EXHIBIT 99.2
RECEIVING, WAREHOUSING AND PHYSICAL DISTRIBUTION
SERVICES AGREEMENT
by and between
Footstar Corporation
and
FMI International LLC
dated as of July 8, 2004
TABLE OF CONTENTS
PAGE
1. Definitions.......................................................... 1
2. Relationship of Supplier and Customer................................ 6
3. Rights of the Parties to the Products................................ 6
4. Services............................................................. 7
5. Change Management................................................... 13
6. Project Management; Staffing........................................ 13
7. Protection of Customer's Products; C-TPAT........................... 17
8. Confidentiality; Trademarks......................................... 18
9. Office Accommodation................................................ 18
10. Records and Audits.................................................. 18
11. Fees; Payment....................................................... 20
12. Disaster Recovery................................................... 20
13. Term and Termination................................................ 20
14. Liability........................................................... 23
15. Representations and Warranties...................................... 23
16. Indemnities......................................................... 24
17. Required Insurance.................................................. 26
18. Use of Subcontractors............................................... 28
19. Conditions Precedent................................................ 29
20. General............................................................. 29
Exhibits
--------
A Services
B Employees
C Pricing
D Performance Standards
E Customer Software
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THIS RECEIVING, WAREHOUSING AND PHYSICAL DISTRIBUTION SERVICES
AGREEMENT (this "Agreement"), dated as of July 8, 2004, is by and between
Footstar Corporation, a corporation organized under the laws of the State of
Texas, ("Customer"), and FMI International LLC, a limited liability company
organized under the laws of the State of Delaware ("Supplier").
RECITALS
WHEREAS, as of the date hereof Customer and Alere Property Group, LLC
have entered into a Purchase and Sale Agreement, an Escrow Instruction and
Customer and Supplier have entered into an Asset Purchase Agreement
(collectively, the "Transaction Documents") and shall close the transactions
contemplated by the Transaction Documents simultaneously with this Agreement;
and
WHEREAS, the Customer is engaged in the business of selling footwear
and in connection with the closing of the Transaction Documents desires to
engage Supplier to provide receiving, warehousing and physical distribution
services related to the Customer Parties' products to the Customer Parties'
stores and customers throughout the United States and its territories;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS.
1.1 Definitions. As used herein, each of the following words and
expressions, whenever capitalized, shall have the meaning set forth in this
Section 1.
"Affiliate" means, with respect to a Person, any Person controlling,
controlled by or under common control with, such first Person. For purposes of
this definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or otherwise. A
Person shall be deemed to control another Person if such first Person has legal,
beneficial or equitable ownership, directly or indirectly, of more than fifty
percent (50%) of the aggregate of all voting equity interests in such second
Person.
"Carton Rounding" means store distributions for solids may equal less
than a received carton amount. The distribution will either be rounded up or
down to create a full carton pick from rack and eliminate residual product
needing to be returned to rack in less than carton quantities.
"Change of Control" means, with respect to a Party, (a) a change in
beneficial ownership of such Party of greater than fifty percent (50%), whether
in a single transaction or a series of transactions, (b) a merger of such Party
with another Person, whether or not such Party is the surviving entity, (c) the
acquisition of more than fifty percent (50%) of any class of such Party's voting
stock, or any class of non-voting security convertible into voting stock, by
another Person, whether in a single transaction or a series of transactions.
"Cross-dock" means cartons that have a store distribution provided
before the product arrives at the distribution center for receipt. The product
is received, labeled for store delivery and sorted to a shipping door for
loading onto a trailer. Such cartons are never opened or put into storage rack.
"Customer Owned Software" means Software owned by Customer, including
the Software identified in Exhibit E, as such exhibit may be modified from time
to time by Customer upon notice to Supplier.
"Customer Parties" means Customer and its direct and indirect
subsidiaries of which it owns at least fifty percent (50%) of the outstanding
capital stock or similar equity interests.
"Customer Proprietary Information" means (a) any and all non-public,
confidential, restricted or proprietary information of Customer Parties
(including information licensed or otherwise provided to a Customer Party by a
third party) provided directly or indirectly to any Supplier Party, at any time
(either before or after the date of this Agreement), by any Customer Party or
any third party acting on behalf, or at the request, of any Customer Party known
to the Supplier Party as acting in such capacity, including: (i) information
marked confidential, restricted, or proprietary; (ii) customer lists, customer
information and account information; (iii) computer programs and other materials
and information concerning data processing and information systems (including
the Customer Owned Software); (iv) information regarding business planning and
operations of Customer Parties and their administrative, financial or marketing
activities and (v) methods and techniques used in the operation of the Customer
Parties' businesses (including those related to logistics, allocation and
distribution of products); (b) the Work Product; (c) the financial terms of this
Agreement; and (d) all non-public information and materials that are derived
from or include any of the foregoing information (including the content of all
output files and reports produced from Customer Proprietary Information or other
data and programs provided by Customer Parties). Customer Proprietary
Information shall not include any information which (i) is or becomes generally
available to the public other than as a direct or indirect result of a
disclosure by Supplier; (ii) was known to Supplier on a nonconfidential basis
prior to its disclosure to Supplier as evidenced in writing by the Supplier's
documents; or (iii) becomes lawfully available to Supplier on a nonconfidential
basis from a third party without violation of any confidentiality obligation by
such third party known to Supplier as evidenced in writing by the Supplier's
documents.
"Customer Provided Items" means each and every item, resource,
facility, service or function that is provided to Supplier by Customer in
connection with this Agreement or the Services, including the Customer Owned
Software.
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"Disaster" means an event which (a) materially interferes with
Customer's ability to operate its business or to receive the benefit of the
Services or (b) which materially interferes with Supplier's ability to perform
the Services and (i) is caused, directly or indirectly, by fire, flood,
earthquake, elements of nature or acts of God, acts of war, terrorism, riots,
civil disorders, rebellions or revolutions in the United States, strikes,
lockouts, or labor difficulties (other than strikes, lockouts, or labor
difficulties in which it, or its Affiliates or its consultants or subcontractors
are directly involved) or any other similar cause beyond the reasonable control
of such Party; and (ii) could not have been prevented by reasonable precautions
and cannot reasonably be circumvented by the non-performing Party through the
use of alternate sources, work around plans or other means.
"Effective Date" means the closing date of this Agreement.
"Employee Plans" shall mean all "employee benefit plans" as defined by
Section 3(3) of ERISA, all specified fringe benefit plans as defined in Section
6039D of the Code, severance, vacation, sick leave, plan or agreement as to
which Customer has any obligation or liability, contingent or otherwise, with
respect to Employees.
"Employees" means those individuals set forth on Exhibit B.
"Lease Agreement" means the lease agreement between Supplier and Alere
Property Group, LLC leasing the Facility.
"Losses" means losses, liabilities, damages, demands, claims (including
taxes), and costs, payments and expenses (including any and all reasonable
attorneys' fees, reasonable costs of investigation, litigation and settlement,
interest and any judgments and penalties) but excluding lost profits and
consequential damages.
"MQC" means minimum quantity commitment.
"Pallet Storage" means non cross-dock product that is stored for any
length of time in the pallet rack of the Facility. Product is stored on pallets
containing like product (same style and pre-pack configuration).
"Parties" means both Customer and Supplier.
"Party" means either Customer or Supplier.
"Performance Standards" means the standards applicable to the
performance of the Services under this Agreement, including the availability
requirements, service levels, performance standards, and other standards for the
Services that are set forth in Section 4.7 ("Performance Standards") or Exhibit
D.
"Person" means an individual, corporation, limited liability company,
partnership, sole proprietorship, association, joint venture or other form of
organization.
"Pre-packs" means product that is received and shipped without the
carton being opened. The carton is received and stored in rack. When a store
distribution is created it is pulled from the rack, labeled for shipping and
sorted to a shipping door for loading onto an outbound trailer. The carton is
never opened. The carton usually has a mix of sizes within it but could be a
full carton of the same size.
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"Regulatory Authority" means each judicial, legislative or regulatory
authority with jurisdiction or authority over any Customer Party.
"Services" means all services and functions Supplier is obligated to
provide or perform pursuant to this Agreement.
"Software" means all versions and releases (including corrections,
enhancements, additions, updates, upgrades, revisions, modifications,
translations, conversions, compilations and other derivatives) of a computer
program in any form (including source code, object code, and executable code),
all related input and output formats and screens, and all related documentation,
configuration files and related materials (including functional specifications,
design specifications, user manuals, installation manuals, narrative
descriptions, comments in program source code, flow charts, logic diagrams,
configuration files, data dictionaries, operating instructions, test plans,
scripts and data), regardless of how fixed, displayed or transmitted (including
by using RAM, ROM, magnetic media, optical media, other machine readable media,
visual display or hardcopy).
"Solids" means product that is sorted by the individual unit level to
store distributions. The product is received in cartons containing multiple unit
of a single style and size. When a store distribution is received the carton is
pulled from rack, opened and the individual pairs are sorted by store.
"Supplier Parties" means Supplier and its direct and indirect
subsidiaries of which it owns at least fifty percent (50%) of the outstanding
capital stock or similar equity interests.
"Supplier Provided Items" means each and every item, resource,
facility, service or function that is provided by Supplier pursuant to this
Agreement, including the Services.
"Technology" means, collectively, all designs, formulas, algorithms,
procedures, methods, techniques, ideas, know-how, programs, subroutines, tools,
inventions, creations, improvements, Software, works of authorship other similar
materials, and all recordings, graphs, drawings, reports, analyses, other
writings, and any other embodiment of the above, in any form whether or not
specifically listed herein, and all related technology, that are used in,
incorporated in, embodied in or displayed by any of the foregoing, or used or
useful in the design, development, reproduction, maintenance or modification of
any of the foregoing.
"Termination Date" means the date on which this Agreement terminates.
