform the Services due to a Force Majeure, then NEWROADS may out-source
Services on a temporary basis pursuant to the Section of this Agreement
entitled, Place of Performance. Force Majeure shall not be an excuse for
COMPANY not meeting any financial obligation hereunder with respect to the
timely payment for Services.
16. TERM AND TERMINATION.
a. TERM. The initial term of this Agreement shall commence on FEBRUARY 1,
2002 (the "COMMENCEMENT DATE"), continue for five years and shall
expire on JANUARY 31, 2007 (the "EXPIRATION DATE") unless earlier
terminated in accordance with this Section or elsewhere in this
Agreement (the "INITIAL TERM"). This Agreement shall automatically be
renewed for one two-year term commencing after the expiration of the
Initial Term and, thereafter, for additional one year terms after the
expiration of any renewal term unless NEWROADS or COMPANY provides the
other with at least 90 days prior written notice of its election to
terminate this Agreement at the end of the then current term (the
Initial Term and all renewal terms are collectively referred to as the
"TERM").
b. EARLY TERMINATION. This Agreement may be terminated prior to the
Expiration Date upon the occurrence of any of the following, provided
that any amounts owing to NEWROADS through the date of termination
(including any Close-Down Expenses and Termination Fees, if
applicable) shall be payable to NewRoads notwithstanding any such
early termination:
i. MONETARY DEFAULT. NEWROADS shall have the termination rights
described in the Section of this Agreement entitled Monetary
Default.
ii. BANKRUPTCY. Either party may terminate this Agreement, effective
immediately upon giving written notice if the other party files a
petition in bankruptcy or files for a reorganization or for the
appointment of a receiver or trustee of all or substantially all
of such party's property, or makes an assignment or petitions for
or enters into an arrangement for the benefit of creditors, or if
a petition in bankruptcy is filed against the other party which
is not discharged within 90 days thereafter.
iii. FORCE MAJEURE. In the event that following a Force Majeure,
NEWROADS (with out-sourcing) is unable to perform at the Service
Levels for a period in excess of 20 Business Days, Company shall
have the right to terminate this Agreement.
iv. A material default by NEWROADS pursuant to the Section of this
Agreement entitled, OTHER DEFAULTS, which is not cured within the
time periods stated therein shall entitle COMPANY to terminate
the Agreement.
17. REPRESENTATIONS AND WARRANTIES.
a. NEWROADS and COMPANY. NEWROADS and COMPANY each hereby individually
represent and warrant that: (i) it has the full authority and legal
right to carry out the terms of this Agreement; (ii) the terms of this
Agreement will not violate the terms of any agreement, contract or
other instrument to which it is a party, and no consent or
authorization of any other
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person, firm or corporation is a condition precedent to this
Agreement; (iii) it has taken all action necessary to authorize the
execution and delivery of this Agreement; and (iv) this Agreement is a
legal, valid, and binding obligation of NEWROADS and COMPANY, as the
case may be, enforceable in accordance with its terms, except as
limited by bankruptcy and other laws of general application relating
to or affecting the enforcement of creditors' rights.
b. COMPANY. COMPANY hereby warrants and represents that except as
otherwise set forth on SCHEDULE 1:
i. it has, to the best of its knowledge, and will use its
commercially reasonable efforts to continue to have for the Term
of this Agreement, all necessary authority from all of the
corporations, partnerships and individuals whose products are
offered for sale by Company, to use their trademarks, service
marks and other intellectual property for the purposes of
conducting COMPANY'S business. COMPANY'S business as conducted or
as currently proposed to be conducted does not and will not cause
Company to infringe or violate any patents, trademarks, service
marks, trade names, copyrights, licenses, trade secrets or other
intellectual property rights of any other person or entity.
ii. it owns the Merchandise inventory free and clear of all liens,
restrictions, claims, charges, security interests or other
encumbrances of any nature whatsoever, including any chattel
mortgages, conditional sales contracts, collateral security
arrangements and other title or interest retention arrangements
(a "LIEN").
