Transaction Management Services Agreement - Priority Fulfillment Services Inc. and Daisytek Inc.
TRANSACTION MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT is dated as of December 7, 1999 and is by and between
PRIORITY FULFILLMENT SERVICES, INC., a Delaware corporation ("PFS") having an
address at 500 North Central Expressway, Plano, Texas 75074, and DAISYTEK, INC.,
a Delaware corporation ("DZTK") having an address at 500 North Central
Expressway, Plano, Texas 75074.
PFS provides various transaction management services, including Web
order processing, inbound call handling, order entry, warehousing and
distribution, credit management and collection and information management, to
manufacturers, resellers and marketers of products.
DZTK wishes to retain PFS to provide the transaction management
services described herein.
IN CONSIDERATION of the mutual covenants contained herein, the parties
agree as follows:
1. Statement of Work; Products. During the term of this Agreement, and
subject to the terms and conditions set forth herein, PFS will provide the
transaction management services described in one or more Statement(s) of Work (a
"Statement of Work") as shall be mutually agreed from time to time. Each
Statement of Work may be amended, modified or revised by mutual agreement of the
parties from time to time during the term of this Agreement, although neither
party has any obligation to agree to any amendment, modification or revision.
PFS will provide its services with respect to various products designated by
DZTK (the "Products"), provided, however, that the type, nature, dimensions,
etc., of the Products shall be set forth in a Statement of Work. Upon mutual
agreement, the type or nature of the Products may be modified during the term of
this Agreement.
2. Distribution Center. During the term of this Agreement, and as more
fully set forth in a Statement of Work, Products will be shipped by, or on
behalf of, DZTK to, and stored by PFS at, the PFS distribution center(s)
identified in a Statement of Work (the "Distribution Center"). DZTK is
responsible for all freight, handling and importation costs in delivering the
Products to the Distribution Center. DZTK is responsible for administering and
managing the shipment and delivery of Products to the Distribution Center and
will provide PFS with prior notice and rolling projections of Product shipments
and deliveries as described in a Statement of Work. PFS will unpack and store
all Products delivered to the Distribution Center in accordance with the terms
of a Statement of Work. Except as otherwise set forth in a Statement of Work,
PFS has no liability for in-bound or out-bound freight or shipping costs.
3. Sales and Marketing. DZTK is responsible for all sales and marketing
of Products. Except as expressly set forth in the Statement of Work in
connection with the services to be provided by it hereunder, PFS shall not be
deemed an agent or representative of DZTK, nor shall PFS have any authority to
make any representation or commitment on the part of DZTK. For all purposes,
DZTK, and not PFS, shall be deemed the seller of all Products to customers. DZTK
shall retain title to all Products and PFS shall not be deemed a consignee of
any Products, nor shall PFS pledge, encumber or
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grant any security interest in or to the Products at any time. DZTK shall at all
times comply with all applicable laws, rules and regulations in respect of its
sales and marketing of Products.
4. Information; Exceptions. DZTK will provide PFS with all information
reasonably necessary for PFS to perform its obligations hereunder, including
information regarding the Products, part numbers, descriptions, costs, pricing,
documentary requirements, technical information, call center scripts, customer
and credit guidelines and limits, returns criteria and similar information,
including Product training, etc. PFS has no responsibility with respect to the
adequacy, accuracy or validity of any information, guidelines, limits or
criteria provided by DZTK to it hereunder. In performing its services hereunder,
PFS shall act in accordance with, and shall be entitled to rely upon, the
instructions and authorizations received from DZTK, including all customer,
credit, shipping, allocation, pricing and other information and instruction as
shall be provided to PFS hereunder.
5. Sales Tax. Except as set forth in the Statement of Work, PFS shall
have no liability for the payment, collection or remittance to the proper
authorities, of all sales tax, use tax or other tax arising from the sale of
Products to customers, the storage of Products in the Distribution Center or the
shipment of Products to or from any jurisdiction, and DZTK shall indemnify and
hold PFS harmless in respect thereof (including any costs incurred by PFS in
connection with any audit or inquiry of any taxing authority). DZTK is
responsible to determine the applicable taxing jurisdictions arising in
connection with the sale of Products and for providing PFS with copies of any
resale certificates or other documentation as may be required by PFS to perform
its services hereunder.
6. Insurance; Shrinkage. PFS shall provide insurance for all Products
stored in the Distribution Center. Such insurance (which may include
self-insurance) shall cover damage, destruction, theft and other risks as shall
be set forth in the Statement of Work. DZTK shall provide PFS with all
information necessary for such insurance. PFS shall provide DZTK with a
certificate of insurance and, upon request, will provide for not less than ten
days' prior notice of nonrenewal or cancellation. PFS shall perform its services
hereunder in accordance the performance standards set forth in the Statement of
Work and the ordinary level of care it provides its customers. Subject to the
applicable terms of the Statement of Work, in the event of any loss or damage to
Products arising from the failure of PFS to provide such level of care, PFS
shall, as its sole liability, reimburse DZTK for the actual cost of such lost or
damaged Products.
