Exhibit 10.10
MERCHANDISE SERVICING
AGREEMENT
THIS
AGREEMENT is
made and entered into as of the 1st day of April 2002, by and
between American Consolidation, Inc ., 500 Washington
Avenue, Carlstadt, New Jersey 07512 (“ACI”) and
Aeropostale, Inc ., 35 Continental Drive Wayne NJ 07470.
(“Customer”).
W I T N E S S E T
H
WHEREAS
, Customer is engaged
in the retail business and the sale of merchandise customarily
available therein; and
WHEREAS
, ACI receives,
processes, marks, picks, consolidates, packs, manifests and loads
merchandise at its facility located at 500 Washington Avenue,
Carlstadt, New Jersey (the “ACI
Facility”); and
WHEREAS
, Customer desires to
have ACI perform and ACI is willing to provide to Customer all
receiving, processing, marking, consolidating, picking, packing,
manifesting, and loading services for Customer’s merchandise
sent to ACI at Customer’s discretion (the
“Merchandise”) subject to the terms and conditions
specified herein;
NOW,
THEREFORE ,
in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
The term of this
Agreement shall be for an initial term of five (5) years
commencing as of April 1, 2002 and ending March 31, 2007.
Customer shall have the option to extend this Agreement for an
additional five (5) year period commencing as of April 1,
2007 and ending March 31, 2012 upon terms mutually agreed
upon. Customer will notify ACI with its intent to exercise its
option to renew within 120 days of the expiration of the
initial term.
In the event there is a
breach of any term of this Agreement by ACI, including but not
limited to ACI’s failure to provide the Services, materials
and equipment pursuant to the standards set forth herein, Customer
shall notify ACI of such breach in writing and ACI shall have
thirty (30) days to cure such breach. In the event ACI has not
cured the breach within such time, Customer shall have the right to
terminate this Agreement upon three (3) days notice to
ACI.
Customer shall have
right to terminate this Agreement: (a) upon thirty
(30) days notice to ACI, if a substantial change in ownership
of ACI occurs, (b) immediately in the event ACI seeks
bankruptcy protection or assigns a substantial portion of its
assets for the benefits of creditors, or (c) immediately after
an Event of Force Majeure, as hereafter defined in Section 12,
continues for ninety (90) days.
In addition, in the
event Customer terminates this Agreement during the initial term
prior to March 31, 2007, the expiration date set forth in
Section 1, other than due to ACI’s breach of its
obligations under this Agreement, Customer agrees to reimburse ACI
for the unamortized value of the material and equipment upgrades,
which material and equipment shall be amortized over a five
(5) year period, made to the ACI Facility at the request of
Customer during the calendar year 2002.
|
|
|
|
3.
|
Services, Materials and Equipment
Provided By ACI
|
During the term of this
Agreement, ACI shall provide the distribution services for Customer
according to the performance standards as set forth in
Exhibit A (the “Services”), which Exhibit may be
amended from time to time upon written agreement by both parties
hereto.
In addition ACI will
provide, at its sole cost and expense, the ACI Facility, utilities,
insurance, all merchandise handling equipment including
consolidation, manifesting and sortation systems, a Pro Handling
rapidpack system
50
and management and labor necessary
for the efficient performance of its obligations herein.
Notwithstanding Section 5(a) of this Agreement, the parties
understand that ACI is specifically providing new scanners, radio
frequency or other, manifesting and sortation equipment, and
software which is part of ACI’s new material handling system,
which is compatible with the Customer’s existing computer
hardware and software
|
|
|
|
4.
|
Representations and Warranties of
ACI
|
ACI makes the following
representations and warranties to Customer on a continuing
basis:
(a) ACI is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of New Jersey and has the requisite
power and authority and the legal right, without violating its
certificate or articles of incorporation or bylaws or any agreement
with any third party or any applicable law, rule, regulation or
governmental or judicial decree, to conduct its business as
presently conducted and hereafter contemplated to be conducted and
to execute, deliver and perform this Agreement.
(b) This Agreement
has been duly executed and delivered by ACI and constitutes the
legal, valid, and binding obligation of ACI.
(d) No contract,
lease agreement, or other instrument to which ACI is a party or by
which either ACI is bound, and no provision of applicable law,
materially and adversely affects or may so affect the financial
condition, business, property or prospects of ACI or ACI’s
ability to perform this Agreement.
(e) ACI shall
comply with all present and future laws, statutes, ordinances,
rulings, regulations, orders and requirements of all federal,
state, municipal, county and other government agencies and
authorities relating to the ACI Facility, and shall obtain and keep
in full force and effect all necessary licenses, permits and
similar authorizations from governmental authorities required to
perform its obligations hereunder.
|
|
|
|
5.
|
Customer’s
Responsibilities
|
(a) Customer will
provide, at its sole cost, all the materials and equipment set
forth in Exhibit B attached hereto and made a part hereof (the
“Customer Equipment”). In addition, Customer will be
responsible for the cost of all inbound and outbound freight
associated with the processing of its Merchandise.
