Exhibit 99.1
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
MASTER SERVICES AGREEMENT
This Master Services Agreement (the "Agreement"), dated as of March 21,
2005, and effective as of July 27, 2005 (the "Effective Date"), by and between
NewRoads, Inc., a Delaware corporation with a principal place of business at 000
X Xxxxxx Xx, Xxxxxxxxxxxx, Xxxxxxxx 00000 ("NewRoads"), and Bluefly, Inc.
("Company"), a Delaware corporation with a principal place of business at 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000.
RECITALS
A. Company has a variety of marketing programs for the sale and/or
distribution of various merchandise and a variety of promotional
campaigns to enhance such marketing programs; and
B. NewRoads is a provider of various services to the direct response
industry, 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;
C. NewRoads currently provides services to Company in connection with the
sale of certain merchandise pursuant to a Services Agreement, dated as
of July 27, 2000, by and between Company and NewRoads (as amended to
date, the "Original Agreement"), which is set to expire on the Effective
Date; and
D. Company desires that NewRoads continue to provide such services and
NewRoads desires to provide such services to Company on the terms set
forth herein, effective as of the Effective Date.
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. DEFINITIONS. For the purposes of this Agreement, the following
definitions shall apply:
a. "Actual Variable Costs" shall mean those costs, charges or
expenses not included in Transaction Rates, which are incurred
by NewRoads in connection with its performance of the Services,
and are comprised of (i) all direct labor costs (including
wages, 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
Transaction Rates (ii) supervisory personnel costs up to an
amount that does not exceed [***]% 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 an applicable Statement
of Work, (viii) recurring costs incurred in connection with the
provision of redundant assets or services provided to the
Company (such as alternate redundant telephone service into the
facility), installed or maintained for back-up or disaster
recovery purposes and (ix) costs incurred to train employees and
associates to handle the Company's business pursuant to the
terms of this Agreement Actual Variable Costs do not include the
Transaction Rates, Special Services Costs, Account Management
Fees and Close Down
Expenses (all as more particularly described elsewhere in this
Agreement), and the costs, charges and expenses associated with
performing the Transaction Services, Special Services and Close
Down Services shall not be included in calculating the Actual
Variable Costs. In addition, Actual Variable Costs shall not
include any costs involved in any changes in the Process
instituted by NewRoads. The level or amount of expense to be
incurred by NewRoads which comprise 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 or
intentional misconduct. Throughout the Term, NewRoads shall make
its best efforts to minimize Actual Variable Costs. To the
extent that the 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 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 Actual
Variable Costs payable by the Company in respect of the Services
performed by or on behalf of NewRoads. The calculation by
NewRoads of 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.
b. "Adjusted Actual Variable Costs" shall mean the Actual Variable
Costs adjusted by a percentage specified in an applicable
Statement of Work.
c. "Annual Forecast" shall mean a complete set of projections
covering the operation of the Company's business for the
applicable calendar year, including, by month and quarter, the
forecasted number of orders; the forecasted number of units
received and shipped; and the forecasted returns.
d. "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.
e. "Close Down Expense" shall mean charges from NewRoads to Company
relating to the Close Down Services.
f. "Close Down Services" shall mean all activities necessary to
remove Company's Merchandise from NewRoads facilities, for
purging the NewRoads computer system of Company Data and for
such other activities as shall be agreed upon between NewRoads
and Company. Other activities covered by Close Down Expenses may
include, but are 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, loading on the trucks of Company's designated
carrier and the transfer of any Data to systems designated by
the Company, together with the cost of any necessary supplies.
g. "Competitive Business" shall mean a business that generates more
than 20 percent of its revenues through the sale of multiple
brands of fashion products at prices that are consistently
discounted to retail prices, exclusive of any "sale" items.
h. "Count Date" shall mean the dates, established by the parties
under the terms of this Agreement, for the executing a cycle
count or physical inventory.
i. "Data" shall mean the data being stored by NewRoads in or on the
Process with respect to the provision of Services under this
Agreement.