"Time and Materials Rate" means (i) actual and reasonable travel,
lodging and meal costs and (ii) the following direct personnel costs, as the
case may be, with no ▇▇▇▇-up: (a) with respect to employees, wages, benefit
costs, payroll taxes, and other variable costs associated with employees and (b)
with respect to consultants and subcontractors, any consulting fees or other
amounts contractually obligated to be paid thereto.
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"Vendor Compliance Inspections" means review of product packaging and
marking (labels, tickets, etc.) for accuracy and meeting guidelines in
accordance with Customer's then current vendor communication, compliance and
routing procedures manual. It is not an inspection of actual product and product
quality.
"Work Product" means any and all of the following produced, derived,
collected, prepared, written, created, fixed, invented, discovered, conceived or
reduced to practice by Supplier Parties, alone or together with others, at any
time, in connection with the performance of Services under this Agreement: (a)
the Disaster Recovery Plan and (b) all reports prepared, and data generated, by
Supplier pursuant to this Agreement
1.2 Interpretation, Terms Generally, Rules of Construction.
(a) The Schedules shall have the same force and effect as if expressly
set out in the body of this Agreement, and any reference to this Agreement shall
include the Schedules or any other Exhibit or attachment to this Agreement. To
the extent that there is an inconsistency between the terms of the body of this
Agreement and the Schedules, the body of this Agreement shall prevail, unless
the Schedule expressly states that it is to prevail over the terms of the body
of this Agreement.
(b) In construing this Agreement, unless the context otherwise
requires:
(i) all defined terms shall apply equally to both the plural as
well as the singular forms of the terms defined; any pronoun shall also include
the corresponding masculine, feminine and neuter forms;
(ii) unless otherwise stated, the words "herein", "hereunder"
and other similar words refer to this Agreement as a whole and not to a
particular Section or other subdivision;
(iii) references to "Sections" and "Schedules" are to sections
of, and schedules to, this Agreement;
(iv) a reference to any statute or statutory provision shall be
construed as a reference to the same as it may have been, or may from time to
time be, amended, modified or re-enacted;
(v) headings and titles are for convenience only and do not
affect the interpretation of this Agreement;
(vi) a reference in relation to any particular jurisdiction to
any specific legal term for any action, remedy, method of judicial proceeding,
legal document, legal status, court, official or any legal concept or thing
shall in respect of any other jurisdiction be treated as a reference to any
analogous term in that jurisdiction;
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(vii) any list or examples following the word "including" shall
be interpreted without limitation to the generality of the preceding words; and
(viii) general words shall not be given a restrictive meaning,
where introduced by the word "other", by reason of the fact that they are
preceded by words indicating a particular class of acts, matters or things, nor
by reason of the fact that they are followed by particular examples intended to
be embraced by the general words.
2. RELATIONSHIP OF SUPPLIER AND CUSTOMER.
2.1 Customer hereby retains Supplier as its independent contractor
during the term of this Agreement to receive, warehouse and provide physical
distribution of Customer's product and to provide logistic services. Customer
hereby agrees to allow Supplier to receive, process, warehouse and ship the
Customer Parties' imported, landed and domestic product throughout the Term of
this Agreement.
2.2 This Agreement shall not be construed as constituting either Party
as partner of the other or to create any other form of legal association that
would impose liability upon one Party for any act or omission of the other.
Supplier is not the agent or representative of any Customer Parties for any
purpose whatsoever other than to receive, warehouse and physically distribute
products. Supplier, in performing its obligations under this Contract, is acting
as an independent contractor. Supplier shall perform the Services using only
those personnel who are employees of Supplier or its Affiliates, consultants or
subcontractors for federal tax purposes, or who are bona fide independent
consultants. Personnel who perform the Services are not Customer employees or
agents, and Supplier assumes full responsibility for their acts. Except as
provided in the definition of Time and Materials Rate, Supplier shall be solely
responsible for the payment of compensation to personnel assigned to perform the
Services, and Supplier's personnel shall be informed that they are not entitled
to any Customer employee benefits. Except as provided in the definition of Time
and Materials Rate, Customer shall not be responsible for payment of workers'
compensation, disability benefits, or unemployment insurance or for withholding
or paying employment taxes for any personnel who perform the Services, and sole
responsibility for such items shall be that of Supplier or its Affiliates,
consultants or subcontractors. Each Party shall be responsible for the
management, direction and control of its employees and such employees shall not
be employees of the other Party. Except as expressly provided herein, nothing
contained in this Agreement shall be deemed to create any form of exclusivity
between the Parties.
2.3 Supplier is not granted any right or authority to accept orders or
to create any obligations, express or implied, on behalf of the Customer Parties
or to bind the Customer Parties in any manner whatsoever except as provided
herein.
3. RIGHTS OF THE PARTIES TO THE PRODUCTS.
3.1 Customer will consign products to itself in care of Supplier. All
products shall remain the property of Customer and shall be systematically
stored and identified as Customer's property. Customer shall retain a security
interest in all of its products consigned to Supplier. Supplier agrees to
execute such security agreements, UCC-1 Financing Statements and other documents
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as may be reasonably requested by Customer and other similar documents requested
by Customer that are required by Customer's lenders. Any such UCC-1 Financing
Statements shall be executed by Supplier if required and delivered to Customer
in a form to be recorded and/or filed among the records of the Secretary of
State of the State of Texas or such other relevant jurisdiction. Notwithstanding
anything contained in this Agreement to the contrary, but subject to the rights
of any of Customer's lenders as may be set forth in a warehouseman agreement
between Supplier and any such lender, Supplier shall be entitled to all the
rights of a public warehouseman.
3.2 TITLE TO CUSTOMER PARTIES' PRODUCTS SHALL NOT PASS TO SUPPLIER IN
ANY MANNER WHATSOEVER. SUPPLIER SHALL NOT CLAIM (a) ANY RIGHTS OF OWNERSHIP IN
ANY OF THE PRODUCTS AND SHALL NOT ENCUMBER, LEASE, TRANSFER OR OTHERWISE DISPOSE
OF ANY PRODUCTS, EXCEPT AS INSTRUCTED BY CUSTOMER AND (b) ANY RIGHTS WHATSOEVER
IN CUSTOMER PARTIES' PRODUCTS.
4. SERVICES.
4.1 Warehousing and Distribution Services; Exclusivity.
(a) Supplier shall provide services for the receiving, warehousing and
physical distribution of the Customer Parties' products at the distribution
center facility located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the
"Facility"). The Facility shall be provided by Supplier to Customer on a first
priority but nonexclusive basis. Supplier shall provide Services for one hundred
percent (100%) of Customer Parties' products during the Initial Period in
accordance with the statement of the total unit volume by year and product mix
that Customer provides to Supplier on a similar basis as the other statements
Customer provides to Supplier under Section 10.4. Supplier shall have the right
to use the Facility to service other customers, so long as the servicing of such
other customers does not impair the Services provided to Customer or result in
any additional cost or expense to Customer. Any change in the system of
receiving, warehousing or distribution of the products of Customer and its
subsidiaries shall require the prior written consent of Customer. Upon Customer
providing six (6) month's prior written notice to Supplier, Customer may elect
to transfer from the Facility the receiving, warehousing and physical
distribution services related to the Customer Parties' Rite-Aid and/or Wal-Mart
products to another facility of Supplier.
(b) Supplier will receive all (i) inbound import shipments where
Customer and/or its Affiliates are the importer of record and (ii) Customer's
and/or its Affiliates' landed and domestic shipments. Supplier will take a
physical count of inbound shipments to verify the shipment items and quantities
versus the delivery documentation, whether in hard copy or electronic format.
All discrepancies or receiving errors will be reported to Customer and to the
shipper as soon as practicable, but in any event, no later than three (3)
business days after discovery by Supplier of such discrepancy or receiving
error. Supplier shall be responsible for and reimburse Customer for the cost of
all such inbound shortfalls in inventory that Supplier fails to notify Customer
about within such three-day period. All receipts for inbound shipments will be
entered into Customer's inventory management system. Customer shall pay directly
all freight charges for inbound and outbound shipments.
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(c) Except as otherwise provided herein, Supplier shall be the Customer
Parties' exclusive provider of the receiving, warehousing and physical
distribution Services during the Term for imported product where a Customer
Party is the importer of record or landed and/or domestic shipments controlled
within a Customer Party's supply chain. During years three (3) through eight (8)
of the Term, Supplier shall be the exclusive provider of such Services with
respect to the MQC as established in accordance with Section 10.4. To the extent
that for any calendar year commencing January 1, 2008 Customer exceeds the MQC
for such calendar year at any time during such calendar year, Customer, may, at
its option, use the services of any other provider with respect to such excess
for such calendar year only. If (i) commencing January 1, 2007 Customer's MQC
volume is below 70,000,000 units in any calendar year or (ii) cross-dock exceeds
eighty percent (80%) of total units during any calendar year or Customer's
projections for cross-dock exceeds eighty percent (80%) of total units during
any calendar year, then Supplier may, upon ninety (90) days' prior written
notice to Customer, transfer, at no cost or penalty to Supplier, the Customer
Parties' products and Services from the Facility to a different facility
selected by Customer, provided that Customer is not negatively impacted and that
any migration services required by Customer upon termination of this Agreement
shall be at Supplier's cost and expense. The costs and expenses associated with
such transfer shall be Customer's obligation up to a maximum amount of
$1,300,000 (One Million Three Hundred Thousand Dollars), and all costs and
expenses in excess of such amount shall be the obligation of Supplier. On
January 1, 2007, Supplier may, at Supplier's cost and expense, transfer all of
the Customer Parties' products and the Services to Supplier's facility located
in San ▇▇▇▇▇, California if Supplier provides written notice to Customer on or
prior to January 1, 2006.
