WHEREAS, the Company has a direct marketing program for the sale of various merchandise sold by the Company (respectively, the “Merchandise”); WHEREAS, CLS provides to various retailers and manufacturers direct-to-customer order fulfillment services, cross docking pursuant to which CLS provides storage, packing and shipping Merchandise to the retailer’s end-use customers (the “Services”); and WHEREAS, the Company desires that CLS provide Services in connection with the operation of its direct response business and CLS desires to provide such Services for Company. NOW, THEREFORE, in consideration of the mutual promises and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: AGREEMENT NOW, THEREFORE, The Company hereby appoints CLS as the primary provider of Services in connection with the Merchandise upon the terms and conditions set forth in this Agreement.
1. Appointment
The Company hereby appoints CLS as the primary provider of Services in connection with the Merchandise upon the terms and conditions set forth in this Agreement.
2. Services
During the Term and subject to the terms hereof, CLS shall provide to the Company the Services set forth in Exhibit A.
3. Special Services
The Company may at any time during the Term hereof request CLS to perform services on its behalf not covered by this Agreement (“Special Services”). The Company shall notify CLS in writing of its particular requirements with respect to such Special Services, and CLS shall use its best efforts to comply with such requirements provided that the written notification is given in a timely manner and the FULFILLMENT SERVICES AGREEMENT - 1 requirements and procedures are reasonable and not economically burdensome. CLS shall charge the Company for such Special Services at an agreed upon rate or amount, as applicable.
4. Place of Performance
The Services shall be performed at CLS’s place of business and at such other locations as CLS may maintain from time to time; provided, however, that CLS shall not be precluded from out-sourcing certain Services, if necessary, on a temporary basis to providers which CLS determines to be reasonably acceptable. 5. Company Accounts Fees and Charges
5.1 Pay as You Go Payments and Invoicing.
CLS uses a pay-as-you-go system for the payment of Services. The Company agrees to put funds into their CLS account and CLS will deduct fees and costs as incurred by the Company. Invoices for Services will be sent at the end of each billing period and will serve as a receipt for the Company.
5.2 Merchandise Invoicing.
Any and all fees due for the cost of the Merchandise shall be paid directly by the end-user to the Company. Under no circumstances shall CLS accept, receive or otherwise be held responsible for payments from an end-user made in exchange for the Merchandise.
5.3 Late Payment Fee.
If CLS fails to receive payment from the Company by the due date of the invoice; a late payment fee of five percent (5%) will be applied to the outstanding invoice.
5.4 Options to Pay.
CLS provides the Company with a convenience to pay for their invoices online through the Company’s account using the following payment methods: Bank Transfer & ACH transfer, credit or debit card, or a wire transfer ($20 fee). If the Company’s invoice remains unpaid by the 10th day of the month, the Company agrees that CLS shall have the right to automatically charge any payment method that has been used in the past. 5.5 Pay-As-You-Go. The Company has the option to agree to opt-in for auto-pay service, in which CLS will automatically charge the saved payment method on file to replenish the Company’s pay as-you-go account. Using the auto-pay service will prevent orders from being delayed in processing due to insufficient funds.
5.6 Account Balances.
Any invoices CLS sends to the Company in accordance with this Agreement shall be based on any balance accrued in the Company’s Account. Any third party fees are the fees for postage, shipping, including, but not limited to carrier fees, shipping fees, rates of duty, international brokerage charges, freight charges, insurance premiums or other charges given during the Company’s use of the Services, and as ordered through the Company’s account and any special or additional fees assessed against the Company’s account as permitted in this Agreement. The third party fees for Services are billed during the month in which the Services are performed, but such fees are subject to change due to circumstances beyond CLS’s control. The Company agrees that should the FULFILLMENT SERVICES AGREEMENT - 2 Company change the Company’s account billing plans during or at the end of any month, then the previous pricing plan may no longer be available. All other fees for the Services, including special services and hourly rates, etc., will be billed monthly, during the conclusion of the month for which such Services were provided, or that the Company’s account balance has accrued.