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j. "Estimated Variable Cost Per Order" shall mean, for each week
during the Term, an amount equal to the Adjusted Actual Variable
Costs, as herein defined, for the preceding calendar month,
divided by the Gross Orders for the same calendar month.
k. "Fixed Fee per Order" shall mean a fixed fee, as specified in an
applicable Statement of Work, to be paid by Company for each
order received from Company by NewRoads. Except as otherwise set
forth herein, the Fixed Fee per Order is intended to cover all
fixed costs that NewRoads may incur (or for which NewRoads may
become responsible) in performing the Services, including,
without limitation, (1) real estate costs and real property
taxes, (2) repairs and maintenance (including the cost of
computer maintenance contracts and equipment and systems
additions and upgrades, (3) security, (4) executive and
management staff and supervisory staff in excess of the
Supervisory Allocation and (5) building and liability insurance.
l. "Gross Orders" shall mean the number of orders on System Report
SLS929, or other such report as the parties shall mutually
agree.
m. "Imprest Fund" shall mean a segregated fund maintained by
NewRoads to pay certain expenses on behalf of Company, including
all common carrier and other delivery service shipping costs,
packing materials, stationery and other similar expenses, as
specified in an applicable Statement of Work.
n. "Merchandise" shall mean products offered for sale or
distribution by Company.
o. "Merchandise Inventory Shrinkage" shall mean the quotient which
results from dividing (1) the cumulative Merchandise Inventory
Variance (as defined below) by (2) the total Merchandise
inventory receipts processed by NewRoads during the prior twelve
(12) months.
p. "Merchandise Inventory Variance" shall mean, as of a Count Date,
the difference between the value of the Merchandise as
determined from the perpetual inventory report on such Count
Date and the value of the Merchandise established by a cycle
count or physical inventory on such Count Date; provided,
however, that for purposes of determining the Merchandise
Inventory Variance, 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
Merchandise Inventory Variance for the purpose of Merchandise
calculating Merchandise Inventory Shrinkage. The value of any
Merchandise that is damaged at the Facility by NewRoads shall be
added to the Merchandise Inventory Variance for the purpose of
calculating Merchandise Inventory Shrinkage.
q. "Non-Merchandise Inventory" shall mean packing supplies,
stationery, inserts and other materials held by NewRoads on
behalf of the Company that are not Merchandise.
r. "Non-Merchandise Inventory Shrinkage" shall mean the quotient
which results from dividing (1) the cumulative Non-Merchandise
Inventory Variance (as defined below) by (2) the total
Non-Merchandise Inventory receipts processed by NewRoads during
the prior twelve (12) months.
s. "Non-Merchandise Inventory Variance" shall mean, as of a Count
Date, the difference between the value of the Non-Merchandise
Inventory as determined from the perpetual inventory report on
such Count Date and the value of the Non-Merchandise Inventory
established by a cycle count or physical inventory on such Count
Date; provided, however, that for purposes of determining the
Non-Merchandise Inventory Variance, 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 Inventory Variance for the purpose of calculating Inventory
3
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment. The omitted portions, marked
"[***]," have been separately filed with the Securities and
Exchange Commission.
Shrinkage. The value of any Non-Merchandise Inventory that is
damaged at the Facility shall be added to the Non-Merchandise
Inventory Variance for the purpose of calculating
Non-Merchandise Inventory Shrinkage.
t. "Problem Merchandise" shall mean 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 that (i) arrives with insufficient
paperwork, (ii) is delivered to NewRoads in the absence of a
delivery appointment or (iii) is faulty or damaged.
u. "Problem Merchandise Rate" shall mean a storage rate of [***]
times the applicable storage rate in an applicable Statement of
Work.
v. "Process" shall mean all computer software, databases,
inventions, ideas, trade secrets, methods of operation, 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.
w. "Quarterly Forecast" shall mean a complete set of projections
covering the operation of the Company's business and demand for
merchandise for the next succeeding two calendar quarters,
including, by week, the forecasted number of orders and the
forecasted number of units received and shipped each week; and
the forecasted returns.
x. "Revised Quarterly Forecast" shall mean any revision to a
Quarterly Forecast or a previous Revised Quarterly Forecast.
y. "Service Levels" shall mean certain standards of performance
more fully described in a Statement of Work, which NewRoads
shall maintain in the rendering of the Services so long as no
default by the Company prevents NewRoads from meeting such
standards.
z. "Services" shall mean the NewRoads services provided hereunder
further specified in an applicable Statement of Work.
