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EXHIBIT 10.7
FULFILLMENT SERVICES AGREEMENT
THIS FULFILLMENT SERVICES AGREEMENT (the "Agreement") is made as of
this 22nd day of October, 1998, by and between Fingerhut Business Services, Inc.
("FBS"), a Minnesota corporation with offices located at 0000 Xxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxx 00000, and PC Flowers & Gifts, Inc., a Delaware
corporation with offices located at 0000 Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxxxxx 00000 ("PC").
WHEREAS, FBS desires to provide to PC, and PC desires to receive
from FBS, fulfillment services for PC under the terms and conditions of this
Agreement and any Schedule (as defined below).
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, FBS and PC hereby agree as follows:
1. SCHEDULES
(a) The parties acknowledge and agree that the detailed terms and
conditions of any and all projects entered into between the parties shall be set
forth in a form and format substantially similar to Schedule A. Schedule A sets
forth Order Management & Customer Service PC Flowers fulfillment project. The
parties acknowledge and agree that in addition to the terms and conditions of
the Schedules, the general terms of this Agreement shall apply to each project
and the overall relationship between the parties. If there is a conflict between
the terms of any Schedule and this Agreement, the terms of the Schedule shall
control.
(b) Commencing as of the date hereof and continuing during the term of
this Agreement, FBS hereby agrees, subject to the terms and conditions of this
Agreement and any Schedule hereof to provide PC or cause its various affiliates
(all of which are collectively referred to as "FBS") to provide the services
identified on any attached Schedules (collectively referred to as the
"Fulfillment Services").
(c) From time to time during the term of this Agreement, PC may request
Fulfillment Services for a new project(s). Any such request shall be in writing.
FBS reserves the right to accept or decline any project from PC for any reason
with a response due to PC no later than 30 days from the date of FBS' receipt of
the request. In the event a new project is accepted, a Schedule with pricing
will be created pursuant to this Article.
(d) Pricing of Fulfillment Services: The pricing of Fulfillment Services
shall be set forth in each Schedule. FBS reserves the right to adjust the price
of Fulfillment Services on a quarterly basis from the Effective Date (as defined
in Article 4).
(e) Postage and Freight: Postage and freight shall be determined by FBS on
a project by project basis. FBS reserves the right to adjust these rates at any
time to reflect actual increases or decreases in costs to the same extent such
decreases are provided to other FBS clients. Any increase in these rates shall
be substantiated in writing by FBS. FBS considers all postage and freight
information to be Proprietary Information (as defined in Article 10).
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(f) Sales and Use Tax: PC acknowledge that it is solely responsible for
identifying and resolving sales and use tax collection issues for product
orders, including the necessity for charging and collecting such amounts. FBS
acknowledges that it will provide PC with a 90 day notice of any changes in the
fulfillment location of PC orders which may cause nexus in states other than MN,
CT, and TN.
(g) Reports: The parties agree to provide each other such reports as are
mutually agreed upon and set forth in each Schedule.
2. PAYMENT TERMS
(a) Fulfillment Services: FBS shall provide PC with an invoice for the
Fulfillment Services provided to PC on a monthly basis setting forth the prior
month's Fulfillment Services and associated charges. Within 30 days from the
date of the invoice, PC shall pay each such invoice by check or wire transfer of
immediately available funds pursuant to wire instructions provided by FBS to PC.
(b) Postage and Freight: On a weekly basis, FBS shall provide PC with an
invoice for the postage and freight provided to PC the prior week with detail
substantiation available. Within 7 days from the date of the invoice, PC shall
pay each such invoice by check or wire transfer of immediately available funds
pursuant to wire instructions provided by FBS to PC. PC may dispute specific
charges but must remit the balance of the invoice.
(c) Penalty for Late Payment: Any payment not received within the above
stated time period shall accrue interest at a rate of 1 1/2 % per month until
all outstanding amounts, including interest, are paid in full to FBS.
3. BOOKS AND RECORDS
FBS agrees to keep complete and accurate books of account, records and other
documents with respect to Fulfillment Services provided hereunder ("Books and
Records"). The Books and Records shall be available for inspection and copying
by a qualified accounting representative of PC, at the expense of PC, subject to
the following terms and conditions: (a) such examination shall take place at
FBS' principal place of business, during normal business hours and only to the
extent necessary for PC to verify inventory levels and payment amounts relating
to Fulfillment Services provided hereunder; (b) PC shall give FBS at least 15
business days' written notice prior to any such examination; (c) PC shall keep
all information disclosed to it during the examination confidential and shall
not disclose such information to any third party unless required by law or
necessary to enforce its rights under this Agreement; and (d) PC shall not
conduct more than one such inspection during any twelve-month period during the
term of this Agreement.
4. TERM AND TERMINATION
(a) Term. Unless terminated earlier, the term of this Agreement shall be
for a period of one (1) year commencing on October
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22, 1998 ("Effective Date") and terminating on October 21, 1999 ("Expiration
Date"). Thereafter, this Agreement shall automatically renew for one (1) year
terms ("Renewal Term(s)") unless either party gives written notice of
non-renewal at least 60 days prior to the expiration of the Renewal Term..