5.7 Fee Estimates for Services.
Any estimates or quotes for third party services and fees are informational and are subject to change without notice and shall not under any circumstances be binding upon CLS. The final rates and service fees may vary based upon the actual shipment costs, the work actually performed, or any number of factors such as carrier shipping prices, the actual characteristics of the Merchandise, the delivery locations, among other variations occurring in the ordinary course of business.
5.8 Pricing Changes & Currency Fluctuations.
CLS reserves the right to adjust its pricing for the Services, with thirty (30) days' notice via publication on the CLS website and/or directly to the Company due to market forces and/or in response to any currency fluctuations, including but not limited to, applicable peak surcharges, currency conversion rate changes, conversion fee changes, and/or discount rate changes. CLS reserves the right to revise pricing without notice if actual volume does not meet or exceed the initial volume estimates provided by the Company at the time of contract execution to a rate equal to actual volume. All dollar amounts stated in this Agreement will be in US dollars unless otherwise specified. All of the Services subsequently requested by Company will be at a mutually agreed upon rate, memorialized, signed and agreed upon by both Parties.
5.9 Usage Fee Disputes.
If the Company disagrees with any fees (other than carrier or third-party fees) invoiced or charged against the Company’s account, the Company must submit written notice to CLS within thirty (30) days of the fee being charged. CLS will not review or consider any requests by the Company for adjustments that are received after this thirty (30) day period.
5.10 Account Balance Disputes.
If CLS becomes aware of, or is notified of, a dispute relating to the Company’s account balance, then CLS will promptly review the dispute. Within five (5) business days after the resolution of the dispute, CLS will forward a bill for outstanding amounts due, or will credit the Company’s account balance accordingly.
5.11 Abandoned Accounts and Liquidation.
If the Company’s fees remain unpaid for a period greater than thirty (30) days, then CLS reserves the right, in its sole discretion, to reclassify the Company’s account as abandoned. Additionally, any account that remains unpaid for greater than sixty (60) days will automatically be deemed abandoned. If a Company account becomes abandoned, then the Company immediately forfeits its rights of ownership of such Company’s Merchandise in inventory up to the cumulative amount necessary for payment of all outstanding fees as well as any reasonable expenses incurred by CLS for the preservation and storage of the Merchandise in inventory or for its sale. Such Merchandise in inventory will become immediately unavailable to the Company, and liquidation proceedings will begin. The Company agrees that all such Merchandise in inventory so liquidated shall be sold at the absolute discretion of CLS and would be free and clear of liability, and that the Company assumes any liability therefrom. The Company has no rights to any liquidation proceeds arising from an FULFILLMENT SERVICES AGREEMENT - 3 abandoned account unless the amounts recovered through such liquidation process exceed the cumulative amount necessary for payments as stated above. Should the amounts recovered through such liquidation process be insufficient to cover the cumulative amounts above, the Company would remain liable for any pending fees above and beyond the liquidation proceeds.
5.12 Termination of the Account.
Upon termination of this Agreement, the Company’s account will be inaccessible to the Company, and all activities will be suspended. CLS reserves the right to cease shipping orders for a number reasons, including but not limited to the following: (1) the Company’s account balance remaining unpaid within thirty (30) days of receipt of an invoice; (2) if anyone using the Company’s account uses abusive language or otherwise threatens CLS, its officers or its employees; (3) to allow time to resolve or investigate a third party complaint of a violation of this Agreement; (4) to allow time for investigation or resolution of an unauthorized transaction, customer complaint, dispute or accusation; and (5) to allow time for the Company to pick all inventory and to close out the order.
