Exhibit 10.11
DROP SHIP AGREEMENT
THIS AGREEMENT (this "Agreement") is entered this 15th day of February,
1999 by and between YouNetwork Corporation, a Delaware corporation having an
address at 000 Xxxx 00xx Xxxxxx, Xxxxx 000, XXX, XX 00000 ("Retailer") and XXXXX
& XXXXXX, INC. ("B&T"), a Delaware corporation having an address at 0000 Xxxxxxx
00 Xxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000.
WITNESSETH:
For valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
As used throughout this Agreement the following terms have the following
meanings:
1.1 "EDI" means electronic data interchange, using BISAC or X.12 formats.
1.2 "Effective Date" means February 15, 1999.
1.3 "Initial Expiration Date" means the day preceding the first anniversary
of the Effective Date.
1.4 "Expiration Date" means the day preceding an anniversary of the
Effective Date.
1.5 "Customers" means customers of Retailer within the United States who
order Products (hereinafter defined) from Retailer and to whom Retailer wishes
B&T to ship Products directly from B&T's distribution facilities.
1.6 "Products" means books, spoken word audio products and calendars.
2. SCOPE OF AGREEMENT The services to be provided by B&T herein are also
subject to the terms and conditions set forth in the Methodology and
Requirements Document attached to, and made a part of, this Agreement as
Exhibit A.
3. TERM
3.1 This Agreement will begin on the Effective Date and will expire on the
Initial Expiration Date, unless terminated on an earlier date pursuant to the
express terms of this Agreement or unless extended pursuant to the terms of
Section 3.2.
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3.2 B&T will notify Retailer of any changes in the pricing and payment terms
hereunder by written notice (a "Pricing Notice") given not less than 60 days
prior to the Initial Expiration Date or any subsequent Expiration Date
(hereinafter defined). If Retailer is not satisfied with any changes in the
pricing and payment terms set forth in the Pricing Notice, Retailer's only
option will be to notify B&T that it does not wish that this Agreement be
renewed pursuant to the following sentence. Unless one of the parties (the
"Notifying Party") to this Agreement notifies the other party not less than 45
days prior to the Initial Expiration Date or any subsequent Expiration Date that
the Notifying Party wishes that this Agreement not be renewed, and if this
Agreement otherwise is in full force and effect and no Event of Default
(hereinafter defined) has occurred, this Agreement automatically may be renewed
for not more than five (5) consecutive periods of one (1) year each (each such
period, a "Renewal Term") without further action by either party and on the same
terms and conditions as set forth herein (except for any changes in the pricing
and payment terms as set forth in the Pricing Notice. If the Notifying Party
notifies the other party before the 60 day period that it does not wish that
this Agreement be renewed, this Agreement automatically will expire on the
Initial Expiration Date or on the next succeeding Expiration. As used herein,
"Expiration Date" means the anniversary of the Initial Expiration Date in a
Renewal Term to which the same relates. As used herein, "Term" means the period
beginning on the date hereof and ending on the Initial Expiration Date or on an
Expiration Date, as the case may be.
4. ORDER FULFILLMENT
4.1 Upon receipt of an order for one or more Products from Customers, Retailer
will transmit the order to B&T's EDI mailbox location by means of a mutually
acceptable form of EDI. Each order transmitted by Retailer to B&T will contain
the following information: (a) the Customer's name and shipping address, (b) the
method by which Products ordered must be shipped to the Customer, (c) whether or
not the order may be fulfilled in multiple shipments of Products to the Customer
or if the order may only be fulfilled when B&T has all Products ordered in
stock, (d) the text of any standard retail messages and/or special messages to
the Customer, (e) instructions concerning specific package inserts to be
included in the order, and (f) instructions concerning gift wrapping and gift
cards.
4.2 If Retailer wishes B&T to include package inserts with orders to Customers,
Retailer will deliver to B&T a quantity of package inserts to be included with
orders to Customers in sufficient quantity to supply to Customers as directed by
Retailer to B&T. Within five (5) business days after inquiry from Retailer, B&T
will notify of the quantity of the various package inserts on hand at B&T's
facilities. B&T will use reasonable commercial efforts to assure that an
adequate quantity of package inserts is maintained at each B&T facility from
which Products are being shipped to Customers. Retailer will give B&T not less
than five (5) business days' prior notice to include, or to cease inclusion of,
a particular package insert in shipments of orders to Customers.
