EXHIBIT
10.3
SERVICES
AGREEMENT
This SERVICES AGREEMENT (as same may
be supplemented, modified, amended, restated or extended from time
to time, the “ Agreement ”), dated as of
August 11, 2008 (the “ Effective Date
”), between QUALITY KING DISTRIBUTORS, INC. (“
QK ”), a corporation organized under the laws
of the State of New York, and E COM VENTURES, INC. (“ E
Com ”), a corporation organized under the laws of the
State of Florida (each a “ Party ” and
together, the “ Parties ”).
W I T N E S S E T H:
WHEREAS, E Com desires for itself
and on behalf of certain of E Com’s wholly-owned subsidiaries
(E Com and such subsidiaries being collectively referred to herein
as the “ E Com Companies ”) to obtain
from QK the services set forth below, and QK is willing to provide
such services to E Com, each on the terms and conditions of this
Agreement; and
WHEREAS, QK desires to obtain from E
Com certain economic benefits as set forth below, and E Com is
willing to share with QK such economic benefits, each on the terms
and conditions of this Agreement.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, QK and E Com agree as follows:
ARTICLE 1. QK
SERVICES
1.01 QK shall provide to the E Com
Companies the services set forth on Appendix A hereto,
as may be amended from time to time, including, without limitation,
to provide for additional future services (the “ QK
Services ”). The term for each QK Service (each, a
“ Service Term ”) shall be determined
pursuant to Article 3 below. The QK Services shall include such
reasonably necessary personnel, material, management expertise, and
procurement services to furnish and deliver to the E Com Companies
the QK Services. Any functions, responsibilities, activities or
tasks that are not specifically described in this Agreement or
Appendix A , but are reasonably required for the proper
performance and delivery of the QK Services, and are a necessary
part of such QK Services, shall be deemed to be implied by and
included within the scope of the QK Services to the same extent and
in the same manner as if specifically described in this
Agreement.
1.02 QK shall work jointly with the
E Com Companies to create a plan for the provision or delivery of
the QK Services. During the Term (as defined hereinafter), E Com
shall (i) comply with any reasonable requests or instructions
provided by QK that are necessary for QK to adequately provide the
QK Services to E Com and (ii) comply with all reasonable
standards, policies and procedures applicable to the QK
Services.
ARTICLE 2. SHARED SERVICE
E Com shall, to the extent permitted
by UPS, share with QK the economic benefit of the bulk rate
contract (which contract provides certain discounts and other
benefits for the shipping of merchandise and related items) E Com
has with UPS to ship QK’s merchandise and related items (the
“ Shared Service ”). QK agrees that upon
receipt of an invoice from UPS or E Com for the Shared Service, it
will remit to UPS the amount payable by QK to UPS or E Com, as the
case may be, in a timely manner. QK acknowledges and agrees that it
does not have any claim against any E Com Company for UPS’s
provision or non-provision of the Shared Service to QK.
ARTICLE 3. ARTICLE 3. TERM AND
TERMINATION
3.01 The Service Term for each of
the QK Services and the Shared Service shall commence on the
Effective Date and shall continue with respect to each such service
until such time as either Party notifies the other Party, in
writing, that such QK Service or Shared Service, as the case may
be, is no longer being provided or is no longer being purchased.
Such notice shall provide that the Service Term for such QK Service
or Shared Service, as the case may be, shall terminate no earlier
than thirty (30) days after such written notice (or such
earlier date as may be required to comply with any applicable
regulatory or third party contractual requirements). The
termination of a QK Service or the Shared Service, as the case may
be, in no way affects the Service Terms of the remaining QK
Services or Shared Service, as applicable, and the Service Terms
for the remaining QK Services or Shared Service, as applicable,
shall continue until terminated in accordance with this
Section 3.01.
3.02 The term of this Agreement (the
“ Term ”) shall commence on the Effective
Date and shall terminate on the earlier of (i) the date on
which the last of the QK Services and the Shared Service is being
provided or being purchased and (ii) thirty (30) days
after written notice from one Party to the other Party terminating
this Agreement, each in accordance with Section 3.01 above.
The provisions of Articles 4, 6, 7, 8.02, 9, and 10 shall survive
termination of this Agreement.
ARTICLE 4. FEES
4.01 In consideration of QK
providing the QK Services to E Com, E Com shall pay to QK the
amounts provided for under Appendix A hereto, unless
otherwise agreed upon in writing by the Parties. All payments for
the QK Services are payable within thirty (30) days from date
of invoice. The Parties shall also reimburse each other for
reasonable out-of-pocket costs and expenses incurred in connection
with performing the QK Services or making available the Shared
Service, as the case may be; provided that proper
documentation is provided to the reimbursing Party for such costs
and expenses. E Com may withhold payments for (i) amounts in
dispute, but only until such disputes are resolved, and
(ii) amounts for which appropriate documentation is lacking,
but only until such documentation is supplied to E Com. The
payments contemplated by this Article 4 and Article 2 above shall
fully compensate the respective Party for the QK Services and the
Shared Service, as the case may be, and no further payments shall
be due to either Party for the same.
4.02 QK shall prepare and maintain
complete and accurate books of account and records (including
originals or copies of documents that support entries in the books
of account) covering all QK Services and the fees and
reimbursements charged by QK to E Com under this Agreement. E
Com’s representatives may, from time to time during regular
business hours on reasonable advance notice, during the term of
this Agreement and for one year thereafter, audit QK’s books
of account and records and examine and copy all documents and
materials relating to the QK Services, including invoices, credits
and shipping documents and other information related to the QK
Services. Any such audit commenced within such one-year period may
continue through completion in the ordinary course. QK’s
books of account, records and documents, including computer
records, shall be maintained for at least three years after the
fiscal year in which the related QK Services are billed and, if an
audit is pending, through the completion of any audit commenced in
accordance with the preceding two sentences (and resolution of any
dispute with regard to any payments hereunder). If any audit of
QK’s books and records discloses that E Com’s payments
were higher than the amount that should have been paid, all
payments required to be made to eliminate the discrepancy, plus
interest thereon at the interest rate payable by E Com from time to
time under its senior revolving credit facility from the date of
overpayment until the date of repayment, shall be made promptly by
QK.
ARTICLE 5. FORCE
MAJEURE
5.01 Neither Party shall be held
liable for any delay or failure in performance of any part of this
Agreement (other than payment obligations hereunder) from any cause
beyond its reasonable control, including, without limitation, acts
of God, acts of civil or military authority, embargoes, epidemics,
war, terrorist acts, riots, insurrections, fires, explosions,
earthquakes, nuclear accidents, floods, strikes, and power
blackouts. Upon the occurrence of a condition described in this
Article 5, the Party whose performance is prevented shall give
written notice to the other Party as soon as practicable but in any
event within five (5) days of such occurrence, and the Parties
shall promptly
