EXHIBIT 10.11
INTERIM MERCHANDISE SERVICING AGREEMENT
THIS INTERIM AGREEMENT is made and entered into as of the 11th day of
February, 2002, by and between AMERICAN CONSOLIDATION, INC., 000 Xxxxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 ("ACI") and AEROPOSTALE, INC., 00
Xxxxxxxxxxx Xxxxx, Xxxxx, Xxx Xxxxxx 00000 ("Customer").
W I T N E S S E T H
WHEREAS, Customer is engaged in the retail business and the sale of
merchandise customarily available therein; and
WHEREAS, ACI is engaged in the business of providing certain
warehousing services to retail businesses; and
WHEREAS, Customer and ACI are in the process of negotiating the terms
and conditions whereby ACI will provide to Customer receiving, processing,
marking, consolidating, picking, packing, manifesting, and loading services for
Customer's merchandise (the "Merchandise") at Customer's warehouse and
distribution center located at 0 Xxxxx Xxxxx Xxxx, Xxxxx Xxxxx, Xxx Xxxxxx (the
"Brick Plant Facility"); and
WHEREAS, Until such time as the aforementioned negotiation is finalized
Customer and ACI wish to use this Interim Agreement for any services provided by
ACI at the Brick Plant Facility.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. TERM
The term of this Agreement shall commence as of February 11th, 2002 and
terminate upon the execution of a final Agreement between ACI and Customer for
the services to be provided by ACI at the Brick Plant Facility or as provided
for in Section 2 of this Agreement. Customer and ACI agree that the terms and
conditions in this Interim Agreement are non-binding as to terms and conditions
to be incorporated into the final agreement and accordingly are subject to
change and negotiation by both parties.
2. TERMINATION
This Agreement may be terminated by either Party on thirty (30) days
written notice to the other party hereto. In the event there is a breach of any
material term of this Agreement by either Party, the non-breaching party shall
notify the breaching party of such material breach in
-1-
writing and the breaching party shall have three (3) days to cure such breach.
In the event the breaching party has not cured the default within such time, the
non-breaching party shall have the right to terminate this Agreement on three
(3) days notice to the breach party. This Agreement shall terminate immediately
in the event either party seeks bankruptcy protection or assigns a substantial
portion of its assets for the benefits of creditors.
3. SERVICES
ACI agrees to perform distribution services (the "Services") for
Customer, including but not limited to the following:
(a) Schedule deliveries within twenty-four (24) hours of request
for appointment based upon Customer's monthly plan.
(b) Receive, Check, Xxxx (where applicable), Pick, Pack,
Consolidate, Manifest and Ship merchandise in accordance with
past practice and with customer's standard policies and
procedures.
(c) Process all documentation related to the warehouse and
distribution system including but not limited to, Appointment
Log, Vendor Invoice, Packing Slip, Xxxx of Lading, Key Rec
Panel, Trouble Notification Form, Receiving Worksheet,
Receiving Manifest, Vendor Chargeback Form and LTA Shipping
Manifest, and in accordance with past practice and with
customer's standard policies and procedures.
4. REPRESENTATIONS AND WARRANTIES OF ACI
(a) ACI will perform the Services in a proper and workmanlike
manner in accordance with accepted industry standards,
practices and procedures ("Industry Standards").
(b) ACI shall provide the Services with regard to the Merchandise
within the following time constraints:
(i) All Merchandise received as Cross-Docked will be
processed and shipped within 24 hours of receipt of
Distribution information from Customer.
(ii) All other Merchandise will be processed within
48 hours of receipt of Distribution information from
Customer.
(c) ACI shall maintain a Quality Level of 99% with respect to
Merchandise processing accuracy and as defined in the Base
Plus Xxxx Xxxxxx Associates Quality System.
-2-
(d) ACI shall comply with all present and future laws, statutes,
ordinances, rulings, regulations, orders and requirements of
all federal, state, municipal, county and other government
agencies and authorities relating to the Brick Plant Facility,
and shall obtain and keep in full force and effect all
necessary licenses, permits and similar authorizations from
governmental authorities required to perform its obligations
hereunder.