4.3 After receipt of an order, B&T will (a) fill the order from inventory of
Products in stock at B&Ts facilities, (b) gift wrap any Products as instructed
by Retailer, (c) print the text of any standard retailer message and/or any
special message requested by Retailer on the packing slip or on
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a separate gift card included in the order, (d) include in the order up to three
(3) package inserts requested by Retailer, (e) pursuant to Retailer's
instructions, and based upon availability of Products in stock, ship the order
to the Customer either as a multiple shipment or as one shipment, (f) pursuant
to Retailer's instructions, promptly place any Products ordered by Retailer
which B&T does not have in stock on a backorder report for review by B&T's
account manager, after which time such Products will be promptly ordered by B&T
(collectively, "Backordered Products") and (g) ship any Backordered Products,
when received by B&T, pursuant to the terms of the preceding clauses (a)-(e) and
the following two sentences. For all Products which B&T then has in stock, B&T
will use commercially reasonable efforts to fulfill on the same day all orders
received from Retailer not later than 12:00 P.M. Central time for orders
received Monday through Friday), If B&T from time to time is unable to meet the
schedule specified in the preceding sentence, B&T promptly will notify Retailer
of the same. Any orders received by B&T after such times will be fulfilled on
the following business day. Notwithstanding the foregoing, if any orders are
received on a day which is not a business day will be fulfilled on the following
business day. As used in this Agreement, "business day" means any day which is
not a recognized holiday on which B&T and the approved carrier or shippers
providing services under this Agreement are open for business.
4.4 B&T will acknowledge receipt of orders to Retailer via EDI at Retailer's
EDI mailbox location. The first acknowledgment will be made promptly after an
order is received and will identify Products as being in stock and/or
backordered and/or as for which the order is being cancelled. The second
acknowledgment will be made at the time an order is ready to be shipped to a
Customer and will contain the shipper's tracking number if provided by the
shipper to B&T. Each such acknowledgment is referred to herein as an "ASN".
4.5 B&T will use commercially reasonable efforts to fulfill orders from
Retailer. Retailer acknowledges that it does not expect B&T to maintain in
stock a complete inventory of all Products that may be ordered by Customers.
4.5 B&T will transmit all invoices to Retailer via EDI to Retailer's mailbox
location.
4.6 B&T will not be liable for delays arising from the failure of any freight
carrier to meet its respective delivery standards.
5. RETURNS
5.1 Each shipment of Products to Customers will include Retailer's return
center address and Customers will be instructed to make returns of Products to
such address. Retailer will forward all such returns to B&T on a weekly basis
and will pay the freight costs for the same. B&T will process all returns of
Products within five (5) business days of its receipt of the same. B&T will not
be obligated to accept any returns made more than 60 days after shipment of the
Product to a Customer. Retailer agrees to comply with the terms of B&T's then
current published returns policy, as long as B&T has provided the same to
Retailer.
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5.2 (a) As used in this Agreement:
(i) "Defective Products" means Products which contain manufactured defects
which prevent them from being used for their intended purpose;
(ii) "Damaged Products" means Products which are damaged during shipment to
Customers which prevent them from being used for their intended purpose;
and
(iii) "Unmerchandisable Products" means Products which are shopworn and/or
soiled.
(b) Retailer promptly will reimburse B&T for any freight costs incurred for
Products returns, except for returns of Defective Products, Unmerchandisable
Products (if shipped in that condition by B&T) and/or Products shipped
erroneously to Customers (collectively, "Free Return Products"). B&T promptly
will issue a credit to Retailer equal to the U.S. Postal Service charge for
shipment from Customers to B&T of Free Return Products and B&T will be
responsible for freight costs to ship replacement Products to Customers for Free
Return Products.
6. PRICING AND PAYMENT TERMS
6.1 (a) Retailer will pay B&T for all Products ordered by Customers, and will
pay all fees and reimbursables payable to B&T herein, within 30 days from the
date of delivery of B&T's detailed invoice therefor. All payments made to B&T
will be in good funds and delivered by check or wire transfer to the order of
B&T pursuant to B&T's instructions. Retailer may not reduce and set off amounts
payable hereunder against any indebtedness or any other claim that may have
against B&T, however or whenever arising.