(b) Termination. This Agreement may be terminated as follows:
(1) Breach - by either party, upon 30 days prior written notice to
the other party, in the event of a material breach of this Agreement by
the other party. The written notice shall specify the precise nature of
the breach. In the event the breaching party cures the breach within 30
days after the non-breaching party's written notice, this Agreement shall
not terminate.
(2) Insolvency - by either party, immediately upon written notice to
the other party, in the event the other party voluntarily files or has
filed involuntarily against it a petition under the United States
Bankruptcy Code, including a petition for Chapter 11 reorganization as set
forth in the United States Bankruptcy Code.
(3) Without Cause - upon sixty (60) days written notice to either
party.
(c) Other Rights. The rights of the parties to terminate this Agreement or
any Schedule are not exclusive of any other rights and remedies available at law
or in equity, and such rights shall be cumulative. The exercise of any such
right or remedy shall not preclude the exercise of any other rights and
remedies.
(d) Post-Termination Performance. Notwithstanding any termination by
either party of this Agreement or any Schedule, FBS shall continue to fulfill
all orders from customers in connection with any product orders made prior to
such termination, and PC shall continue to remit amounts due to FBS under this
Agreement or any Schedule.
Upon termination of this Agreement for any reason, each party shall
immediately return to the other all property (including without limitation,
Proprietary Information and all material related to any customers) that it has
received from the other party in connection with the performance of its
obligations hereunder, except to the extent such property is needed by the other
party in connection with its obligations under this Article. Such property shall
thereafter be returned immediately upon the party's fulfillment of such
obligations. This provision shall survive the termination of this Agreement.
5. LICENSE
(a) License. PC hereby grants to FBS and its affiliates a limited,
nonexclusive license to use certain names, including any related marks, service
marks, logos, or artwork owned or licensed to PC and/or its affiliates
(collectively referred to the "Marks") solely for the purpose of fulfillment of
FBS' obligations under this Agreement and any Schedule. The Marks relevant to
any project shall be identified in an Exhibit to a Schedule. FBS may not make
any other use of any name or logo or any related marks or intellectual property
of PC.
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(b) Customers. FBS recognizes that customer information (including e mail
addresses) from PC orders is confidential information and such information is
only to be utilized in the fulfillment of a customer order ( including
subsequent customer service follow up). Such customer information is not to be
utilized by FBS, its' parent company or any affiliated or non-affiliated
companies in any manner without the express written consent of PC, such consent
to be not unreasonably withheld.
(c) Representation and Warranty. PC hereby represents and warrants to FBS
that it is authorized to grant the aforementioned license and shall fully
indemnify FBS and its affiliates against any and all claims by a third party
alleging a violation of such third party's intellectual property or other
proprietary rights in connection with FBS' use of the Marks pursuant to the
license or this Agreement. The indemnification granted under this Article
expressly includes indemnification with respect to attorneys fees, expense
costs, legal fees, defense costs, court costs, or amounts paid in settlement or
in satisfaction of any judgment or award.
6. RELATIONSHIP OF THE PARTIES
(a) Independent Contractors. The relationship created hereunder between
FBS and PC shall be solely that of independent contractors entering into an
agreement. No representations or assertions shall be made or actions taken by
either party which could imply or establish any agency, joint venture,
partnership, employment or trust relationship between the parties, or between or
among any of FBS, and PC with respect to the subject matter of this Agreement
and any Schedule. FBS and PC shall not have any authority or power whatsoever to
enter into any agreement, contract or commitment on behalf of the other, or to
create any liability or obligation whatsoever on behalf of the other, to any
person or entity.
(b) Subcontractors. FBS reserves the right to subcontract with other
individuals and businesses for similar services required to be performed
pursuant to this Agreement or any Schedule. Use of any such subcontractor shall
be subject to receipt of prior consent of PC, which consent shall not be
unreasonably withheld. FBS shall be responsible for the direction and control of
the work to be performed by it and its subcontractors, if any, pursuant to this
Agreement and any Schedule. FBS reserves the right to increase its pricing at
any time in accordance with any rate increases by subcontractors.
7. REPRESENTATIONS AND WARRANTIES
(a) Representations and Warranties of FBS. With the knowledge that PC is
relying thereon in entering into this Agreement and any Schedule, FBS hereby
represents and warrants as follows:
(1) FBS is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Minnesota.
(2) This Agreement and any and all Schedules constitute the legal,
valid, and binding obligation of FBS, enforceable against FBS in accordance with
its terms except as enforcement may be limited by any applicable bankruptcy,
insolvency, reorganization or similar
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laws affecting creditors' rights generally and except as enforcement may be
limited by general principles of equity, FBS has the absolute and unrestricted
right, power, authority and capacity to execute and deliver this Agreement and
any Schedule and to perform its obligations under this Agreement and any
Schedule.
(3) To FBS' actual knowledge, neither the execution and delivery of
this Agreement nor the consummation or performance of any obligations hereunder
shall, directly or indirectly (with or without notice or lapse of time), in any
material respect, contravene, conflict with, or result in a violation or breach
of any provision of, or give any person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any relevant contract to which FBS is a party.
