EXHIBIT 10.10
MERCHANDISE SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of March,
1999, by and between AMERICAN CONSOLIDATION, INC., 000 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000 ("ACI") and MSS-DELAWARE, INC., 00 Xxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 ("Customer").
W I T N E S S E T H
WHEREAS, Customer is engaged in the retail business and the sale of
merchandise customarily available therein; and
WHEREAS, ACI receives, processes, marks, picks, consolidates, packs,
manifests and loads merchandise at its facility located in Carlstadt, New Jersey
(the "ACI Facility"); and
WHEREAS, Customer desires to have ACI perform and ACI is willing to
provide to Customer all receiving, processing, marking, consolidating, picking,
packing, manifesting, and loading services for Customer's merchandise sent to
ACI at Customer's discretion (the "Merchandise") subject to the terms and
conditions specified herein;
WHEREAS, in consideration for this agreement having been executed, ACI
agrees to renovating, upgrading and automating the interior facility and
equipment at 000 Xxxxxxxxxx Xxxxxx, including but not limited to all materials
handling equipment, inventory location systems, carton control systems,
sortation systems and consolidation systems. The upgrading of the property shall
commence on March 1st and be completed by July 1st, 1999.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. TERM
The term of this Agreement shall be for an initial term of five (5)
years commencing as of March 1, 1999 and ending February 29, 2004. Customer
shall have the option to extend this Agreement for an additional five (5) year
period ending February 28, 2009 upon terms mutually agreed upon. Customer will
notify ACI with its intent to exercise the option to renew within 120 days of
the expiration of the initial term.
2. TERMINATION
Customer shall have the right to terminate this Agreement upon 120 days
written notice for ACI's failure to meet the Service and Representations and
Warranties of ACI stated in Sections 3 and 4. In the event that Customer
terminates this Agreement in the initial five (5)
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years of the Term, Customer shall reimburse ACI $12,000.00 per month (or part
thereof) for the remaining number of months in the initial five (5) year Term.
This sum shall be paid in a lump sum prior to vacating the ACI Facility.
Customer shall, nonetheless, be entitled to a credit against such lump sum for
50% of the fair market value of the new equipment installed by ACI at the ACI
Facility as a result of this Contract with Customer.
ACI shall have 30 days from receipt of notice from Customer to attempt
to cure any such violation of the Service and performance standards before
Customer shall be entitled to terminate this Agreement.
Customer shall have right, for period of 30 days, to terminate the
Agreement if a substantial change in ownership of ACI occurs.
Customer shall also have the right to terminate this Agreement if an
Event of Force Majeure as hereafter defined in Paragraph 12 continues for ninety
(90) days.
3. SERVICES
ACI agrees to perform distribution services (the "Services") for
Customer including but limited to the following:
(a) Schedule deliveries within twenty four (24) hours of request
for appointment based upon Customer's monthly plan.
(b) Receive, Check, Xxxx (where applicable), Pick, Pack,
Consolidate, Manifest and Ship merchandise in accordance with
past practice and with customer's standard policies and
procedures.
(c) Process all documentation related to the warehouse and
distribution system including but not limited to, Appointment
Log, Vendor Invoice, Packing Slip, Xxxx of Lading, Key Rec
Panel, Trouble Notification Form, Receiving Worksheet,
Receiving Manifest, Vendor Chargeback Form and LTA Shipping
Manifest, and in accordance with past practice and with
customer's standard policies and procedures.
4. REPRESENTATIONS AND WARRANTIES OF ACI
(a) ACI will perform the Services in a proper and workmanlike
manner in accordance with accepted industry standards,
practices and procedures ("Industry Standards").
(b) ACI shall provide the Services with regard to the Merchandise
within the following time constraints:
All Merchandise received as Cross-Docked will be
processed and shipped within 24 hours of receipt of
Distribution information from Customer.
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All other Merchandise will be processed within 48
hours of receipt of Distribution information from
Customer.
(c) ACI shall maintain a Quality Level of 99% with respect to
Merchandise processing accuracy and as defined in the Base
Plus Xxxx Xxxxxx Associates Quality System.
(d) ACI shall comply with all present and future laws, statutes,
ordinances, rulings, regulations, orders and requirements of
all federal, state, municipal, county and other government
agencies and authorities relating to the ACI Facility, and
shall obtain and keep in full force and effect all necessary
licenses, permits and similar authorizations from governmental
authorities required to perform its obligations hereunder.