(b) The price charged by B&T to Retailer for Products purchased from B&T
will be expressed on the basis of a discount from the publishers' list prices
for the same as of the date of shipment of Products to Customers, and as set
forth on Schedule 6.2. Publishers' list prices for Products are displayed on
B&T's title database of Products, which presently is available for license by
B&T to third parties (including Retailer). Retailer acknowledges and agrees that
publishers' list prices for Products may be subject to change without notice.
Retailer acknowledges and agrees that it is Retailer's responsibility to
determine the pricing of Products to Customers and that B&T is not responsible
if Retailer sells Products at prices which result in a lower selling margin than
may be desired by Retailer.
6.2 (a) Each party will be responsible for the payment of its EDI transmissions
to the other party.
(b) Retailer will pay the charges and fees to B&T as more particularly set
forth on Schedule 6.2 attached hereto and made a part hereof.
6.3 Retailer will pay all freight costs for all Product shipments to, and
Product returns from, Customers. Freight costs will be at the carriers'
published rates.
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7. WARRANTIES
7.1 B&T warrants that it has good title to the Products delivered to Customers
pursuant to this Agreement. EXCEPT FOR THE FOREGOING WARRANTY, THERE ARE NO
OTHER EXPRESS WARRANTIES, AND THERE ARE NO IMPLIED WARRANTIES. EXPRESSLY
EXCLUDED ARE ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY B&T OR ITS AGENTS OR
EMPLOYEES WILL CREATE A WARRANTY OR IN ANY WAY INCREASE THE SCOPE OF THE
FOREGOING WARRANTY.
7.2 B&T WILL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, OR
INCIDENTAL DAMAGES (INCLUDING DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS
INTERRUPTION, AND THE LIKE) ARISING OUT OF THE DELIVERY OF, USE OF, OR INABILITY
TO USE, ANY PRODUCTS, EVEN IF B&T HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. The only liability B&T will have with respect to any Defective
Products, Unmerchandisable Products and/or Damaged Products will be the return
rights of Customers described herein. Retailer will indemnify and hold harmless
B&T, its officers, employees and agents, for any loss, claim, cost or expense
(including reasonable attorneys' fees and expenses) incurred by reason of any
claim made by a Customer concerning any matter to which the preceding limitation
of liability may apply.
7.3 The provisions of this Section shall survive the termination or expiration
of this Agreement.
8. TERMINATION
8.1 (a) Either party may terminate this Agreement upon the occurrence of an
Event of Default by the other party. An "Event of Default" is hereby defined to
mean the defaulting party's failure to cure, (a) after receipt of 30 days'
written notice from the non-defaulting party, of any of the following: (i)
failure of the defaulting party to observe or perform any condition or
obligation imposed under this Agreement on the defaulting party not relating to
the payment of money, (ii) breach of any warranty made by the defaulting party
under this Agreement, (iii) filing of a voluntary petition in bankruptcy or
having a involuntary petition filed against it, the appointment of a receiver or
trustee, the execution of an assignment for the benefit of creditors; and (b)
after receipt of 10 days' written notice from the non-defaulting party of the
failure of the defaulting party to make any payments when due hereunder. The
option to terminate this Agreement all be in addition to, and not in lieu of,
any other remedy available to the terminating party under this Agreement or at
law or equity, all such remedies being cumulative.
(b) In addition to the preceding remedies, upon the occurrence of an Event
of Default by Retailer hereunder at any time and from time to time, B&T may
require Retailer to reduce its account balance with B&T to a level determined by
B&T in its sole discretion (up to and including an account balance of $0).
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8.2 Termination of this Agreement upon either party's default, or the
expiration of this Agreement will not affect:
(a) the rights of either party with respect to any breach of this
Agreement, or
(b) the obligations of either party already accrued prior to the effective
date of expiration or termination (including obligations with respect to
returned Products).
(c) those obligations of the parties that, by their terms, survive
termination or expiration of this Agreement.
8.3 In the event of the expiration or a termination of this Agreement, Retailer
promptly will reconcile accounts payable and receivable with B&T and bring the
balance owed, if any, current and up-to-date.