(4) To its actual knowledge, FBS is not and shall not be required to
give any notice to or obtain any consent from any person in connection with the
execution and delivery of this Agreement and any Schedule or the consummation or
performance of any of its obligations. If such consent is required, FBS shall
use its best efforts to obtain such consents.
(5) FBS represents that its facilities and computer system utilized
to provide the Fulfillment Services have been designed or will be modified to
ensure continuous operation and use prior to, during, and after the calendar
year 2000, and to operate during such time periods so that PC will not
experience any loss of information or assets, interruption in service, invalid
and/or incorrect reporting or results.
(6) FBS represents that it is in material compliance with all rules
and regulations of the Federal Trade Commission and the Direct Marketing
Association that are relevant to its performance hereunder.
(7) To its actual knowledge, FBS is not currently in default under
any contract that is material to this Agreement.
(b) Representations and Warranties of PC. With the knowledge that FBS is
relying thereon in entering into this Agreement and any Schedule, PC hereby
represents and warrants as follows:
(1) PC is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware.
(2) This Agreement and any and all Schedules constitute the legal,
valid, and binding obligation of PC, enforceable against PC in accordance with
its terms except as enforcement may be limited by any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
and except as enforcement may be limited by general principles of equity. PC has
the absolute and unrestricted right, power, authority and capacity to execute
and deliver this Agreement and any Schedule and to perform its obligations under
this Agreement and any Schedule.
(3) To PC actual knowledge, neither the execution and delivery of
this Agreement and any Schedule nor the consummation or performance of any
obligations hereunder
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shall, directly or indirectly (with or without notice or lapse of time), in any
material respect, contravene, conflict with, or result in a violation or breach
of any provision of, or give any person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any relevant contract to which PC is a party.
(4) To its actual knowledge, PC is not and shall not be required to
give any notice to or obtain any consent from any person in connection with the
execution and delivery of this Agreement and any Schedule or the consummation or
performance of any of its obligations. If such consent is required, PC shall use
its best efforts to obtain such consents.
(5) PC represents that it is in material compliance with all rules
and regulations of the Federal Trade Commission and the Direct Marketing
Association that are relevant to its performance hereunder.
(6) To its actual knowledge, PC is not currently in default under
any contract that is material to this Agreement.
(c) NEITHER FBS NOR PC MAKES ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY REPRESENTATION OR WARRANTY
AS TO NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
ARISING OUT OF THIS AGREEMENT AND ANY SCHEDULE AND THE SERVICES TO BE PROVIDED
UNDER THIS AGREEMENT AND ANY SCHEDULE EXCEPT AS OTHERWISE SPECIFICALLY SET
FORTH.
(d) The representations and warranties under this Article shall survive
the termination of this Agreement and any Schedule.
8. INDEMNIFICATION AND LIMITATIONS ON LIABILITY
(a) Indemnification by FBS. Subject to the limitations specified in this
Section, FBS shall indemnify, hold harmless and defend PC and each person or
entity that is a stockholder, officer, director, partner, employee, affiliate or
agent of PC from and against any and all losses, claims, damages, liabilities,
expenses (including reasonable legal fees and expenses), judgments, fines and
other amounts paid in settlement incurred or suffered by any such person or
entity arising out of or in connection with (i) the inaccuracy of any
representation or warranty made by FBS hereunder, (ii) any breach of this
Agreement by FBS, or (iii) any negligent act or omission by FBS or its employees
or agents in connection with the performance by FBS or its respective employees
or agents of the Fulfillment Services hereunder, provided such negligent act or
omission was not done or omitted at the direction of PC or the result of
information provided by PC to FBS or its employees or agents.
(b) Indemnification by PC. Subject to the limitations specified in this
Section, PC shall indemnify, hold harmless and defend FBS and each person or
entity that is a stockholder, officer, director, partner, employee, affiliate or
agent of FBS from and against any and all losses, claims, damages, liabilities,
whether joint or several, expenses (including reasonable legal fees
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and expenses), judgments, fines and other amounts paid in settlement incurred or
suffered by any such person arising out of or in connection with (i) the
inaccuracy of any representation or warranty made by PC hereunder, (ii) any
breach of this Agreement by PC, (iii) any negligent act or omission by FBS or
its employees or agents in connection with the performance by FBS or its
employees or agents of the Fulfillment Services hereunder done or omitted at the
direction of PC or based upon information provided by PC to FBS or its employees
or agents, (iv) any act or omission by PC or any of its employees, agents or
shareholders in connection with any project for which Fulfillment Services are
provided to PC hereunder, or (v) any claim or action for personal injury, death,
property damage or other cause of action (A) involving a product liability claim
arising from or relating to products for which Fulfillment Services are provided
to PC hereunder, or (B) resulting from defects or the inherently dangerous
nature of PC' products that are the subject of this Agreement and any Schedule.
