EXHIBIT 10.1
ADMINISTRATIVE AND OPERATIONAL SERVICES AGREEMENT
THIS AGREEMENT (the "Agreement") made effective the 1st day of January,
1998 by and between KIDS' STUFF, INC., a Delaware corporation ("Manager"), and
THE HAVANA GROUP, INC., a Delaware corporation ("Company").
W I T N E S S E T H:
WHEREAS, Company functions as a catalog sales organization with few direct
operations of its own and has fewer than 10 employees or management staff;
WHEREAS, Manager is owned by an affiliate of Company and has previously
provided on an informal basis certain necessary management services and
Operational services for the Company; and
WHEREAS, Company desires to have Manager continue to provide all such
services pursuant to this Administrative and Operational Services Agreement,
NOW, THEREFORE, and in consideration of the mutual promises and covenants
hereinafter set forth, Manager and Company hereby agree as follows:
1. ADMINISTRATIVE SERVICES. During the term hereof, Manager shall
provide all administrative services (the "Fulfillment Services") reasonably
necessary or appropriate to facilitate the ordinary operations of the Company,
including the following:
1.1 ACCOUNTING AND PAYROLL SERVICES including payroll production
and payroll reporting to all tax authorities, and all basic
internal accounting services. Such services shall include
administering the Company's finances and bank accounts,
maintaining accurate records of and collecting payment on
accounts receivable, assisting in the preparation of the
Company's budgets, and maintaining financial and accounting
records subject to periodic review and audit by the Chief
Financial Officer and such other public accountant(s) as the
Company in its sole discretion, may authorize. Manager shall
also provide the services of such accounting, bookkeeping and
clerical personnel as may be required to assist the Chief
Financial Officer in his or her duties.
Manager shall also provide accounts payable administration,
accounting consultation regarding interpretation of accounting
policies and facilitation of the implementation of accounting
policies and all necessary processing of payroll and employee
benefits. Such services shall include but shall not be limited
to acting as paymaster for Company and collecting, paying or
causing to be paid, reporting, and maintaining records of any
and all required federal, state, and local payroll taxes.
1.2 ADMINISTRATION AND HUMAN RESOURCE MANAGEMENT including testing,
evaluation, and benefits administration, employment training
and
management of both managers and employees and all necessary
time and attention of accounting and payroll personnel,
purchasing and receivables staff, sales managers, sales staff,
customer service staff, and such other administrative and
clerical personnel (the "Manager's Employees") as may be
required to assure delivery of the services required hereunder.
Manager shall employ, train, and manage all Manager's Employees
and shall be responsible for the hiring, supervision, and
firing of said Manager's Employees. All Manager's Employees
shall be strictly and solely the employees of Manager. Manager
reserves the exclusive right to determine the manner in which
Manager's Employees will carry out their duties hereunder, to
hire and fire same at its own discretion, to maintain the
Manager's Employees on the Manager's books as its employees,
and to pay and make all deductions from Manager's Employees'
wages or salaries and benefits. Company shall not attempt to
exercise authority over the Manager's Employees in any way
inconsistent with the aforesaid.
The Company shall employ a President and a Chief Financial
Officer (the "Company Employees") separate and apart from this
Agreement, and the Manager shall exercise no authority over
said Company Employees.
All clerical, secretarial services and other customary and
usual general and administrative services reasonably necessary
to the daily operations of Company's business.
1.3 DATA PROCESSING SERVICES including use of Manager's computers,
copiers, software telephones, facsimile machines, and other
office equipment, and printing and postage services as
necessary.
1.4 OFFICE EQUIPMENT AND FACILITIES USE including use of as much of
Manager's administrative office(s) and warehouse space as is
reasonably necessary to Company for the purpose of managing and
operating Company's business.
Manager shall be solely responsible for compensating all personnel who
provide the services specified above and shall be deemed to be the employer for
all such personnel, except that Manager shall not be responsible for
compensating and shall not be deemed to be the employer for the Company
Employees.
2. MERCHANDISING AND MARKETING SERVICES. During the term hereof, Manager
shall provide all services reasonably necessary or appropriate to select
merchandise and market the Company's products and services including the
following:
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2.1 Marketing including mailing, advertising, maintenance and
procurement of mailing lists, compliance with postal
regulations, advertising selection and creation not including
the direct cost of media buys.