(d) Commencing on the Effective Date through December 31, 2006 (the
"Initial Period"), Customer agrees that Supplier's fees generated for the
Services provided hereunder to Customer (the "Revenue") shall be at least
$3,772,000 (Three Million Seven Hundred Seventy Two Thousand Dollars) per
calendar quarter other than the portion of the first quarter from the Effective
Date, which amount shall be $3,133,661 (Three Million One Hundred Thirty Three
Thousand Six Hundred Sixty One Dollars) (each such quarterly amount, the
"Minimum Revenue"). To the extent the actual amount billed for Services in a
given calendar quarter is less than the Minimum Revenue (the "Minimum Revenue
Shortfall") during the Initial Period, Customer shall pay the amount of such
Minimum Revenue Shortfall within thirty (30) days after the end of such calendar
quarter; provided, that if the aggregate Revenue for the period from the
Effective Date through December 31, 2004 is $6,905,661 (Six Million Nine Hundred
Five Thousand Six Hundred Sixty One Dollars) or more, or $15,088,000 (Fifteen
Million Eighty Eight Thousand Dollars) or more for the period of January 1, 2005
through December 31, 2005, or $15,088,000 (Fifteen Million Eighty Eight Thousand
Dollars) or more for the period from the January 1, 2006 through December 31,
2006 (each such period, the (Revenue Period"), then Supplier shall apply as a
credit against the first invoice for Services immediately following the end of
the applicable Revenue Period an amount equal to the aggregate amount of the
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Minimum Revenue Shortfall(s) paid by Customer (and to the extent that the
aggregate amount of the Minimum Revenue Shortfall(s) exceeds such credited
invoice, then the following invoice(s) shall be credited until Customer has been
credited for the entire amount of such Minimum Revenue Shortfall(s) paid).
During each calendar year after the Initial Period, Customer agrees to the MQC
as established in accordance with Section 10.4 (the "Annual MQC"). The Annual
MQC shall be trued-up quarterly within thirty (30) days after the end of each
calendar quarter to determine the actual total units processed and/or received
against the Annual MQC for such quarter. If there is any quarterly shortfall to
the Annual MQC, Customer shall pay to Supplier an amount equal to such shortfall
from the Annual MQC at the billable transaction rate for the type of transaction
where such shortfall exists, provided that, with respect to any such shortfall,
if Customer has paid Supplier an aggregate amount in excess of the Annual MQC
during such year, then Supplier shall apply as a credit against the first
invoice for Services in the immediately following calendar year an amount equal
to such excess paid by Customer (and to the extent that such excess exceeds the
first invoice, then the following invoice(s) shall be credited until Customer
has been credited for the entire amount of such excess).
4.2 Custom Development. At the request of Customer from time to time,
Supplier shall perform the custom development Services or modifications to the
warehouse management system (such as "Sunrise 2005", RFID tagging or other
industry wide enhancements that are required to ship to at least ninety percent
(90%) of retailers in the United States) or other systems utilized by Supplier
to provide Services at or from the Facility ("Custom Development") mutually
agreed upon by the Parties in an executed statement of work setting forth the
description, performance standards, acceptance criteria, fees and specifications
for the Services to be performed. Unless otherwise specified in the applicable
statement of work, the fees for such Custom Development shall be at the Time and
Materials Rate.
4.3 Included Services. Except as contemplated by that certain
Transition Services Agreement dated as of the date hereof between Customer and
Supplier (the "Transition Services Agreement"), if any application development
and maintenance, data processing or network services, functions or
responsibilities not specifically described in this Agreement are required by
Supplier to perform the Services that are described in this Agreement, then
Supplier shall perform them, at Supplier's sole cost and expense, and they shall
be included within the scope of the Services, to the same extent, and in the
same manner, as if they had been specifically described in this Agreement. As of
the date hereof, Customer has no knowledge of any such application or
development and maintenance, data process or network services, functions or
responsibilities that are currently required, other than general ongoing
maintenance, including, without limitation, the fixing of bugs. Any development
of programming initiated by Supplier related to Supplier's billing of Customer
for Services shall be at Supplier's sole cost and expense.
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4.4 New Services.
(a) General. If Customer requests in writing that Supplier perform
additional functions (including performing new services or making available or
supporting new machines or Software) that are not included in the Services as
then defined (which included Services include any migration services upon
termination or expiration of this Agreement or as set forth on Exhibit A), then:
(i) such additional function shall constitute a "New Service";
(ii) Supplier shall not perform such New Service unless and
until directed to do so by Customer in accordance with Section 4.4(a)(iv);
(iii) Supplier promptly shall quote to Customer a price for such
New Service; and
(iv) Customer, upon receipt of such quote, may then elect
whether to have Supplier perform such New Service. If Customer does not elect to
have Supplier perform such New Service, Supplier shall reasonably cooperate with
Customer to enable Customer to obtain such New Service from a third party
selected by Customer, at Customer's expense.
(b) Exceptions. The Parties anticipate that the Services and the
systems used by Supplier to perform the Services will evolve and be supplemented
and enhanced over time to keep pace with technological advancements and
improvements in the methods available for performing the Services and services
similar thereto. The Parties acknowledge that, unless otherwise mutually agreed,
the use of such advancements and improvements to perform the Services shall not
constitute New Services. Industry information technology modifications
supporting the existing warehouse management system and other systems utilized
by Supplier to provide Services at or from the Facility will be mutually agreed
upon by Customer and Supplier and the related costs and expenses associated
shall be paid by Supplier. Customer shall be required to pay the costs and
expenses related to enhancements in connection with retailer required
initiatives.
4.5 Modification of Information Systems. Supplier, at its own cost and
expense, shall provide any systemic changes required to comply with
governmental, legal, statutory, regulatory or accounting requirements. Supplier
shall not make any changes to the data interfaces between the warehouse
management system utilized at the Facility and Customer's system without
receiving the prior written consent of Customer, which consent may be withheld
for any reason. Supplier shall be required to promptly reimburse Customer for
any out-of-pocket expenses or costs incurred by Customer in connection with such
systemic changes.
4.6 Physical Inventory. Customer shall perform a physical inventory at
the Facility on or prior to the Effective Date, which Supplier's designee(s) may
observe, and Customer shall provide the results of such physical inventory to
Supplier.
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4.7 Performance Standards.
(a) Supplier shall (i) meet or exceed the levels of accuracy, quality,
completeness, availability and responsiveness specified in the Performance
Standards, (ii) meet or exceed the levels of accuracy, quality, completeness,
availability and responsiveness provided by Supplier to its other customers and
(iii) perform the Services in accordance with Customer's practices and policies
as of the Effective Date unless otherwise mutually agreed.
(b) Supplier shall provide Customer with a monthly performance report,
in a form and with content mutually agreed to by Supplier and Customer,
documenting Supplier's performance with respect to each of the Performance
Standards. Supplier's outbound Services, which shall be in accordance with the
Performance Standards set forth in Exhibit D, shall be monitored for performance
and accuracy through audits performed by DanBee Investigations or such other
third party firm selected by Customer and consented to by Supplier, which
consent shall not be unreasonably withheld or delayed. Supplier shall deliver
each such monthly report to Customer within ten (10) calendar days after the end
of each calendar month. In addition, Supplier shall provide Customer with such
documentation and other information and access to the Facility as may be
reasonably requested by the Customer from time to time in order to verify
Supplier's performance against the Performance Standards.
(c) During the Term, if Supplier fails to meet any Performance
Standard, then Supplier shall (i) promptly investigate the "root causes" of the
problem and prepare a report to Customer identifying the same; (ii) use
reasonable efforts to correct the problem and to begin meeting the Performance
Standards as soon as practicable; and (iii) advise Customer, as and to the
extent requested by Customer, of the status of remedial efforts being undertaken
with respect to such problems.
(d) In connection with all shrinkage and shortages in excess of the
tolerances set forth in Exhibit D, Supplier shall be required to pay Customer
the landed duty paid cost of such merchandise within thirty (30) days after the
determination of any such excess of the tolerances set forth in Exhibit D.
4.8 Integrity, Privacy and Lost Data. Supplier shall implement all
commercially reasonably safeguards to prevent the loss or alteration of all data
collected in connection with the Services. Supplier acknowledges and agrees that
any data collected in connection with Supplier's performance of the Services
under this Agreement is the sole and exclusive property of Customer. In no event
shall such data be: (i) collected, stored, or used by Supplier for purposes
other than complying with the requirements of this Agreement, or (ii) disclosed,
distributed, shared, transferred or sold by Supplier to any third party for any
purpose other than to Supplier's accountants, lenders and attorneys. If any
Customer Proprietary Information or other information, data or materials
provided to Supplier Parties in connection with this Agreement or the Services,
Work Product or such other data are lost or damaged by any Supplier Party, then
Supplier will replace or regenerate it promptly at Supplier's sole cost and
expense and Customer will not pay for such replacement or regeneration.
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4.9 Security.
(a) Supplier shall provide mutually agreed upon security measures to
ensure that access to the Customer Proprietary Information is available only to
Supplier and Supplier's authorized agents, consultants, subcontractors or
Affiliates, and to Customer. Supplier reserves the right to issue and change
procedures from time to time to improve or protect file security. Customer has
the right to approve any such new procedures or changes that are material,
provided that if there is an emergency, Supplier may implement such new
procedures prior to obtaining Customer's consent, provided, further, that
Supplier shall be required to obtain Customer's consent as soon as practicable
thereafter in order to continue such new procedures.
(b) Supplier agrees, that with respect to electronic access to its
information processing, transmission, and storage system (the "Server"), it will
use all reasonable efforts to ensure the security and integrity of the content
of, and other information transmitted through or stored on, the Server,
including, without limitation: (i) firewall protection; (ii) maintenance of
independent archival and backup copies of the content; and (iii) protection from
any network attack and other malicious, harmful, or disabling data, work, code
or program. 4.10 Required Resources. Except as may be expressly provided to the
contrary elsewhere in this Agreement or the Transition Services Agreement,
Supplier shall provide all facilities, equipment, procedures, personnel and
other resources necessary to perform the Services in accordance with this
Agreement.