(c) Notice and Defense of Third-Party Claims. If a claim for
indemnification hereunder arises from a claim or demand from a third party, the
rights of the indemnified parties to be indemnified pursuant to this Agreement
and any Schedule shall be governed by the following:
(1) Promptly after receipt by an indemnified party of notice of any
claim, allegation or facts which may result in a claim for indemnification
hereunder, an indemnified party will give the indemnifying party prompt notice
thereof. The failure to give such notice shall not affect the indemnified
party's ability to seek reimbursement unless such failure has materially and
adversely affected the indemnifying party's ability to defend the claims.
(2) An indemnified party shall have the right (i) to employ separate
counsel in any action as to which indemnification may be sought under any
provision of this Agreement and to participate in the defense thereof, or (ii)
to the extent that it may wish, jointly with any other indemnified party, to
assume the defense of any such action with counsel reasonably satisfactory to
the indemnifying party but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (x) the indemnifying party has agreed
in writing to pay such fees and expenses, (y) the indemnifying party has failed
to assume the defense thereof without reservation and employ counsel within a
reasonable period of time after being given the notice required above, and as a
consequence thereof the indemnified party has employed separate counsel to
protect its rights, or (z) the named parties to any such action (including any
impleaded parties) include both such indemnified party and the indemnifying
party and such indemnified party shall have been advised by its counsel that
representation of such indemnified party and the indemnifying party by the same
counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them. It is
understood, however, that the indemnifying party shall, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
indemnified parties having actual or potential differing interest with the
indemnifying party.
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(3) The indemnifying party shall not be liable for any settlement of
any such action effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with such written consent, or if there be
a final judgment against any indemnified party in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified parties
to the extent provided above from and against any loss, claim, damage, liability
or expense by reason of such settlement or judgment.
(d) Limitations on Liability.
(1) IN NO EVENT SHALL EITHER PARTY'S LIABILITY OF ANY KIND
HEREUNDER INCLUDE ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL LOSSES OR DAMAGES, EVEN IF SUCH PARTY SHALL HAVE
BEEN ADVISED OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR
DAMAGE.
(2) Each of the parties hereto shall be liable to the other for
damages arising out of or in connection with any breach of
this Agreement or any Schedule by such party to the extent
permitted by law, subject to the duty of the non-breaching
party to take all reasonable actions in order to mitigate such
damages; provided, however, that (i) FBS' liability for any
Fulfillment Service provided hereunder shall be limited to the
recovery by PC of the amount actually paid to FBS by PC for
such Fulfillment Service, and (ii) FBS' aggregate amount of
liability hereunder shall be limited to the aggregate amount
actually paid by PC to FBS for Fulfillment Services provided
to PC hereunder.
(e) Government Actions. PC hereby agrees that it will promptly provide FBS
copies of all complaints or inquiries received by PC from any governmental
agency in any way relating to, having potential effect on, or in connection
with, the Fulfillment Services provided to PC hereunder. In the event FBS is
required, as a result of any such action, to change the manner in which it does
business in any material respect, FBS shall have the option to terminate
immediately the availability of such Fulfillment Services hereunder. FBS hereby
agrees that it will promptly forward to PC copies of all written complaints or
written inquiries addressed to FBS from any governmental agency in any way
relating to, having a potential effect on or in connection with the Fulfillment
Services provided to PC hereunder.
(f) Survival. The provisions of this Article shall survive the termination
of this Agreement and any Schedule.
9. MARKETING MATERIALS
Both parties hereby agree to be a reference for each other in regard to the
subject matter of this Agreement during the term of this Agreement. Each party
agrees to allow the other to incorporate mutually agreed upon information and
results in regard to the subject matter of this Agreement for the term of this
Agreement in publicly distributed marketing materials ("Marketing Materials").
Each party must submit to the other all Marketing Materials for its
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prior review and consent. The parties have final approval rights in any
Marketing Materials to be distributed using any names, related marks, service
marks, logos, or artwork owned or licensed to PC or FBS and/or their affiliates.
10. PROPRIETARY INFORMATION
(a) Proprietary Information. The parties hereto agree that certain
information of the other party hereto used or made available in connection with
this Agreement and any Schedule is proprietary and not publicly available (the
"Proprietary Information") and each of them agrees that during and after the
term of this Agreement and any Schedule, it shall not permit the duplication,
use or disclosure of the other party's Proprietary Information by or to any
person (other than employees, agents or representatives who must have such
information in connection with this Agreement and any Schedule), unless the
duplication, use or disclosure is specifically authorized in writing by the
other. The parties shall use reasonable measures and take reasonable action with
respect to its employees, agents or representatives to ensure that its
obligation of non-use and non-disclosure hereunder is satisfied.
(b) Remedies. Each party agrees that neither party would have an adequate
remedy at law in the event of any breach by the other party of any of the
provisions of this Article. Accordingly, in the event of any actual or
threatened breach of such provisions of this Article, each party agrees that the
non-breaching party shall (in addition to any other available remedies) be
entitled to seek temporary and/or permanent injunctive relief to enforce such
provisions.
11. MISCELLANEOUS PROVISIONS
(a) Notices. All notices, demands, requests or other communications to be
given or delivered under or by reason of this Agreement will be in writing and
will be deemed to have been given when personally delivered or upon confirmation
of receipt when sent by certified mail, return receipt requested or facsimile.
