EXHIBIT 10.5
PRODUCT SALES, INVENTORY MANAGEMENT
AND ORDER FULFILLMENT AGREEMENT
This PRODUCT SALES, Inventory Management and ORDER Fulfillment
Agreement (this "Agreement") is entered on September 1, 2004, by and between AF
Services, Inc., a Delaware corporation ("AF Services"), and ▇▇▇▇▇.▇▇▇, Inc., a
Delaware corporation ("eCost").
WHEREAS, eCost obtains certain purchasing, inventory management and
product fulfillment services from AF Services, and purchases certain products
from AF Services;
WHEREAS, eCost is considering an initial public offering of its Common Stock ("IPO"); and
WHEREAS, eCost desires to continue to obtain certain purchasing,
inventory management and product fulfillment services from AF Services and to
purchase products from AF Services, and AF Services desires to continue to
provide such services and sell such products to eCost, as more fully set forth
herein.
NOW, THEREFORE, in consideration of the promises and mutual covenants
described herein, the parties agree as follows:
ARTICLE I
ENGAGEMENT OF AF SERVICES; DUTIES
1.1 Engagement. Effective as of the closing date of the IPO (the "Effective
Date"), eCost hereby retains AF Services to perform the Inventory Management
Services (as defined below) and the Fulfillment Services (as defined below),
including such activities as may be related, ancillary, or necessary to perform
such Inventory Management Services and Fulfillment Services (collectively, the
"Services").
1.2 Duties and Rights.
(a) AF Services Obligations.
(i) AF Services hereby covenants and agrees that it shall, during the term
of this Agreement, perform the Services. AF Services further covenants
and agrees that it shall maintain accurate records and accounts of all
transactions relating to the Services performed pursuant to this
Agreement. Such records and accounts shall contain such information as
would normally be examined by an independent accountant in performing a
complete audit pursuant to United States generally accepted auditing
standards for the purpose of certifying financial statements, and as
would normally be required by a government taxing authority in order to
verify provision of the Services.
(ii) AF Services shall perform the Services pursuant to this Agreement in a
manner and at a level of service substantially similar to that provided
by AF Services to eCost prior to the date hereof and shall exercise the
same care and skill as it exercises in performing similar services for
other subsidiaries of PC Mall. In the event AF Services engages third
parties to perform one or more Services under the supervision of AF
Services pursuant to Section 1.2(c), AF Services shall cause such third
parties to perform such Service under the same applicable performance
standard.
(b) eCost Obligations. eCost hereby covenants and agrees that it shall pay
AF Services for Services in accordance with Article III of this
Agreement. eCost further covenants and agrees that it shall provide AF
Services with all documents and information necessary for AF Services
to perform the Services pursuant to this Agreement. To the extent
required, eCost shall authorize AF Services to perform such actions as
may be necessary for the performance of the Services.
(c) Right to Subcontract. In the performance of its obligations hereunder,
AF Services shall have the right, in its sole discretion, to
subcontract its rights and responsibilities to any third party,
provided that AF Services shall remain responsible for the performance
of any such third party.
(d) No Additional Resources. Unless otherwise agreed in writing, AF
Services shall not be required to perform the Services at a level that
is substantially greater than the level of use required by eCost
immediately prior to the Effective Date. Without limiting the
foregoing, in connection with the performance of the Services, in no
event shall AF Services be required to hire any additional employees,
maintain the employment of any specific employee or purchase, lease or
license any additional equipment or intellectual property.
1.3 Independent Contractors. The relationship of AF Services and eCost is that
of a vendor and vendee and of independent contractors. Nothing contained in this
Agreement shall be construed to (a) constitute the parties as partners, joint
venturers, co-owners or otherwise as participants in a joint or common
undertaking; (b) create the relationship of principal and agent between the
parties; (c) prevent AF Services from entering into any other business; or (d)
allow AF Services to create or assume obligations on behalf of or in the name of
eCost. Except as provided herein, all financial obligations associated with each
party's businesses are the sole responsibility of each respective party, and
nothing in this Agreement is intended to make either party responsible for the
financial obligations of the other.