9. CONFIDENTIALITY
The parties acknowledge that each may be exposed to confidential
information relating to the other party's business under this Agreement,
including, but not limited to, the terms of this Agreement, quantities of
Products, dollar volumes, revenues of Products, wholesale prices and similar
information. The parties agree that, during the Term, and for a period of three
(3) years after the termination or expiration of this Agreement, neither party
will disclose to any third party any such confidential information without the
prior written consent of the other party, except to employees, agents, auditors,
contractors, directors and similar entities solely required to fulfill the terms
of this Agreement, and as long as such third parties agree to be bound by the
confidentiality provisions hereof. The confidential information which each party
may receive from the other party for the above period will be treated with the
same degree of care used to protect its own confidential information. The
confidentiality obligations between the parties will not apply to any
information (a) which is in the public domain or which becomes part of the
public domain through no fault of the receiving party; (b) which is known to the
receiving party prior to the disclosure thereof by the disclosing party (as
established by documentary evidence); (c) which is lawfully received by the
receiving party from a third party who provided such information without breach
of any separate confidentiality obligation owed to the disclosing party; (d)
which is disclosed by the disclosing party to any third party without
restriction on further disclosure; or (e) which is independently developed by
personnel having no access to the disclosing party's confidential information
(as established by documentary evidence).
10. MISCELLANEOUS.
10.1 The risk of parcel loss or damage shall pass from B&T to Retailer when the
parcels containing Products are tendered to Retailer's carriers for shipment to
Customers. Title to Products shall transfer from B&T to Retailer when the
parcels containing Products are tendered to Retailer's
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carriers for shipment to Customers. Retailer will be liable for any Products for
which shipments are damaged, lost and/or misdirected by Retailer's carrier
and/or refused by Customers.
10.2 B&T will not be liable for any sales and related tax liability, if any,
associated with the sale to Customers of Products. Retailer will indemnify and
hold harmless B&T for any claim for payment of sales tax made upon B&T by any
state or other governmental authority for sales of Products to Customers
hereunder.
10.3 Neither party will be liable for any failure to perform, or delay in the
performance of, any of its obligations hereunder (nor will the same constitute
in an Event of Default) if and to the extent the failure or delay is caused,
directly or indirectly, by events beyond its control, such as acts of God, acts
of the public enemy, acts of any governmental body in its sovereign or
contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes
or other labor disputes (except strikes or labor disputes that are not industry
wide but are brought against Retailer or B&T solely), freight embargoes, and/or
unusually severe weather. Lack of funds by either party will not excuse its
timely performance of its obligations hereunder. In the event of an occurrence
described in the first sentence, the non-performing party affected will be
excused from further performance or observance of the obligation(s) so affected
for as long as such circumstances prevail and if the party continues to use its
best efforts to recommence performance or observance whenever and to whatever
extent possible without delay.
10.4 Continued extension of credit to Retailer by B&T shall be subject to
Retailer paying B&T in a timely manner and to B&T's assessment of Retailer's
financial condition, which assessment shall be made in B&T's sole judgment.
Retailer will deliver to B&T at its address at 000 Xxxxx Xxxxxxxxx Xx., Xxxxxxx,
XX., 00000-0000, Attn: Credit Manager, the following financial information:
(a) within seven (7) days of issuance, but not later than 90 days after
the end of each fiscal year of Retailer, Retailer's audited financial
statements (including footnotes and accountant's opinion) as of the
last day of each of Retailers' fiscal year;
(b) within seven (7) days of issuance, but not later than 30 days after
the end of each calendar quarter, Retailer's unaudited financial
statements (including comparative profit and loss and balance sheet
statements) dated as of the last day of each calendar quarter;
(c) not later than the 15th day of the following calendar month, a
statement of Retailer's cash balance as of the last day of each
calendar month; and
(d) other data that B&T may reasonably request to establish and maintain a
credit line for Retailer.
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At any time and from time to time during the Term, B&T may require Retailer to
reduce its account balance with B&T to a level determined by B&T in its sole
discretion (up to and including an account balance of $0), based upon B&T's
determination that Retailer's financial condition warrants the same.
10.5 This Agreement shall be construed in accordance with the laws of the State
of New Jersey, without giving effect to the conflict of laws provisions thereof.