Notices, demands and communications to FBS and PC will, unless another address
is specified in writing, be sent to the addresses indicated below:
(1) If to FBS:
FBS
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Vice President of Sales
Facsimile: (000) 000-0000
With a copy to: Fingerhut Companies, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel, Mailstop A-260
(2) If to PC:
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PC Flowers & Gifts, Inc.
0000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile: 000-000-0000
(b) Severability. Whenever possible, each provision of this Agreement and
any Schedule shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement or any Schedule is
held to be prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement and any Schedule.
(c) Amendment and Waiver. This Agreement and any Schedule may be amended,
and any provision of this Agreement and any Schedule may be waived; provided
that any such amendment or waiver will be binding upon any party hereto only if
such amendment or waiver is set forth in a writing executed by such party. No
course of dealing between or among any persons having any interest in this
Agreement and any Schedule will be deemed effective to modify or amend any part
of this Agreement and any Schedule or any rights or obligations of any person
under or by reason of this Agreement and any Schedule. The waiver of any
default, or the remedying of any default in a reasonable manner, shall not
operate as a waiver of any other prior or subsequent default. No extension of
time for the performance of any obligation or act shall be deemed to be an
extension of time for the performance of any other obligation or act hereunder.
No delay or omission by a party to exercise rights hereunder shall impair any
such rights or shall be construed to be a waiver of any such default or any
acquiescence therein.
(d) Complete Agreement. This Agreement, all Schedules, and exhibits
hereto, contain the complete agreement between the parties relating to the
Fulfillment Services and supersede any prior understandings, agreements or
representations by or between the parties, written or oral, which may be related
to the subject matter hereof in any way.
(e) Headings. Section headings contained in this Agreement and any
Schedule are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement and any Schedule, respectively, or any purpose, and
shall not in any way define or affect the meaning, construction or scope of any
of the provisions hereof.
(f) Governing Law. The internal law, and not the law of conflicts, of the
State of Minnesota will govern all questions concerning the construction,
validity and interpretation of this Agreement and any Schedule and the
performance of the obligations imposed by this Agreement and any Schedule.
(g) Agreement. This Agreement and any Schedule and all of the provisions
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
and any Schedule nor any of the rights, interest or obligations may be assigned
by any party hereto without the prior written consent of
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the other party hereto; provided, however, that FBS shall have the right,
without the prior written consent of PC, to assign or otherwise transfer its
rights and obligations under this Agreement and any Schedule to any affiliate of
FBS.
(h) Interpretation. Each party acknowledges it has participated in the
drafting and preparation of this Agreement, and has reviewed and revised this
Agreement and consulted with its counsel and accountants with respect to its
terms. For this reason each Party agrees that the normal rule of construction,
to the effect that any ambiguities in a document shall be interpreted against
the drafting party, shall not be utilized in the interpretation, construction,
or enforcement of this Agreement, and no consideration shall be given to the
issue of which party hereto actually prepared, drafted or requested any term or
condition of this Agreement or any agreement or instrument subject hereto.
(i) Disputes. If there is a dispute under this Agreement or any Schedule,
each party agrees attempt to resolve such dispute in good faith. If the parties
are unable to resolve their dispute after using such good faith efforts, then
either party may submit the dispute for binding arbitration under the commercial
Arbitration Rules of the American Arbitration Association. The prevailing party
in any such proceedings shall be entitled to its attorneys' fees.
(j) Force Majeure. No party shall be liable for any failure of or delay in
the performance of this Agreement and any Schedule for the period that such
failure or delay is due to acts of God, public enemy, war, strikes or labor
disputes, or any other cause beyond the parties' reasonable control, it being
understood that lack of financial resources is not to be deemed a cause beyond a
party's control. Each party shall notify the other party promptly of the
occurrence of any such cause and carry out this Agreement and any Schedule as
promptly as practicable after such cause is terminated; provided, however, that
the existence of any such cause shall not extend the term of this Agreement and
any Schedule.
IN WITNESS WHEREOF, the parties hereto executed this Agreement effective
as of the date first set forth above.
FINGERHUT BUSINESS SERVICES, INC.
By
---------------------------------
Its
----------------------------
PC FLOWERS & GIFTS, INC.
By /s/ Xxxxxxx X. Xxxxx
---------------------------------
Its CEO
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SCHEDULE A
This Schedule A is made as of this 22nd day of October, 1998 (the
"Schedule"), by and between Fingerhut Business Services, Inc. ("FBS") and PC
Flowers & Gifts, Inc. ("PC").
RECITALS:
WHEREAS, the parties have entered into a Fulfillment Services Agreement
dated as of October 22, 1998, (the "Agreement");
WHEREAS, the Agreement provides that the parties shall set forth the
specifics of the Order Management & Customer Service PC Flowers fulfillment
project as Schedule A to the Agreement and execute the same.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, FBS and PC hereby agree as follows:
1. FULFILLMENT SERVICES*
*FBS is relying on information provided by PC, which is noted herein, to
successfully complete certain Fulfillment Services under this Schedule.