5. SUPPLY OF MATERIALS AND EQUIPMENT
(a) ACI will provide, at its sole cost, the ACI Facility,
utilities, insurance, all merchandise handling equipment
including consolidation, manifesting and sortation systems and
management and labor necessary for the efficient performance
of its obligations herein.
Customer will provide, at its sole cost, all control room
equipment, ticket making equipment, ticket stock, computer
forms, labels, and packing cartons.
Customer will provide at its sole cost all control room
computer equipment and data communication lines.
Customer will provide all Packing supplies, Hangers, Poly
Bags, Cartons, Sealing Tape, and Labels necessary for
merchandise processing.
Customer will be responsible for the cost of all inbound and
outbound freight associated with the processing of its
merchandise.
Such equipment and materials shall at all times remain the
sole and exclusive property of Customer and shall not be used
for any purpose except as specifically directed by Customer.
ACI shall not permit any security interest, lien or other
encumbrance ("Encumbrance") to attach to Customer's such
equipment or merchandise and in the event any such Encumbrance
attaches to Customer's equipment or merchandise, ACI will pay
to have it discharged of record promptly, and to take such
action as may be required to reasonably and legally object to
such security interest or lien or to have such security
interest or lien removed from such property. ACI hereby waives
any right to lien against any property of Customer, including
Customer's equipment and merchandise which may be located at
the ACI Facility. Customer may make, in its sole discretion,
any and all UCC
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informational filings regarding its ownership interest in its
equipment and the Merchandise. ACI agrees to cooperate with
Customer in making such filings and take all reasonable action
to complete such filings as requested by Customer at
Customer's cost and expense. Customer shall be responsible for
the cost of maintenance of its equipment located at the ACI
Facility and ACI agrees to notify Customer of the need for any
non-routine maintenance on the equipment and Customer agrees
to keep all of this equipment in a condition which enables ACI
to perform the Services for Customer herein. Upon termination
of this Agreement, all such equipment shall be returned
forthwith to Customer in the condition such equipment was
delivered to ACI, reasonable wear and tear excepted. ACI
hereby agrees that it will assume all risk of loss on the
Merchandise and equipment owned by Customer from the time of
its receipt of such Merchandise or equipment until such time
as Customer subsequently receives such Merchandise or
equipment. ACI shall replace or repair any of such equipment
which is lost, stolen, damaged, destroyed or otherwise
unavailable for use or return to Customer. Notwithstanding the
above, the parties understand that ACI is providing new
scanners, radio frequency or other, manifesting and sortation
equipment, and software which is part of ACI's new material
handling system, which is compatible with the customer's
existing computer hardware and software.
Customer will provide personnel from its Home Office for
directing the following support functions:
Act as an information resource for ACI in the event
ongoing operational issues arise.
Handle all systems (AS 400 & Island Pacific) problems.
Handle all communications with vendors regarding
shipments which are received at the ACI Facility.
Handle all freight negotiations and payment of freight
bills.
6. BASE FEE, PAYMENT TERMS AND ADJUSTMENTS
(a) As ACI's entire and full compensation for its provision of the
Services and any necessary and related costs or expenses
incurred by ACI in the course of providing the Services,
Customer shall pay ACI as follows:
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Service CostService Cost
-------------------- ---------------------------
Processing Service 1999* 2000 2001 2002 2003
Regular $0.357 $0.345 $0.335 $0.325 $0.315
Pre-Pack $0.287 $0.275 $0.265 $0.255 $0.245
Pre-Ticketed $0.292 $0.280 $0.270 $0.260 $0.250
Pre-Pack/Pre-Ticketed $0.257 $0.245 $0.235 $0.225 $0.215
Cross Dock $0.050 $0.050 $0.050 $0.050 $0.050
Back Stock $0.150 $0.155 $0.155 $0.160 $0.160
Special Projects $ 9.00 $ 9.25 $ 9.25 $ 9.50 $ 9.50
* Rate effective as of August 2, 1999. Current rates shall apply prior to August
2, 1999.
Customer Unit Plan
1999 2000 2001 2002 2003
12,232,000 14,672,000 17,108,000 19,552,000 21,992,000
In the event that ACI receives 8% less than the plan units allocated
for that year, ACI will charge Customer $0.005 per unit charge on total unit
receipts processed for that year in addition to payments previously remitted
under the base fee terms.
(b) Customer shall make payment to ACI of all correctly stated amounts
within seven (7) days of Customer's receipt of the invoice.