1.4 Additional Services. From time to time after the Effective Date, the parties
may identify additional services that AF Services will provide to eCost in
accordance with the terms and conditions of this Agreement ("Additional
Services"). The parties shall create an Exhibit for each Additional Service
setting forth a description of the Additional Service, the charge, if any,
applicable thereto, and any other applicable terms and conditions with respect
to such Additional Service. In order to become a part of this Agreement, such
Exhibit must be executed by a duly authorized representative of each party, at
which time such Additional Service shall be deemed to constitute a "Service" for
purposes hereof and shall be subject to the terms and conditions of this
Agreement. For the avoidance of doubt, the parties may, but shall not be
required to, agree on Additional Services during the term of this Agreement.
Notwithstanding anything to the contrary in the foregoing or elsewhere in this
Agreement, any service actually performed by AF Services upon a written or
verbal request by eCost in connection with this Agreement shall be deemed to
constitute a "Service" for purposes of Sections 5.1 and 5.2.
1.5 Cooperation; Consents; Alternatives.
(a) Cooperation and Consents. The parties will use good faith efforts to
cooperate with each other in all matters relating to the provision and receipt
of the Services, including, without limitation, cooperating in connection with
obtaining all consents, approvals licenses or sublicenses reasonably necessary
in order for AF Services to perform the Services. eCost shall be solely
responsible for any costs incurred by AF Services in connection with obtaining
such consents or approvals or procuring such licenses or sublicenses.
(b) Alternatives. In the event that AF Services reasonably believes that it is
unable to provide any Service because of a failure to obtain any consent,
approval, license or sublicense, the parties shall in good faith discuss and
agree to an alternative approach; provided that, in no event shall AF Services
be required to provide such Service until such time that the parties have agreed
to an alternative approach or the relevant consent, approval, license or
sublicense has been obtained. eCost shall be solely responsible for any
increased cost in providing a Service resulting from any agreed alternative
approach.
1.6 Defined Terms. Capitalized terms used and not otherwise defined herein shall
have the meanings given to them in that certain Master Separation and
Distribution Agreement (the "Master Separation and Distribution Agreement"), by
and between PC Mall, Inc., a Delaware corporation ("PC Mall") and eCost, dated
as of the date hereof.
ARTICLE II
INVENTORY AND FULFILLMENT SERVICE; PRODUCT SALES
2.1 Inventory Management Services. AF Services shall provide the following
inventory management services ("Inventory Management Services") to eCost: (a)
receiving, processing and analyzing data, that eCost shall regularly provide and
update, regarding eCost's past product sales and projected future sales; (b)
maintaining sufficient inventory and packing materials to meet eCost's projected
order volumes; (c) maintaining sufficient warehouse facilities, equipment,
employees, vendor relationships, information technology, and all other
equipment, training, personnel, and facilities to monitor, maintain, receive,
inspect, record, manage, track, and access efficiently the inventory warehoused
by AF Services; (d) maintaining sufficient quality control programs as are
necessary to ensure that products sold by AF Services to eCost under this
Agreement conform to eCost's requirements and meet eCost's specifications as to
appearance, performance, reliability, durability, technical specifications and
branding (as such requirements and specifications are provided by eCost to AF
Services from time to time); and (e) on a periodic basis, preparing and
providing to eCost inventory reports, logs, and other data compilations that the
parties agree are reasonably required by eCost in connection with the conduct of
its business.
2.2 Fulfillment Services. AF Services shall fulfill customer orders generated by
eCost's phone order, mail order and Internet business ("Fulfillment Services")
in accordance with the following:
(a) Fulfillment by AF Services. Upon receipt of instructions for fulfillment
from eCost for any particular customer order, AF Services shall timely perform
all picking, packing, shipping and tracking functions necessary to fulfill the
order in a manner that meets or exceeds specifications agreed upon in writing by
the parties.
(b) Shipping Expenses and Materials. Shipping expenses, including national
carrier premium service rates such as USPS Priority Mail, UPS expedited delivery
services, and FedEx will be billed to eCost at actual cost, and all shipping
materials including packaging and labels, shall be billed to eCost at AF
Services' prorated cost, consistent with historical practices.
(c) Packing Lists and Shipping Notices. All packing lists and shipping notices
shall contain the applicable customer purchase order number. AF Services shall
include a packing list with each Product (as defined in Section 2.3 below)
shipment to eCost's customers.