**Performance standards are noted in bold print.
FBS will provide the following fulfillment services:
- Division and Product Setup
- Order Management
- Customer Service/Customer Service Policies
- Order Fulfillment
- Returns Processing
- Reporting
(a) Division and Product Setup
FBS will complete necessary setups to establish PC as a separate division within
the Fingerhut Logistics System ("FLS") to facilitate the processing and
fulfillment of PC orders. The following services will take place:
o FBS will set up PC as a separate division in FLS.
o FBS will set up PC as a separate inventory company within the Corporate
Inventory System to facilitate the maintenance and reporting of PC
inventory separate and distinct from all other inventory maintained in the
Corporate Inventory System.
o FBS will provide the necessary setups in the Vertex Tax System for the
collection of sales tax in the states designated by PC. Currently, taxes
are collected for the state of Connecticut, Tennessee, and Minnesota, but
additional states may be setup at the direction of PC.
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o Fingerhut Treasury staff will secure merchant ID's from First National
Bank Omaha for Visa, Mastercard and Discover for the processing of credit
card orders. The same staff will work with PC to secure a merchant ID for
American Express. PC will provide FBS with a merchant ID for Diners Club.
o FBS will perform any other related setups required by any FBS system.
o FBS will coordinate any required setups necessary to provide credit
services through Fingerhut National Bank.
o Fingerhut will use its best efforts to enable the Fingerhut Credit
Advantage Card (CAC) to be utilized for the purchase of PC products by
March 15, 1999. Fingerhut will use its best efforts to develop and enable
a PC credit card.
FBS will provide for the setup and maintenance of PC products and shipping and
handling information into the various FBS merchandise information systems, based
on information supplied by PC. PC will supply this information in an Excel
spreadsheet document based on a format supplied by FBS. The following services
will take place:
o Fingerhut Treasury staff will assign vendor numbers to all vendors
supplying product to PC including Figi's, FTD, Four Farmers, Teleflora,
USA Floral Products, and Fingerhut Corporation. Additional vendors
supplying product to PC may be added in the future.
o FBS will set up all PC products in the Fingerhut Merchandise Management
System using the vendor numbers described above, and information provided
by PC. FBS will assign each product a unique Fingerhut product code that
will be provided to PC for inclusion on the various websites as the number
to be used for ordering purposes.
o FBS will maintain a cross-reference file of PC product numbers to FBS
product codes and provide this information to PC. Additional products will
be set up on an as-needed basis from information provided by PC.
o Any product identified by PC as discontinued will be flagged in the
Merchandise Management System as discontinued.
o FBS will assign each product code to a system generated source and segment
# to accommodate the processing of the order in FLS.
o All shipping and handling charge information provided by PC will be set up
in the appropriate FBS systems.
(b) Order Processing
PC customers will submit orders to FBS using the PC internet site, the
1-800-PCFLOWERS telephone number, the Prodigy Classic website, the Yahoo Store,
the Figi's catalog. FBS will work with PC on a case by case basis to enable
other shopping platforms, both on and off the Internet, as they become
available. FBS will gather these orders and process them in the FLS using
standard FBS order processing procedures and policies. Approved orders will be
routed systematically to one of the vendors providing product fulfillment - FTD,
Four Farmers, Figi's or Fingerhut. The following services will be provided:
o Shipment area will be in the continental United States and International
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o All PC orders will be processed as credit card orders using the credit
authorization and bank settlement processing systems of FBS. Credit cards
accepted for payment will include: VISA, Mastercard, Discover, American
Express, Diners Club, and Fingerhut Credit Advantage Card. The PC credit
card will be accepted for payment when developed and implemented. Credit
card authorization will occur as orders are received. Settlement will
occur same day.
o Diners Club authorization is not supported in the FLS system and will be
handled manually by FBS Order Processing staff in St Cloud.
o FBS will take customer orders via the telephone. Customer order calls will
be taken by FBS staff and entered into FLS via the order entry system. FBS
staff will be available for order calls as follows:
- 24 hours per day, 7 days per week
o The standard for handling order line calls as noted below is based on the
assumption that FBS will receive reasonably accurate order forecasts from
PC:
- 98% answered
Note: This standard may be adjusted on a quarterly basis after the initial 6
months based on the accuracy of the forecasts provided by PC.
o FBS staff will be given upsell capabilities based on guidelines jointly
developed by PC and FBS. Upsell products will be determined by PC.
o As mutually determined by the parties, FBS IS staff will systematically
"pull" orders from the various websites including Exceed, Prodigy Classic,
Yahoo, and Figi's and bring the orders into the FLS system. If other sites
are subsequently added, FBS will use it's best efforts to systematically
gather orders from them. FBS will pull the orders from Exceed at the
following times:
- 5:00 a.m. Central time
- 6:00 a.m. Central time
- 7:00 a.m. Central time
- 8:00 a.m. Central time
- 9:00 a.m. Central time
- 10:00 a.m. Central time
- 11:15 a.m. Central time
- 1:00 p.m. Central time
- 3:00 p.m. Central time
- 6:00 p.m. Central time
NOTE: These times will be adjusted as necessary to accommodate anticipated
changes in order volume. Times will be mutually agreed upon by FBS and PC.
o FBS Order Processing in STC will pull orders from Prodigy Classic three
(3) times per day at the following times:
- 8:00 a.m. Central time
- 11:00 a.m. Central time
- 3:30 p.m. Central time
Note: These times will be adjusted as necessary to accommodate anticipated
changes in order volume. Times will be mutually agreed upon by FBS and PC.
o FBS IS will make all non-rejected orders available for "scrubbing" by St.