18. INDEMNITY & LIABILITY.
a. NEWROADS agrees to indemnify, defend and hold COMPANY harmless from
and against any and all claims, suits, actions, debts, damages,
injuries, costs, charges, and expenses, (including without limitation
court costs and reasonable attorneys' fees), which Company may at any
time incur by reason of (i) a material breach of this Agreement by
NEWROADS or (ii) NewRoads' gross negligence or an intentional or
willful act of misconduct by NewRoads.
b. COMPANY agrees to indemnify, defend and hold NEWROADS harmless from
and against any and all claims (including claims by third party
providers engaged by COMPANY), suits, actions, debts, damages,
injuries, costs, charges, and expenses, including without limitation
court costs and reasonable attorneys fees, which NEWROADS may at any
time incur arising from (i) use or consumption of the Merchandise,
including without limitation use or consumption of Merchandise that
contains or is claimed to contain a defect, or (ii) a material breach
of this Agreement by COMPANY.
c. The indemnification provisions of this Section apply only to claims
made against either party hereto by any third party and not to any
claims made by either party hereto against the other. A party hereto
seeking indemnity hereunder is referred to as the "Indemnified Party"
and the other party to which indemnity is sought hereunder is referred
to herein as the "Indemnifying Party". An Indemnified Party under this
Agreement shall with respect to Claims asserted against such party by
any third party, give written notice to the Indemnifying Party of any
liability which might give rise to a claim for indemnity under this
Agreement within 60 Business Days, of the receipt of any written claim
from any such third party, but not later than 20 days prior to the
date any answer or responsive pleading is due or five Business Days
after notice of the action, whichever is later, and with respect to
other matters for which the Indemnified Party may seek
indemnification, give prompt written notice to the Indemnifying Party
of any liability which might give rise to a claim for indemnity;
provided, however, that any failure to give such notice will not waive
any rights of the Indemnified Party except to the extent the rights of
the Indemnifying Party are materially prejudiced. The Indemnifying
Party shall have the right, at its election, to take over the defense
or settlement of such claim by giving written notice to the
Indemnified Party at least 15 days prior to the time when an answer or
other responsive pleading or notice with respect thereto is required
or 10 days after notice, whichever is later. If the Indemnifying Party
makes such election, it may conduct the defense of such claim through
counsel of its choosing (subject to the Indemnified Party's approval
of such counsel, which approval shall not be unreasonably withheld)
and shall be solely responsible for the expenses of such defense and
shall be bound by the results of its defense or settlement of the
claim. The Indemnifying Party shall not settle any such claim without
prior notice to and consultation with the Indemnified Party, no such
settlement involving any equitable relief or which might have an
adverse effect on the Indemnified Party may be agreed to without the
written consent of the Indemnified Party which consent shall not be
unreasonably withheld. So long as the Indemnifying Party is diligently
contesting any such claim in good faith, the Indemnified Party may pay
or settle such claim only at its own expense and the Indemnifying
Party will not be responsible for the fees of separate legal counsel
to the Indemnified Party, unless the named parties to any proceeding
include both parties and representation of both parties by the same
counsel would be inappropriate. If the Indemnifying Party does not
make such election, or having made such election does not, in the
reasonable opinion of the Indemnified Party proceed diligently to
defend such claim, then the Indemnified Party may (after written
notice to the Indemnifying Party), at the expense of the Indemnifying
Party, take over the defense of and proceed to handle such claim in
its discretion and the Indemnifying Party shall be bound by any
defense or settlement that the Indemnified Party may make in good
faith with respect to such claim. The parties agree to cooperate in
defending such third party claims and the Indemnified Party shall
provide such cooperation and such access to its books,
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records and properties as the Indemnifying Party shall reasonably
request with respect to any matter for which indemnification is sought
hereunder; and the parties hereto agree to cooperate with each other
in order to ensure the proper and adequate defense thereof with regard
to claims of third parties for which indemnification is payable
hereunder, such indemnification shall be paid by the Indemnifying
Party upon the earlier to occur of: (i) the entry of a judgment
against the Indemnified Party and the expiration of any applicable
appeal period, or if earlier, five Business Days prior to the date
that the judgment creditor has the right to execute the judgment; (ii)
the entry of a non-appealable judgment or final appellate decision
against the Indemnified Party; or (iii) a settlement of the claim,
provided that if a judgment or settlement provides that payments may
be made in installments, that the indemnification payments required
-to be made hereunder in connection therewith shall be payab1e in a
like manner. Notwithstanding the foregoing, providing that there is no
dispute as to the applicability of indemnification, the reasonable
expenses of counsel to the Indemnified Party shall be reimbursed on a
current basis by the Indemnifying Party if such expenses are a
liability of The Indemnifying Party. With regard to other claims for
which indemnification is payable hereunder, such indemnification shall
be paid promptly by the Indemnifying Party upon demand by the
Indemnified Party.