2.2 Merchandising including catalog production, inventory/product
selection, catalog design and production.
3. FULFILLMENT AND PURCHASING SERVICES. During the term hereof, Manager
shall provide all Fulfillment and Purchasing Services reasonably necessary
or appropriate to timely and accurately fulfill all Customer Orders
received by telephone or by mail from Company's customers, including the
following:
3.1 All functions reasonably necessary to fulfill Customer Orders.
Manager shall be responsible for receiving and fulfilling all
Customer Orders received in the normal course of Company's
business Such services shall include receiving and maintaining
accurate records of Customer Orders, matching Customer Orders
with inventory, handling shipping and delivery, and handling
receipt and replacement/reimbursement for returns pursuant to
customer satisfaction guarantees established by the Company.
Manager shall also be responsible for initially fielding all
questions and/or complaints raised by customers of the company,
including questions about specific items advertised in the
Company's catalog and returns.
3.2 All purchasing functions including initiating and maintaining
contact with Company's suppliers when necessary to ensure
favorable and continued business relations with same. Such
services will also include ordering all inventory and equipment
necessary to the customary operation of Company's business,
managing shipping, receipt, and payment of same by or on behalf
of company, all functions to purchase goods, process deliver of
goods including inventory maintenance, warehousing, and
inventory reporting.
4. TERM. The term of this Agreement shall be deemed to commence as of
December 15, 1997 and shall continue for until December 31, 1998, renewable upon
renegotiation of fees for services. However, this Agreement may be terminated
by either party upon not less than ninety (90) days written notice.
5. FEES. In exchange for the Management Services and Operational
Services specified above, Company shall, on a monthly basis in arrears, pay
Manager an amount equal to the reasonable value of the services received
hereunder based upon the quantity thereof and the cost incurred by Manager in
producing such services. Such fees shall be determined as follows:
5.1 (a) For Accounting and Payroll services, $34,000.00 per
year;
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(b) For Administration and Human Resource Management,
$51,600.00 per year;
(c) For Data Processing, $34,900.00 per year;
(d) For Office Equipment and Facilities Use, $32,200.00 per
year;
(e) For Merchandising and Marketing Services, $38,100.00
per year;
(f) For Fulfillment, $2.40 per order.
(g) For Purchasing Services, $15,300.00 per year;
6. MEDIATION AND ARBITRATION.
6.1 The Manager and Company shall make a good faith attempt to
settle the any dispute by mediation pursuant to the provisions
of this Section 6.3 before resorting to arbitration, litigation
or any other dispute resolution procedure.
6.2 Unless the Manager and Company agree otherwise, the mediation
shall be conducted in accordance with the Commercial Mediation
Rules of the American Arbitration Association (the "AAA") then
in effect by a mediator who (I) has the qualifications and
experience set forth in 6.3 below of this Section and, (ii) is
selected as provided in Section 6.4.
6.3 Unless the Manager and Company agree otherwise, the mediator
shall be a person with excellent academic and professional
credentials who has had both training and experience as a
mediator as a member of the AAA Mediation Panel or who is a
lawyer or retired judge who has mediated cases for the federal
or state courts or a reputable commercial ADR firm or
not-for-profit ADR organization.
6.4 Either party (the "Initiating Party") may initiate mediation of
a dispute by giving the other party (the "Recipient Party")
written notice (a "Mediation Notice") setting forth a list of
the names and resumes of qualifications and experience of three
impartial persons who the Initiating Party believes would be
qualified as a mediator pursuant to the provisions of Section
6.3 hereof. Within 15 days after the delivery of the Mediation
Notice, the Recipient Party may designate a person to serve as
the mediator from among the three persons listed by the
Initiating Party in the Mediation Notice (in which event such
designated person shall be the mediator). If none of the
persons listed in the Mediation Notice is designated by the
Recipient Party to serve as the mediator, the Counter-Notice
should set forth a list of the names and resumes
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of three impartial persons who the Recipient Party believes
would be qualified as a mediator pursuant to the provisions
hereof. Within 10 days after the delivery of the
Counter-Notice, the Initiating Party may designate a person to
serve as the Mediator from among the three persons listed by
the Recipient Party in the Counter-Notice (in which event such
designated person shall be the mediator). If the parties
cannot agree on a mediator from the three impartial nominees
submitted by each party, each party shall strike two names from
the other party's list, and the two remaining persons on both
lists will jointly select as the mediator any person who has
the qualifications and experience set forth in Section 6.3
hereof. If they are unable to agree, then the mediator will be
selected by the President of the AAA or his regional designee.