(d) Return Instructions. eCost and AF Services shall instruct eCost's customers
to direct their Product returns to an address of AF Services. AF Services shall
process all returns, including performing all necessary inspection, recording,
restocking, warehousing, and inventory maintenance functions.
(e) Returns. Upon AF Services' receipt of a returned Product from an eCost
customer, such returned Product shall be accepted in accordance with the terms
and conditions of this Agreement and eCost's return practices and policies (as
such practices and policies are provided to AF Services in writing from time to
time). Upon receipt of an original condition returned Product from an eCost
customer, AF Services may place such returned Products in inventory in the
absence of any noticeable wear, damage, defect in design, workmanship,
materials, merchantability, or fitness for the purpose for which the Product was
intended. AF Services shall bear the risk of such defects subject to its rights
under warranties received from vendors. Products which are returned by eCost's
customers, but because of customer use or abuse, or damage occurring in return
shipping, are not in a condition to be placed in inventory and resold as new,
shall be held by AF Services for liquidation or disposal of such Products. Each
Product returned and placed in inventory shall be subject to a restocking fee as
set forth in Schedule 1. For all Product returns, title to such Product and all
packaging materials shall pass back to AF Services, and AF Services agrees to
credit the cost of such Product to eCost, less any discounts or other price
reductions obtained by AF Services.
(f) Notification. If AF Services has reason to believe that a delivery, in whole
or in part, will not be made as directed by eCost, either because of AF
Services' actions or failure to act, or because of circumstances beyond AF
Services' control, AF Services shall as soon as reasonably practical notify
eCost of that fact and the reasons therefor.
(g) Coordination. eCost and AF Services shall comply with the Federal Trade
Commission's "Mail Order Rule" and "Telemarketing Sales Rule," and other federal
and state trade regulations, and shall coordinate their efforts to such end.
2.3 Product Sales. AF Services shall purchase on its own account, and take into
inventory for storage, protection and retrieval, sufficient goods (each good, a
"Product;" and collectively, "Products") to meet the projected sales
requirements of eCost based upon data provided by eCost to AF Services in
accordance with Section 2.1(a) of this Agreement. AF Services shall warehouse
each such Product until directed by eCost to ship such Product directly to
consumers or to eCost, or until AF Services makes reasonable demand upon eCost
to accept shipment of Excess Inventory (as defined below) pursuant to Section
2.3(g) of this Agreement.
(a) Product Sales. A Product sale from AF Services to eCost ("Product
Sale") shall be deemed to have occurred upon either of the following
events (whichever occurs earlier):
(i) AF Services' delivery of a Product from its warehouse to a common
carrier, following its receipt from eCost or eCost's customer of a
Product order and accompanying delivery instructions; or
(ii) delivery of a Product to eCost following demand by AF Services for
eCost to accept shipment of Excess Inventory pursuant to Section 2.3(g)
of this Agreement.
(b) Title and Risk of Loss. In the event of a Product Sale, AF Services
shall retain all right and title to the applicable Product and
packaging materials until immediately after the delivery thereof to a
common carrier for shipment to eCost or eCost's customer, at which time
title shall pass to eCost or eCost's customer, respectively. Risk of
physical loss for all Products and packaging materials shall be borne
by the party holding title at the time of such loss.
(c) Cost. With respect to each Product sold to eCost, eCost agrees to pay
AF Services the cost of such goods in inventory at the time of
shipment, as reasonably determined by AF Services, net of the value of
any special discounts or incentives obtained by AF Services in
connection with its acquisition of such Product, consistent with
historical practices.
(d) Payment. Payment by eCost for Products purchased from AF Services shall
be governed by Article III.
(e) Warranties. With respect to Products sold by AF Services to eCost, AF
Services shall assign or pass through, as permitted, all warranty and
indemnification rights which it receives from vendors to eCost. AF
Services shall ensure that Product warranties obtained by AF Services
from its vendors survive delivery to and return from any customer. AF
Services shall make reasonable attempts to secure from vendors
warranties that are transferable to the eCost customer and provide that
the applicable Products (i) are free from defects in design,
workmanship, and materials, (ii) conform to eCost's specifications, and
(iii) are of merchantable quality and fit for the purposes for which
they are intended.