5.13 Termination for Breach.
Either party may terminate this Agreement upon thirty (30) days’ notice to the other party in the event of a breach by the other party of any provision of this Agreement. If the breaching party fails to cure such breach during such thirty (30) day period; then upon the expiration of the (30) day period to cure such breach, then a thirty (30) day wind down of the Company account shall commence. The Company may have full or limited use of the Company’s account during this period for the sole purpose of winding down its use of the account in a commercially reasonable manner. Any Merchandise in inventory remaining at the expiration of this period will be shipped to Company, at Company’s expense, to the address on file and, if the address is not on file, to the billing address on the Company’s credit card. If no address is available or no balance is available in the Company account to pay for shipment back to the Company, CLS will liquidate the Merchandise in inventory as if it were an abandoned account. Also, CLS may terminate this Agreement immediately upon notice to the Company of fraudulent, abusive or illegal activity.
5.14 Additional Actions.
If the Company is in breach of any terms of this Agreement, CLS may close, put on hold, or limit access to the Company account or the Services. Without limiting any of the remedies under law or equity, CLS may also take any available legal actions.
5.15 Closing Accounts.
The Company may close the Company’s account for any reason, upon giving CLS thirty (30) days prior written notice. Merchandise will be returned to the Company subject to the Company paying the fees for such Service.
6. Merchandise
6.1 Title.
The Company hereby agrees that at no time during the period that Merchandise is held by CLS as Inventory in the CLS facilities will CLS hold any right of ownership in the Inventory. Title in Inventory will continue to be held by the Company until the Merchandise is delivered. FULFILLMENT SERVICES AGREEMENT - 4
6.2 Risk of Loss.
The Company agrees that during the period that Merchandise is in the CLS facilities the Company will carry the risk of loss in the Inventory. Risk of Loss in Inventory will be held by the Company until the Merchandise is delivered. CLS shall exercise commercially reasonable standards of care for all of the Company’s Merchandise in its possession but disclaims liability of loss except for instances of gross negligence by CLS.
6.3 Insurance.
The Company agrees to be responsible to maintain an insurance policy that covers the cost of the Merchandise held in Inventory. The Company may add CLS facilities as a designated storage location in Company’s general inventory policy. CLS, upon request, shall allow for inspection of the facilities to assist the Company adding the CLS facilities as a location. If the Company fails to ensure its Merchandise held in CLS facilities, then CLS will not be liable for any loss or damage to such inventory.
7. Indemnification, Disclaimer, and Limitation on Liability
7.1 Indemnification.
Subject to the terms and conditions of this Agreement, the Company shall indemnify, defend and hold harmless CLS and its representatives/officers, directors, employees, agents, affiliates, successors and permitted assigns (collectively, “Indemnified Party”) against any and all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including attorneys’ fees, fees and the costs of enforcing any right to indemnification under this Agreement and the cost of pursuing any insurance providers, incurred by Indemnified Party or end-user (collectively, “Losses”), arising out or resulting from any claim of a third party alleging: (1) breach or non-fulfillment of any representation, warranty or covenant under/representation or warranty set forth in this Agreement by the Company; (2) any negligent acts or omissions of the Company in connection with the performance of its obligations under this Agreement; (3) any negligent acts or omissions of any third party impacting the Services; and (4) any failure of the Company to comply with state or federal rules or regulations.
7.2 Disclaimer.
CLS obligations under this Agreement are provided on an “as is” and “as available” basis. CLS expressly disclaims all warranties of any kind, whether expressed or implied, including, but not limited to, the implied warranties of merchantability, fitness for a particular purpose and non-infringement for the Services, and any third-party services. In addition, CLS does not guarantee continuous, uninterrupted, secure access to the Services. The Services may be interfered with by numerous factors outside of CLS’s control. However, CLS will make reasonable efforts to process requests for Services in a timely manner but makes no representations or warranties regarding the time needed to complete the Services, because the Services are dependent upon many factors outside of CLS’s control.