10.6 No representation, promise, inducement or agreement relating to the
transactions contemplated by this Agreement has been made by either party that
is not set forth in this Agreement, and neither party shall be bound by or
liable for any representation, promise, inducement or agreement not so set
forth.
10.7 All notices, demands, consents, approvals and requests given by either
party hereunder and shall be in writing and shall be sent, by a nationally
recognized overnight courier with receipt acknowledged and provision for payment
made, by telecopy, or by registered or certified mail (return receipt
requested), return postage pre-paid, to the parties at the following addresses:
If to B&T: Xxxxx & Xxxxxx, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Director, Sales Administration
If to Retailer: YouNetwork Corp.
000 Xxxx 00xx Xxxxxx
Xxxxx 000
XXX, XX 00000
Attn.: Xxxx Xxxxxx
All notices given by courier or by telecopy will be deemed received at the
notice address and all notices given by registered or certified mail will be
deemed delivered five (5) days after deposit with the U.S. Postal Service.
Either party may change is notice address from time to time by notification in
writing to the other party, however any such notification will not be deemed
given until actually received by the recipient party.
10.8 The waiver or failure of either party to exercise in any respect any right
provided for herein will not be deemed a waiver of any further right hereunder.
10.9 The provisions of this Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and each of their respective successors and
assigns.
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10.10 Nothing contained in this Agreement shall be deemed or construed to create
a partnership or joint venture of or between and B&T, or to create any other
relationship between the parties other than that of independent contractors.
10.11 The captions used herein are for convenience of reference only and are
not part of this Agreement, and shall in no way be deemed to define, limit,
describe, or modify the meaning of any provision of this Agreement.
10.12 If any term or provision of this Agreement or applications thereof to any
person or circumstances is, to any extent, held to be invalid or unenforceable,
the remaining terms and provisions of this Agreement, or the applications of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, will not he affected thereby, and each term
and provision of this Agreement will be valid and enforced to the fullest extent
permitted by law.
10.13 If Retailer fails to make any payment due hereunder to B&T within 30 days
after receipt of B&T's invoice therefore, then Retailer will pay B&T the amount
due, together with interest thereon until paid, calculated at the rate of
eighteen percent (18%) per annum.
10.14 This Agreement contains and embodies the entire agreement of the parties
here to, and no representations, inducements, or agreements, oral or otherwise
between the parties not contained in this Agreement, if any, will be of any
force or effect. This Agreement may not be modified, changed or terminated in
whole or in part in any manner other than by an agreement in writing duly signed
by both parties.
10.15 This Agreement may be signed in counterparts both of which taken together
shall be deemed one original. Telecopied facsimiles of a signed counterpart of
this Agreement from one party to the other will be deemed to be delivery of a
signed counterpart by the party sending the telecopied facsimile.
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IN WITNESS WHEREOF, the parties have signed and delivered this Agreement on
the date first above written.
XXXXX & XXXXXX, INC.,
by Xxxxx & Xxxxxx Books
By:/s/ Xxxxx X. Xxxx
--------------------------------------
Name: Xxxxx X. Xxxx
------------------------------------
Title:Vice President Business Development
-----------------------------------
[RETAILER]
By:/s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
------------------------------------
Title: President
-----------------------------------
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SCHEDULE 6.2
DROP SHIP SERVICE PRICING
* MINIMUM ORDER: None
* PRICE PLAN: 0001
* PRICES AND CHARGES (prices expressed as discounts off publishers
list prices):
Trade Hardcover and Trade Paperback - Flat 40%
(except for those products designated by B&T as short discount products)
Mass Market Paperback - Flat 35%
Spoken Word Audio Products - Flat 45%
(except for those products designated by B&T as short discount products)
Short Discount Products - 25% to 5%
Products for which B&T receives no discount from the publisher or for which
B&T must pre-pay - No discount to Retailer (i.e., Retailer's price is
publishers' list price), plus $4.95 surcharge.
* Handling Charge: $.95 per book/cassette/disk
* Shipment Stuffers: $.05 fee per each insertion
* Freight Charge: Exact cost of freight charge per package
* Gift Wrap & Card Charge: $2.00 per gift item in shipment (provided Retailer
specifies B&T's standard gift wrap and card)
Set up Fee $5.00 Refundable once $10,000 in net sales is
reached.
Charges include all costs of packaging materials, invoicing, labeling and
packing list preparations.