7. RIGHT TO AUDIT
ACI agrees to allow Customer's personnel to inspect and to perform an
operation field audit of the Services and the ACI Facility and to inspect and
audit ACI's invoicing and records which relate to the Services performed on the
Merchandise as Customer deems necessary in its sole discretion at times during
any business hours in which ACI operates and upon reasonable notice to ACI.
8. SHORTAGES AND DAMAGES TO MERCHANDISE
ACI shall be responsible and liable to Customer for the cost to
Customer of lost or misplaced Merchandise. The cost to Customer shall be the
book value of the Merchandise as
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determined by the invoice cost plus per unit processing cost or if ACI has been
reimbursed by virtue of an insurance claim, then the total amount of said
reimbursement. Customer shall notify ACI of any shortage within thirty (30) days
of ACI's receipt of the Merchandise.
9. INSURANCE
ACI shall, at all times during the term of this Agreement, and at its
sole cost and expense, obtain and maintain the following insurance written by
insurance companies reasonably acceptable to Customer having a minimum rating of
A-X in the most recently published A.M. Best's Guide, and admitted and licensed
to provide insurance in the states in which services will be performed:
(a) All-risk property insurance upon the Merchandise in ACI's
possession in an amount equal to the full replacement cost of
the Merchandise;
(b) Commercial general liability insurance (including contractual
liability coverage specifically covering ACI's obligations
hereunder) written on an occurrence basis in amounts of Five
Million Dollars ($5,000,000.00) combined single limit per
occurrence with respect to bodily injury (including death),
personal injury and property damage;
(c) Workers' compensation insurance covering all of its employees
to the full extent required of all states in which ACI
performs services under this Agreement;
(d) Employers' liability insurance with a limit of not less than
One Million Dollars ($1,000,000.00) for each accident and One
Million Dollars ($1,000,000.00) for disease.
(e) Business income interruption insurance in an amount not to
exceed $500,000.00 per occurrence.
The insurance policies, other than the workers' compensation insurance
policy, shall name Customer as an additional insured. Such insurance coverage
shall commence as of the date of this Agreement and ACI promptly shall deliver
to the Customer the policies of such insurance, or certificates thereof, and
with respect to each renewal policy, at least thirty (30) days prior to the
expiration of the policy it renews. All insurance policies maintained by ACI
shall provide that such policies name customer as loss payee and shall not be
amended or canceled without at least thirty (30) days prior written notice to
Customer. In the event ACI does not obtain the insurance required under this
Agreement, ACI shall be in default of this Agreement and Customer, in addition
to its remedies at law and equity and as may be found elsewhere in this
Agreement, may obtain such insurance on behalf of ACI and ACI shall pay to
Customer upon demand the costs thereof, together with interest of the maximum
lawful rate. Failure by ACI to pay such cost to Customer within fifteen (15)
days after written demand shall entitle Customer to offset any sums due to ACI
until fully reimbursed.
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The required liability insurance may be carried under a "blanket
policy" covering other work of ACI, provided that if the blanket policy contains
an aggregate limit, the limit will apply on a per location basis.
Such policies shall provide for a waiver of any right of subrogation
that the insurer may acquire against Customer.
It is the express intention of the parties to this Agreement that ACI
shall cause such coverages to be provided on a "primary" basis, regardless of
any other insurance Customer may elect to purchase and maintain.
Accordingly, no liability coverage required of ACI shall be subject to
an "excess" or "pro-rata" type of other insurance clause, nor shall any such
coverage be subject to any clause which would be contrary to the aforesaid
intent of the parties. All coverage purchased by Customer will be excess for
Customer only and not provide any coverage for ACI.
10. INDEMNIFICATION
ACI shall indemnify, defend and hold harmless Customer, its affiliates
and their respective directors, officers, employees and agents from and against
any and all damages, costs, losses, liability and expenses (including reasonable
attorneys fees) in connection with any and all actions or threatened actions
arising out of: (a) the use by ACI of the equipment described in Section 5(b) of
this Agreement, or (b) the performance by ACI of the services contemplated by
this Agreement; except that such indemnification obligation shall not arise in
circumstances where the claim in question arose from any grossly negligent,
intentional, wrongful or unlawful act or omission of the person who otherwise
would have been indemnified.
11. EFFECT OF TERMINATION
Upon the termination of this Agreement, ACI shall fully perform all
Services with respect to all Merchandise delivered to ACI prior to the effective
date of such termination. Customer shall pay for all Services performed by ACI
prior to the effective date of such termination. Each party also agrees to
perform all other obligations on its part which, by the terms of this Agreement,
are required to be performed upon termination thereof.