5. SUPPLY OF MATERIALS AND EQUIPMENT
Customer will provide, at its sole cost, the Brick Plant Facility,
utilities, insurance, all merchandise handling equipment including
consolidation, manifesting and sortation systems and management and labor
necessary for the efficient performance of its obligations herein.
Customer will provide, at its sole cost, all control room equipment,
ticket making equipment, ticket stock, computer forms, labels, and packing
cartons.
Customer will provide at its sole cost all control room computer
equipment and data communication lines.
Customer will provide all Packing supplies, Hangers, Poly Bags,
Cartons, Sealing Tape, and Labels necessary for merchandise processing.
Customer will be responsible for the cost of all inbound and outbound
freight associated with the processing of its merchandise.
All equipment and materials at the Brick Plant Facility shall at all
times remain the sole and exclusive property of Customer and shall not be used
for any purpose except as specifically directed by Customer. ACI shall not
permit any security interest, lien or other encumbrance ("Encumbrance") to
attach to Customer's equipment or merchandise and in the event any such
Encumbrance attaches to Customer's equipment or merchandise, ACI will pay to
have it discharged of record promptly, and to take such action as may be
required to reasonably and legally object to such security interest or lien or
to have such security interest or lien removed from such property. ACI hereby
waives any right to lien against any property of Customer, including Customer's
equipment and merchandise which may be located at the Brick Plant Facility.
Customer may make, in its sole discretion, any and all UCC informational filings
regarding its ownership interest in its equipment and the Merchandise. ACI
agrees to cooperate with Customer in making such filings and take all reasonable
action to complete such filings as requested by Customer at Customer's cost and
expense. Customer shall be responsible for the cost of maintenance of its
equipment located at the Brick Plant Facility and ACI agrees to notify Customer
of the need for any non-routine maintenance on the equipment and Customer agrees
to keep all of this equipment in a condition which enables ACI to perform the
Services for Customer herein. Upon termination of this Agreement, all such
equipment shall be returned forthwith to Customer in the condition such
equipment was delivered to ACI, reasonable wear and tear excepted. ACI hereby
agrees that it will assume all risk of loss on the Merchandise and equipment
owned by Customer from the time of its receipt of such Merchandise or equipment
-3-
until such time as Customer subsequently receives such Merchandise or equipment.
ACI shall replace or repair any of such equipment which is lost, stolen,
damaged, destroyed or otherwise unavailable for use or return to Customer.
Customer will provide personnel from its Home Office for directing the
following support functions:
(a) Act as an information resource for ACI in the event ongoing
operational issues arise.
(b) Handle all systems (AS 400 & Island Pacific) problems.
(c) Handle all communications with vendors regarding shipments
which are received at the Brick Plant Facility.
(d) Handle all freight negotiations and payment of freight bills.
6. BASE FEE, PAYMENT TERMS AND ADJUSTMENTS
(a) As ACI's entire and full compensation for its provision of the
Services and any necessary and related costs or expenses
incurred by ACI in the course of providing the Services,
Customer shall pay ACI $0.16 per unit for Back Stocking
Services and $9.50 per hour for any special projects.
(b) Customer shall make payment to ACI of all correctly stated
amounts within seven (7) days of Customer's receipt of the
invoice.
7. RIGHT TO AUDIT
ACI agrees to allow Customer's personnel to inspect and to perform an
operation field audit of the Services and the Brick Plant Facility and to
inspect and audit ACI's invoicing and records which relate to the Services
performed on the Merchandise as Customer deems necessary in its sole discretion
at times during any business hours in which ACI operates and upon reasonable
notice to ACI.
8. SHORTAGES AND DAMAGES TO MERCHANDISE
ACI shall be responsible and liable to Customer for the cost to
Customer of lost or misplaced Merchandise. The cost to Customer shall be the
book value of the Merchandise as determined by the invoice cost plus per unit
processing cost or if ACI has been reimbursed by virtue of an insurance claim,
then the total amount of said reimbursement. Customer shall notify ACI of any
shortage within thirty (30) days of ACI's receipt of the Merchandise.