(f) Compliance with Laws; Consents. Each party shall comply with all
applicable federal, state and local laws and take reasonable steps to
ensure that all Products sold to eCost for resale to consumers can be
lawfully sold to eCost. eCost shall comply with all applicable federal,
state and local laws in connection with the re-sale of Products to its
customers. AF Services shall, at its sole cost and expense, obtain and
maintain in effect all permits, licenses, and other consents necessary
to sell Products to eCost in accordance with this Section 2.3, and
eCost shall, at its sole cost and expense, obtain and maintain in
effect all permits, licenses and other consents necessary to sell
Products to its customers.
(g) Excess Inventory. eCost acknowledges that market uncertainties or
eCost's errors in projection of future sales may result in excess
Products being acquired by AF Services for resale to eCost. In the
event that AF Services has in its possession, at the end of a customary
sales season, Products purchased by AF Services based upon reasonably
calculated projections using data provided by eCost for which it has
not received Product orders (such Products, "Excess Inventory"), AF
Services shall have the right to demand that eCost purchase all or any
portion of such Excess Inventory, and eCost agrees to purchase from AF
Services all or any portion of such Excess Inventory upon demand by AF
Services. Alternatively, and at its option, AF Services may dispose of
such Excess Inventory through any other means, including sale to
eCost's competitors. However, should AF Services elect not to exercise
its right to require eCost to purchase Excess Inventory pursuant to
this Section 2.3(g) within forty-five (45) days of the end of the
applicable customary sales season, eCost shall have no further
responsibility or liability for such Excess Inventory.
ARTICLE III
FEES
3.1 Fees for Services; Invoices. AF Services shall invoice eCost for Services on
a monthly basis. Invoices shall specify the monthly fee for, and provide
reasonable detail regarding, the Services rendered during the previous month.
Fees, costs and charges for the Services set forth on Schedule 1 shall be in
accordance with such Schedule. Invoices shall also include any adjustments
required for credits or Product returns that were given or occurred during the
previous month, in accordance with Section 3.2 of this Agreement. AF Services'
invoices shall be due and payable not later than fifteen (15) days after the
date of the invoice.
3.2 Products. For each Product Sale, eCost shall pay AF Services within two (2)
business days after receipt of shipment confirmation of the applicable Product.
Shipment confirmation may be transmitted by electronic mail or other agreed
electronic means. Each month, AF Services will adjust the amount paid or payable
by eCost for Product Sales to take into account Product returns and applicable
credits, with any such adjustments reflected in the invoice for Services
delivered in accordance with Section 3.1 above.
3.3 Excess Inventory. Promptly after delivering a demand to purchase Excess
Inventory in accordance with Section 2.3(g), AF Services shall deliver to eCost
an invoice for such Excess Inventory. Such invoice shall be due and payable
within fifteen (15) days after the date of the invoice.
3.4 Manner of Payment; Late Payments. Payments by eCost to AF Services under
this Agreement shall be made by electronic fund transfers or other mutually
accepted means. Late payments under this Article III shall bear interest at the
prime rate plus two percent (2%) per annum or the maximum amount permitted by
applicable law, whichever is less.
3.5 Taxes. All amounts payable for Services hereunder are exclusive of any
taxes. All taxes and other charges imposed by any taxing authority on any
Service shall be added to the appropriate invoice and shall be payable by eCost
in accordance with Section 3.1.
3.6 Audit Adjustments. In the event of a tax audit adjustment relating to the
pricing of any Service provided pursuant to this Agreement in which it is
determined by a taxing authority that any of the fees charged hereunder,
individually or in combination, did not constitute an arm's length payment, the
parties will in good faith discuss and agree to make adjustments to the
applicable fees in order to achieve arm's length pricing. Any adjustment made
pursuant to this Section 3.6 shall be reflected in each party's books and
records, and shall create a right to receive payment, in the case of the party
that either overpaid or was under-compensated (as applicable), and an obligation
to make payment, in the case of the party that either underpaid or was
over-compensated (as applicable), in accordance with Section 3.1.
