EXHIBIT 10.38
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
XXXXXX FULFILLMENT SERVICES INC. AGREEMENT
This Fulfillment Services Agreement (the "Agreement") is made and
entered into as of October 8, 1999 between Xxx.xxx Inc. ("Xxx.xxx"), and XXXXXX
FULFILLMENT SERVICES INC., ("IFSI").
A. Xxx.xxx intends to maintain an electronic commerce site "Web
Store" on computer systems owned and operated by Xxx.xxx
utilizing the World Wide Web service to sell various book
products (the "Products"). Products consist of items purchased by
Xxx.xxx's customers from Xxx.xxx's Web Store. Xxx.xxx may also
seek fulfillment services under this Agreement for its customer
orders received from sources other than its Web Store.
B. IFSI is in the business of providing product shipping services of
the nature required by Xxx.xxx.
C. Xxx.xxx desires that IFSI provide, and IFSI is willing to provide
Xxx.xxx, certain services on the terms and conditions set forth
herein.
AGREEMENT
In Consideration of the mutual agreements contained herein, the
parties agree as follows:
1. SERVICES TO BE RENDERED. Xxx.xxx will be an Internet Distribution
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Partner ("(DP") of IFSI and will receive IDP status as set forth in this
agreement. [***] IFSI agrees to process at its facilities ("Facility") Xxx.xxx
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customer orders for Products, which will include the following:
1.1 Packing. IFSI will carefully package Products in order to
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protect the Products against damage during shipment and to maintain the high
quality shopping image desired by Xxx.xxx. IFSI will prepare gift-wrap Product
when the customer so requests at rates set forth in Section 2.1.
1.2 Shipping. IFSI will handle Product shipment including weighing,
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labeling, coding as to type of delivery services required and deliver items to,
or hold items for pickup by, carriers. IFSI will be the shipper of record for
freight purposes only. When the shipment has been manifested, IFSI will notify
Xxx.xxx of the date and time of shipment, along with any assigned tracking
numbers. All Product orders to be shipped directly to Xxx.xxx's customers will
be packaged with no reference to Xxxxxx. Specifically, the packaging will not
display any Xxxxxx trademark, service xxxx, logo or trade name. If the carrier
requires a return address, Xxxxxx may use its warehouse address, without its
company name on such shipment. IFSI will create, at [***] to Xxx.xxx, a custom
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invoice with Xxx.xxx's logo, product return and customer service information
printed on same. IFSI will not be liable for delivery or processing
___________________________
[***] Confidential treatment has been requested for the bracketed
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portions. The confidential redacted portion has been omitted and filed
separately with the Securities and Exchange Commission.
delays beyond IFSI's control relating to such factors as weather, postal
strikes, transportation delays, Acts of God and other outside forces. IFSI will
be responsible for damage losses refunded by the carrier and reshipments due to
IFSI's error.
1.3 Inserts. IFSI will insert in shipments such literature as
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Xxx.xxx may from time to time specify and provide to IFSI. The fee for standard
inserts, which is one piece no larger than an 8 1/2 by 11 sheet of paper, will
be [***] for set-up fee of each item and [***] per insertion. Non-standard
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inserts are quoted on an individual basis. IFSI will insert in Xxx.xxx
shipments only material which has received prior written approval from Xxx.xxx.
1.4 Order Status Research. When requested by Xxx.xxx staff, IFSI will
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assist with researching the status of orders, including in the case of hold
orders, (when feature available), the expected shipping date; changes in status,
such as delivery address changes and the status of non-delivery problems.
2. COMPENSATION FOR SERVICES.
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Amount of Compensation. In exchange for services rendered by IFSI
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pursuant to Section 1, Xxx.xxx agrees to pay to IFSI the following compensation
on the following terms:
2.1 Invoicing. IFSI invoices will be generated weekly. Billing
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is 7-day terms.
Processing Charges. Xxx.xxx will pay processing Book Company and
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shipped by IFSI from the Facility. IFSI may change processing
charges after giving Xxx.xxx ninety (90) days advance written
notice. As an IDP, IFSI will provide fulfillment services to
Xxx.xxx [***] or until Xxx.xxx reaches a total of [***] fulfilled
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by IFSI, whichever comes first. Once Xxx.xxx reaches [***],
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whichever comes first, IFSI will review the service relationship
with Xxx.xxx and IFSI will thereafter charge to Xxx.xxx
processing charges upon terms to be mutually agreed and if the
parties are unable to agree, this Agreement shall terminate. In
the event the Agreement terminates due to the terms of this
paragraph 2.1 prior to November 15, 2001, the provisions of
paragraph 8 below shall survive termination. Gift Wrapping.