7. Returns. All sales of Products shall be subject to the then
prevailing return policies of DZTK. DZTK shall at all times be solely
responsible for any credits or other amounts payable to customers, and PFS shall
have no responsibility to return, rebate or refund any portion of any fee
received by it hereunder in respect thereof. All returns shall be administered
in accordance with the terms set forth in the Statement of Work. In the event
any return is the result of a misshipment or error on the part of PFS, PFS
shall, as its sole liability, be responsible for all return freight for such
Product.
8. Service Fees. DZTK shall pay to PFS the service fees and other
amounts described in the Statement of Work. All fees and other amounts shall be
payable in accordance with the payment and invoice terms set forth in the
Statement of Work.
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9. Pricing Modification. The service fees payable hereunder are based
upon the assumptions regarding the scope of work set forth in the Statement of
Work. The Statement of Work contains a list of certain key assumptions and
certain parameters regarding acceptable deviations from these assumptions. In
the event that, for any month (calculated on an annualized basis), the
operations of DZTK (and the scope of work provided by PFS in respect of such
operations) are outside these parameters, PFS shall notify DZTK of such event
and the modification of the fees payable hereunder which PFS shall propose as a
result thereof. Such fee modification proposal shall be based upon, but not
limited to, the increase or other material change in the scope of work and
services to be provided by PFS arising from the deviation from the aforesaid
assumptions. DZTK shall then have a period of 30 days (or such longer period as
shall be reasonable under the circumstances) to restore its operations to within
the aforesaid parameters. If DZTK is successful in doing so, as determined (on
an annualized basis) during the month (or such longer period as shall be
reasonable under the circumstances) following such cure period, then the
proposed fee modification shall not go into effect. If DZTK is unsuccessful in
doing so (as determined as aforesaid), then the proposed fee modification shall
go into effect for all succeeding months until DZTK shall restore its operations
to within the aforesaid parameters for two consecutive months. Notwithstanding
the foregoing, the parties agree to use their respective best efforts to
negotiate in good faith any proposed fee modification, and either party may
request that any proposed fee modification be submitted to non-binding
mediation. In addition, following the second anniversary of the date hereof, if
PFS' costs in providing its services hereunder have increased by more than 5%
(on an annual basis) from the prior year, PFS may propose, by written notice to
DZTK, a modification of the fees payable hereunder. Such fee modification
proposal shall be based upon, but not limited to, the increase or other material
change in PFS' costs and shall be accompanied by a reasonable description of
such increased costs. The parties agree to use their respective best efforts to
negotiate in good faith any proposed fee modification, and either party may
request that any proposed fee modification be submitted to non-binding
mediation. If the parties are unable to agree upon any such proposed fee
modification, and within 30 days thereafter, PFS shall elect to terminate this
Agreement without cause (as provided in Section 12 below) and shall deliver the
requisite termination notice, then, in such event, PFS shall be deemed to have
delivered such termination notice as of the date of its delivery of its proposed
fee modification.
10. Trademark. DZTK represents that it has a valid and effective
license and right to use all trademarks, tradenames and logos which appear on
the Products and to sell the Products to its customers and shall continue to
have such rights during the term of this Agreement, free of any claim of
infringement or unlawful use, and DZTK shall indemnify and hold PFS harmless in
respect of all matters arising in connection therewith.
11. Confidentiality. Each party acknowledges that in implementing and
performing this Agreement each party shall disclose and make available to the
other certain confidential and proprietary information, including without
limitation, customer and Product information. Each party agrees to utilize such
information solely for the purpose of this Agreement and to keep and maintain
all such information as confidential. The provisions of this Section shall
survive any termination or non-renewal of this Agreement. This Section shall not
apply to any information (i) which (without violation of this Section) is or
becomes generally known in the industry or (ii) which is provided by a third
party without violation by such third party of any obligation of non-disclosure.
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Each party may disclose the existence of this Agreement (but not its terms), the
identity of the parties hereto and the general nature of the Products.
12. Term. This Agreement shall be in effect for a five year term
commencing from the date of execution hereof and shall be automatically renewed
for successive one year periods thereafter unless either party shall give notice
in writing of non-renewal not less than 180 days prior to any termination date.