aa. "Special Services" shall mean Services not specified in any
Statement of Work, requested by Company.
bb. "Term" shall mean the Initial Term and all renewal terms,
collectively.
cc. "Termination Fee" shall mean a fee due to NewRoads as a result
of the early termination of the Agreement by Company.
dd. "Transaction Fees" shall mean a fee due to NewRoads for the
provision of Transaction Services.
ee. "Transaction Rate" shall mean the amount of a specific fee due
to NewRoads for the provision of a specific Transaction Service.
ff. "Transaction Services" shall mean Services billed to Company on
a "per unit" basis, as specified in an applicable Statement of
Work.
4
2. APPOINTMENT. Company hereby appoints NewRoads as a third party provider
of Services upon the terms and conditions set forth in this Agreement.
3. SERVICES. Company hereby engages NewRoads to provide such Services as
are described in the attached Statements of Work or future Statements of
Work to be entered into between the parties, and Company shall pay for
such Services as set forth in such Statements of Work. All services will
performed at the Martinsville, VA facility in which NewRoads currently
performs pick, pack and ship services for the Company (the "Facility"),
except that receiving services may be performed in the second
Martinsville, VA facility in which NewRoads currently performs such
services so long as NewRoads is fully responsible for any costs involved
with transporting merchandise to and from such second facility. The
Facility shall at all times include safe, secure, clean and adequate
storage for all Merchandise, both bin and hanging. NewRoads will take
commercially reasonable efforts to include adequate space in the
Facility to support Company's projected growth during the Term, based
upon the written forecasts provided by Company pursuant to the Statement
of Work. Company recognizes its responsibility to support NewRoads'
efforts to minimize space requirements.
a. If there is any difference between the terms and conditions of
any Statement of Work and any other portion of this Agreement,
the terms of the Statement of Work including any exhibits
thereto shall control.
b. Any modifications to a Statement of Work shall require execution
of a written change order agreed to and executed by both parties
to this Agreement.
c. NewRoads shall not be precluded from outsourcing certain
Services, if necessary and with the prior written consent of
Company, which shall not be unreasonably withheld or delayed, on
a temporary basis to providers which the parties determines to
be reasonably acceptable, so long as (1) NewRoads remains
primarily responsible for the providing of such out-sourced
Services at the Service Levels and (2) the use of any such
provider does not increase the cost of the Services to the
Company.
4. SERVICE LEVELS.
a. Certain of the Services set forth in the Statement of Work are
subject to the Service Levels set forth in the Statement of
Work. In circumstances where this Agreement does not stipulate a
certain Service Level, 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 optimize its performance of the Services and to
provide service levels not less than the industry norm for such
Services.
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. Transaction Fees and Rates.
i. Company shall pay to NewRoads Transaction Fees
at the Transaction Rates set forth in the
Statement of Work.
ii. Company shall pay NewRoads the Adjusted Actual
Variable Cost, as defined herein and in an
applicable Statement of Work.
b. Account Management Fees. Company shall pay to NewRoads Account
Management Fees for account management services as specified in
an applicable Statement of Work.
5
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
c. Special Services. If Company requests that NewRoads provide
services not already defined in the Statement 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 Services shall
be in writing and signed by both parties.
d. Close Down Expenses. Upon expiration or any termination of this
Agreement for any reason, Company shall pay Close Down Expenses
based on the hourly rates set forth in the applicable Statement
of Work ("Hourly Rates"). NewRoads shall provide Company a good
faith estimate of such Close Down Expenses, prior to
commencement of any close down activities, and the parties will
agree in good faith upon a schedule for completion of the Close
Down Services. NewRoads acknowledges that the success of the
Company's business will depend upon NewRoad's ability to perform
the Close Down Services in a professional manner and in
accordance with the schedule for completion agreed upon by the
parties upon a close down and that the failure to do so would
have a material adverse effect on the Company's business and
that, therefore, time will be of the essence.
e. Termination Fee. If Company terminates this Agreement prior to
the expiration of the term for convenience pursuant to Section
16(b)(vi), a Termination Fee shall be due. The Termination Fee,
as specified in an applicable Statement of Work, shall be
prorated from the date of termination to the end of the Term.