6.5 Within 30 days after the mediator has been selected as provided
above, both parties and their respective attorneys shall meet
with the mediator for one mediation session of at least four
hours, it being agreed that each party representative attending
such mediation session shall be a Senior Party Representative
with authority to settle the dispute. If the dispute cannot be
settled at such mediation session or at any mutually agreed
continuation thereof, either party may give the other and the
mediator a written notice declaring the mediation process at an
end, in which event either party shall be free to pursue such
remedies as it may elect.
6.6 All conferences and discussions which occur in connection with
mediation conducted pursuant to this Agreement shall be deemed
settlement discussions, and nothing said or disclosed, nor any
document produced, which is not otherwise independently
discoverable shall be offered or for any other purpose in any
current or future arbitration or litigation.
6.7 The costs of the mediation shall be shared equally between the
Manager and Company.
6.8 The Manager and Company will endeavor to amicably resolve any
dispute controversy or claim arising out of or related to this
Agreement, or breach thereof. In the event, however, that any
dispute, controversy or claim cannot be amicably resolved, it
shall be finally settled by binding arbitration. Such
arbitration shall be conducted by the American Arbitration
Association in Canton, Ohio, under that organization's
commercial arbitration rules. The expense of arbitration will
be borne by the losing party. The parties further agree that
the award of the arbitrator shall be the final, sole, and
exclusive remedy between them regarding any claims,
counterclaims, issues, or accounting presented or pled to the
arbitrator; that is shall be nonappealable; that any monetary
award shall be promptly paid, free of any tax, deduction
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or offsets; and that any costs, fees, or taxes incident to
enforcing the award shall be charged against the party
resisting such enforcement. Judgment upon the award of the
arbitrator may be entered and enforced in any court having
jurisdiction thereof.
7. MISCELLANEOUS.
7.1 RELATIONSHIP OF THE PARTIES. The relationship between Manager
and Company under this Agreement is that of independent
contractors. Nothing contained in this Agreement or otherwise
shall be construed to constitute or create a partnership,
agency relationship, joint venture, equity interest or lease
between Manager and Company. Neither party has the power or
authority to act on behalf of the other party, except as
expressly set forth in this Agreement, as reasonably implied
hereunder or as authorized in writing by the other party.
7.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties and supersedes and cancels any
other agreement, representation, or communication, whether oral
or written, between the parties hereto relating to the
transactions contemplated herein or the subject matter hereof.
7.3 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State
of Ohio.
7.4 ADDITIONAL DOCUMENTS. Each of the parties hereto agrees to
execute any document or documents that may be requested from
time to time by the other party in order to implement or
complete any obligations pursuant to this Agreement.
7.5 PARTIES INTEREST. This Agreement shall insure to the benefit
of, and be binding upon, the parties hereto and their
successors and assigns; provided, however, that any assignment
by either party of its rights under this Agreement without the
written consent of the other party shall be void.
7.6 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
7.7 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully
severable and this Agreement shall be construed and enforced as
if such illegal, invalid, or unenforceable provision never
comprised a part hereof; and the remaining provisions hereof
shall
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remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its
severance here from. Furthermore, in lieu of such illegal,
invalid or unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar
in its terms to such illegal, invalid or unenforceable as may
be possible and legal, valid, and enforceable.
7.8 COMMUNICATION. The parties agree that good communication
between the parties is essential to the successful performance
of this Agreement, and each pledges to communicate fully and
clearly with the other on matters relating to the successful
management and operation of the Company.
7.9 NOTICES. Any notices required to be in writing under this
Agreement shall be sent to the parties as follows:
To MANAGER: KIDS' STUFF, INC.
0000 Xxxxxx Xxxxxxx Xx. X.X.
Xxxxxx, Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn:___________________________
To COMPANY: THE HAVANA GROUP
[ADDRESS]
6.10 AMENDMENT. This Agreement may only be amended by a written
instrument signed by both parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first set forth
above.
KIDS' STUFF, INC.
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, Director of Finance
THE HAVANA GROUP
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxxx, Chief Executive Officer
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