ARTICLE IV
terM; TERMINATION;
oBLIGATIONS OF AF SERVICES UPON TERMINATION
4.1 Term. The term of this Agreement shall commence on the Effective Date and
shall continue until the earlier to occur of (a) the closing of a distribution
by PC Mall of all of the issued and outstanding common stock of eCost in
accordance with the Master Separation and Distribution Agreement and (b) one (1)
year following the Effective Date, unless earlier terminated as provided in
Section 4.2 below.
4.2 Events of Termination. This Agreement shall be terminated upon the
occurrence of any of the following events:
(a) The mutual agreement of eCost and AF Services;
(b) Ninety (90) days advance written notice, with or without cause, by eCost to AF Services; or
(c) Thirty (30) days advance written notice of non-payment from AF Services to
eCost, unless eCost pays all overdue amounts, together with interest, within
twenty-one (21) days of such notice.
4.3 Termination Obligations. Termination or expiration of this Agreement shall
not affect, negate or obviate any obligation of either party to the other
arising prior to the date of such termination or expiration. By a date that is
reasonably practical prior to the date of termination or expiration of this
Agreement, AF Services shall transfer to eCost all data, records, files and
other information, in whatever format maintained, solely concerning eCost and
the performance of the Services. AF Services shall provide reasonable access to
such data, records, files and other information, and shall support eCost and
respond to eCost inquiries as reasonably necessary to allow eCost to understand,
interpret and use all such data, records, files and information, so that eCost
may provide for, after the date of such termination or expiration, the
performance of the Services by either itself or a third party.
4.4 Survival. The terms and conditions of the following provisions will survive
the termination or expiration of this Agreement: Article III; Sections 1.4, 4.3,
4.4, 5.1, 5.2 and 5.4; Article VII; and Article VIII.
ARTICLE V
LIMITATION OF LIABILITY;
5.1 Limitation of Liability. EXCEPT WITH RESPECT TO LOSSES OR DAMAGES ACTUALLY
SUFFERED OR INCURRED BY ECOST AS A RESULT OF AF SERVICES' WILLFUL MISCONDUCT OR
GROSS NEGLIGENCE IN PROVIDING THE SERVICES, AF SERVICES OR ANY AFFILIATE THEREOF
SHALL HAVE NO LIABILITY FOR DAMAGES IN CONNECTION WITH THIS AGREEMENT,
REGARDLESS OF THE FORM OF ACTION GIVING RISE TO SUCH LIABILITY (WHETHER UNDER
CONTRACT, TORT, STATUTORY OR OTHERWISE). TO THE EXTENT PERMITTED BY APPLICABLE
LAW AND NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NEITHER AF
SERVICES NOR ANY AFFILIATE THEREOF SHALL BE LIABLE FOR ANY INDIRECT, EXEMPLARY,
SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY KIND, OR FOR ANY DAMAGES
RESULTING FROM LOSS OR INTERRUPTION OF BUSINESS, LOST DATA OR LOST PROFITS,
ARISING OUT OF OR RELATING TO THIS AGREEMENT, HOWEVER CAUSED, EVEN IF AF
SERVICES HAS BEEN ADVISED OF OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH
DAMAGES.
5.2 Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, AF
SERVICES MAKES NO, AND DISCLAIMS ALL, WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT, WITH RESPECT TO THE SERVICES AND THE
PRODUCTS. AF SERVICES MAKES NO REPRESENTATIONS OR WARRANTIES AS TO THE QUALITY,
SUITABILITY OR ADEQUACY OF THE SERVICES OR THE PRODUCTS FOR ANY PURPOSE OR USE.
5.3 Force Majeure.
(a) Definition. "Force Majeure Event" means any event or condition, not existing
as of the date of this Agreement, not reasonably foreseeable as of such date and
not reasonably within the control of AF Services, which prevents in whole or in
material part the performance by AF Services of its obligations hereunder or
which renders the performance of such obligations so difficult or costly as to
make such performance commercially unreasonable. Without limiting the foregoing,
the following will constitute a Force Majeure Event: acts of state or
governmental action, riots, disturbance, war, strikes, lockouts, slowdowns,
prolonged shortage of energy supplies, epidemics, fire, flood, hurricane,
typhoon, earthquake, lightning and explosion.