Xxx.xxx will pay IFSI [***] for each unit requiring gift-
wrapping. This charge will include labor and materials.
2.3 Charges for Certain Expenses. Xxx.xxx will reimburse IFSI
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for the following expense incurred by IFSI, but for no other expenses unless
agreed in writing by the parties.
Delivery Expense. Xxx.xxx will reimburse IFSI for all carrier
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costs (Delivery Expense) incurred by IFSI for shipping Product.
Xxx.xxx's IDP rate will be at [***]
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Outside Services. Outside services as agreed by both in writing
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and purchased on behalf of and authorized by Xxx.xxx and paid by
IFSI will be billed at actual cost.
___________________________
[***] Confidential treatment has been requested for the bracketed
---
portions. The confidential redacted portion has been omitted and filed
separately with the Securities and Exchange Commission.
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3. GENERAL RIGHTS AND OBLIGATIONS OF IFSI. In addition to the
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rights and obligations of IFSI set forth elsewhere herein, IFSI will have the
following rights and obligations.
3.1 Service. IFSI will render the Services required hereunder
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in a professional manner and will provide all personnel and supplies necessary
to fulfill its obligations hereunder. As an IDP, Xxx.xxx order cut-off times
for same day shipment will be the latest offered to any fulfillment client, and
as late as possible to meet IFSI's carrier pick-up schedules. [***]
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3.2 Liability for Product Stored at IFSI Facility. IFSI will
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maintain and preserve the Products stored on its premises in as good a condition
as received. Further, IFSI will take all steps as may be reasonably necessary
to protect the Products stored at the Facility from damage or loss, including
without limitation, loss by theft, fire, water, or smoke, IFSI will be
responsible for and will insure all product losses while at the Facility.
3.3 Liability. Other than IFSI's replacement obligations under
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Section 1.2, neither Xxx.xxx nor IFSI will have any liability to the other under
the terms of this Agreement, or for any alleged breach thereof, for indirect,
punitive, consequential, or special damages, including damages for lost profits.
3.4 Account Executive. IFSI will designate an individual who
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will be responsible for supervising all services rendered to Xxx.xxx.
4. GENERAL RIGHTS AND OBLIGATIONS OF Xxx.xxx. In addition to the
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rights and obligations of Xxx.xxx set forth elsewhere herein, Xxx.xxx will have
the following rights and obligations.
4.1 Owner and Seller of Products. Xxx.xxx agrees to be the
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owner and seller of the Products, including for sales and use tax purposes, and
will be responsible for reporting and remitting sales and use taxes to the
applicable authorities. In the event IFSI is considered the owner or seller of
the Products by taxing authorities, Xxx.xxx will indemnify and reimburse IFSI
for any sales or use tax required to be paid by IFSI.
4.2 Returns Processing. Xxx.xxx will handle returns processing
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from Xxx.xxx's customers.
4.3 Access to Premises. Xxx.xxx, as its own expense, and its
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authorized agents will have access to IFSI's premises during normal business
hours, for the purpose of reviewing order processing and fulfillment relating to
IFSI's services hereunder to Xxx.xxx customers.
5. CONFIDENTIALITY. IFSI recognizes and acknowledges that the names
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and addresses of Xxx.xxx customers and information and records respecting
Xxx.xxx or its customers maintained by IFSI are confidential and constitute
valuable and unique assets of
___________________________
[***] Confidential treatment has been requested for the bracketed
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portions. The confidential redacted portion has been omitted and filed
separately with the Securities and Exchange Commission.
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Xxx.xxx's business. IFSI will maintain such information as confidential. IFSI
and Xxx.xxx agree to keep the terms of this Agreement confidential.
Additionally, in performing its obligations under this Agreement, IFSI or
Xxx.xxx may receive other confidential information about the other party, which
may include but not be limited to financial information, business plans,
technical data, and identity of IFSI' Buy.coms. IFSI and Xxx.xxx will respect
the confidentiality of such confidential information and will make no disclosure
thereof to third parties or use it for its own purposes, except upon written
permission of the disclosing party. This obligation does not apply to any
information, which is publicly available. IFSI and Xxx.xxx will cause its
employees to comply with this section. This Section 5 will survive any
termination or expiration of this Agreement for a period of 2 years.