6. PAYMENT PROCEDURE.
a. Invoices. The frequency of invoices shall be specified in a
Statement of Work.
b. Payment Terms.
i. Payment terms for Transaction Fees and Hourly
Rates, Adjusted Actual Variable Cost, Account
Management Fees and Special Services shall be
specified in a Statement of Work.
ii. Payment terms for Close Down Expenses. [***]
percent ([***]%) of the estimated close down
expense, which NewRoads shall provide to
Company, must be paid 30 days before the
expected date on which close down will be
completed or before any Merchandise is removed
from NewRoads facility as part of close down
activity, whichever is earlier. The remaining
balance of the estimated close down expense due
NewRoads shall be placed by Company into an
Escrow Account at a bank designated by NewRoads
at least 30 days before the expected date on
which close down will be completed. NewRoads
shall be able to draw against such Escrow
Account by presenting a final invoice which
Company has approved. Company shall not
unreasonably withhold approval of such invoice.
iii. Payment terms for Termination Fee. [***] percent
of any Termination Fee due hereunder shall be
due and payable seven days after the date notice
of such termination is provided. The balance of
the Termination Fee shall be placed in an Escrow
Account at a bank designated by NewRoads no
later than seven days after the date notice of
such termination is provided. NewRoads shall be
entitled to draw the balance of the Termination
Fee at the same time that it presents an
approved final invoice in order to draw the
remainder of the Close Down Expenses from the
Escrow Account as described in Section 6(b)(ii)
above.
iv. Irrevocable Letter of Credit. If Company
defaults monetarily, as described under the
Section of this Agreement entitled, Monetary
Defaults, at NewRoads sole
6
Portions of this exhibit have been omitted
pursuant to a request for confidential
treatment. The omitted portions, marked "[***],"
have been separately filed with the Securities
and Exchange Commission.
discretion, Company shall provide NewRoads with
an irrevocable letter of credit (the "Letter of
Credit" or "ILOC") in an amount equal to the
expected total of Transaction Fees and
Administrative Fees for one month. As an
alternative, at the option of Company, Company
may establish a cash deposit account in the same
amount, funded by Company and maintained in
NewRoads' name (the "Deposit Account"). The
amount maintained in this account will initially
be specified in the initial Statement of Work.
The amount maintained in the Deposit Account or
the amount of the Letter of Credit will be
adjusted once every three (3) months so as to be
consistent with the average monthly xxxxxxxx of
the previous three (3) months. Upon the payment
in full of all fees and other amounts owed to
NewRoads following expiration or termination of
this Agreement, the money remaining in the
Deposit Account will be returned to Company
and/or the Letter of Credit shall be terminated.
Notwithstanding anything contained herein to the
contrary, NewRoads shall have a right of offset
against the Deposit Account or the Letter of
Credit for any charge owed and payable to
NewRoads by Company pursuant to the terms of
this Agreement. In the event of a distribution
from the Deposit Fund to or a drawing down of
the Letter of Credit by NewRoads during the Term
as provided in this Section, Company shall
restore the Deposit Fund or the Letter of Credit
to the required level within fifteen (15) days
after receipt of notice by NewRoads of any such
distribution. Failure to comply with this clause
shall constitute a material breach by Company.
7. IMPREST FUND. At any time during the term of this Agreement, Company may
establish and maintain with NewRoads an Imprest Fund. 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 Imprest Fund, it being
understood that such list of charges may change from time to time
according to Company's business needs and NewRoads' operations. If the
Imprest Fund 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
[***] percent xxxx-up, and such invoice amount shall be payable within
five Business Days after receipt; or (b) following five (5) Business
Days after providing Company with written notice of insufficient funds
in the Imprest Fund (and the Imprest Fund 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.
In addition, if the Imprest Fund is being used to cover the costs of
common carrier and other delivery service shipping, NewRoads may suspend
shipping if the available funds are insufficient to pay additional
shipping charges. NewRoads shall provide Company with a weekly statement
setting forth the balance of, and accounting for disbursements from, the
Imprest Fund.
8. INVENTORY. All Merchandise in the possession of NewRoads shall be and
remain the exclusive property of Company and NewRoads acknowledges and
agrees that it shall require no right, title or interest in or to the
Merchandise by reason of this Agreement. Merchandise inventory shall be
handled and processed as follows:
a. Company shall, at its own expense, supply NewRoads at the
Facility, 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 consistent 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.