4.11 Non-Infringement and Third Party Materials. Supplier shall perform
its responsibilities under this Agreement in a manner that does not infringe, or
constitute an infringement or misappropriation of, any intellectual property of
any Person or cause Customer in the normal course of its business to commit any
such act. Supplier shall be responsible for obtaining all third party Software
and hardware necessary to perform the Services, other than Customer Provided
Items, if any, or as contemplated in the Transition Services Agreement. If any
Services or any Supplier Provided Items are held or believed by Supplier to
infringe on the intellectual property of any party, Supplier shall have the
option, at its expense, to (a) modify such Services or Supplier Provided Items
to be non-infringing, or (b) obtain a license to continue using such Services or
any Supplier Provided Items at Supplier's expense.
4.12 Continued Performance. Regardless of any dispute between the
Parties, or any actual or alleged breach of this Agreement by Customer, Supplier
shall perform each of its obligations under this Agreement (including its
obligation to perform the Services in accordance with the Performance Standards)
unless and until such obligation expires, or is discharged, excused, or
terminated, in accordance with the provisions of this Agreement.
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5. CHANGE MANAGEMENT.
Without first obtaining written approval from Customer, which approval
Customer may withhold in its sole discretion, Supplier shall not make any system
changes or other changes at the Facility that could reasonably be expected to:
(a) adversely affect Customer's operations during the Term, (b) increase
Customer's costs during the Term (including fees payable under this Agreement or
any other agreement to which Customer is a party), or (c) adversely affect the
Services to be provided by Supplier to Customer pursuant to this Agreement;
provided, however, that Customer's approval of a particular System Change cannot
be unreasonably withheld or delayed if (i) it is unlikely to adversely affect
Customer's operations during the Term and (ii) Supplier pays, or reimburses
Customer for, all increased costs arising out of or in connection with such
System Change.
6. PROJECT MANAGEMENT; STAFFING.
6.1 Supplier Project Manager.
(a) Supplier shall designate, prior to the Effective Date, a Supplier
project manager ("Supplier Project Manager") to whom all of Customer's
communications concerning the Services may be addressed and who has the
authority to act for and to bind the Supplier and its Affiliates, consultants
and subcontractors in connection with performance under this Agreement (it being
understood that amendments to this Agreement shall require the signature of
either the chief executive officer or president of Supplier). The Supplier
Project Manager will be the senior manager responsible for managing the
performance of the Services. Supplier shall cause the person assigned to the
position of Supplier Project Manager to devote substantially full time and
effort to the provision of the Services under this Agreement. In addition, if at
any time Customer is not reasonably satisfied with the Supplier Project Manager,
Supplier will take appropriate action to resolve Customer's concerns to
Customer's satisfaction.
(b) If, within one (1) year after the Effective Date, Supplier desires
to transfer the Supplier Project Manager from the Customer account or modify the
scope of his or her duties in the provision of the Services, Supplier must
provide Customer thirty (30) days' prior written notice. In such case, Supplier
must identify alternative Supplier Project Managers and ensure that the outgoing
and incoming Supplier Project Managers overlap in their provision of the
Services to Customer for a period of no less than one (1) month, with Supplier
bearing the cost of the incoming Supplier Project Manager during such
three-month period of overlap. Notwithstanding anything to the contrary in this
Section, Supplier may immediately terminate the Supplier Project Manager for
cause.
6.2 Customer Project Manager. Customer shall designate, prior to the
Effective Date, a Customer project manager ("Customer Project Manager") to whom
all Supplier communications concerning this Agreement may be addressed and who
has the authority to act for and to bind Customer in connection with all aspects
of this Agreement. Customer may designate a new Customer Project Manager at any
time by written notice to Supplier.
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6.3 Mahwah Director of Client Services. Supplier shall designate and
provide at its own cost and expense effective January 3, 2005, a Customer
account manager ("Mahwah Director of Client Services") who will work on-site at
Customer's facility located at Mahwah, New Jersey (the "Mahwah Facility") to
answer questions, research problems and provide information in connection with
the Services provided by Supplier. The Mahwah Director of Client Services will
work the standard business hours of Meldisco employees and will act as a liaison
between Customer and Supplier.
6.4 Joint Advisory Committee.
(a) Committee Membership. Supplier and Customer agree to create a six
(6) member "Joint Advisory Committee" consisting of three (3) people with the
following titles from Supplier and three (3) people with the following titles
from Customer:
Supplier:
(i) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
(ii) ▇▇▇▇ ▇▇▇▇▇; and
(iii) Supplier Project Manager
Customer:
(i) ▇▇▇ ▇▇▇▇▇▇;
(ii) ▇▇▇ ▇▇▇▇▇▇; and
(iii) Customer Project Manager.
(b) Committee Responsibilities. The Joint Advisory Committee shall:
(i) Conduct quarterly reviews of progress on projects and
performance under this Agreement;
(ii) Annually review the operating and strategic plans prepared
by Supplier;
(iii) Review, on an annual basis, performance objectives and
measurements; and
(iv) Provide advice and direction on technology changes.
(c) Expenses. Each Party shall pay the expenses incurred by its
representatives to attend meetings of the Joint Advisory Committee.
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(d) Replacement of Committee Members. Each Party may replace any of its
members of the Joint Advisory Committee upon written notice to the other Party.
6.5 Employment; Transferred Employees.
(a) Customer shall terminate all Employees on the Effective Date and
Supplier shall offer full-time employment effective as of the Effective Date to
the specific Employees designated by the Supplier ("Transferred Employees").
Except if there is a failure by Customer to make payments in accordance with
Section 4.1(d) during the Initial Period and any such default remains uncured by
Customer for sixty (60) days or in the case of any employee Customer asks to be
replaced under Section 6.7(b), Supplier agrees to retain the Transferred
Employees, other than in the case of termination of employment for "Cause" (as
defined below), as follows: (i) executive Transferred Employees, pursuant to
confidential employment agreements; (ii) exempt Transferred Employees, a period
of not less than two years from the Effective Date and (iii) non-exempt
Transferred Employees, a period of not less than one year from the Effective
date. In the case of executive Transferred Employees, "Cause" shall be defined
in such executive Transferred Employee's confidential employment agreement. In
the case of exempt and non-exempt Transferred Employees, "Cause" shall mean,
with respect to the Transferred Employee's employment with the Supplier: (i)
willful misconduct or gross negligence with regard to the Supplier or its
business, assets or employees; (ii) refusal to perform the duties required in
connection with such Transferred Employee's employment (other than any such
failure resulting from incapacity due to physical or mental illness) or comply
with the lawful directives of such Transferred Employee's supervisory personnel;
(iii) any breach of Supplier's policy regarding sexual harassment; (iv) any act
of embezzlement or theft with respect to the Supplier's property; (v) conviction
of a felony or pleading nolo contendere to a felony; or (vi) the material breach
of any fiduciary duty owed to the Supplier. Except as otherwise specifically set
forth herein, Customer shall have no responsibility whatsoever for any
liabilities or obligations which relate in any way to such Transferred
Employee's employment service with Supplier.
(b) Supplier shall not during the 90-day period beginning on the
Closing Date terminate the employment of full-time employees (as determined for
purposes of the Worker Adjustment and Retraining Notification Act of 1988, as
amended, and any similar state law, and the rules and regulations thereunder,
hereinafter, the "WARN Act") of the Facility hired by Supplier so as to cause
any "plant closing" or "mass layoff" (as those terms are defined in the WARN
Act) such that Customer has any obligation under the WARN Act that Customer
otherwise would not have had absent such terminations; provided, however, that
in the event of any breach by Supplier of the foregoing, Supplier agrees to
indemnify Customer for any such obligations.
6.6 Employee Benefits.
(a) Effective as of the Closing Date, and except as provided in
subsection (c) below, Supplier shall cause each Transferred Employee who was
covered under the Employee Plans immediately prior to the Closing Date to be
covered under the employee benefit plans, programs and arrangements maintained
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by Supplier (the "Supplier Plans") in accordance with the terms and provisions
of the Supplier Plans. The Supplier Plans shall recognize each Transferred
Employee's prior service that is recognized under the Employee Plans (including
prior service with predecessor employers to the extent such prior service is
recognized under the Employee Plans) for eligibility and vesting purposes and,
in the case of vacation (but not severance) benefits, for purposes of
determining the amount of benefits.
(b) Effective as of the Closing Date, Supplier shall take all action
necessary or appropriate to cause a defined contribution plan adopted or
maintained by Supplier (the "Supplier 401(k) Plan") to recognize prior service
with Customer or any of its Subsidiaries for purposes of participation. It is
understood that such prior service shall not affect the vesting requirements of
the Supplier 401(k) Plan. Customer shall cause the account balances of the
Transferred Employees under the 401(k) Profit Sharing Plan of Customer and its
Affiliates, as amended from time to time (the "Footstar 401(k) Plan"), to be
fully vested as of the Closing Date. Customer shall permit Transferred Employees
to make a "direct rollover" of such Transferred Employees' account balances
(including loans to Transferred Employees) under the Footstar 401(k) Plan to
Supplier 401(k) Plan. Customer acknowledges that on and after the Closing Date,
the account balances of Transferred Employees held in the Footstar 401(k) Plan
will be distributable from the Footstar 401(k) Plan in accordance with the Code.
Customer and the Footstar 401(k) Plan shall not place any Transferred Employee's
plan loan in default or declare a default with respect to any outstanding plan
loan during the ninety (90) day period following the Closing Date or such
shorter period requested by Supplier, so long as such Transferred Employee
continues to make loan repayments when due and such Transferred Employee
transfers his or her account balance under the Footstar Plan, together with the
promissory note evidencing the plan loan, to the Supplier 401(k) Plan through a
"direct rollover" on or as soon as administratively practicable following the
Closing.