In the event either party shall breach any of the terms or provisions of this
Agreement, and such breach shall not be cured within 30 days after notice, the
non-breaching party shall have the right to terminate this Agreement upon ten
days written notice. In addition (i) DZTK may terminate this Agreement, without
cause, upon 180 days prior written notice, (ii) PFS may terminate this
Agreement, without cause, upon 365 days prior written notice (subject to the
provisions of Section 9 above regarding the date upon which such notice shall be
deemed to have been given in the event of a proposed fee modification) and (iii)
within 30 days following the effective date of any "Change in Control" of DZTK,
PFS may, upon 90 days prior written notice, terminate this Agreement. As used
herein, a "Change in Control" shall be deemed to occur upon (i) any sale or
transfer of all or substantially all of the assets of DZTK or (ii) the
acquisition by any party (or group of related parties) (other than a financial
institution, mutual fund or other party holding shares for investment purposes),
whether in one transaction or a series of related transactions, of 25% or more
of the issued and outstanding shares of capital stock of DZTK. Any termination
of this Agreement shall not affect any obligations of any party incurred or
arising prior to such termination. During the applicable period following the
giving of any notice of nonrenewal, or termination without cause, the parties
shall continue to fully perform all of their respective obligations hereunder
and shall cooperate with each other in order to effect an orderly winding down
and transition. DZTK is solely responsible, at its cost and expense, to remove
all Products and other DZTK property from the Distribution Center on or prior to
the effective date of termination of this Agreement. DZTK shall reimburse PFS
for all reasonable costs and expenses incurred by PFS in assisting DZTK with
such removal efforts. In addition, in the event DZTK shall terminate this
Agreement without cause, DZTK shall pay to PFS the Termination Fee set forth in
the Statement of Work.
13. Indemnification; Limitation of Liability. Each party agrees to
indemnify, defend and hold the other harmless from and against and in respect of
any and all costs, expenses (including without limitation, attorneys fees and
litigation and investigation costs), losses, damages and claims arising from, in
connection with or relating to (i) any actual or alleged infringement or
misappropriation by the indemnifying party of any patent, copyright, trademark,
service mark, tradename, trade secret or any other intellectual property right
of any other party (whether domestic or foreign), (ii) any failure by the
indemnifying party to comply with or breach of any governmental, regulatory,
judicial or municipal law, rule, regulation, decision, order, directive,
ordinance or ruling of any kind or (iii) any product liability, personal injury
or property damage claim of any kind or any negligence or misconduct on the part
of the indemnifying party; provided, however, that, notwithstanding anything
contained herein, no party shall be liable for consequential damages of any kind
(even if advised of the possibility or likelihood thereof) or any punitive
damages in connection with any claim or matter arising under or in connection
with this Agreement. Except as expressly set forth herein or in the Statement of
Work, no party makes any
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representation or warranty of any kind. The provisions of this Section shall
survive any termination or non-renewal of this Agreement.
14. Restrictive Covenant. PFS covenants and agrees that, during the
term of this Agreement, it will not, on its own behalf, engage in the business
of selling or distributing, on a wholesale basis, any Products. The foregoing
shall not apply to (i) the provision by PFS of transaction management services
to third parties who may be engaged in the business of selling or distributing,
on a wholesale basis, any Products or (ii) any existing arrangements to which
PFS may be a party on the date hereof (and any modifications, supplements or
amendments thereto arising after the date hereof).
15. Miscellaneous. Each party to this Agreement is an independent
contractor and this Agreement does not create a joint venture or partnership of
any kind, nor shall this Agreement give rise to any fiduciary duty on the part
of any party to any other party. Except as contemplated herein, no party shall
have the authority to represent, warrant or bind any other party. This
Agreement, and the rights, powers and duties set forth herein, shall bind and
inure to the benefit of the parties hereto and their respective successors and
assigns. This Agreement may not be assigned or delegated to any unaffiliated
third party. This Agreement may only be amended, modified or waived by an
instrument in writing duly executed and delivered by each of the parties hereto
to be bound by such amendment, modification or waiver. This agreement (and the
Statement of Work hereto) sets forth the entire understanding and agreement of
the parties and supersedes any prior agreement. The failure of either party to
enforce any provision of this Agreement shall not be construed as a waiver
thereof, and any waiver of any term or provision hereof shall not be construed
as a waiver of any other term or provision. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall be deemed one and same instrument. In the event that any one or
more of the provisions of this Agreement shall be determined to be void or
unenforceable by a court of competent jurisdiction or by law, such determination
shall not render this Agreement invalid or unenforceable and the remaining
provisions hereof shall remain in full force and effect. All notices hereunder
shall be in writing and shall be effective upon receipt at each party's address
for notice set forth herein. EACH PARTY WAIVES TRIAL BY JURY.
15. Arbitration. Any and all disputes arising hereunder shall, upon the
request of either party, be submitted to binding arbitration in Dallas, Texas,
in accordance with the rules and regulations of the American Arbitration
Association and each party agrees that (i) all notices and service of process in
respect thereof may be delivered or served at the address for notice set forth
herein, (ii) each party consents and submits to the jurisdiction of said
arbitration and to the state and federal courts of the State of Texas for the
purpose of enforcing the provisions of this Agreement and entering and judgment
in respect thereof and (iii) the foregoing shall not preclude the joinder of any
party in respect of any third party claim or the pursuit of equitable remedies.
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IN WITNESS WHEREOF, the parties hereto, being duly authorized, have
executed and delivered this Agreement as of the day and year above written.
PRIORITY FULFILLMENT SERVICES, INC.
By:
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Name:
Title:
DAISYTEK, INC.
By:
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Name:
Title:
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