(b) Release of AF Services. Upon being affected by a Force Majeure Event and
after notice to eCost, AF Services will be released without any liability on its
part from the performance of its obligations under this Agreement, but only to
the extent and only for the period that its performance of such obligations is
prevented by such Force Majeure Event. Such notice must include a reasonable
description of the nature and cause of the Force Majeure Event. AF Services will
as soon as reasonably practical notify eCost at such time that it is no longer
affected by the Force Majeure Event and is able to resume providing Services.
(c) Cover. eCost is entitled, following the occurrence of the Force Majeure
Event and the receipt of notice from AF Services in accordance with Section
5.3(b), to contract or provide for the performance of the Services or the
procurement of Products otherwise performed by or procured from AF Services
hereunder. Upon notice of termination of the Force Majeure Event, eCost shall
consent to AF Services resuming performance of the Services and obligations
hereunder.
5.4 Work Product.
5.4.1 Ownership. As used herein, the term "Work Product" means all materials,
software, tools, data, inventions, works of authorship, documentation and
other innovations of any kind, including, without limitation, any improvements
or modifications to AF Services' proprietary computer software programs and
related materials, that AF Services, or personnel working for or through AF
Services, may make, conceive, develop or reduce to practice, alone or jointly
with others, in the course of performing the Services or as a result of such
Services, whether or not eligible for patent, copyright, trademark, trade
secret or other legal protection. eCost agrees that all Work Product shall be
the property of AF Services and hereby assigns all rights it may have in the
Work Product and in all related patents, patent applications, copyrights, mask
work rights, trademarks, trade secrets, rights of priority and other
proprietary rights to AF Services. eCost acknowledges that AF Services, in its
sole discretion, shall have the right to license the Work Product or any
portion thereof, and/or incorporate the Work Product or any portion thereof
into AF Services products, for use by other licensees or customers of AF
Services. At AF Services' request and expense, eCost shall assist and
cooperate with AF Services in all reasonable respects and shall execute
documents, give testimony and take further acts as reasonably requested by AF
Services to acquire, transfer, maintain and enforce patent, copyright,
trademark, mask work, trade secret and other legal protection for the Work
Product.
5.4.2 License of Work Product. Subject to eCost's performance of its obligations
hereunder, AF Services hereby grants to eCost a worldwide, non-exclusive,
non-transferable license to use, within eCost's enterprise only, the Work
Product solely for eCost's internal business purposes. eCost shall not,
without the written consent of AF Services: (a) decompile, disassemble or
otherwise reverse engineer the Work Product or any portion thereof; or (b)
rent, lease, sublicense, sell, transfer or otherwise grant rights in or to the
Work Product (in whole or in part) to any third party in any form.
5.4.3 Reservation of Rights. Except as otherwise expressly provided herein,
nothing in this Agreement shall be deemed to grant, directly or by
implication, estoppel or otherwise, any right or license with respect to any
technology or other intellectual property rights, and each party retains all
right, title and interest in and to their respective technologies and other
intellectual property rights.
ARTICLE VI
requests for information
AF Services shall, at eCost's cost and expense, provide reasonable
access to eCost to any documents, records, data or information reasonably
requested by eCost concerning eCost or the Services provided or Product Sales
made hereunder as soon as reasonably practicable after the receipt of a written
request therefor from eCost or its authorized representatives. In addition, upon
reasonable notice from eCost and at eCost's cost and expense, AF Services shall
provide authorized representatives of eCost with reasonable access to the books
and records maintained by AF Services that pertain to the Services provided or
Product Sales made hereunder.
ARTICLE VII
confidentiality
Each party shall hold, and shall cause its employees, accountants,
attorneys and other authorized representatives to hold, in confidence, and shall
otherwise not disclose to anyone other than each of their respective
accountants, attorneys and other authorized representatives, together with such
other individuals or organizations as may from time to time be authorized in
writing by the other party or as may otherwise be required by any administrative
body or required by law, all documents, records, data and information of each
party ("Confidential Information") disclosed by such party to the other party in
connection with the performance of this Agreement. Confidential Information
shall not include information that (1) is already or otherwise becomes publicly
available through no act of receiving party; (2) is lawfully received by
receiving party from third parties subject to no restriction of disclosure; or
(3) can be shown by receiving party to have been independently developed by such
party. Each party shall promptly notify the other party of any subpoena or other
request or demand made to such party seeking documents, records, data or
information concerning the other party or the Services provided hereunder, and
shall resist production of any such materials consistent with its obligations
pursuant to this Article. Neither party shall use the Confidential Information
of the other party except to exercise its rights and perform its obligations
hereunder.