7.3 Limitation on Liability.
7.3.1 No Liability for Consequential or Indirect Damages.
Except as otherwise provided in this Agreement for Indemnification and breach of confidentiality, CLS and its representatives, officers, employees are liable for any indirect, incidental, special, consequential, exemplary, FULFILLMENT SERVICES AGREEMENT - 5 punitive, or enhanced damages, or damages for loss, loss of profits, revenue, data or use, incurred by the Company, or any third party, whether in an action in contract or tort, arising out of or relating to any breach of this Agreement, whether or not the possibility of such damages has been disclosed in advance by CLS or could have been reasonably foreseen by CLS, regardless of the legal or equitable theory, whether in contract, tort or otherwise, upon which the claim is based, and notwithstanding the failure of any agreed or other remedy of its essential purpose, other than as set forth below, in no event shall CLS’s liability under this Agreement exceed monies paid or payable by the Company to CLS, excluding any carrier or other third party fees, and CLS must be notified with five (5) days after any unauthorized transaction of the Company waives all damages.
7.3.2 Exclusive Remedy.
This Agreement provides the Company’s exclusive remedy for any claim or cause of action relating to loss, damage, and/or destruction of Merchandise in inventory against CLS, and shall apply to any and all claims, including inventory shortage and disappearance claims, unless proven by affirmative evidence that CLS converted such Merchandise in inventory to its own use. The Company waives any right to rely on any presumption of conversion imposed by any law.
7.3.3 Inventory Count Inaccuracies.
In the event of Merchandise held in Inventory losses due to inventory count inaccuracies, inaccurate inventory counts during receiving or any time that CLS is in possession of such inventory for which the causes above is determined to be inapplicable and CLS is held legally liable, the Company agrees that it will be considered an “inventory loss” and CLS’s liability shall be limited as stated above and in no event shall CLS be liable for any lost sales revenue from the inventory loss due to inventory count inaccuracies.
7.3.4 Special Projects on Hourly Rate.
In the event or a loss do to any special project that may be defined as either hourly or piece work done on expected or on held Merchandise inventory, the Company agrees that CLS’s liability shall be limited to such hourly charge paid by the Company for such special project.
8. Use of Confidential and Private Information.
8.1 Confidential Information.
During the course of providing the Services, either party may disclose to the other party certain confidential information, whether oral, in writing, or electronic, and whether marked, identified or designated as confidential. Confidential information includes, but is not limited, to any intellectual property rights regarding the following; (1) patents; (2) trademarks, service marks, trade dress, trade names, brand names, logos , corporate names and domain names or other similar designations indicating source, sponsorship, association or origin; (3) rights to domain names, web addresses, web pages, websites and URLs; (4) rights to works of authorship, expressions, designs and design registrations, whether copyrightable or not, including copyrights and copyrightable works; and (5) any inventions, discoveries, trade secrets, technical information, databases, data collections, proprietary information and rights. Such confidential information excludes information that: (1) becomes generally available to the public; (2) comes to the recipient from a third party source on a FULFILLMENT SERVICES AGREEMENT - 6 non-confidential basis; (3) is published by the discloser; (4) was generated independently of any confidential information; and (5) is required to be disclosed by a court, governmental rule or regulation. No confidential information shall become owned by of the recipient of such information and the Company grants to CLS a non-exclusive license to use such confidential information as needed to provide the Services to the Company.
8.2 Aggregate Use.
In accordance with the terms of this Agreement, the Company agrees that CLS may compile aggregate results from all, or a selection of the Company’s use of the Services, but CLS shall recognize that such information is confidential information and not disclose such information that would identify the Company.
9. CLS Intellectual Property.
9.1 CLS Intellectual Property.
CLS intellectual property includes its processes and procedures in providing the Services and any of CLS’s confidential information, and it shall retain all right, title and interest in such intellectual property.
9.2 Third Party Software.
All third-party software used and related to the Services is solely subject to such third-party licenses, and CLS does not own, control, or have any responsibility or liability for such third-party software.
10. General Provisions
10.1 Notices.
All notices, requests, consents, claims, demands, waivers and other communications under this Agreement (each, a “Notice”) must be in writing and addressed to the other Party at its address designated from time to time. Unless otherwise agreed herein, all Notices to the Company must be delivered by email listed in the Account, personal delivery, nationally recognized overnight courier or certified or registered mail to the address listed in the Account. Except as otherwise provided in this Agreement, a Notice is effective only (a) on receipt by the receiving Party, and (b) if the Party giving the Notice has complied with the requirements of this Section. Notwithstanding the foregoing, legal notices to CLA must be sent by postal mail to its registered agent.
