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VarsityBooks.com - DROP SHIP AGREEMENT
AMENDED AND RESTATED DROP SHIP AGREEMENT
THIS AMENDED AND RESTATED DROP SHIP AGREEMENT (this "Agreement"), effective as of the 1st day of October, 1999 (the "Effective Date"), is entered into by and between VARSITYBOOKS.COM INC. (f/k/a The Textbook Club, Inc.), a Delaware corporation ("Retailer"), and BAKER & TAYLOR, INC., a Delaware corporation ("B&T"). This Agreement amends, restates and supersedes in its entirety that certain Drop Ship Agreement by and between the parties dated July 10, 1998 (the "Prior Agreement").
W I T N E S S E T H:
For valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
As used throughout this Agreement the following terms have the following meanings:
1.1. "EDI" means electronic data interchange, using BISAC or X.12 formats.
1.2. "Expiration Date" means the day on which the Operating Agreement is terminated in accordance with its terms.
1.3. "Customers" means customers of Retailer within the United States who order Products (hereinafter defined) from Retailer and to whom Retailer wishes B&T to ship Products directly from B&T's distribution facilities.
1.4. "Operating Agreement" means that that certain Equity Investment and Operating Agreement dated July 10, 1998, as amended by the First Amendment to Equity Investment and Operating Agreement and License Agreement by and between Retailer and B&T dated October 9, 1998 and as further amended by that certain Operating Agreement of even date herewith.
1.5. "Products" means books, spoken word audio products and calendars.
2. SCOPE OF AGREEMENT. The services to be provided by B&T herein are also subject to the terms and conditions set forth in the Methodology and Requirements Document attached to, and made a part of, this Agreement as Exhibit A.
3. TERM. This Agreement will begin on the Effective Date and will expire on the Expiration Date, unless terminated on an earlier date pursuant to the express terms of this Agreement.
4. ORDER FULFILLMENT.
4.1. Upon receipt of an order for one or more Products from Customers, Retailer will transmit the order to B&T's EDI mailbox location by means of a mutually acceptable form of EDI. Each order transmitted by Retailer to B&T will contain the following information: (a) the Customer's name and shipping address, (b) the method by which Products ordered must be shipped to the Customer, (c) whether or not the order may be fulfilled in multiple shipments of
Products to the Customer or if the order may only be fulfilled when B&T has all Products ordered in stock, (d) the text of any standard retail messages and/or special messages to the Customer, (e) instructions concerning specific package inserts to be included in the order, and (f) instructions concerning gift wrapping and gift cards.
4.2. If Retailer wishes B&T to include package inserts with orders to Customers, Retailer will deliver to B&T a quantity of package inserts to be included with orders to Customers in sufficient quantity to supply to Customers as directed by Retailer to B&T. Within five (5) business days after inquiry from Retailer, B&T will notify of the quantity of the various package inserts on hand at B&T's facilities. B&T will use reasonable commercial efforts to assure that an adequate quantity of package inserts is maintained at each B&T facility from which Products are being shipped to Customers. Retailer will give B&T not less than five (5) business days' prior notice to include, or to cease inclusion of, a particular package insert in shipments of orders to Customers.
4.3. After receipt of an order, B&T will (a) fill the order from inventory of Products in stock at B&T's facilities, (b) gift wrap any Products as instructed by Retailer, (c) print the text of any standard retailer message and/or any special message requested by Retailer on the packing slip or on a separate gift card included in the order, (d) include in the order up to three (3) package inserts requested by Retailer, (e) pursuant to Retailer's instructions, and based upon availability of Products in stock, ship the order to the Customer either as a multiple shipment or as one shipment, (f) pursuant to Retailer's instructions, promptly place any Products ordered by Retailer which B&T does not have in stock on a backorder report for review by B&T's account manager for, after which time such Products will be promptly ordered by B&T (collectively, "Backordered Products") and (g) ship any Backordered Products, when received by B&T, pursuant to the terms of the preceding clauses (a) - (e) and the following two sentences. For all Products which B&T then has in stock, B&T will use commercially reasonable efforts to fulfill on the same day all orders received from Retailer not later than 12:00 P.M. Central time for orders received Monday through Friday. If B&T from time to time is unable to meet the schedule specified in the preceding sentence, B&T promptly will notify Retailer of the same. Any orders received by B&T after such times will be fulfilled on the following business day. Notwithstanding the foregoing, if any orders are received on a day which is not a business day will be fulfilled on the following business day. As used in this Agreement, "business day" means any day which is not a recognized holiday on which B&T and the approved carrier or shippers providing services under this Agreement are open for business.
4.4. B&T will acknowledge receipt of orders to Retailer via EDI at Retailer's EDI mailbox location. The first acknowledgment will be made promptly after an order is received and will identify Products as being in stock and/or backordered and/or as for which the order is being canceled. The second acknowledgment will be made at the time an order is ready to be shipped to a Customer and will contain the shipper's tracking number if provided by the shipper to B&T. Each such acknowledgment is referred to herein as an "ASN".
4.5. B&T will use commercially reasonable efforts to fulfill orders from Retailer. Retailer acknowledges that it does not expect B&T to maintain in stock a complete inventory of all Products that may be ordered by Customers.
4.6. B&T will transmit all invoices to Retailer via EDI to Retailer's mailbox location.
4.7. B&T will not be liable for delays arising from the failure of any freight carrier to meet its respective delivery standards.