(c) Effective as of the Closing Date, Customer shall provide
continuation health care coverage to all Transferred Employees and their
qualified beneficiaries in accordance with the continuation health care coverage
requirements of Section 4980B of the Code and Title I, Subtitle B, Part 6 of
ERISA ("COBRA") for such period of time (not to exceed the maximum required
period under COBRA) as required for the Transferred Employees to commence
coverage under the Supplier Plans. Supplier will reimburse each Transferred
Employee for the cost of such coverage in an amount equal to the difference
between the Transferred Employees' contribution under the applicable Employee
Plan and the full cost of continuation coverage.
6.7 Staffing.
(a) General. Supplier shall use adequate numbers of qualified
individuals to perform the Services. Each of Supplier's employees, agents,
subcontractors and consultants assigned to performing the Services shall have
the proper skill, training, education and experience to perform assigned tasks
in a competent and professional manner. In any event, notwithstanding transfer
or turnover of personnel, Supplier remains obligated to perform the Services
without degradation and in accordance with this Agreement.
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(b) Replacement of Supplier Personnel. If Customer requests that
Supplier replace any Supplier personnel (including any employees, consultants or
subcontractors of Supplier), Supplier shall in good faith consider replacing
such personnel, and shall replace such personnel as is reasonably necessary.
Nothing in this provision shall be deemed to give Customer the right to require
that Supplier terminate the employment of any of Supplier's personnel; it only
gives Customer the right to require that Supplier discontinue using an employee
in the performance of Services for Customer.
6.8 Dispute Resolution. If any dispute between the Parties hereto
arises from or concerns in any manner the subject matter of this Agreement, each
Party will attempt, in good faith, to resolve such dispute through discussion
between its employees in the order set forth in this Section. First, within five
(5) days of receipt of any written request by either Party of a dispute
hereunder (a "Dispute Notice"), the Supplier Project Manager and Customer
Project Manager shall attempt to resolve the dispute. In the event such persons
are unable to resolve such dispute within ten (10) days of receipt of a Dispute
Notice, then, a senior vice president of each Party shall meet in person to
resolve such dispute. Finally in the event such respective representatives are
unable to resolve such dispute within fifteen (15) days of receipt of a Dispute
Notice, then the chief operating officer of Supplier and the chief operating
officer or administrative officer of Customer (each, an "Executive Officer")
shall meet in person to resolve such dispute. If the respective Executive
Officers cannot resolve the dispute within ten (10) days of such dispute being
submitted to them ("Negotiation Period"), then the dispute may be resolved by
litigation. Any and all disputes arising from this Agreement whether or not
resolved pursuant to this Section 6.8 shall be subject to the provisions of
Sections 14 ("Liability") and 16 ("Indemnities").
7. PROTECTION OF CUSTOMER'S PRODUCTS; C-TPAT.
7.1 Protection of Customer's Products. Supplier shall provide
sufficient security at the Facility and preserve and maintain the Customer
Parties' products and supplies in as good a condition as such items are received
from the Customer Parties or their vendors. At any time requested by Customer or
at the expiration of this Agreement, Supplier shall return the Customer Parties'
products and supplies to Customer in as good a condition as when received.
7.2 C-TPAT. Supplier will continue to support Customer's C-TPAT plan
for the Facility at Supplier's sole cost and expense; provided, however, in the
event that any such plan materially increase Supplier's costs, the parties agree
to negotiate in good faith an appropriate one-time payment by Customer to
Supplier to cover Customer's share of any required capital expenditures.
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8. CONFIDENTIALITY; TRADEMARKS.
8.1 Supplier acknowledges that during the course of performing this
Agreement, Supplier may be privy to confidential information regarding
Customer's products, pricing and business operations and procedures. Supplier
agrees not to disclose confidential information of Customer to any other person
not already in possession of such confidential information except employees or
agents who require the same for purposes of performance of this Agreement.
Supplier agrees to take reasonable precautions to prevent the unauthorized
disclosure of Customer's confidential information to third parties.
8.2 Supplier acknowledges that it has no right to use any trademarks of
Customer. Supplier acknowledges that this Agreement shall not be construed to
give Supplier any vested right, title or interest in any of the trademarks or
copyrighted material of Customer.
9. OFFICE ACCOMMODATION.
Supplier shall provide Customer with 6,230 square feet of office space
at the Facility in accordance with its current office space usage as of the date
hereof, together with furniture, fixtures and equipment as existing on the
Effective Date and data connection services at no charge during the Term.
Customer shall arrange for and pay the telephone company directly for local and
long distance telephone service for such office space.
10. RECORDS AND AUDITS.
10.1 Supplier's Invoices. Supplier shall maintain complete and accurate
accounting records to support and document all amounts payable by Customer under
this Agreement, including, but not limited to, records relating to any and all
operating expenses of Supplier that are relevant to the calculation of any such
amounts. Each such record shall be retained for a period of at least five (5)
years after the date of the last invoice to which it is relevant. Throughout
such period, upon reasonable prior notice, Customer, any Regulatory Authority,
and accounting organizations retained by any of the foregoing (collectively, the
"Designated Persons"), shall have the right to audit and examine such records
during normal business hours for the purpose of auditing the accuracy and
correctness of Supplier's invoices to Customer and/or the provision of Services
for the specified billing period (which shall be at least three (3) months). If
the Parties learn, through any such audit or examination or otherwise, that any
invoice of Supplier was not correct, then, as appropriate, Supplier shall
promptly reimburse Customer for the amount of any overcharge or Customer shall
pay Supplier for the amount of any undercharge. If such audit reveals that
Supplier has overcharged fees to Customer by greater than five percent (5%),
then Supplier shall pay the costs of such audit.
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10.2 Operations and Services. Supplier shall assist Customer in meeting
its audit and regulatory requirements. Upon reasonable prior notice to Supplier,
Supplier shall permit the Designated Persons to access (a) personnel performing
the Services, (b) the Facility, (c) the systems used to perform the Services
(including the Customer Owned Software), and (d) data and records relating to
the performance of the Services; in each case, for the purposes of auditing or
examining: (i) the business and operations of Supplier and its Affiliates, (ii)
the operations of Supplier relating to the performance of the Services, (iii)
the procedures used by Supplier to control access to, and use of, the Services,
the system used to perform the Services and the Customer Provided Items, (iv)
Supplier's compliance with this Agreement (including the Performance Standards),
(v) Supplier's procedures to control information asset security, (vi) general
controls and security practices and procedures in connection with the Services,
(vii) disaster recovery and back up procedures, (viii) the efficiency with which
Supplier utilizes resources chargeable to Customer, and (ix) any matters
reasonably related to regulatory requirements applicable to Customer or its
Affiliates (including C-TPAT). Such access shall include installing and
executing such reasonable audit Software as Customer may from time to time
request and making copies of files for downloading to other computing platforms;
provided, that Customer shall pay for such installation and operation of such
Software or the making of such copies at the Time and Materials Rate. Such
access shall be provided at reasonable hours and in a manner designed to avoid
unreasonable interference with the performance of the Services. Supplier will
cooperate fully with, and will provide reasonable assistance to, the Designated
Persons in connection with such access. Supplier shall take reasonable steps to
avoid allowing the Designated Persons to have access to proprietary information
of Supplier or its other customers. Supplier shall be solely responsible and
shall make such changes to its operations and take such other actions as may be
necessary to maintain compliance by Supplier and its Affiliates with all
applicable laws, rules, statutes and regulations relating to the Facility and
the Services, and Supplier shall at all times comply with all applicable laws,
rules, statutes and regulations relating to the Facility and the Services.
10.3 Annual Review. At least annually during the Term of this
Agreement, Customer may conduct an audit of the systems used to perform the
Services for adequacy of security, audit information, system integrity and other
matters as may be prudent or required by any Regulatory Authority or any of its
Affiliates. Promptly after such audit, Supplier shall correct any deficiencies
identified in such audit that relate to the performance of the Services.
10.4 Annual Estimates of Total Unit Volume. For each calendar year
commencing on January 1, 2007 through the Term of this Agreement, Customer will
provide to Supplier an initial statement of the estimated total unit volume by
year and product mix on or prior to October 1 of the immediately succeeding
year, and Customer will provide to Supplier a statement of the final total unit
volume by year and product mix on or prior to December 31 of the immediately
succeeding year.
10.5 Other Audits of Supplier. Supplier shall furnish Customer with the
audit reports of any other reviews of Supplier's general controls and a summary
of findings and recommendations of any such reviews, in each case to the extent
related to the Services. Supplier shall promptly correct any control weaknesses
identified in such audits that relate to the Services.
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10.6 Report of Corrective Actions. Promptly after the end of each
calendar quarter, Supplier shall provide Customer with a report describing the
status of corrective actions on any open audit recommendations.
11. FEES; PAYMENT.
11.1 Fees.
(a) Subject to the terms and conditions of this Agreement, Customer
shall pay to Supplier the fees specified in Exhibit C for all Services performed
during the Term, other than Services pursuant to Section 4.2 and New Services.
All fees shall be due within thirty (30) days after Customer's receipt of
invoice and shall be paid weekly by ACH transfer to an account designated by
Supplier. Except as may be expressly provided to the contrary elsewhere in this
Agreement, Customer shall not be obligated to pay any additional amounts for the
Services.
(b) For the period from the Effective Date through December 31, 2006,
there shall be no adjustment in the fees specified in Exhibit C for changes in
the United States Department of Labor Bureau Consumer Price Index in the
California Urban Wage Earners and Clerical Workers, Los Angeles - Riverside -
Orange County, California Metropolitan area ("CPI"). Commencing January 1, 2007
and each January 1 thereafter, the labor component (which shall be mutually
agreed to by Supplier and Customer) (the "Labor Component") related to the fees
set forth in Exhibit C shall be increased by a percentage equal to the
percentage of the increase in the CPI for the immediately prior twelve (12)
month period; provided, however, for calendar years 2007 and 2008, such increase
in the Labor Component resulting from the CPI increase for each such period
shall not exceed three and a half percent (3.5%) in any such year.