Cloud Order Processing immediately after the pull is completed
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- St. Cloud Order Processing will complete the scrubbing process
within one (1) hour of receiving the information
o FBS IS will send information to the various fulfillment vendors (FTD, Four
Farmers, Figi's, Teleflora, USA Floral Products) in the following manner:
- Orders for FTD will be provided to St. Cloud Order Processing
in a report format for entry into the Mercury terminal one (1)
hour after each pull.
- Orders for Four Farmers will be sent via data file to Four
Farmers one (1) hour after each pull was completed.
- Orders for Figi's will be sent via data file to Figi's one (1)
hour after the the original pull from Figi's.
- Orders will be routed to Teleflora and USA Floral in a manner
to to be defined by FBS IS and the respective fulfillment
vendor.
(c) Customer Service
FBS Customer Service will provide all customer service support to PC customers
via telephone or email following FBS' standard policies and procedures,
which may be mutually modified by FBS and PC. The following services will
be provided:
o FBS Customer Service will provide service:
Between the hours of 7:00 a.m. Central Standard Time and 7:00 p.m. Central
Standard Time Monday through Friday, and between the hours of 8:00 a.m.
Central Standard Time and 1:00 p.m. Central Standard Time on Saturday.
o A specific #800 telephone number will be established for inbound customer
service calls. Customer service for orders originated via telephone will
be handled via telephone. The standard service level for customer service
calls will be:
- 95% of calls answered
o A specific email address will be established for inbound customer service
inquiries and outbound responses. Customer service inquiries for orders
originating via the web, with accompanying email addresses, will be
responded to via email. Emails will be responded to in a timeframe as
close as possible to the following guidelines:
- 2 hr. response for emails received after 7:00 a.m.
- 12 hr. response for emails received after 7:00 p.m.
o Problems or issues regarding FTD products or Teleflora products will be
communicated back to FBS via the Mercury network or the Dove system. FBS
Customer Service will provide communication back to the customer via
telephone or email, and then back to FTD via the Mercury terminal, or to
Teleflora via the Dove system, with the customer's response.
o Problems or issues concerning Figi's products will be handled by FBS
Customer Service staff with customer response communicated back to Figi's.
o Problems or issues regarding Four Farmers or USA Floral products will be
communicated back to FBS Customer service via email. FBS Customer Service
will communicate this to the customer via telephone or email, and then
back to Four Farmers or USA Floral via email with the customer's response.
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(d) Customer Service Policies
Customer service policies specific to PC will be established by FBS Customer
Service in conjunction with PC. These policies will be published internally and
communicated to all FBS Customer Service staff. These policies include:
o Returns Policy - complete customer satisfaction via
replacement, discount or refund. Jewelry
returns will be accepted for full credit
within 30 days, and 90 days for partial
credit
o Exchanges - same as above
o Return Authorization less - specifically refers to gifts, not floral
Shipping/Handling arrangements
o Return Postage Refunded - Specific policy refers to gifts, not
at Customer Request floral arrangements. Complete
satisfaction guarantee.
o Postage Paid Label/Call - food items should be referred to local
Tag Customer Request non-profit organizations if possible.
Damaged/Defective - offer 25% discount or complete
Merchandise parts exchange/refund
o Merchandise Not Received - call florist responsible for delivery.
To Customer (MNR-TC) Determine if customer still wants and
offer adjustment if necessary to satisfy
customer
o Gift Certificates/Discount - will be offered on websites and other
Coupons advertising media. Discounts will be
given at time of order.
o External Competitive Price - not offered
o Upsales - will be offered by Fingerhut Call Centers
o Substitutions - yes, will work with customer and florist
o Free Gifts - no. Buy 1, get I free from grower.
o Remove from Promotion - yes.
o Deferred Billing - no
o Promotional Media - Figi's, Fingerhut, and other websites
o Method of Payment - full pay.
(e) Order Fulfillment
FBS will provide all fulfillment functions necessary to prepare and ship PC
customer orders routed to FBS for order fulfillment. These orders will contain
products stored in FBS facilities, or FBS product stored in a remote facility.
These functions include, but are not limited to, the receipt and put away of PC
product, the storage of product, the picking and packing of product, customer
invoice generation, and the shipping of product to the customer.
FBS will work with PC to mutually determine the optimal physical location for
use in the fulfillment of the orders described above. Once a location is
determined, this section will be updated with a detailed description of the
services to be provided.