9. INSURANCE
-4-
ACI shall, at all times during the term of this Agreement, and at its
sole cost and expense, obtain and maintain the following insurance written by
insurance companies reasonably acceptable to Customer having a minimum rating of
A-X in the most recently published A.M. Best's Guide, and admitted and licensed
to provide insurance in the states in which services will be performed:
(a) All-risk property insurance upon the Merchandise in ACI's
possession in an amount equal to the full replacement cost of
the Merchandise;
(b) Commercial general liability insurance (including contractual
liability coverage specifically covering ACI's obligations
hereunder) written on an occurrence basis in amounts of Five
Million Dollars ($5,000,000.00) combined single limit per
occurrence with respect to bodily injury (including death),
personal injury and property damage;
(c) Workers' compensation insurance covering all of its employees
to the full extent required of all states in which ACI
performs services under this Agreement;
(d) Employers' liability insurance with a limit of not less than
One Million Dollars ($1,000,000.00) for each accident and One
Million Dollars ($1,000,000.00) for disease.
(e) Business income interruption insurance in an amount not to
exceed $500,000.00 per occurrence.
The insurance policies, other than the workers' compensation insurance
policy, shall name Customer as an additional insured. Such insurance coverage
shall commence as of the date of this Agreement and ACI promptly shall deliver
to the Customer the policies of such insurance, or certificates thereof, and
with respect to each renewal policy, at least thirty (30) days prior to the
expiration of the policy it renews. All insurance policies maintained by ACI
shall provide that such policies name customer as loss payee and shall not be
amended or canceled without at least thirty (30) days prior written notice to
Customer. In the event ACI does not obtain the insurance required under this
Agreement, ACI shall be in default of this Agreement and Customer, in addition
to its remedies at law and equity and as may be found elsewhere in this
Agreement, may obtain such insurance on behalf of ACI and ACI shall pay to
Customer upon demand the costs thereof, together with interest of the maximum
lawful rate. Failure by ACI to pay such cost to Customer within fifteen (15)
days after written demand shall entitle Customer to offset any sums due to ACI
until fully reimbursed.
The required liability insurance may be carried under a "blanket
policy" covering other work of ACI, provided that if the blanket policy contains
an aggregate limit, the limit will apply on a per location basis.
Such policies shall provide for a waiver of any right of subrogation
that the insurer may acquire against Customer.
-5-
It is the express intention of the parties to this Agreement that ACI
shall cause such coverages to be provided on a "primary" basis, regardless of
any other insurance Customer may elect to purchase and maintain.
Accordingly, no liability coverage required of ACI shall be subject to
an "excess" or "pro-rata" type of other insurance clause, nor shall any such
coverage be subject to any clause which would be contrary to the aforesaid
intent of the parties. All coverage purchased by Customer will be excess for
Customer only and not provide any coverage for ACI.
10. INDEMNIFICATION
ACI shall indemnify, defend and hold harmless Customer, its affiliates
and their respective directors, officers, employees and agents from and against
any and all damages, costs, losses, liability and expenses (including reasonable
attorneys fees) in connection with any and all actions or threatened actions
arising out of: (a) the use by ACI of the equipment described in Section 5 of
this Agreement, or (b) the performance by ACI of the services contemplated by
this Agreement; except that such indemnification obligation shall not arise in
circumstances where the claim in question arose from any grossly negligent,
intentional, wrongful or unlawful act or omission of Customer.
11. EFFECT OF TERMINATION
Upon the termination of this Agreement, ACI shall fully perform all
Services with respect to all Merchandise delivered to ACI prior to the effective
date of such termination. Customer shall pay for all Services performed by ACI
prior to the effective date of such termination.