11.2 Disputed Amounts. Notwithstanding anything to the contrary
elsewhere in this Agreement, if Supplier charges more for Services than Customer
believes in good faith is due under this Agreement, then the Parties will
resolve such dispute in accordance with Section 6.8. If the Parties are unable
to resolve such dispute and Customer has a reasonable basis to believe that the
Supplier has charged more than Customer believes in good faith is due under this
Agreement, Customer shall be excused from paying such disputed amount until such
dispute is finally resolved.
12. DISASTER RECOVERY.
The Parties shall jointly develop a disaster recovery plan (the
"Disaster Recovery Plan") for recovering the Services in the event of a
Disaster. The costs and expenses related to preparing and putting into place the
Disaster Recovery Plan (as opposed to implementing the Disaster Recovery Plan in
the case of a Disaster) shall be the sole responsibility of Supplier.
13. TERM AND TERMINATION.
13.1 Term. The term of this Agreement ("Term") shall commence at 5:00
a.m. PDT on the Effective Date and shall terminate, unless extended by the
mutual written agreement of the Parties, at 5:00 p.m. PDT on July 1, 2012 or
until otherwise terminated in accordance with the terms of this Agreement. If
Customer sends a notice to Supplier prior to July 1, 2008 of its desire to
extend the term of this Agreement, then Supplier and Customer shall negotiate in
good faith an extension of this Agreement.
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13.2 Termination by Customer for Supplier's Failure to Meet Performance
Standards.
(a) If during any thirty-day period, the average time it takes Supplier
to move Customer's products from the applicable port to the Facility and unload
and receive such product into the Facility is greater than seven days after such
product become available at the applicable port, then Customer may send Supplier
written notice of such breach. If Supplier fails to cure such breach within
thirty (30) days after it receives such notice, then Customer may thereafter
notify Supplier in a written notice of Customer's election to terminate this
Agreement, and the Termination Date shall become the date specified in such
notice of election, which date shall be not more than six (6) months after the
date of such notice. Customer shall not have the right to terminate pursuant to
this Section 13.2 if Supplier's breach is caused by any material act or omission
on the part of Customer.
(b) If during any calendar quarter Supplier fails to comply with the
fill-rate standard set forth in Exhibit D three (3) times or more, then Customer
may thereafter notify Supplier in a written notice of Customer's election to
terminate this Agreement, and the Termination Date shall become the date
specified in such notice of election, which date shall be not more than six (6)
months after the date of such notice.
(c) If during any six-month period an audit of one (1) outbound
shipment shows that Supplier has failed to comply with the ▇▇▇▇ of lading
accuracy rate set forth in Exhibit D, then an audit of four (4) outbound
shipments shall be conducted, and if such audit shows that Supplier is not in
compliance with the ▇▇▇▇ of lading accuracy rate set forth in Exhibit D, then an
audit of ten (10) outbound shipments shall be conducted, and if such audit shows
that Supplier is not in compliance with the ▇▇▇▇ of lading accuracy rate set
forth in Exhibit D, then Customer may thereafter notify Supplier in a written
notice of Customer's election to terminate this Agreement, and the Termination
Date shall become the date specified in such notice of election, which date
shall be not more than six (6) months after the date of such notice.
(d) If there is any labor strike with respect to Supplier's employees
which prevents Customer's products from being shipped from the Facility for six
(6) or more consecutive business days, then Supplier must make arrangements, at
its sole cost and expense, (i) to perform the Services under this Agreement at
another facility of Supplier or a third party and (ii) to move the Customer
Parties' products from the Facility to another facility of Supplier or a third
party and perform the Services at such other facility; provided, however, if a
third party's facility is utilized in whole or in part, such facility must be
reasonably acceptable to Customer. If the labor strike continues for more than
sixty (60) consecutive days, then Customer may thereafter notify Supplier in a
written notice of Customer's election to terminate this Agreement, and the
Termination Date shall become the date specified in such notice of election,
which date shall be not more than six (6) months after the date of such notice.
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13.3 Termination by Customer for Cause.
(a) If Supplier commences, or has commenced against it, proceedings
under chapter 7 or chapter 11 of the United States Bankruptcy Code after the
date hereof, which proceedings are not dismissed within sixty (60) days, then
Customer may terminate this Agreement. Customer shall thereafter notify Supplier
in a written notice of Customer's election to terminate this Agreement, then the
Termination Date shall become the date specified in such notice of election,
which date shall be not more than six (6) months after the date of such notice.
(b) Upon Supplier's default under the Lease Agreement, Suppler shall
notify Customer of such default within one (1) business day after such default.
If Customer elects to pay any cure amount (the "Cure Amount") owed to the lessor
under the Lease Agreement as a result of such default by Supplier and Supplier
does not reimburse Customer for the payment to such lessor of the Cure Amount
within the applicable cure period provided in the Lease Agreement for curing
such default, then Supplier may elect to assume the subject lease and this
Agreement shall automatically terminate, provided that upon such termination any
amounts owed to Supplier hereunder by Customer shall be offset against the Cure
Amount Customer paid to such lessor.
13.4 Termination by Supplier for Cause.
(a) If Customer defaults under its payment obligations under Section
4.1(d) for more than ten (10) business days after written notice from Supplier
to Customer, Supplier may notify Customer in a written notice of Supplier's
election to terminate this Agreement, and the Termination Date shall become the
date that is six (6) months after the date of such notice.
(b) If Customer or Kmart commences, or has commenced against it,
proceedings under chapter 7 or chapter 11 of the United States Bankruptcy Code
after the date hereof, which proceedings are not dismissed within sixty (60)
days, Supplier may notify Customer in a written notice of Supplier's election to
terminate this Agreement, and the Termination Date shall become the date that is
six (6) months after the date of such second notice.
13.5 No Other Termination. Except for the rights of termination
expressly set forth in Article 13, each of Customer and Supplier shall not have,
and hereby expressly waives any rights it might otherwise have, to terminate
this Agreement, regardless of any breach of this Agreement by Customer or
Supplier or any non-performance of Customer's or Supplier's obligations
hereunder, and regardless of the severity, cause or purpose of such breach or
non-performance. However, nothing in this Section 13.5 shall limit any rights
Supplier or Customer might otherwise have to recover damages or to obtain
injunctive relief if Customer or Supplier should breach any of its obligations
under this Agreement.
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13.6 Transfer of Services. Upon the expiration or termination of this
Agreement, Supplier shall, upon Customer's written request, provide all services
required by Customer in order to facilitate the transfer of the provision of the
Services from Supplier to another service provider designated by Customer. Such
transition services shall be provided at no cost to Customer if Customer
terminates this Agreement pursuant to Article 13, but such transition services
shall be provided to Customer at a Times and Materials Basis if this Agreement
expires by its terms or is terminated by Supplier pursuant to Article 13.
13.7 Survival. Notwithstanding anything to the contrary elsewhere in
this Agreement, the following Sections of this Agreement shall survive the
termination of this Agreement and the Termination Date: Section 6.7 ("Project
Management; Staffing - Dispute Resolution"); Section 7 ("Protection of
Customer's Products") Section 10.1 ("Records and Audits - Supplier's Invoices"),
but only for the periods stated therein; Section 11.1 ("Fees; Payment"),
provided that Customer is not obligated to pay for Services after the
Termination Date; Section 13.6 ("Termination - Transfer of Services"); Section
13.7 ("Termination - Survival"); Section 14 ("Liability"); Section 15
("Representations and Warranties"); Section 16 ("Indemnities"); Section 18.3
("Use of Subcontractors - Continuing Responsibility of Supplier"); and Section
20 ("General").
14. LIABILITY.
In the event that this Agreement is terminated by Customer pursuant to
Section 13.2 or 13.3, Customer's sole remedy shall be such termination together
with Customer's rights, if any, under Section 22 of the Lease Agreement and
Customer's offset right if this Agreement is terminated pursuant to Section
13.3(b) hereunder, and any migration services required by Customer upon any such
termination of this Agreement by Customer shall be at Supplier's cost and
expense. In the event that this Agreement is terminated by Supplier pursuant to
Section 13.4, Supplier's sole remedy shall be such termination; provided,
however, Customer shall remain liable for all unpaid amounts under this
Agreement through the date of such termination and, in the event that
termination occurs pursuant to Section 13.4 during the Initial Period, any
amount that would have been payable under Section 4.1(d) during the calendar
quarter in which such termination occurs and the immediately succeeding calendar
quarter.
15. REPRESENTATIONS AND WARRANTIES.
15.1 Mutual Representations and Warranties. Each Party hereby makes the
following representations and warranties to the other:
(a) Power. On or prior to the Effective Date, it shall have all
requisite power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby.
(b) Authorization. On or prior to the Effective Date, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly authorized by all
requisite action on its part.
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(c) Enforceability. On or prior to the Effective Date, this Agreement
shall have been duly executed and delivered by it and (assuming the due
authorization, execution and delivery hereof by the other Party) shall be a
legal, valid and binding obligation of it, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(d) No Conflict. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do not
(i) conflict with or violate its charter documents or by laws or similar
organizational documents, (ii) violate or constitute a material breach of any
agreement to which it is a party, by which it is bound, or to which any of its
assets are subject or (iii) violate any applicable law or any order, decree or
judgment of any court or governmental authority.
15.2 Supplier's Representations and Warranties. Supplier hereby
represents and warrants to Customer that:
(a) Performance Standards. Supplier will perform the Services in
accordance with the terms of this Agreement, including the Performance
Standards.