d. Notwithstanding any other provision of this Agreement, neither party
shall be liable to the other for any other special, incidental,
punitive or consequential damages of any nature whatsoever, even if
that party has been previously notified of the possibility of such
damages. Any successful claim for actual damages against either Party
shall be limited to the amounts billed under this agreement.
e. LIMITATION OF LIABILITY Neither party shall be liable to the other for
any other special, incidental, punitive or consequential damages of
any nature whatsoever even if that party has been previously notified
of the possibility of such damages. NewRoads shall have no liability
to the Company for the results of any acts of terrorism, including
without limitation the insertion by third parties of hazardous
substances in any packages handled by NewRoads, or any consumer
response to such act of terrorism, provided NewRoads had no advance
knowledge or through the exercise of reasonable diligence could have
had no advance knowledge of such acts of terrorism.
19. INSURANCE.
a. COMPANY agrees to maintain insurance, at its sole cost and expense,
against loss or damage by fire or other casualty to COMPANY'S
Merchandise on the premises of NEWROADS, and against any claims and
liability growing out of either product liability, advertising
liability or trademark or service mark, patent or copyright
infringement, and to list NEWROADS as an additional insured
thereunder. Such insurance will be maintained with insurers qualified
to do business in the state where the inventory is warehoused.
Attached hereto, as EXHIBIT A, is a Certificate of Insurance for
COMPANY reflecting such coverage.
b. NEWROADS shall not be responsible for the provision or maintenance of
any insurance coverage for the Merchandise or other inventory or for
Company or its subsidiaries or respective businesses, products, goods
and property. NEWROADS agrees to maintain at all times during the Term
insurance with the coverages and at the levels set forth in the
Certificate of Insurance for NEWROADS attached as EXHIBIT B; with
insurers qualified to do business in the state of where the Services
are performed.
20. COMPLIANCE WITH LAWS. COMPANY and NEWROADS shall comply with all laws,
rules and regulations, whether local, state, or federal, applicable to the
sale of Merchandise and to the providing of Services.
21. INSPECTIONS AND AUDITS. COMPANY or its agents shall, during normal business
hours and upon one Business Days notice, have the right to inspect the
Merchandise located at NEWROADS' place of business. COMPANY shall, during
normal business hours and upon three Business Days notice, have the right
to audit the books and records of NEWROADS pertaining to Merchandise and
the Services rendered by NEWROADS to COMPANY and the fees charged in
connection therewith pursuant to this Agreement; provided, however, that
such audit of books and records shall occur no more frequently than in
three month intervals and then shall cover only the three month period
ending on the date such inspection commences. At least once each calendar
year, the Chief Financial Officer of NEWROADS shall meet with the Chief
Financial Officer of COMPANY and review the audited financial statements of
NEWROADS.