10.2 Entire Agreement.
This Agreement, including any Exhibits, invoices and service orders sets forth the entire agreement between the parties with respect to the subject matter contained herein, and supersedes any and all prior and contemporaneous undertakings of any kind, whether written or oral. No terms, conditions, or warranties, other than those contained in this Agreement, and no amendments or modifications to this Agreement, shall be valid unless made in writing and signed by the Parties.
10.3 Severability.
If any term, covenant, condition or agreement of this Agreement or the application of it to any person or circumstance shall to any extent be invalid or unenforceable, the remainder of this Agreement or the application of such term, covenant, condition or agreement to persons or circumstances, other than those as to which it is invalid or unenforceable, shall not be FULFILLMENT SERVICES AGREEMENT - 7 affected thereby and each term covenant, condition or agreement of this Agreement shall be valid and shall be enforced to the extent permitted by law.
10.4 No Waiver.
The waiver by either party of any breach of any provision of this Agreement shall not be construed as a waiver of any subsequent breach of the same or another provision. The failure to exercise any right under this Agreement shall not operate as a waiver of such right. Any waiver must be in writing and signed by the party to be charged.
10.5 Effect and Benefit of Agreement; Assignment.
Except as otherwise expressly limited herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto. None of the rights, privileges, or obligations set forth in, arising under, or created by this Agreement may be assigned without the prior consent in writing of each party to this Agreement.
10.6 Force Majeure.
Any delay or failure of either Party to perform its obligations under this Agreement will be excused to the extent that the delay or failure was caused directly by an event beyond such Party’s control, without such Party’s fault or negligence and that by its nature could not have been foreseen by such Party or, if it could have been foreseen, was unavoidable (which events may include natural disasters, embargoes, explosions, riots, wars or acts of terrorism) (each, a “Force Majeure Event“). The Company’s financial inability to perform, changes in cost or availability of materials, components or services, market conditions or the Company’s actions or contract disputes will not excuse performance by the Company under this Section. The Company shall give CLS prompt written Notice of any event or circumstance that is reasonably likely to result in a Force Majeure Event, and the anticipated duration of such Force Majeure Event. The Company shall use all diligent efforts to end the Force Majeure Event, ensure that the effects of any Force Majeure Event are minimized and resume full performance under this Agreement. If requested, the Company shall, within thirty (30) days of such request, provide adequate assurances that a Force Majeure Event will not exceed thirty (30) days. The rights granted to the Company with respect to excused delays under this Section are intended to limit the Company’s rights under theories of force majeure, commercial impracticability, impracticability or impossibility of performance, or failure of presupposed conditions or otherwise, including any rights arising under the Idaho Uniform Commercial Code or any similar statute or regulation.
10.7 Remedies.
All disputes under this Agreement which are not disposed of by mutual agreement may be decided by recourse to an action at law or in equity.
10.8 Governing Law.
This Agreement shall be governed by and construed according to the laws of the State of Idaho, without regard to the conflict of laws provisions thereof. Any dispute arising under or in relation to this Agreement shall be resolved in a competent court in the State of Idaho, and each of the parties hereby submits irrevocably to the exclusive jurisdiction of such court.
10.9 10.9 Attorneys
In the event of a legal dispute, the prevailing Party shall have the right to collect from non-prevailing Party any reasonable costs and/or attorneys’ fees incurred in enforcing this Agreement. FULFILLMENT SERVICES AGREEMENT - 8
10.10 Conflict of Terms.
If there is a conflict between this Agreement and the terms of any air waybill, bill of lading or other such transit documentation set forth by a contracted carrier, the carrier’s terms will control. If not stated within the carrier’s terms, this Agreement shall control.