(b) Diligence. Supplier has investigated and is familiar with the
receiving, warehousing and physical distribution requirements of Customer
included within the Services and is able to satisfy those requirements
economically and in accordance with the terms and conditions of this Agreement.
15.3 DISCLAIMER. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS
OR WARRANTIES TO THE OTHER (EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) IN
CONNECTION WITH THIS AGREEMENT, THE SUBJECT MATTER HEREOF, OR THE SERVICES,
INCLUDING, ANY WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. ALL OTHER REPRESENTATIONS AND WARRANTIES ARE HEREBY
SUSPENDED, EXCLUDED, DISCLAIMED AND WAIVED.
16. INDEMNITIES.
16.1 Indemnity by Supplier. Subject to Section 14, Supplier shall
indemnify, defend and hold harmless the Customer Parties, their Affiliates and
their respective directors, officers, employees, representatives and agents (in
accordance with the procedures described in Section 16.3 to the extent
applicable) for, from and against any and all Losses, as incurred, arising out
of, or in connection with (i) any breach or alleged breach by Supplier Parties
of any of Supplier's representations, warranties or covenants contained herein
and (ii) any bodily injury or death of an individual or any damage or
destruction of real property or tangible personal property, in each case to the
extent such injury, death, damage, or destruction (a) is proximately caused by
the tortious conduct any Person for whose conduct any of Supplier, its
Affiliates or its consultants or subcontractors is legally responsible and (b)
arises out of, or occurs in connection with, this Agreement or the Services.
24
16.2 Indemnity by Customer. Subject to Section 14, Customer shall
indemnify, defend and hold harmless the Supplier Parties, their Affiliates and
their respective directors, officers, employees, representatives and agents (in
accordance with the procedures described in Section 16.3 to the extent
applicable) for, from and against any and all Losses, as incurred, arising out
of, or in connection with any breach or alleged breach by Customer of any of
Customer's representations, warranties or covenants contained herein.
16.3 Indemnification Procedures.
(a) If any civil, criminal, administrative or investigative action or
proceeding (any of the foregoing being a "Claim") is threatened or commenced by
any third party against any Person (such Person, or if such Person is not a
Party the applicable Party, the "Indemnified Party") that the other Party (the
"Indemnifying Party") is obligated to defend or indemnify under Section 16.1
("Indemnity by Supplier") or 16.2 ("Indemnity by Customer"), then written notice
thereof shall be given to Indemnifying Party as promptly as practicable;
provided, however, that any delay by the Indemnified Party in giving such
written notice shall not constitute a breach of this Agreement and shall not
excuse the Indemnifying Party's obligations under this Section 16
("Indemnities") except to the extent, if any, that the Indemnifying Party is
prejudiced by such delay. After such notice, if the Indemnifying Party shall
acknowledge in writing to the Indemnified Party that the Indemnifying Party is
obligated under this Section 16 ("Indemnities") to defend and/or indemnify the
Indemnified Party, then the Indemnifying Party shall be entitled, if it so
elects in writing within ten (10) days after receipt of such notice, to take
control of the defense and investigation of such Claim and to employ and engage
attorneys of its choice reasonably acceptable to the Indemnified Party to handle
and defend the same, at the Indemnifying Party's sole cost and expense. The
Indemnified Party shall cooperate in all reasonable respects with the
Indemnifying Party and its attorneys in the investigation, trial and defense of
such Claim and any appeal arising therefrom; provided, however, that the
Indemnified Party may, at its own cost and expense, participate, through its
attorneys or otherwise, in such investigation, trial and defense of such Claim
and any appeal arising therefrom. No settlement of a Claim that involves a
remedy other than the payment of money by the Indemnifying Party shall be
entered into by the Indemnifying Party without the prior consent of the
Indemnified Party, which consent shall not be unreasonably withheld.
(b) After notice by the Indemnifying Party to the Indemnified Party of
its election to assume full control of the defense of any such Claim pursuant to
Section 16.3(a), the Indemnifying Party shall not be liable to the Indemnified
Party for any legal expenses incurred thereafter by such Indemnified Party in
connection with the defense of that Claim. If the Indemnifying Party does not
assume full control over the defense of a Claim pursuant to Section 16.3(a),
then the Indemnifying Party may participate in such defense, at its sole cost
and expense, and the Indemnified Party shall have the right to defend the Claim
in such manner as it may deem appropriate, at the cost and expense of the
Indemnifying Party.
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(c) Notwithstanding anything to the contrary elsewhere in this Section
16 ("Indemnification Procedures"), if (a) the Indemnified Party shall have
reasonable grounds for insecurity with respect to the Indemnifying Party's
financial ability to pay for an adequate defense against such Claim or to pay
any amounts which may reasonably be expected to become payable by it if such
Claim is determined adversely, and (b) the Indemnifying Party shall fail to
provide "adequate assurances" in writing to the Indemnified Party within fifteen
(15) days after the Indemnified Party notifies the Indemnifying Party in writing
of the grounds for the Indemnified Party's insecurity and demands adequate
assurances, then (notwithstanding any election by the Indemnifying Party to
control the defense of such Claim) (i) the Indemnified Party shall have the
right to defend the Claim in such manner as it may deem appropriate, at the cost
and expense of the Indemnifying Party, and (ii) the Indemnifying Party may
participate in such defense, at its sole cost and expense.
(d) Subrogation. If an Indemnifying Party shall be obligated to
indemnify an Indemnified Party against a third party claim pursuant to Section
16.1 ("Indemnity by Supplier") or 16.2 ("Indemnity by Customer"), then the
Indemnifying Party shall, upon payment of such indemnity in full, be subrogated
to all rights of the Indemnified Party with respect to the claims and defenses
to which such indemnification relates.
17. REQUIRED INSURANCE.
17.1 General. Supplier shall procure and shall maintain in force at all
times throughout the Term in connection with operating the Facility and the
performance of Services, policies of insurance, mutually acceptable to Supplier
and Customer, including cargo, property, liability and workers' compensation
insurance, written by companies duly licensed to do business in California and
any other state or states where the Services are to be performed or the
Supplier's Provided Utilized Equipment is to be located, with a minimum A.M.
Best rating of A or better and with a minimum financial class of XII. Supplier
shall deliver to the Customer, at least five (5) days prior to the Effective
Date, a copy of each such policy, certified by the insurance carrier as being a
true and complete copy. The minimum limits and coverages are to be reflected in
such insurance policies.
17.2 Required Terms. Such insurance policies must (a) disclose any
deductibles, self-insured retention (deductibles or self-insured retentions
above $25,000 will require approval from the Customer), aggregate limit or any
exclusions to the policy that materially change the coverage; (b) indicate that
Customer is an additional insured on all policies (except workers'
compensation); (c) include a special cancellation provision which shall read
"Customer is interested in the maintenance of this insurance, and it is agreed
that this insurance will not be canceled, terminated, materially changed or not
renewed without at least thirty (30) days' prior written notice to Customer,
attention: Risk Manager, by certified mail, return receipt requested"; (d)
indicate that the coverage afforded under the policies shall apply on a primary
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basis, and not on an excess or contributing basis, with any policies which may
be available to Customer. Policies written on a "claims made" basis are not
acceptable; and (e) indicate that Customer is a loss payee with respect to
property insurance. At least two weeks prior to the expiration of the original
policies or any renewals thereof, evidence of renewal or replacement policies of
insurance, with the same terms and limits as the expiring policy, shall be
delivered to the Customer.
17.3 Required Coverages. Supplier shall carry and maintain the
following insurance coverages:
(a) Commercial general liability insurance policy on an occurrence
basis in Supplier's name with Customer as additional insured, with limits of
liability of $2,500,000 per occurrence on a combined single limit basis for
injuries (bodily injuries, including death and personal injuries) to persons and
for damage to property. Such policy shall include contractual coverage for
liability assumed by Supplier under Section 16 ("Indemnities"),
products-completed operations coverage, and independent suppliers coverage and
shall not contain any other exclusion which are unacceptable to Customer.
(b) Workers' compensation insurance (including employers' liability
insurance with limits of not less than $500,000 per occurrence) covering all
Supplier employees performing services hereunder and meeting all applicable
statutory limits.
(c) Excess or umbrella liability policy(ies) with a limit of at least
$10,000,000 per occurrence in excess of the limits of each of the above
specified coverage(s), other than all risk property insurance and workers'
compensation insurance.
(d) Cargo insurance in an amount of at least $250,000 per incident.
(e) Warehouse liability insurance with replacement cost coverage,
including earthquake coverage and covering, among other things, the Customer
Parties' products, with a limit of at least $2,500,000.
(f) Insurance policy covering all risk of physical loss at the Facility
of conveyor systems, racking, computers, phone systems, security systems,
machinery, electronic data processing equipment, empty trailers and containers
with a limit of at least $10,000,000.
(g) Any additional insurance policies necessary to obtain required
permits or otherwise comply with applicable law, ordinances or regulations
regarding performance of Supplier's obligations under this Agreement.
17.4 Insurance for Subcontractors. Supplier shall cause its
consultants, subcontractors and agents hereunder maintain the types and
quantities of insurance, and the structure, as set forth in this Section 17
("Required Insurance") as though they were Supplier hereunder.
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17.5 No Limitation on Other Obligations. Nothing contained in this
Section 17 ("Required Insurance") shall be deemed to relieve Supplier of its
responsibility and liability as elsewhere provided in this Agreement for
personal injury or damage to tangible property, nor of its obligation to
indemnify and save harmless the Customer Parties in connection therewith,
whether or not insured.
17.6 Customer's Option to Obtain Missing Insurance. If at any time
during the term of this Contract, insurance as required is not in effect, or
proof thereof is not provided to Customer, then Customer may, in its sole
discretion, obtain the required insurance at Supplier's expense.