12. FORCE MAJEURE
Neither party to this Agreement shall be liable for any default
hereunder due to act of God, riot, accident, strikes, labor disputes, work
stoppages, fires, floods, acts of a public enemy, acts of the United States
Government, war or other unforeseeable cause beyond its control and without its
fault or negligence (an "Event of Force Majeure"). Each party thereto shall
notify the other in writing of any such unforeseeable causes beyond its control
which may have delayed or may delay the performance of this Agreement. When ACI
has, for any reason, failed to perform Services hereunder because of an Event of
Force Majeure or given notice hereunder that it will fail to make such delivery
because of any Event of Force Majeure, Customer shall have the right, for a
period of not less than thirty (30) days, to have the Services performed with
respect to the Merchandise from sources other than ACI to assure Customer of
Merchandise, provided that Customer's commitment to have such Services performed
by sources other than ACI cannot continue thereafter for a period longer than
ACI's inability to perform. Notwithstanding anything contained herein to the
contrary, in the event any Event of Force Majeure, including but not limited to
strikes, labor disputes or work stoppages, occurs, ACI shall have a period of
ten (10) days from the date of said occurrence to have the Services performed
with respect to the Merchandise from another source to assure Customer of
Merchandise. In the event ACI is
-6-
unable to provide such alternate source to have the Services performed within
such 10-day period, Customer shall have the right to have the Services performed
through an alternate source, and any difference in the cost of having the
Services performed by an alternate source and the cost of Services provided
under this Agreement shall be immediately reimbursed by ACI to Customer. The
failure of ACI to perform the Services on the Merchandise due to an Event of
Force Majeure shall not be deemed to be a breach of any provision of this
Agreement; provided that ACI commences performing Services with respect to the
Merchandise within ninety (90) days after and Event of Force Majeure or after
notice to Customer of any Event of Force Majeure.
13. ALTERNATE DISPUTE RESOLUTION
If there is a controversy or dispute arising out of, related to or
involving this Agreement that is not resolved by negotiation and agreement of
the parties within 30 calendar days of the controversy or dispute arising, such
controversy or dispute shall be resolved exclusively through binding, conclusive
and confidential alternate dispute resolution ("ADR") pursuant to the New Jersey
Alternate Procedure for Dispute Resolution Act ("NJADR Act"), N.J.S.A. 2A:23A-1
et seq, by submission to an umpire mutually selected by the parties. If the
parties are unable to mutually agree upon an umpire, each party shall designate
a former federal judge or New Jersey Supreme Court justice of Superior Court
judge and the umpire shall be selected as between them by the flip of a coin.
The ADR shall be held in Wayne, New Jersey, and shall then proceed in accordance
with the NJADR Act but shall be conducted confidentially. The decision of the
umpire shall be binding upon the parties hereto and the parties hereby waive and
relinquish right of appeal afforded by the NJADR Act. The cost of the umpire
shall be borne equally by the parties, unless the umpire decides based on
equitable principles to apportion such costs in a different manner.
14. CONFIDENTIALITY
ACI shall, from time to time, gain access to certain proprietary
business information (including, without limitation, information relating to
Customer's business activities, cost of doing business and the cost of supplies
purchased hereunder) (the "Proprietary Information") of Customer which is
confidential in nature. In consideration of Customer's execution of this
Agreement, ACI agrees to hold all such Proprietary Information in trust and
confidence for the exclusive benefit of Customer. ACI shall not disclose or
divulge, nor permit any disclosure of, any Proprietary Information to any entity
not a party to this Agreement, nor shall ACI appropriate or use any Proprietary
Information to benefit itself or any other entity. ACI shall also inform any of
its respective affiliates or subsidiaries and their respective directors,
officers, employees and agents thereof ("Agent") providing services hereunder of
the terms of this subparagraph. ACI shall be responsible for its respective
Agent's failure to comply with the terms of this paragraph and any liability
arising therefrom. ACI and Customer agree that any disclosure or use of the
Proprietary Information other than for the exclusive benefit of Customer will
cause irreparable harm to Customer and that money damages alone would be an
inadequate remedy for any disclosure or unauthorized use of the Proprietary
Information by ACI.
-7-
Therefore, ACI and Customer agree that Customer shall be entitled to
obtain specific performance, injunctive relief or any other remedy available at
law or in equity in the event of such disclosure or unauthorized use. This
section 14 shall survive the termination of this Agreement for a period of two
(2) years.