22. CONFIDENTIALITY; NON-SOLICITATION.
a. In the course of its performance of this Agreement, it is anticipated
that NEWROADS and COMPANY will come into possession of certain
proprietary information belonging to the other, including but not
limited to
i. in the case of COMPANY, marketing records, merchandising records,
customer records and customer files and
ii. in the case of NEWROADS, its financial condition, cost
structures, staffing levels, systems information,
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monitoring records, customer records, customer files, trade
secrets, sales forecasts, general business plans and other
confidential or proprietary information (all such information
relating to COMPANY or NEWROADS being "CONFIDENTIAL INFORMATION"
and the party to whom such Confidential Information relates being
the "PROPRIETARY PARTY").
b. NEWROADS and COMPANY agree that each will not, during the Term hereof
or thereafter, furnish, disclose, or make accessible to any third
party any of the other's Confidential Information unless otherwise
instructed by the Proprietary Party in writing; provided, however,
that Confidential Information shall not include any information which
i. at the time of disclosure by the other party is generally
available to and known by the public other than as a result of
its disclosure by such party,
ii. was available to the other party on a non-confidential basis from
a source other than the Proprietary Party, provided that such
source is not bound by a confidentiality agreement, or
contractual or fiduciary obligation with the Proprietary Party,
or
iii. has been independently acquired or developed by the other party
without violating any obligations under this Agreement, or of any
other agreement between Company and NEWROADS.
c. NEWROADS agrees that COMPANY'S customer files will not be made
available for use by anyone other than COMPANY, without COMPANY'S
specific prior written permission for each occurrence of such use.
d. COMPANY agrees that it will not at any time during the Term or within
three years after the termination or expiration of this Agreement,
solicit, interfere with, employ or endeavor to entice away from
NEWROADS (or any subsidiary or affiliate of NEWROADS) any employee,
consultant, agent or other client of NEWROADS. The parties agree that
placing advertisements soliciting employees of the type then employed
by the Company or NewRoads, as the case may be, in newspapers,
Internet job sites and similar media generally accessible to the
public shall not be deemed to be a breach of this Section.
23. NOTICES. Any and all notices and all communication provided for in this
Agreement shall be given in writing. Such notices and other communications
shall be deemed given when received, when delivered by hand, by confirmed
facsimile transmission or when deposited in the United States Mail,
Registered or certified, with proper postage prepaid, and addressed as
follows, or to such other address as NEWROADS or COMPANY may designate to
the other in writing.
a. If to NEWROADS: NewRoads, Inc., 730 East Church Street, Martinsville,
VA 24112, Attn: President, Fax 276-656-2218, Phone 276-670-2000.
i. With copies to:
1. NewRoads, Inc.75 Holly Hill Lane, Greenwich, Connecticut
06830; Attn: James S. Hersh; Fax: 203.625.4767; Phone:
203.625.9899
2. Kane Kessler, PC; 1350 Avenue of the Americas; New York, NY
10019-4896; Attn: Robert L. Lawrence, Esq.; Fax:
212-245-3009; Phone: 212-519-5146.
b. If to COMPANY: Alloy, Inc., 151 West 26th Street, 11th Floor, New
York, NY 10001, Attn: Samuel A. Gradess, fax: 212-244-4311.
i. With a copy to:
1. Alloy, Inc., 151 West 26th Street, 11th Floor, New York, NY
10001, Attn. General Counsel, Fax: 212-244-4311.
24. ASSIGNMENT. This Agreement shall inure to the benefit of and be binding
upon the parties and their successors and permitted assigns. This Agreement
may not be assigned by either party without the prior written consent of
the other party which shall not be unreasonably withheld; provided,
however, that, it may be assigned to any person, firm or corporation which
purchases all or substantially all of the stock or assets of either party
or to any person, firm or corporation into which or with which either party
consolidates or merges and provided further that either party may assign
this agreement to any of its affiliates, subsidiaries, or its parent
company.
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25. AMENDMENTS. This Agreement shall not be modified or amended except by a
written agreement signed by authorized representatives of NEWROADS and
Company.
26. GOVERNING LAW. This Agreement has been entered into and shall be governed,
construed, and interpreted in accordance with the laws of the State of New
York without reference to any conflicts of law principles.