10.11 Counterparts.
This Agreement may be executed in one or more counterparts, all of which together shall constitute one and the same instrument. FULFILLMENT SERVICES AGREEMENT - 9
Exhibit A Fulfillment Services
1. Access to, and interface with the CLS proprietary order entry fulfillment system (the “System”).
2. Order entry via telephone, mail, fax, and/or Internet.
3. Respond to all order and non-order inquiries.
4. Open and sort mail.
5. Prepare and make bank deposits into accounts maintained solely in the name of the Company. All payments received by CLS from customers of the Company are to be payable to the order of the Company and deposited directly into such accounts.
6. Answer customer service telephone inquiries and resolve customer problems during days and hours of operation specified in Exhibit [designation of exhibit].
7. Make staff available for Merchandise training at the Company’s reasonable request.
8. Make available to the Company an agreed set of reports and information (the “Reports”) via a telecommunications link at such times and at such schedule as the parties shall agree (the “Reports Schedule”).
9. Receive Merchandise against purchase orders provided by the Company either electronically or by hard copy as agreed between the parties. A. Sign for the number of cartons received. B. Perform quantity checks, quality assurance checks, and inspection. Non-problem Merchandise will be processed into active, reserve, or backorder status. Problem Merchandise will be segregated, and notification will be given to the Company in such form and at such times as agreed between the parties.
10. Pick/Pack/Ship backordered Merchandise according to specifications set forth by the Company.
11. Pick/Pack/Ship active or reserve Merchandise according to specifications set forth by the Company.
12. Write gift cards and gift wrap the Merchandise.
13. Insert additional materials (package inserts) into outbound shipments per the Company’s instructions.
14. Process customer exchanges.
15. Process customer returns: FULFILLMENT SERVICES AGREEMENT - 10 A. Receive returned Merchandise. B. Inspect returned Merchandise. C. Process returned Merchandise in accordance with mutually agreed upon specifications with respect to (i) refurbishment, (ii) holding it pending receipt of RA number, (iii) returning it to active or reserve inventory, and (iv) setting it aside for liquidated or special handling. D. Notify the Company of returned Merchandise in such form and such times as agreed between the parties.
16. Fulfill Merchandise requests according to the Company’s specifications.
17. Provide warehouse security.
18. Batch and process credit orders to credit card processor at times as specified by CLS to meet Service Levels. Deposit receipts to the Company designated accounts.
19. Maintain and operate a drop ship program as agreed between the parties.
20. Apply policies and procedures for Merchandise fulfillment operation as agreed between the Company and CLS.
21. On behalf of the Company, make payments from the Imprest Fund for invoices approved by the Company for fulfillment related expenses.
22. Generate refund checks and credit card credits in accordance with the Company’s written instructions.
23. Issue gift certificates, discount coupons or other purchase incentives in accordance with the Company’s lawful written instructions.
24. Maintain sales tax schedules in accordance with the Company’s lawful written instructions.
25. Create and dispatch customer notices in accordance with legal requirements or the Company’s lawful written instructions.
26. Maintain customer file records on tape and remit such files to the Company’s service bureau or other parties in accordance with the Company’s lawful written instructions.
27. Maintain a backup and “disaster recovery” system and procedures in accordance with CLS specifications. On an annual basis, perform tests of these systems and procedures to the Company satisfaction.
28. Provide new program start-up services as agreed between the parties.
29. Provide close-down services as described herein. FULFILLMENT SERVICES AGREEMENT - 11
30. Provide for computer programming and system design on a mutually agreed upon basis.
31. Weekly performance measurement of all customer support activities, including weekly performance measurements of (i) abandon rate for calls in queue between twenty (20) and forty-five (45) seconds (after new telephone software implementation) and (ii) percent of incoming calls that go on hold/that go into queue.
32. Respond to credit card charge backs after such charge backs are forwarded to CLS by the Company.
33. Screen incoming checks for potential fraud. (It being understood that CLS shall have no liability for failure to detect any such fraud.)
34. Establish e-mail based and web page-based Merchandise request and order fulfillment mechanisms.
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