ARTICLE VIII
Miscellaneous
8.1 Further Assurances. AF Services and eCost agree, upon the reasonable request
of the other, to execute, acknowledge and deliver any and all such further
instruments, and to do and perform any and all such other acts as may be
necessary or appropriate in order to carry out the intent and purposes of this
Agreement.
8.2 Waivers or Modifications. No waiver, modification or cancellation of any
term or condition of this Agreement shall be effective unless executed in
writing by the party to be charged therewith. No written waiver shall excuse the
performance of any act(s) other than those specifically referred to therein. A
waiver of any breach by any party hereunder shall not constitute a waiver of any
subsequent breach(es) by such party hereunder.
8.3 Governing Law. This Agreement shall be governed by the laws of the State of
California (regardless of the laws that might otherwise govern under applicable
principles of conflicts of law) as to all matters, including, but not limited
to, matters of validity, construction, effect, performance and remedies.
8.4 Notices. Except as expressly otherwise provided herein, all notices,
requests, demands, waivers and other communications under this Agreement shall
be in writing and shall be deemed to have been duly given if delivered
personally or by facsimile transmission or mailed (certified or registered mail,
postage prepaid, return receipt requested):
If to AF Services, to: AF Services, Inc.
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Attention: President
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to eCOST: ▇▇▇▇▇.▇▇▇, Inc.
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Attention: Chief Executive Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date on which hand
delivered, upon transmission of the facsimile transmission by the sender and
issuance by the transmitting machine of a confirmation slip confirming that the
number of pages constituting the notice have been transmitted without error, or
on the third business day following the date on which so mailed, except for a
notice of change of address, which shall be effective only upon receipt thereof.
In the case of a notice sent by facsimile transmission, the sender shall
contemporaneously mail a copy of the notice to the addressee at the address
provided for above. However, such mailing shall in no way alter the time at
which the facsimile notice is deemed received. In no event shall the provision
of notice pursuant to this Section 8.4 constitute notice for service of process.
8.5 Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable, such provision will be fully severed and this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof will remain in full force and effect and will not be affected
by the illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
will be added automatically as part of this Agreement a provision as similar in
its terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.
8.6 Entire Agreement. This Agreement, the Master Separation and Distribution
Agreement, the other Ancillary Agreements and the exhibits and schedules
referenced or attached hereto and thereto constitute the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of or by and between the parties hereto in respect of
such subject matter and may not be amended except by a written instrument
hereafter signed by each of the parties hereto.
8.7 Assignment. Except to the extent expressly provided herein, neither party
has the right to, directly or indirectly, in whole or in part, assign, delegate,
convey or otherwise transfer, whether voluntarily, involuntarily or by operation
of law, its rights and obligations under this Agreement, except with the prior
written approval of the other party. Any such prohibited action will be null and
void. Notwithstanding anything to the contrary in the foregoing, AF Services
shall have the right to assign this Agreement without eCost's prior approval to
any successor of AF Services in connection with a corporate reorganization.
8.8 Binding Agreement. This Agreement is binding upon, and inures to the benefit
of, the parties and their respective successors. Nothing in this Agreement,
expressed or implied, is intended to confer on any person, other than the
parties or their respective successors, any rights, remedies or liabilities
under this Agreement.
8.9 Counterparts. This Agreement may be executed in one or more counterparts,
each of which when so executed shall be deemed an original, and such
counterparts together shall constitute one and the same instrument.
8.10 No Impairment of Rights. No delay or omission by either party hereto in
exercising any right, power or privilege hereunder will impair such right, power
or privilege, nor will any single or partial exercise of any such right, power
or privilege preclude any further exercise thereof or the exercise of any other
right, power or privilege.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
AF SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
SCHEDULE 1
eCost shall compensate AF Services for the following Services as follows:
o Fulfillment Charge of $4.00 per shipment.
o Shipping Expense (at cost)
o Restocking Fee of 10% of cost.
o Monthly Inventory Management Fee of $9,700