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(f) Returns Processing
FBS will provide all functions necessary to complete the receipt and return
processing of any merchandise returned from PC orders. FBS will determine the
optimum location for the processing of returns. FBS will work in conjunction
with PC to develop guidelines for the disposition of returned merchandise. These
guidelines will be updated as necessary depending on the type of merchandise
offered by PC.
(g) Reporting
FBS will provide PC with all daily, weekly, and month end reporting currently
available in the FLS system. In addition FBS will work with PC and FBS IS to
develop reporting specific to the business of PC. Specific reports from the
various FBS and FLS systems include the following:
o Open Orders and Shipped Sales Report (Daily)
o Daily Orders Received and Shipped Report (Daily)
o Month to Date Received and Shipped Report (Weekly)
o Daily Ship Detail Report/Daily Ship Summary Report
o Month to Date Ship Detail Report/Month to Date Ship Summary Report
o Daily Marketed Detail Report/Daily Marketed Summary Report
o Month to Date Marketed Detail Report/Month to Date Marketed Summary
o Return Activity Summary (Weekly)
o Released Refund Summary (Weekly)
o Released Reship/Exchange Summary (Weekly)
o Customer Call Activity Summary (Weekly)
o Month End Tax Report (Monthly)
FBS will work with PC and FBS IS to develop reports or queries based on samples
of existing PC reporting.
2. FULFILLMENT SERVICES PRICING
FBS will invoice PC for the services listed below at the listed rates:
- Web order processing
- Phone order processing
- Customer Service
- Order Fulfillment
- Custom Programming
- Special Work Requests
(a) Web Order Processing - $2.40 per order
This rate includes the cost of taking the orders from the various sites and
entering them into the FLS system for transfer to the fulfillment vendors. It
also includes the keying of FTD orders into the Mercury terminal or Teleflora
orders into the Dove system
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(b) Phone Order Processing/Customer Service - $8.60 per order
This rate includes the cost of taking orders via the phone and entering the
order information into the FLS system. It also includes the cost of providing
all aspects of customer service including phone or email responses to customer
inquiries
(c) Order Fulfillment
The rate for order fulfillment will be established and mutually agreed to after
the determination of the location in which fulfillment activities will take
place, and prior to the initiation of fulfillment activity.
(d) Returns Processing
The rate for returns processing will be mutually determined after the
determination of the location in which returns will be processed, and prior to
the initiation of any return activity.
(e) Custom Programming - $70 per hour
This rate includes the cost of providing any system enhancements beyond what is
being initially provided to implement PC.
(f) Special Work Requests - Salaried @ $40 per hour
- Hourly @ $16 per hour
This rate would be used in cases where PC has special work requests not covered
in any of the above categories.
3. WEBSITE FULFILLMENT SERVICES, PRICING & SALE OF PRODUCTS
(a) Web Site Fulfillment: FBS shall provide all necessary Fulfillment
Services for the fulfillment of customer orders placed on the PC Flowers & Gifts
web site (xxx.xxxxxxxxx.xxx) or a PC Flowers Co-branded Site.
(b) Sale of Product: FBS and Figi's shall sell to PC products on a per
order basis on terms and conditions mutually agreeable to both parties. The cost
of the products shall be actual product cost plus ten percent (10%) (hereafter
referred to as the "Product Cost").
(c) PCFlowers & Gifts Web Site Fulfillment: For all Fulfillment Services
provided for orders from the PC Flowers & Gift web site [xxx.xxxxxxxxx.xxx], or
PC co-branded web sites, with the exclusion of flowers, PC shall pay to FBS as
follows: Product Cost, plus actual cost of fulfillment services + ten percent
(10%), plus actual postage or freight cost.
(d) Co-Branded Web Site Fulfillment: For all Fulfillment Services provided
for orders from a PC Flowers Co-branded Site, PC shall pay to the relevant
Fingerhut entity as follows: Product Cost, plus actual cost of fulfillment
services + ten percent (10%), plus actual postage and freight cost. In addition,
PC shall pay to any relevant Fingerhut entity commissions on Net Sales as
defined and set forth in Co-brand agreements between PC and the relevant
Fingerhut entity.
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4. LICENSED MARKS
Reg No. Xxxx
1,990,239 PC Gifts
1,787,646 1-800-PC Flowers
1,623,072 P.C. Flowers
1,781,553 PC Balloons
1,905,177 TV FLOWERS
2,090,415 PC FLOWERS & GIFTS
5. RATIFICATION
The parties acknowledge, confirm and agree that, except as explicitly
inconsistent with this Schedule, the terms and conditions of the Agreement shall
continue to be in full force and effect and are hereby ratified and confirmed.
If there is a conflict between the terms of this Schedule and the Agreement, the
terms of the Schedule shall control.
6. TERMS
Any term, phrase used herein with an initial capital letter shall have the same
meaning as defined herein, or if not so defined, shall have the same meaning set
forth in the Agreement.
IN WITNESS WHEREOF, the parties hereto execute this Schedule A effective
as of the date first set forth above.
FINGERHUT BUSINESS SERVICES, INC.
By
-----------------------------------
Its
----------------------------------
PC FLOWERS & GIFTS, INC.
By /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Its CEO
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