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EXHIBIT 10.21
LETTER OF AGREEMENT
(Distribution and Credit Card Processing, No SA Database)
Agreement made this 1st day of October, 1996, by and between SPRING ARBOR
DISTRIBUTION COMPANY, a Michigan corporation, (hereinafter referred to as
"Spring Arbor"), and Didax On-Line, L.C., a Virginia limited liability company,
(hereinafter referred to as "Didax").
RECITALS
A. Spring Arbor is in the business of distributing books, Bibles, music
and gift products (Christian products) to retailers. Spring Arbor
from time to time acts in the capacity of a fulfillment services
contractor for various clients. Clients provide service
specifications and Spring Arbor performs said service specifications
for the client.
B. Spring Arbor has a comprehensive data base of items typically found in
a Christian retail store
C. Didax seeks to establish and operate a Christian products business via
the Internet through a Didax designed electronic on-line service. For
this agreement this concept hereinafter shall be referred to as
"on-line retail outlet."
D. Didax seeks to attract a customer base of individuals interested in
Christian products and is attempting to build and serve this customer
base through the on-line retail outlet.
NOW, THEREFORE, in consideration of the mutual covenants and conditions herein
contained, and intending to be bound hereby, the parties agree as follows:
1. Spring Arbor agrees to furnish Didax with products on an non-exclusive
basis for Didax customers who order product through on-line retail
outlet. Products will be selected jointly by Spring Arbor and Didax.
Spring Arbor will be responsible for maintaining its inventory file
(Product Description, ISBN or SPCN number, Subject Category and other
fields currently contained in Spring Arbor's corporate inventory
file), and the current manufacturer's suggested retail pricing (MSRP).
Spring Arbor, may, from time to time, suggest certain product specials
for products listed in the on-line retail outlet.
Spring Arbor agrees to furnish Didax with its Christian Resource
Center database (CRC db) on a non-exclusive basis for Didax use in its
on-line retail outlet. In the CRC db, Spring Arbor will provide data
in electronic form as described in the September 3, 1996 letter from
Xxxx Xxxxxxxxxxx (attached). The fee for the CRC db is $1,000 per
month beginning January 1997.
2. Spring Arbor agrees to pick, pack and ship products for Didax to Didax
customers in a timely manner that corresponds to Spring Arbor's
current business practices. These shipments will be referred to as
drop shipments. Spring Arbor will decide which warehousing facility
to use.
3. Didax agrees to be wholly responsible for the operation of the on-line
retail outlet. It further agrees to hold Spring Arbor harmless in the
event of any suit or action taken by customers with respect to Didax's
electronic on-line service to sell Christian products. Provided,
however, this section shall not apply to any lawsuits or actions
arising from or related to any activities of Spring Arbor or Spring
Arbor distributed products.
Spring Arbor shall hold Didax harmless regarding credit card theft by
any Spring Arbor employee. Spring Arbor shall also warrant any
product delivered to a Didax customer to the extent of the product
manufacturer's stated warranty. The remedy for damaged or defective
product(s) shall be limited to product replacement or other stated
terms specifically from manufacturer.
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4. It is understood by both parties that Spring Arbor is acting as a
fulfillment contractor for Didax, Spring Arbor's role is to provide
fulfillment services, including but not limited to picking product
orders, packing product orders, shipping product orders, customer
service, helping in the choosing of products offered, providing and
maintaining the CRC db. Spring Arbor is acting on behalf of Didax,
for Didax's customers. Didax assumes full responsibility to market to
their customers. Didax is solely responsible to collect and pay any
and all sales or use taxes due as a result of the on-line retail
outlet service. Didax agrees it is following customary business
practices as they pertain to the on-line retail outlet and collecting
and paying sales or use taxes where Didax has liability as described
by current commercial law as part of those customary business
practices.
5. Spring Arbor will invoice Didax for products purchased at the
discount, from MSRP as reflected in Spring Arbor's inventory file.
All invoices for product purchases by Didax or its customers will be
under normal Spring Arbor terms and conditions. Spring Arbor, for the
above described services, will charge Didax a $2.00 per order drop
shipment fee, any credit card processing fees and outbound freight.