12. FORCE MAJEURE
Neither party to this Agreement shall be liable for any default
hereunder due to act of God, riot, accident, strikes, labor disputes, work
stoppages, fires, floods, acts of a public enemy, acts of the United States
Government, war or other unforeseeable cause beyond its control and without its
fault or negligence (an "Event of Force Majeure"). Each party thereto shall
notify the other in writing of any such unforeseeable causes beyond its control
which may have delayed or may delay the performance of this Agreement. When ACI
has, for any reason, failed to perform Services hereunder because of an Event of
Force Majeure or given notice hereunder that it will fail to make such delivery
because of any Event of Force Majeure, Customer shall have the right,
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for a period of not less than thirty (30) days, to have the Services performed
with respect to the Merchandise from sources other than ACI to assure Customer
of Merchandise, provided that Customer's commitment to have such Services
performed by sources other than ACI cannot continue thereafter for a period
longer than ACI's inability to perform. Notwithstanding anything contained
herein to the contrary, in the event any Event of Force Majeure, including but
not limited to strikes, labor disputes or work stoppages, occurs, ACI shall have
a period of ten (10) days from the date of said occurrence to have the Services
performed with respect to the Merchandise from another source to assure Customer
of Merchandise. In the event ACI is unable to provide such alternate source to
have the Services performed within such 10-day period, Customer shall have the
right to have the Services performed through an alternate source, and any
difference in the cost of having the Services performed by an alternate source
and the cost of Services provided under this Agreement shall be immediately
reimbursed by ACI to Customer. The failure of ACI to perform the Services on the
Merchandise due to an Event of Force Majeure shall not be deemed to be a breach
of any provision of this Agreement; provided that ACI commences performing
Services with respect to the Merchandise within ninety (90) days after and Event
of Force Majeure or after notice to Customer of any Event of Force Majeure.
13. ALTERNATE DISPUTE RESOLUTION
If there is a controversy or dispute arising out of, related to or
involving this Agreement that is not resolved by negotiation and agreement of
the parties within 30 calendar days of the controversy or dispute arising, such
controversy or dispute shall be resolved exclusively through binding, conclusive
and confidential alternate dispute resolution ("ADR") pursuant to the New Jersey
Alternate Procedure for Dispute Resolution Act ("NJADR Act"), N.J.S.A. 2A:23A-1
et seq, by submission to an umpire mutually selected by the parties. If the
parties are unable to mutually agree upon an umpire, each party shall designate
a former federal judge or New Jersey Supreme Court justice of Superior Court
judge and the umpire shall be selected as between them by the flip of a coin.
The ADR shall be held in Wayne, New Jersey, and shall then proceed in accordance
with the NJADR Act but shall be conducted confidentially. The decision of the
umpire shall be binding upon the parties hereto and the parties hereby waive and
relinquish right of appeal afforded by the NJADR Act. The cost of the umpire
shall be borne equally by the parties, unless the umpire decides based on
equitable principles to apportion such costs in a different manner.
14. CONFIDENTIALITY
ACI shall, from time to time, gain access to certain proprietary
business information (including, without limitation, information relating to
Customer's business activities, cost of doing business and the cost of supplies
purchased hereunder) (the "Proprietary Information") of Customer which is
confidential in nature. In consideration of Customer's execution of this
Agreement, ACI agrees to hold all such Proprietary Information in trust and
confidence for the
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exclusive benefit of Customer. ACI shall not disclose or divulge, nor permit any
disclosure of, any Proprietary Information to any entity not a party to this
Agreement, nor shall ACI appropriate or use any Proprietary Information to
benefit itself or any other entity. ACI shall also inform any of its respective
affiliates or subsidiaries and their respective directors, officers, employees
and agents thereof ("Agent") providing services hereunder of the terms of this
subparagraph. ACI shall be responsible for its respective Agent's failure to
comply with the terms of this paragraph and any liability arising therefrom. ACI
and Customer agree that any disclosure or use of the Proprietary Information
other than for the exclusive benefit of Customer will cause irreparable harm to
Customer and that money damages alone would be an inadequate remedy for any
disclosure or unauthorized use of the Proprietary Information by ACI.
Therefore, ACI and Customer agree that Customer shall be entitled to
obtain specific performance, injunctive relief or any other remedy available at
law or in equity in the event of such disclosure or unauthorized use. This
section 14 shall survive the termination of this Agreement for a period of two
(2) years.