27. ARBITRATION. Any dispute between the parties concerning this Agreement
shall be submitted to binding arbitration before a single arbitrator in
accordance with the following provisions:
a. If a dispute arises concerning this Agreement, the dispute shall be
resolved through binding and non-appealable arbitration pursuant to
the Commercial Arbitration Rules of the American Arbitration
Association (the "RULES"), except where the Rules conflict with the
provisions of this Section of this Agreement, in which event the
provisions of this Section of this Agreement shall prevail. The
arbitration shall be before one arbitrator selected by the parties, or
if the parties cannot agree upon a single arbitrator within 30 days
after a party giving notice to the other of a proposed choice for an
arbitrator, then by a single arbitrator selected by the New York City
office of the American Arbitration Association, who shall be a person
(i) who is admitted to practice law in the State of New York and (ii)
who is a partner in a law firm having at least 50 attorneys. Any
arbitrator so appointed shall be neutral and subject to
disqualification for the reasons specified in Section 19 of the Rules.
b. Each party shall pay the fees of his or its own attorneys, expenses of
its witnesses and all other expenses connected with the preparation
and presentation of such party's case, including any costs involved in
filing and instituting such arbitration, if it is the initiating
party.
c. The arbitration shall be conducted pursuant to the Rules, as then in
effect.
d. The decision of the arbitrator shall be binding upon all parties and
no appeal may be taken therefrom; provided, however, that no decision
by such arbitrator shall include the award of punitive damages. The
decision of the arbitrator shall be enforced and honored by the
parties hereto without the necessity of confirmation by a court. The
parties hereby waive, to the extent permitted by law, any rights to
appeal or to review of any such decision by any court or tribunal.
e. This arbitration shall be conducted in New York City, New York. In the
event a party desires to obtain judicial confirmation of an
arbitration award, the parties consent to the exclusive jurisdiction
of the appropriate state court in New York, New York for the entry and
enforcement of a judgment upon any arbitration award rendered in
connection with any state law, and of the United States District Court
for the Southern District of New York, for the entry and enforcement
of judgment upon any arbitration award rendered in connection with any
federal law, and the parties agree to both subject matter and in
personam jurisdiction for those purposes.
f. Notwithstanding any provision of this Section, the requirement to
arbitrate disputes under this Section shall not apply to any
application for interim injunctive or other equitable relief from any
court of competent jurisdiction with respect to this Agreement or any
matter it contemplates.
28. COMPUTER PROGRAMS; INTELLECTUAL PROPERTY.
a. COMPANY acknowledges that NEWROADS owns all right, title and interest
in and to all computer software, databases, other computer-related
material and all procedures and processes used by NEWROADS in
connection with the performance of its obligations under this
Agreement (including but not limited to those developed by NEWROADS
and modifications or new programs developed by NEWROADS for COMPANY)
(collectively, the "PROCESS") and COMPANY has no right or interest
whatsoever in such Process unless jointly developed and agreed upon in
writing by both parties in advance of said joint development. NEWROADS
acknowledges that COMPANY owns all right, title and interest in and to
all the data being stored on the Process with respect to the provision
of Services under this Agreement ("DATA"), and NEWROADS has no right
or interest whatsoever in such Data. NEWROADS further agrees to enact
strict measures to protect the confidentiality of such Data, in
accordance with COMPANY'S policy as communicated in writing to
NEWROADS from time to time.
b. NEWROADS(TM) is a service mark owned by NEWROADS. No rights to use of
NEWROADS' marks are granted herein, and any right to use NewRoads
marks, subsequently granted, will terminate immediately upon the
termination of this Agreement. COMPANY shall use NEWROADS' marks only
and strictly in accordance with the quality control and trademark
usage policies of NEWROADS. Failure to comply with such policies will
result in termination of the right to use such marks.
c. COMPANY'S service marks and trademarks are owned by COMPANY. No rights
to use of COMPANY'S marks are granted
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herein, and any right to use Company marks, subsequently granted, will
terminate immediately upon the termination of this Agreement. NEWROADS
shall use COMPANY's marks only and strictly in accordance with the
quality control and trademark usage policies of COMPANY. Failure to
comply with such policies will result in termination of the right to
use such marks.