6. Returns will be managed by Spring Arbor at the warehouse facility of
its choice. Didax will be charged a $2.00 per order restocking fee on
any returns from its customers unless returns are for damaged
products. Damaged products will receive no restocking fee unless it
can be determined that the damage was due to customer or freight
carrier mishandling.
7. The term of this agreement shall be for two (2) years. Either party
to this Agreement shall have the right to terminate this Agreement
upon giving the other party ninety (90) days written notice setting
forth therein the performance criteria alleged to have been breached,
if the other party fails or refuses to make any nondisputed payment or
to render any nondisputed statement or report when due under this
Agreement, and such default is not remedied within thirty (30) days
after receipt of written notice thereof. In the event any nondisputed
payment, report, or statement is not made or rendered when due twice
during any calendar year, the party to whom the payment, report, or
statement is due may terminate this Agreement on ten (10) days written
notice, subject to remedy within those ten (10) days by the other
party.
(a) The following provisions shall be in effect upon and
after the effective date of the termination,
cancellation or expiration of this agreement;
(i.) Spring Arbor shall immediately discontinue
the fulfillment services described herein.
(ii) Spring Arbor shall continue to make reports
and payments as required herein except that Spring
Arbor may withhold an amount in reserve for
anticipated returns from Didax customers. As of the
date of written notice or six months prior to
expiration, Spring Arbor will start to build up a
reserve to offset anticipated returns from On-Line
Retail customers, which reserve shall be liquidated
by Spring Arbor on a monthly basis over the six (6)
months following termination. The amount of such
reserve shall be based on and shall not exceed the
greater of: (a) the amount of the returns percentage
from On-Line Retail Outlet Customers during the
twelve (12) month period immediately preceding the
date of notification of termination, cancellation, or
expiration multiplied by the sales from On-Line
Retail Outlet Customers after notice of termination
or six months prior to expiration; or (b) ten (10%)
per cent of net sales calculated in the same manner.
This reserved amount shall be held for six (6) months
by Spring Arbor in a separate account. As On-Line
Retail Outlet Customers products are returned to
Spring Arbor this account will be liquidated during
the six-month period after termination and reconciled
with Didax month-by-month. For example, reserves
held in January will be repaid to Didax in July to
the extent that the reserves have not been offset by
actual returns.
8. Didax agrees that any products advertised by either themselves or
others must, if they are a part of Spring Arbor's CRC db, be offered
for on-line sale soley through the on-line retail outlet supplied by
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Spring Arbor and not directly from the vendor or manufacturer.
Nevertheless, Didax is free to negotiate special discounts or
arrangements directly with other vendors or manufacturers provided
only that shipping be through Spring Arbor. In such cases Spring
Arbor agrees to pass through to Didax the benefits derived from such
negotiations.
9. From time to time, Spring Arbor will make available to Didax
opportunities to participate in extra margin opportunities where
Spring Arbor vendors have made available promotional items at a better
than listed (or system) discount. Didax shall also receive, from time
to time, notification of other market specials.
When annual purchase volume of the on-line retail outlet reaches
$1,000,000 rate, Spring Arbor will negotiate extra discounts for Didax
products sold via on-line retail outlet. Extra discount will not
exceed any current customer classification already in place. Spring
Arbor reserves the right to restrict the extra discount provision for
certain product types, i.e. items with a retail less than $4.95, or
other types.
When monthly volume exceeds $50,000, Spring Arbor will discuss and
negotiate opportunities for labeling Didax shipments with Didax
supplied naming, for guaranteed same day packing and shipping, and for
similar service oriented value.
10. Either party may not transfer or assign its rights or obligations
under this agreement without the expressed written consent of the
other party.
The parties execute this agreement on the date and year first above written.
Spring Arbor Distribution Company The Didax On-Line, L.C.
By: /s/ XXXXX X. XXXXXXXX By: /s/ X.X. XXXXXX
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Xxxxx X. Xxxxxxxx X.X. Xxxxxx
Its Vice President, Vendor Services Its Chairman and CEO
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