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9. SECURITY INTEREST AND LIENS.
a. Company acknowledges that NewRoads may haves a warehousemen's
statutory lien on the Merchandise, as provided for by the laws
of the States in which the Merchandise is being warehoused.
10. RISK OF LOSS.
a. As between Company and NewRoads, 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 as specified
in an applicable Statement of Work for Merchandise Inventory
Shrinkage, which calculation shall be made once annually on such
date as may be mutually agreed between the parties.
b. As between Company and NewRoads, all risk of loss and damage to
Non-Merchandise Inventory 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 as specified in an applicable Statement of Work for
Non-Merchandise Inventory Shrinkage, which calculation shall be
made once annually on such date as may be mutually agreed
between the parties.
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. 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, 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
attorneys' fees, incurred by NewRoads as a result of Company's failure
properly and timely to file and pay applicable taxes.
13. MONETARY DEFAULT. If Company is in breach of the terms governing the
payment of any fees, charges, invoices or other amounts due hereunder to
NewRoads (hereinafter, a "Monetary Obligation"), and such Monetary
Obligation is not the subject of a Dispute Notice (as defined below),
NewRoads shall at its discretion (i) charge a finance charge of one and
one half percent per month of such past due fees, charges, invoices or
other amounts and (ii) upon twenty (20) Business Days prior written
notice terminate this Agreement unless Company cures such default within
such 20 Business Days of receiving such notice, provided that the
finance charge set forth in (i) hereof shall continue on all outstanding
balances. If Company in good faith disputes any amount billed (a
"Monetary Dispute") and reports its reasons therefor to NewRoads in
writing (a "Dispute Notice"), NewRoads and Company agree to work
diligently to resolve the dispute
8
within 15 Business Days after the receipt of such written notice by
NewRoads, provided, however, that (i) during such period NewRoads shall
continue to perform the Services in accordance with the terms of this
Agreement, and (ii) Company shall be current in and shall continue to
make payments to NewRoads relating to all amounts hereunder, other than
such amount that is subject to the Dispute Notice and (iii) in the event
that NewRoads and 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 Company until such
dispute is resolved in accordance with Section 29. Failure to resolve
such dispute during such time period (or to place the disputed amount in
escrow as set forth above) shall allow NewRoads to terminate the
Agreement, subject to all other terms and provisions hereof, and to seek
all available legal remedies.
14. OTHER DEFAULTS. If either Company or NewRoads believes the other party
is in material breach of any of its non-monetary obligations under this
Agreement as a result of any reason other than force majeure, the party
believing that such a breach by the other party has occurred shall give
written notice to the other party declaring a breach of this Agreement
and specifying the nature of the breach. The breaching party shall have
20 days in which to cure such 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.
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, Services. Other than in connection
with the closing of banks and/or financial markets, 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 term of this Agreement shall run concurrently with the
Term of any Statement of Work referenced to this Agreement (the
"Term").
b. Early Termination. This agreement may be terminated prior to the
end of the Term 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) 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.
9
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked "[***]," have been
separately filed with the Securities and Exchange Commission.
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. Non-Monetary Default. A material default by
either party pursuant to the Section 16 of this
Agreement entitled Other Defaults, which is not
cured within the time periods stated therein,
shall entitle the non-breaching party to
terminate the Agreement.
v. Service Deficiency. In the event that NewRoads
receives [***] Service Deficiency Notices during
any consecutive [***] month period during the
term hereof, Company may, within sixty (60) days
of the third such deficiency, terminate this
Agreement upon thirty (30) days prior written
notice to NewRoads. For purposes hereof, a
"Service Deficiency Notice" shall mean a written
notice from Company that NewRoads has failed to
perform a Service in accordance with the Service
Levels. In respect of Service Levels measured on
a daily basis, NewRoads shall not be deemed to
have failed to meet any such Service Level
unless and until such failure continues for more
than [***] out of any [***] consecutive Business
Days.
vi. Termination for Convenience. Company shall be
entitled to terminate this Agreement for
convenience, but shall be required to pay the
Termination Fee as set forth above in connection
with any such termination.
vii. If this Agreement is terminated as provided for
under this paragraph entitled, Monetary Default,
NewRoads shall continue to provide Services to
Company on a Pre-Paid basis for a period not to
exceed 150 days following the effective date of
such termination. Pre-Paid means Company shall
pre-pay to NewRoads the expected xxxxxxxx for
such week, which shall be subsequently
reconciled once each month. If Company is not
willing to make pre-payments, then NewRoads will
not be obligated to provide any Services and
will be entitled to exercise any and all
remedies for termination provided for under this
Agreement or otherwise available under
applicable law.