15. RELATIONSHIP OF THE PARTIES
The relationship between Customer and ACI under this Agreement shall be
solely that of vendor and vendee. It is expressly understood and agreed by the
parties hereto that nothing in this Agreement, its provisions, or the
transactions and relationships contemplated hereby shall constitute either party
as an agent, employee, partner, or legal representative of the other for any
purpose whatsoever, nor shall either party hold itself out as such. Neither
party to this Agreement shall have the authority to bind or commit the other
party hereto in any manner or for any purpose whatsoever but rather each party
shall, at all times, act and conduct itself in all respects and events as an
independent contractor. In no event shall the employees or contractors of ACI or
any other person performing the Services hereunder be deemed to be the employees
of Customer. This Agreement creates no relationships of joint ventures,
partners, associates, or principal or agents between the parties hereto. ACI
agrees that neither it nor any of it officers or affiliates will at any time,
either during or after the termination of this Agreement, directly or
indirectly, in any manner use the name of Customer or any trade, trademark,
service xxxx, or logo of Customer without Customer's prior written permission.
In no event shall the employees or contractors of ACI or any other person
performing the Services hereunder be deemed to be the employees of Customer.
16. ASSIGNMENT
This Agreement may not be assigned by either party hereto except with
the prior written consent of the other party, which consent will not
unreasonably be withheld or delayed, and any attempted assignment in violation
of this provision shall be void.
17. ADMINISTRATIVE EXPENSES
Each party hereto shall pay all of its own administrative expenses
(including, without limitation, the fees and expenses of their agents,
representatives, counsel and accountants, incident to the preparation of this
Agreement).
18. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties hereto.
19. TITLE TO MERCHANDISE
(a) Title to and ownership of the Merchandise shall, at all times,
rest solely with the Customer. ACI shall not act in a manner
which is inconsistent with Customer's
-8-
title thereto including, but not limited to, causing or
allowing any lien or security interest for the benefit of any
ACI creditor to attach to the Merchandise -- and in the event
that any such security interest or lien attaches to such
Merchandise, ACI agrees to pay the same and have it discharged
of record, promptly, and to take such action as may be
required to reasonably and legally object to such security
interest or lien or to have such security interest or lien
removed from such Merchandise, including, without limitation,
completing and signing any documents, acknowledgments or other
documentation requested by Customer.
Without limiting the generality of the foregoing paragraph,
ACI hereby waives any right to lien against any Merchandise
which may be located in the Brick Plant Facility. Customer may
make, in its sole discretion, any and all UCC informational
filings regarding its ownership interest in its equipment and
the Merchandise. ACI agrees to cooperate with Customer in
making such filings and take all reasonable action to complete
such filings as requested by Customer.
(b) In the event ACI causes or allows any such security interest
of lien to attach to Customer's property rights in and to the
Merchandise, which security interest or lien is not removed
within thirty (30) days, Customer shall have the right to
terminate this Agreement upon thirty (30) days' prior written
notice to ACI with out any termination penalty.
20. WAIVER OF BREACH
The waiver by any party to this Agreement of any breach or violation of
any provision of this Agreement by the other party hereto shall not operate or
be construed to be a waiver of any subsequent breach of violation thereof.
21. GOVERNING LAW AND SEVERABILITY
This Agreement shall be governed by and interpreted in accordance with
the substantive and procedural laws of the State of New Jersey. The terms and
conditions of this Agreement are hereby deemed by the parties to be severable,
and the invalidity or unenforceability of any one or more of the provisions of
this Agreement shall not affect the validity or enforceability of the other
provisions hereof.
-9-
22. NOTICES
Any notice contemplated by or required or permitted to be given under
this Agreement shall be sufficient if in writing and if delivered personally or
sent by nationally recognized carrier or by registered or certified mail, return
receipt requested, to the parties' respective addresses below, or to such other
addresses either of the parties hereto may hereinafter designate in writing:
American Consolidation, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxxx Xxxxxxxxx, Principal
Aeropostale, Inc.
00 Xxxxxxxxxxx Xxxxx
Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxx, President
THIS AGREEMENT reflects the complete understanding of the parties and
constitutes their entire agreement, all prior negotiations, representations and
statements having been merged herein. This Agreement, including the Exhibits
hereto, may not be changed or amended orally but only in writing signed by both
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement by the
signature of their respective, duly authorized corporate officers as of the day
and year first above written.
AMERICAN CONSOLIDATION, INC.
By: /s/ Xxxxxxxx Xxxxxxxxx
_______________________________
Xxxxxxxx Xxxxxxxxx
Principal
AEROPOSTALE, INC.
By: /s/ Xxxx X. Xxxxx
______________________________
Xxxx X. Xxxxx
President
-10-