Notwithstanding the foregoing, a party shall have the right to
disclose the terms of this Agreement if upon the advice of its counsel,
disclosure is required pursuant to court order, applicable law, or regulatory
authority. However, the parties agree to use best reasonable efforts to limit
disclosure and will notify the other party prior to any disclosure. In the
event of any disclosure required or desired to be made to the Securities and
Exchange Commission ("SEC") with respect to this Agreement or the terms hereof,
the partners agree that Xxx.xxx shall file a confidential treatment request with
respect thereto and that Xxxxxx shall have the right to participate in the
drafting of, and any discussions or meetings with the SEC with respect to, such
request.
6. TRADE RIGHTS. All trade names, trademarks, copyrights, brand
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names, service marks or design ("Trade Rights") used by IFSI on behalf of
Xxx.xxx during the term hereof are owned by Xxx.xxx, and IFSI has and will
acquire no right or interest therein, except for such Trade Rights as are owned
by IFSI and used on behalf of Xxx.xxx at Xxx.xxx's request. Upon the
termination of the Agreement, IFSI will thereafter refrain from utilizing any of
Xxx.xxx's Trade Rights for any purpose whatsoever. This section 6 will survive
any termination or expiration of this Agreement.
7. TERM. This Agreement will be effective on the date it is
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executed by all parties and will remain in effect until September 30, 2003.
8. IPO. In the event that Xxx.xxx has not made an Initial Public
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Offering on or before December 15, 2001, then Xxx.xxx will pay to IFSI the [***]
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outlined herein at the [***] in effect during the term of this Agreement for
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regular IFSI fulfillment customers within 30 days.
9. MISCELLANEOUS
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9.1 Assignment Binding Effect. This Agreement may not be
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assigned by either party without the prior written consent of the other party,
provided, however, either party may assign this Agreement without such consent
to (i) any person or entity that acquires its business or substantially all of
its assets, by merger, stock sale, or other means or, (ii) to a subsidiary or an
affiliate which is at least 50% owned and controlled by assignor. This
Agreement will be binding on and inure to the benefit of Xxx.xxx and IFSI and
their respective permitted successors and permitted assigns.
_____________________________
[***] Confidential treatment has been requested for the bracketed
---
portions. The confidential redacted portion has been omitted and filed
separately with the Securities and Exchange Commission.
4
9.2 Notices. All notices given the parties hereunder relation
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to the terms of this Agreement will be in writing or by telephone confirmed in
writing and will be personally delivered or mailed, by registered or certified
mail, return receipt requested postage prepaid or overnight delivery, addressed
to the respective parties at the addresses of such parties as specified below or
at such address as either party will designate in notice to the other. Notice
by telephone later confirmed promptly in writing will be deemed given at the
time of the telephone call. Send notifications to the following individuals for
communications concerning this Agreement, other than day-to-day business:
IFSI: Xxxxxxxx Xxx
Chairman of the Board & CEO
One Xxxxxx Boulevard
P.0. Box 3006
La Vergne, TN 37086-1986
With copy to: General Counsel
Xxxxxx Book Group Inc.
Xxx Xxxxxx Xxxxxxxxx
X.0. Xxx 0000
Xx Xxxxxx, XX 00000-0000
Xxx.xxx: Xxxxxxx Xxxxxxx
Chief Executive Officer
Xxx.Xxx Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx
With a copy to: General Counsel
Xxx.Xxx Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx
9.3 Entire Agreement: Waiver. This Agreement sets forth the
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entire understanding of the parties with respect to the subject matter hereof.
No modification or amendment or waiver of any of the provisions of this
Agreement will be effective unless in writing and signed by the party to be
charged.
9.4 Captions. Paragraph headings herein are for convenience only and
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will not affect the construction of this Agreement.
9.5 Governing Law. This Agreement will be governed by the laws of the
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state of Tennessee.
9.6 Representations. Xxx.xxx and IFSI represent and warrant that they
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each have the authority to enter into this Agreement and to perform their
obligations hereunder. IFSI further represents and warrants that all of the
products delivered by IFSI to Xxx.xxx's customers shall be delivered in the same
condition as such products were in when they were received by IFSI in its
distribution facility.
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9.7 Attorneys' Fees. If any action at law or in equity is necessary to
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enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements, in
addition to any other relief to which the party may be entitled.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
XXXXXX FULFILLMENT SERVICES INC.
BY:_______________________________hereunto duly authorized
Print Name:_______________________
Title:____________________________
XXX.XXX INC.
BY:_______________________________hereunto duly authorized
Print Name:_______________________
Title:____________________________
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