EXHIBIT 10.11
The following agreement ("The Amendment") between xXXxX*s Inc. (xXXxX*s) and The
Xxx Group, Inc. ("Xxx") will be considered a binding agreement to the Catalog
Fulfillment Agreement ("The Agreement") between xXXxX*s and The Xxx Group,
entered into April 11, 1996.
1. Both xXXxX*s and Xxx agree to Amend The Agreement (dated April 11, 1996).
xXXxX*s and Xxx reserve the right to terminate the Agreement with 60 days
advance notice of termination. However, both parties will be required to
fulfill their respective obligations under the Agreement until the end of
the calendar month following the 60-day notice period. Upon execution of
the Amendment, neither party shall have the right to give notice of
termination prior to May 1, 1997. After April 30, 1997, the package volume
referenced under BACKEND PACKAGE VOLUME on page 3 under item 6 of the
original Agreement will be calculated on an annualized basis.
2. The price to be paid by xXXxX*s to The Xxx Group for each return processed,
as referenced in The Agreement, will be increased to $2.25 per return,
effective with the signing of the Amendment. The dollar breakdown between
data processing and physically separating returns is $0.31 and $1.94
respectively. This price amendment is not subject to the performance
criteria contained in #4 below.
3. Subject to xXXxX*s approval of sample packages, Xxx will install an
automatic sealing machine rather than hand taping packages.
4. The adjustment related to line items per package referenced on page 4 item
7A of the original Agreement will be waived as in section 4C below,
provided The Xxx Group meets the following performance criteria for 1997
activity as outlined below.
a. All orders will be shipped within 48 hours of receipt unless package
volume is greater than 125% of predicted daily package volume or
greater than the maximum productivity outlined below (predicted volume
is defined as the projected volume supplied by xXXxX*s to Xxx at least
two weeks prior to processing (not including backorders that are
equivalent to 40% of the project order volume). The source document
for determining the start of the 48 hour period will be the production
Planning Worksheet. All orders processed for printing after 1 p.m.
will be assigned to the next business day. The maximum capacity of the
Xxx Group is to ship 6,000 packages per day or 30,000 packages per 5
day week (not including backorders that are equivalent to 40% of the
projected order volume). A 5 day period is required to staff at volume
levels above 30,000 packages with a maximum capacity of 42,000
packages per 7 day week. These quantities represent the ceiling for
the 48 hour performance standard. Xxx will agree to assign additional
shift hours to production if unexpected volume exceeds 42,000 packages
per 7 day week. xXXxX*s agrees to pay at 1.4 times the $1.40 per
package rate ($1.40 x 1.4 = $1.96) outlined in the original Agreement
for all packages shipped over 42,000 during this 7 day time frame.
b. All merchandise will be received within 48 hours of xXXxX*s approval
subject to all carriers scheduling appointments. The consolidated
shipment schedule for Tuesday's arrival will be received within the 72
hour requirement. Changes in the priority of receipts by xXXxX*s
personnel which cause delay in receiving merchandise within 48 hours
will be subject to a 72 hour receiving performance evaluation. Goods
which need to be collated into kits will be received within 48 hours,
but the kit assembly and work orders are not part of the 48 hour
criteria.
c. The Error Rate will be less than .01 for items shipped during the
month of April and will decline an average of .001 per month to a goal
of .005. The Error Rate is defined as that number of which the
numerator is equal to the number of items returned due to omissions,
wrong items packed, and items damaged during the fulfillment process
(a subset of items damaged), and the denominator of which is the
number of items shipped three weeks prior. The number of items
returned due to omissions and wrong items picked will be determined by
a comparison to the printed collate returned by the consumer. Xxx
agrees to this method of calculation assuming an average three week
return cycle. If actual activity deviates from the three week return
cycle assumption, the error rate will be calculated over the life of a
catalog.
Subject to the signing of the Amendment, and on the attainment of the
goals outlined in item 4 (to the extent The Xxx Group can control the
outcome), xXXxX*s will agree to forgive the Net Amount owed to xXXxX*s
by Xxx at 20% of the net total per month April thru August 1997. Net
Amount is defined as the line item penalty amount determined as of the
signing of this amendment, less one half of the storage charges for
March and April 1997 less $60.000 in past due receivables, as
referenced in the February 28, 1997 memo from Xxx to xXXxX*s. Any
invoice credit amount related to the $60,000 in past due receivables
that remains outstanding as of April 30, 1997 represent additions to
the net amount.
In addition, xXXxX*s will consider an incentive payment tied to exceeding the
goals outlined in item 4 above. Xxx is in agreement that an incentive payment
plan is appropriate. The incentives will be tied to the date of the amendment.
5. Payment terms for all activity will be net 7 days via wire transfer.
Disputes not settled within 10 days will be considered delinquent and The
Xxx Group reserves the right to temporarily discontinue service for
non-payment.
6. If for any reason the relationship is not continued thru August 30, 1997
the line item forgiveness subject to the criteria outlined in item 4 will
be considered complete as of the final day of production at The Xxx Group.
7. This amendment has no ties to any future contracts.
Please sign below to indicate your acceptance of the terms of the Amendment.
Agreed to by:
The Xxx Group, Inc. xXXxX*s Inc.
/s/ H. Xxxxxxx Xxxxxxx /s/ Xxxx Xxxxxxxxx
H. Xxxxxxx Xxxxxxx Xxxx Xxxxxxxxx
Chief Financial Officer Chief Financial Officer
Date: 3/27/97 Date: 3/31/97