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 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 represents and warrants that:
i. It has, to the best of its knowledge, and will
use its commercially reasonable efforts to
continue to have for the Term, 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
10
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
(collectively, "Liens"), other than Liens
granted to Xxxxxxxxx & Xxxxxxxxx, Inc. in
connection with Company's credit facility.
iii. Its assets exceed its liabilities, it is able to
pay its debts as they mature, and it is
adequately capitalized.
c. NewRoads. NewRoads hereby represents and warrants that:
i. NewRoads performance of the Services does not
and will not cause NewRoads 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. Its assets exceed its liabilities, it is able to
pay its debts as they mature, and it is
adequately capitalized.
18. INDEMNIFICATION
a. NewRoads shall indemnify, defend and hold Company and its
officers, directors, employees, shareholders and affiliates
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 or related to (i) injury or damage sustained during, or as a
result of, the performance of the Services, (ii) any claim made
by an employee or former employee of NewRoads or any of its
subcontractors or affiliates relating to employment or workers'
compensation laws or (iii) a breach of this Agreement by
NewRoads.
b. Company shall indemnify, defend and hold NewRoads and its
officers, directors, employees, shareholders and affiliates
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 or related to (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 breach
of this Agreement by Company.
c. The indemnification provisions of this Section 18 apply only to
claims made against either party hereto by any third party
(including any claims made by an employee of either party in a
personal capacity) 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 prompt written
notice to the Indemnifying Party of any liability which might
give rise to a claim for indemnity under this Agreement;
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 that an answer or other responsive pleading or
notice with respect thereto is required or ten days after
notice, whichever is later. If the Indemnifying Party makes such
election, it may
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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 or
delayed) 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 or delayed). 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, 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 non-appealable judgment against
the Indemnified Party and the expiration of any
applicable appeal period, or if earlier, five
days prior to the date that the judgment
creditor has the right to execute the judgment;
ii. 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.
d. 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.
19. LIMITATION OF LIABILITY.
a. Notwithstanding any other provision of this agreement, neither
party shall be liable to the other for any special, incidental,
punitive or consequential damages of any nature whatsoever, even
if that party has been previously notified of the possibility of
such damages.
b. Other than for indemnification claims pursuant to Section 17,
any successful claim for actual damages against either party
shall be limited to the amounts paid under this agreement.
20. INSURANCE. 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 currently
in place, with insurers qualified to do business in the state of where
the Services are performed.
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21. PROCESS; INTELLECTUAL PROPERTY.
a. Company acknowledges that NewRoads owns all right, title and
interest in and to, or is licensed to use, the Process and that
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.
b. NewRoads acknowledges that Company owns all right, title and
interest in the Data, and NewRoads has no right or interest
whatsoever in such Data. NewRoads further agrees to enact
commercially reasonable measures to protect the confidentiality
of such Data in accordance with industry standards.
c. NEWROADS(R) is a registered service xxxx owned by NewRoads. No
rights to the use of NewRoads' service marks are granted herein,
and any right to use NewRoads' marks, subsequently granted, will
terminate immediately upon the termination of this Agreement. If
Company is subsequently granted the right to use any of
NewRoads' service marks, Company shall use NewRoads' marks
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.
d. Company's service marks are owned by Company. No rights to use
of Company's marks are granted 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.
22. ACTS OF TERRORISM OR HAZARDOUS SUBSTANCES. The Company shall give to
NewRoads policies and procedures to follow in the event that of any acts
of terrorism or consumer complaints with respect to hazardous
substances. Provided NewRoads follows such policies and procedures,
NewRoads shall have no liability to the Company arising from such any
acts of terrorism, hazardous substance or consumer complaint, 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.