17.7 Waiver of Subrogation. Supplier shall, and shall cause its
consultants and subcontractors to, waive any right of recovery against the
Customer Parties and to effect a corresponding waiver of subrogation on all
policies of insurance on equipment or other tangible property and any business
interruption loss arising out of or in connection with this Agreement or the
Services.
17.8 Failure of Insurer no Excuse. The insolvency, bankruptcy, or
failure of any insurance company carrying insurance for Supplier, or the failure
of any such insurance company promptly to pay proper claims, shall not relieve
Supplier of any of its obligations under this Agreement.
18. USE OF SUBCONTRACTORS.
18.1 Procedure. Except to the extent Customer may otherwise agree in
writing, and subject to Section 18.2 ("Exclusions"), Supplier shall not delegate
or subcontract any of its obligations under this Agreement. With respect to any
of its obligations under this Agreement that Supplier proposes to subcontract,
Supplier shall clearly specify in a written notice to Supplier: (a) the specific
components of the Services that Supplier proposes to subcontract, (b) the scope
of the proposed subcontract, (c) the identity, background and qualifications of
the proposed subcontractor, and (d) the type of contract that exists or will
exist between Supplier and the subcontractor. Customer shall have the right to
approve or disapprove the use of proposed subcontractors in its reasonable
discretion.
18.2 Exclusions. Notwithstanding the foregoing, Supplier's use, in the
ordinary course of business, of third party services or products that are not
substantially dedicated to performing the Services for Customer, that are not
material to any particular function constituting a part of the Services, and
that do not result in a material change in the way Supplier conducts its
business, shall not constitute a delegation or subcontracting of Supplier's
responsibilities under this Agreement.
18.3 Continuing Responsibility of Supplier. Supplier shall remain
responsible for obligations performed (or not performed) by subcontractors to
the same extent as if such obligations were performed (or not performed) by
Supplier's employees.
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19. CONDITIONS PRECEDENT.
The respective obligations of Supplier and Customer to consummate this
Agreement are subject to the fulfillment, prior to or on the Effective Date, of
each of the following conditions:
(a) The United States Bankruptcy Court for the Southern District of New
York shall have entered an order approving this Agreement;
(b) The closing shall have taken place under the Purchase and Sale
Agreement between Customer and Alere Property Group, LLC for the sale of
Customer's property located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇;
(c) Supplier and Alere Property Group, LLC or its designee shall have
executed and delivered to each other the Lease Agreement; and
(d) Customer, Footstar, Inc., Supplier and Fleet Retail Group, Inc.
shall have executed and delivered to each other a bailee agreement reasonably
acceptable to Customer and Supplier.
20. GENERAL.
20.1 Amendments and Revisions. Changes or modifications to this
Agreement or its Exhibits may not be made orally, but may only be made by (i) a
written amendment or revision signed by both Parties or (ii) as expressly
provided elsewhere in this Agreement. Any terms and conditions varying from this
Agreement or its Exhibits on any order or written notification from a Party are
void unless signed by the Party against which enforcement is sought.
20.2 Force Majeure. Continued performance of this Agreement may be
suspended immediately by Supplier to the extent made impossible by any event or
condition beyond the reasonable control of Supplier (except its inability to
discharge obligations of a financial nature), including without limitation (to
the extent beyond such control) acts of God, fire, labor or trade disturbance
(other than labor or trade disturbances which are directly related to the
Facility or in which the Supplier, or its Affiliates or its consultants or
subcontractors are directly involved), war, civil commotion, compliance in good
faith with any requirements of applicable law, rule, statute, judgment, order,
permit, license, regulation or decree of any governmental authority (whether or
not it later proves to be invalid), unavailability of materials, or other event
or condition whether similar or dissimilar to the foregoing (a "Force Majeure
Event"). Supplier shall give prompt notice to Customer of the occurrence of a
Force Majeure Event giving rise to any suspension of all or any part of the
services provided and of the nature and anticipated duration of such Force
Majeure Event, and Supplier shall use reasonable commercial efforts to cure the
cause of such suspension promptly. Upon the occurrence of a Force Majeure Event,
Supplier and Customer shall cooperate with each other to find reasonable
alternative commercial means and methods for the provision of the suspended
service(s).
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20.3 Nonperformance. To the extent any nonperformance by either Party
of its obligations under this Agreement results from or is caused by the other
Party's failure to perform its obligations under this Agreement, such
nonperformance shall be excused.
20.4 Waiver. The agreements set forth in this Agreement may be modified
or waived only by a separate writing signed by the Party against which
enforcement is sought. No failure or delay by a Party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.
20.5 Severability. If any provision of this Agreement shall be held to
be invalid, illegal or unenforceable, then to the extent equitable to the
Parties the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby, and such provision shall
be deemed to be restated to reflect the original intentions of the Parties as
nearly as possible in accordance with applicable law(s).
20.6 Counterparts. This Agreement may be executed in multiple
counterparts. Each such counterpart shall be an original and all of such
counterparts together shall constitute a single instrument.
20.7 Publicity. Each Party shall submit to the other Party all
advertising, written sales promotions, press releases and other publicity
materials relating to this Agreement in which such other Party's name or ▇▇▇▇ is
mentioned or that includes language from which the connection of such name or
▇▇▇▇ ▇▇▇ be inferred or implied, and shall not publish or use such advertising,
sales promotions, press releases, or publicity materials without prior written
approval of such other Party, which approval shall not be unreasonably withheld.
Supplier shall not, without Customer's prior consent, which consent may be
withheld at Customer's sole discretion, state that Customer or any of its
Affiliates endorses Supplier or any of its products or services.
20.8 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the state of New York applicable to
contracts executed and fully performed therein. Subject to Section 6.8, Supplier
and Customer shall bring any dispute arising out of or in connection with this
Agreement or the transactions contemplated herein in any federal or state court
of competent jurisdiction located in the Borough of Manhattan, City of New York,
State of New York, and Supplier submits to the exclusive jurisdiction and venue
of such courts for such purpose. Supplier hereby waives any right that Supplier
might otherwise have to demand a trial by jury in connection with any action
arising out of or in connection with this Agreement. In addition, if a judgment
or award is rendered against either Party, such Party hereby consents to the
jurisdiction of any state, federal or foreign court located within a district
that encompasses assets of such Party for the enforcement of such judgment or
award against the assets of such Party.
30
20.9 Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties and their permitted successors and assigns.
Notwithstanding anything in this Agreement to the contrary, the rights and
obligations of Supplier and Customer under this Agreement are personal and not
assignable or delegable, either voluntarily or by operation of law, without the
prior written consent of the other Party, and any attempted assignment or
delegation in violation of this Section shall be void and ineffective. Each
Party shall have the right to assign this Agreement in whole or in part,
including to any of its Affiliates or successor entity in a Change of Control or
a sale of all or substantially all of a Party's assets, and such Party shall use
commercially reasonable efforts to require any successor entity in an
acquisition of all or substantially all of such Party's assets or a Change of
Control to assume this Agreement. In addition, Supplier may assign the fees it
receives pursuant to this Agreement to its lenders as security.
20.10 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given (i) when delivered
personally by hand (with written confirmation of receipt), (ii) when sent by
facsimile (with written confirmation of transmission) or (iii) one business day
following the day sent by overnight courier (with written confirmation of
receipt) for next business day delivery, in each case at the following addresses
and facsimile numbers (or to such other address or facsimile number as a party
may have specified by notice given to the other party pursuant to this
provision):
If to Supplier:
FMI International, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
If to Customer:
Footstar Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
Footstar Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Senior Vice President, Logistics
Either Party hereto may from time to time change its address for notice purposes
by giving the other prior written notice of the new address and the date upon
which it shall become effective.
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20.11 Obligations Cumulative. Supplier's obligations and
responsibilities under this Agreement shall be cumulative, and unless expressly
provided to the contrary elsewhere in this Agreement, none of Supplier's
obligations or responsibilities shall be deemed to limit any of Supplier's other
obligations or responsibilities.
20.12 Interpretation. This Agreement was drafted with the joint
participation of both Parties and shall be construed neither against nor in
favor of either, but rather in accordance with the fair meaning of its terms.
20.13 Remedies Cumulative. Subject to the express limitations set forth
elsewhere in this Agreement, all remedies in this Agreement are cumulative, and
in addition to and not in lieu of, any other remedies available to a Party at
law or in equity.
20.14 Equitable Remedies. Without limiting the availability of
equitable remedies at any other times, each Party agrees and acknowledges that
if Supplier at any time prior to the termination of this Agreement in accordance
with its terms refuses or threatens to refuse to perform any of the Services,
then (i) Customer may suffer immediate and irreparable harm for which money
damages would be an inadequate remedy, (ii) Customer may be entitled to specific
performance, injunctive relief and such other equitable remedies as a court may
deem appropriate with respect to such obligations and the performance of the
Services, (iii) Customer shall not, and hereby waives any right it might
otherwise have to, oppose the entry of such relief on the grounds that money
damages would be an adequate remedy.
20.15 Covenant of Good Faith and Fair Dealing. Each Party agrees that,
in its dealings with the other Party under or in connection with this Agreement,
it shall act in good faith and shall use its commercially reasonable efforts to
deal fairly with such other Party. Except where expressly provided as being in
the sole discretion of a Party, where agreement, approval, acceptance, consent,
or similar action by a Party is required under this Agreement, such action shall
not be unreasonably withheld or delayed.
20.16 Customer Affiliates. The rights, benefits, privileges and
protections of this Agreement shall extend to Customer's affiliates as though
such affiliates were Customer hereunder.
20.17 Entire Agreement. This Agreement and the other documents referred
to herein constitute the complete agreement between the Parties and supersede
all prior or contemporaneous agreements or representations, written or oral,
concerning the subject matter of this Agreement and the Prior Agreement, except
as incorporated or referenced herein.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf effective as of the date first written above.
FMI INTERNATIONAL LLC
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇'▇▇▇▇▇
Title: President
FOOTSTAR CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Administrative Officer
33