5. RETURNS
5.1. Each shipment of Products to Customers will include Retailer's return center address and Customers will be instructed to make returns of Products to such address. Retailer will forward all such returns to B&T on a weekly basis and will pay the freight costs for the same. B&T will process all returns of Products within five (5) business days of its receipt of the same. B&T will not be obligated to accept any returns made more than 60 days after shipment of the Product to a Customer. Retailer agrees to comply with the terms of B&T's then current published returns policy, as long as B&T has provided the same to Retailer.
5.2. (a) As used in this Agreement:
(i) "Defective Products" means Products which contain manufactured defects which prevent them from being used for their intended purpose;
(ii) "Damaged Products" means Products which are damaged during shipment to Customers which prevent them from being used for their intended purpose; and
(iii) "Unmerchandisable Products" means Products which are shopworn and/or soiled.
(b) Retailer promptly will reimburse B&T for any freight costs incurred for Products returns, except for returns of Defective Products, Unmerchandisable Products (if shipped in that condition by B&T), Damaged Products (if improperly packaged by B&T) and/or Products shipped erroneously to Customers (collectively, "Free Return Products"). B&T promptly will issue a credit to Retailer equal to the charge for shipment from Customers to B&T by the means used by Customer of Free Return Products and B&T will be responsible for freight costs to ship replacement Products to Customers for Free Return Products. B&T will also reimburse Retailer for a stocking fee set forth in Schedule 5.2 attached hereto for each Free Return Product.
6. PRICING AND PAYMENT TERMS.
6.1. (a) Retailer will pay B&T for all Products ordered by Customers, and will pay all fees and reimbursables payable to B&T herein, within 30 days from the date of delivery of B&T's detailed invoice therefor. All payments made to B&T will be in good funds and delivered by check or wire transfer to the order of B&T pursuant to B&T's instructions. Retailer may not reduce and set off amounts payable hereunder against any indebtedness or any other claim that may have against B&T, however or whenever arising.
(b) The price charged by B&T to Retailer for Products purchased from B&T will be expressed on the basis of a discount from the publishers' list prices for the same as of the date of shipment of Products to Customers, and as set forth on Schedule 6.2. Publishers' list
prices for Products are displayed on B&T' s title database of Products, which presently is available for license by B&T to third parties (including Retailer). Retailer acknowledges and agrees that publishers' list prices for Products may be subject to change without notice. Retailer acknowledges and agrees that it is Retailer's responsibility to determine the pricing of Products to Customers and that B&T is not responsible if Retailer sells Products at prices which result in a lower selling margin than may be desired by Retailer.
6.2. (a) Retailer will be responsible for the payment of its EDI transmissions to B&T.
(b) Retailer will pay the prices, charges and fees to B&T for books that are not Textbooks (as such term is defined in the Operating Agreement) as more particularly set forth on Schedule 6.2 attached hereto and made a part hereof. The prices of Textbooks will be determined as set forth in the Operating Agreement.
6.3 Retailer will pay all freight costs for all Product shipments to, and Product returns from, Customers. Freight costs shall be as set forth in Schedule 6.2.
7. WARRANTIES.
7.1. B&T warrants that it has good title to the Products delivered to Customers pursuant to this Agreement. EXCEPT FOR THE FOREGOING WARRANTY, THERE ARE NO OTHER EXPRESS WARRANTIES, AND THERE ARE NO IMPLIED WARRANTIES. EXPRESSLY EXCLUDED ARE ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY B&T OR ITS AGENTS OR EMPLOYEES WILL CREATE A WARRANTY OR IN ANY WAY INCREASE THE SCOPE OF THE FOREGOING WARRANTY.
7.2. NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT CONSEQUENTIAL, OR INCIDENTAL DAMAGES (INCLUDING DAMAGES FOR BUSINESS INTERRUPTION, AND THE LIKE) ARISING OUT OF THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. The only liability B&T will have with respect to any Defective Products, Unmerchandisable Products and/or Damaged Products will be the return rights of Customers described herein. Retailer will indemnify and hold harmless B&T, its officers, employees and agents, for any loss, claim, cost or expense (including reasonable attorneys' fees and expenses) incurred by reason of any claim made by a Customer concerning any matter to which the preceding limitation of liability may apply.
7.3. The provisions of this Section shall survive the termination or expiration of this Agreement.
8. TERMINATION.
8.1. (a) Either party may terminate this Agreement upon the occurrence of an Event of Default by the other party if the Operating Agreement is terminated. An Event of Default under this Agreement shall be deemed to be Event of Default under the Operating
Agreement. An "Event of Default" is hereby defined to mean the defaulting party's failure to cure, (a) after receipt of 30 days' written notice from the non-defaulting party, of any of the following: (i) failure of the defaulting party to observe or perform any material condition or obligation imposed under this Agreement on the defaulting party not relating to the payment of money, (ii) breach of any warranty made by the defaulting party under this Agreement, (iii) filing of a voluntary petition in bankruptcy or having a involuntary petition filed against it, the appointment of a receiver or trustee, the execution of an assignment for the benefit of creditors; and (b) after receipt of 10 days' written notice from the non-defaulting party of the failure of the defaulting party to make any payments when due hereunder. The option to terminate this Agreement shall be in addition to, and not in lieu of, any other remedy available to the terminating party ...
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