23. 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, respectively.
24. INSPECTIONS AND AUDITS. Company or its agents shall, during normal
business hours and upon reasonable, advance notice, have the right to
inspect the Merchandise located at NewRoads' place of business and audit
the books and records of NewRoads pertaining to Merchandise and the
Services rendered by NewRoads to Company pursuant to this Agreement;
provided, however, that such audit of books and records shall occur no
more frequently than twice per calendar year and then shall cover only
the period not included in a prior audit and shall not unreasonably
interfere with NewRoad's business.
25. 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
13
i. in the case of Company, its Data, financial
condition, forecasts, marketing records,
merchandising records, vendor information, sales
records, customer records, customer files,
general business plans and other confidential or
proprietary information and
ii. in the case of NewRoads, its financial
condition, cost structures, staffing levels,
systems information, 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 and five years thereafter, furnish, disclose, or make
accessible to any third party (other than their respective
officers, directors, shareholders, agents, advisors and
affiliates) 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. The parties agrees that they 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 the other party (or any subsidiary or
affiliate of the other party) any person who was employed by the
other party during the Term and remains employed by the other
party at the time of such solicitation.
e. NewRoads shall not enter into any agreement with any actual or
potential client that would prohibit or limit its ability to
provide services to Company under this Agreement or any
extension hereof.
f. The parties mutually agree that any breach of the provisions of
this Section 25 shall cause irreparable harm to the
non-breaching party and that, in the event of such breach, the
non-breaching party shall have, in addition to any and all
remedies pursuant to this Agreement, the right to an injunction,
specific performance or other equitable relief.
26. 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 specified in the Statement of Work, or to such
other address as NewRoads or Company may designate to the other in
writing.
14
27. 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; provided, however, that either party may
assign this Agreement to any person, firm or corporation that 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 without the other party's prior written consent.
28. AMENDMENTS. This Agreement shall not be modified or amended except by a
written agreement signed by authorized representatives of NewRoads and
Company.
29. DISPUTES; ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof, whether common law or
statutory, shall be settled exclusively by arbitration in New York using
the American Arbitration Association. The arbitration shall be heard
before three arbitrators. The arbitrators shall apply the internal law
of the State of New York in determining the rights, obligations, and
liabilities of the parties. The arbitrators shall not have the power to
alter, modify, amend, add to or subtract from any term or provision to
this Agreement, nor to grant injunctive relief, including interim
relief, of any nature. Such injunctive relief may be pursued by NewRoads
or Company, as the case may be, from the federal and state courts
located in New York. The availability of such relief shall depend upon
proofs and showings required under the applicable law. In all other
respects, the commercial rules of the American Arbitration Association
shall govern the arbitration. Judgment on the award of the arbitrators
may be entered by any court having jurisdiction to do so, and the
parties to the Agreement hereby irrevocably consent and submit to the
personal jurisdiction of the federal and state courts of the State of
New York for this purpose as well as for any and all other purposes in
connection with this Agreement. The failure or refusal of either party
to submit to arbitration as provided in this Agreement shall constitute
a breach of this Agreement. If judicial action is commenced in order to
compel arbitration, and if arbitration is in fact compelled, the party
that shall have resisted arbitration shall be required to pay to the
other party all costs and expenses, including reasonable attorneys'
fees, that it incurs in compelling arbitration. All other fees and
charges of the American Arbitration Association shall be borne as the
arbitrators shall determine in their award.
30. 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.
31. 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.
32. 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.
33. 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.
15
34. 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 acknowledge and agree that the
Original Agreement will expire in accordance with its terms as of the
Effective Date (other than any terms thereof that, in accordance with
the Original Agreement, survive expiration or termination) and that, as
of such time, this Agreement shall govern the terms and conditions of
the performance of the Services by NewRoads. Until the Effective Date,
the Original Agreement shall govern the terms and conditions of the
performance of the Services by NewRoads.
35. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
36. 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 Company's 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.
16
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. BLUEFLY, INC. ("COMPANY")
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------- ----------------------------
Name: Xxxxx X Xxxxx Name: Xxx Xxxxx
Title: Senior Vice President Title: Chief Operating Officer and
Chief Financial Officer
Date: March 21, 2005 Date: March 21, 2005
17