(b) Customer will
provide the personnel to:
(i) Act as an
information resource for ACI in the event ongoing operational
issues arise.
(ii) Handle all
systems (AS 400 & Island Pacific) problems.
(iii) Handle all
communications with vendors regarding shipments which are received
at the ACI Facility.
(iv) Handle all
freight negotiations and payment of freight bills.
|
|
|
|
6.
|
Fees and Payment
Terms
|
(a) As ACI’s
entire and full compensation for its provision of the Services,
materials and equipment set forth in Section 3 hereof, and any
necessary and related costs or expenses incurred by ACI in the
course of providing the Services, materials and equipment, Customer
shall pay ACI the fees set forth in Exhibit C attached hereto
and made a part hereof.
(b) Customer shall
make payment to ACI of all correctly stated amounts within seven
(7) days of Customer’s receipt of the
invoice.
ACI agrees to allow
Customer’s personnel to inspect and to perform an operation
field audit of the Services and the ACI Facility and to inspect and
audit ACI’s invoicing and records which relate to the
Services performed on the
51
Merchandise as Customer deems
necessary in its sole discretion at times during any business hours
in which ACI operates and upon reasonable notice to ACI.
|
|
|
|
8.
|
Shortages and Damages to
Merchandise
|
ACI shall be responsible
and liable to Customer for the cost to Customer of lost, damaged or
misplaced Merchandise. The cost to Customer shall be the greater of
(i) the book value of the Merchandise as determined by the
invoice cost plus per unit processing cost or (ii) if ACI has
been reimbursed by virtue of an insurance claim, the total amount
of such reimbursement. Customer shall notify ACI of any shortage or
damage to the Merchandise within thirty (30) days of
ACI’s receipt of the Merchandise.
ACI shall, at all times
during the term of this Agreement, and at its sole cost and
expense, obtain and maintain the following insurance written by
insurance companies reasonably acceptable to Customer having a
minimum rating of A-X in the most recently published
A.M. Best’s Guide, and admitted and licensed to provide
insurance in the states in which the Services will be
performed:
(a) All-risk
property insurance upon the Merchandise in ACI’s possession
in an amount equal to the full replacement cost of the
Merchandise;
(b) Commercial
general liability insurance (including contractual liability
coverage specifically covering ACI’s obligations hereunder)
written on an occurrence basis in amounts of Five Million Dollars
($5,000,000.00) combined single limit per occurrence with respect
to bodily injury (including death), personal injury and property
damage;
(c) Workers’
compensation insurance covering all of its employees to the full
extent required of all states in which ACI performs services under
this Agreement;
(d) Employers’ liability
insurance with a limit of not less than One Million Dollars
($1,000,000.00) for each accident and One Million Dollars
($1,000,000.00) for disease.
(e) Business income
interruption insurance in an amount not to exceed
$500,000.00 per occurrence.
The insurance policies,
other than the workers’ compensation insurance policy, shall
name Customer as an additional insured. Such insurance coverage
shall commence as of the date of this Agreement and ACI promptly
shall deliver to the Customer the policies of such insurance, or
certificates thereof, and with respect to each renewal policy, at
least thirty (30) days prior to the expiration of the policy
it renews. All insurance policies maintained by ACI shall provide
that such policies name Customer as loss payee and shall not be
amended or canceled without at least thirty (30) days prior
written notice to Customer. In the event ACI does not obtain the
insurance required under this Agreement, ACI shall be in default of
this Agreement and Customer, in addition to its remedies at law and
equity and as may be found elsewhere in this Agreement, may obtain
such insurance on behalf of ACI. Customer shall have the option of
(i) offsetting the cost of such insurance against any amounts
payable by Customer to ACI until fully reimbursed, or
(ii) invoicing ACI for such insurance, in which event ACI
shall pay such invoice within fifteen (15) days after the
invoice date together with any the maximum rate of interest that
may be legally charged.
The required liability
insurance may be carried under a “blanket policy”
covering other work of ACI, provided that if the blanket policy
contains an aggregate limit, the limit will apply on a per location
basis.
Such policies shall
provide for a waiver of any right of subrogation that the insurer
may acquire against Customer.
It is the express
intention of the parties to this Agreement that ACI shall cause
such insurance coverages to be provided on a “primary”
basis, regardless of any other insurance Customer may elect to
purchase and maintain. Accordingly, no liability coverage required
of ACI shall be subject to an “excess” or
“pro-rata” type of other insurance clause, nor shall
any such coverage be subject to any clause which would be contrary
to the aforesaid intent of the parties. Any coverage purchased by
Customer will be excess for Customer only and not provide any
coverage for ACI.
52
|