15. RELATIONSHIP OF THE PARTIES
The relationship between Customer and ACI under this Agreement shall be
solely that of vendor and vendee. It is expressly understood and agreed by the
parties hereto that nothing in this Agreement, its provisions, or the
transactions and relationships contemplated hereby shall constitute either party
as an agent, employee, partner, or legal representative of the other for any
purpose whatsoever, nor shall either party hold itself out as such. Neither
party to this Agreement shall have the authority to bind or commit the other
party hereto in any manner or for any purpose whatsoever but rather each party
shall, at all times, act and conduct itself in all respects and events as an
independent contractor. In no event shall the employees or contractors of ACI or
any other person performing the Services hereunder be deemed to be the employees
of Customer. This Agreement creates no relationships of joint ventures,
partners, associates, or principal or agents between the parties hereto. ACI
agrees that neither it nor any of it officers or affiliates will at any time,
either during or after the termination of this Agreement, directly or
indirectly, in any manner use the name of Customer or any trade, trademark,
service xxxx, or logo of Customer without Customer's prior written permission.
In no event shall the employees or contractors of ACI or any other person
performing the Services hereunder be deemed to be the employees of Customer.
16. ASSIGNMENT
This Agreement may not be assigned by either party hereto except with
the prior written consent of the other party, which consent will not
unreasonably be withheld or delayed, and any attempted assignment in violation
of this provision shall be void.
17. ADMINISTRATIVE EXPENSES
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Each party hereto shall pay all of its own administrative expenses
(including, without limitation, the fees and expenses of their agents,
representatives, counsel and accountants, incident to the preparation of this
Agreement).
18. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties hereto.
19. TITLE TO MERCHANDISE
(a) Title to and ownership of the Merchandise shall, at all
times, rest solely with the Customer. ACI shall not act in a
manner which is inconsistent with Customer's title thereto
including, but not limited to, causing or allowing any lien or
security interest for the benefit of any ACI creditor to
attach to the Merchandise -- and in the event that any such
security interest or lien attaches to such Merchandise, ACI
agrees to pay the same and have it discharged of record,
promptly, and to take such action as may be required to
reasonably and legally object to such security interest or
lien or to have such security interest or lien removed from
such Merchandise, including, without limitation, completing
and signing any documents, acknowledgments or other
documentation requested by Customer.
Without limiting the generality of section 4, ACI hereby
waives any right to lien against any Merchandise which may be
located in the ACI facility. Customer may make, in its sole
discretion, any and all UCC informational filings regarding
its ownership interest in its equipment and the Merchandise.
ACI agrees to cooperate with Customer in making such filings
and take all reasonable action to complete such filings as
requested by Customer.
(b) In the event ACI causes or allows any such security interest
of lien to attach to Customer's property rights in and to the
Merchandise, which security interest or lien is not removed
within thirty (30) days, Customer shall have the right to
terminate this Agreement upon thirty (30) days' prior written
notice to ACI with out any termination penalty.
20. WAIVER OF BREACH
The waiver by any party to this Agreement of any breach or violation of
any provision of this Agreement by the other party hereto shall not operate or
be construed to be a waiver of any subsequent breach of violation thereof.
21. GOVERNING LAW AND SEVERABILITY
This Agreement shall be governed by and interpreted in accordance with
the substantive and procedural laws of the State of New Jersey. The terms and
conditions of this Agreement are hereby deemed by the parties to be severable,
and the invalidity or unenforceability of any one or
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more of the provisions of this Agreement shall not affect the validity or
enforceability of the other provisions hereof.
22. NOTICES
Any notice contemplated by or required or permitted to be given under
this Agreement shall be sufficient if in writing and if delivered personally or
sent by nationally recognized carrier or by registered or certified mail, return
receipt requested, to the parties' respective addresses below, or to such other
addresses either of the parties hereto may hereinafter designate in writing:
American Consolidation, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx Xxxxxxxxx, Chief Executive Officer
MSS-Delaware, Inc.
00 Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxx (Executive V.P.)
THIS AGREEMENT reflects the complete understanding of the parties and
constitutes their entire agreement, all prior negotiations, representations and
statements having been merged herein. This Agreement, including the Exhibits
hereto, may not be changed or amended orally but only in writing signed by both
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement by the
signature of their respective, duly authorized corporate officers as of the day
and year first above written.
AMERICAN CONSOLIDATION, INC.
By: /s/ Xxxxxx Xxxxxxxxx
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Xxxxxx Xxxxxxxxx, Chief Executive Officer
MSS-DELAWARE, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx. Executive Vice President
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