29. INSTRUCTION WITH RESPECT TO ACTS OF TERRORISM OR HAZARDOUS SUBSTANCES.
Prior to the processing of Merchandise, the COMPANY shall give to NEWROADS
policies and procedures to follow in the event that any consumer contacts
NEWROADS with a complaint that a product processed by NEWROADS on behalf of
the Company contains any hazardous substance. Provided NEWROADS follows
such policies and procedures and, subject to the provisions of Section
herein, entitled Representations and Warranties, NEWROADS shall have no
liability to the COMPANY arising from such an event and the COMPANY shall
expressly defend, indemnify and hold harmless NEWROADS from any all claims,
damages, demands, causes of action, losses, liabilities, injuries, costs
and expenses (including reasonable attorney's fees) arising from such an
event.
30. BUSINESS DAY. For purposes hereof, "BUSINESS DAY" shall mean any day other
than (1) a Saturday or Sunday or (2) a day when the Federal Reserve Bank of
New York is not open.
31. RELATIONSHIP. Nothing contained in this Agreement shall be construed to
imply a joint venture, partnership or principal/agent relationship between
the parties. Except as specifically set forth herein, neither party by
virtue of this Agreement shall have any right, power or authority to act or
create any obligations, express or implied, on behalf of, or for the use of
the other party, and NEWROADS and COMPANY shall not be obligated,
separately or jointly, to any third party by virtue of this Agreement.
32. HEADINGS. The headings and section numbers appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit,
construe or otherwise describe the scope or intent of the sections of this
Agreement.
33. SEVERABILITY. If any one or more provisions of this Agreement shall be
invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not
in any way be affected or impaired; provided, however, that in such case
the parties agree to use their commercially reasonable efforts to achieve
the purpose of the invalid provision by a new legally valid provision.
34. NO WAIVER. No failure or delay on the part of any party in the exercise of
any right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right preclude any other or further
exercise thereof or of any other right. All rights and remedies under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
35. FULL AGREEMENT. This Agreement, any exhibits and addenda attached hereto,
properly executed Statements of Work, orders for Special Services and
properly delivered notices, contain and embody the entire agreement of the
parties hereto, and no representations, inducements, or agreements, oral or
otherwise made at any time between the parties or with any third party
relating to the subject matter hereof which are not contained in this
Agreement or in the exhibits or addenda, if any, shall be of any force or
effect. The parties recognize and agree that this agreement is separate
from the Services Agreement dated March 31, 2000, between Alloy, Inc.
(f/k/a Alloy Online, Inc.), and Distributions Associates, Inc., and that
this Master Services Agreement shall have no effect on the Services
Agreement of March 31, 2000, and the reverse shall also be true.
36. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
all of which taken together shall be deemed one original.
37. JOINT MARKETING. COMPANY will provide a statement to be used in a NEWROADS
press release, which announces the choice of NEWROADS to provide Services.
COMPANY authorizes NEWROADS to use its logo on the NEWROADS website, at
tradeshows and events and on marketing collateral. NEWROADS and COMPANY may
participate in other joint press releases, as deemed appropriate, when
mutually agreed to by both companies.
38. CESSATION OF OPERATIONS. In the event NEWROADS ceases operations, COMPANY
shall have the first right of refusal to acquire the facilities and
equipment, which are then in use to provide Services under this Agreement.
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IN WITNESS WHEREOF, Company has executed this Agreement effective the date first
above written and NEWROADS has executed and accepted this Agreement effective
the same date.
NEWROADS, INC. ALLOY, INC. ("COMPANY")
By: /s/ Michael Shelton By: /s/ Samuel A. Gradess
----------------------------- ---------------------------------------
Name: Michael Shelton Name: Samuel A. Gradess
--------------------------- -------------------------------------
Title: Senior Vice President Title: Chief Financial Officer/ Secretary
-------------------------- ------------------------------------
Date: February 1, 2002 Date: February 1, 2002
--------------------------- -------------------------------------
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