Reapbusiness will promptly advise Client in writing at any time that Reapbusiness believes modifications to the Services are needed to achieve such results, and if such modifications are material, the parties may agree on a change in the Services in accordance with this Section 1.1. If Client desires to purchase services in addition to the Services or add products in addition to the Products or modify the Services, Client shall submit a written request for such changes to Reapbusiness, and Reapbusiness will then prepare a document (a “Change Order”) outlining the scope of additional work and describing the particular additional services to be purchased by Client and provided by Reapbusiness, together with pricing for the additional services, and time lines for design, development and delivery, as applicable. If and when the parties execute a mutually agreed upon Change Order, it will become part of this Agreement and the additional services and/or products described in therein shall thereafter be included in the Services and the Products covered by this Agreement. Unless and until the parties execute the Change Order, however, Reapbusiness shall have no duty to furnish the additional services or handle any additional products (and Client shall have no obligation to pay for the additional services if those additional services were not performed).
Section 2.1 Prices.
(a) Client agrees to pay for the Services furnished by Reapbusiness at the rates set forth in Exhibit A and referred to herein as the “Prices.” Subject to Section 1.2(b) below with regard to the amount of a Price increase, Reapbusiness may increase the Prices once, twelve (12) months after the Commencement Date, and thereafter may subsequently increase the Prices annually at the beginning of each Renewal Term (as defined in Section 6.1 below) by giving prior written notice of such increase in Prices (an “Adjustment Notice”) to Client at least ninety (90) calendar days prior to the commencement of the twelve (12) month period for which such increase in Prices shall be effective. Annually, Reapbusiness may not exceed a 5% price increase.
(b) In addition to any Price increases pursuant to Section 1.2(a), beginning with the first 12-month period after the Commencement Date, Reapbusiness shall annually increase the Prices by the lesser of (i) three (3%) percent and, (ii) the increase in CPI-W for each Adjustment Notice. For purposes of this Agreement, “CPI-W” shall mean the official Consumer Price Index for Urban Wage Earners and Clerical Worker, U.S. City Average, All Items 1982-84 (U.S. Department of Labor).
(c) Notwithstanding anything to the contrary contained herein, Reapbusiness may increase Prices for postage, freight, other shipping services, or telephone service upon prior written notice to Client. In the event that Reapbusiness’s third party vendors increase the rates charged to Reapbusiness, Reapbusiness shall provide notice of such increase to Client and such increase will be effective at the time the increase is imposed upon Reapbusiness. Additionally, if Reapbusiness allocates the cost of the service provided by such vendor to multiple customers (e.g., the service comprises part of “overhead”), such notice of increased third party vendor rates shall be accompanied by a reasonably detailed description of the basis on which Reapbusiness is allocating the increased rates among its customers. If the revised third party vendor prices are unacceptable to Client, Client shall stipulate to Reapbusiness, in writing, an alternate third party vendor source to be used for Client. Reapbusiness shall use best efforts to use the services of third party vendors selected by Client. If Reapbusiness is unable for any reason whatsoever to engage such third party vendor, Reapbusiness shall have the discretion to engage a third party vendor of its choice. Any increase in costs for the services in this Section 1.2(c) provided by third party vendors selected by Client shall be borne by Client.
Reapbusiness’s Representations and Responsibilities
Section 2.1. Corporate Power and Authority.
Reapbusiness represents that it is a corporation duly organized and existing under the laws of the State of Georgia with lawful power and authority to enter into this Agreement, and is duly qualified and in good standing and is authorized to do business in each jurisdiction where such qualification is required. This Agreement has been duly executed, by an Reapbusiness corporate officer having full power and authority to bind Reapbusiness.
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Section 2.2. Performance.
Reapbusiness will perform the Services on a timely basis and in accordance with the terms of this Agreement, subject to Client’s satisfactory compliance with all of its precedent obligations hereunder.
Reapbusiness shall not be responsible for any loss, damage, cost or expense to Client or to any purchaser or recipient of Products that result from any delay by Reapbusiness in performing or any failure to perform any of its obligations hereunder if such delay or failure to perform results directly or indirectly from the failure by Client or its representatives or suppliers to provide to Reapbusiness all or any of the following: (i) sufficient quantities of Product and supplies or related materials to meet order and shipping demand in a timely manner; (ii) sufficient quantities of Products of proper quality that are free of defects; (iii) sufficient quantities of Products with proper packaging; (iv) timely, complete and accurate order and shipping information; (iv) adequate time to allow for changes in procedures, product packaging or changes to Services requirements; or (vi) timely approvals and consents.
Section 2.3. Lost Goods.
If any of Client’s Products are lost, damaged and/or destroyed as a direct result of Reapbusiness’s negligent acts or omissions, beyond one-half of one percent (0.5%) (the “Shrinkage Allowance”), of the value of the Products, calculated on an annual basis, based on Client’s actual cost of such Products, Client agrees that, as its sole remedy, Reapbusiness shall reimburse Client for the actual replacement cost to Client for such excess lost, damaged and/or destroyed Products above the Shrinkage Allowance, together with the freight costs to Reapbusiness’s fulfillment center.
Section 2.4. Disclaimer.
EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE II, Reapbusiness MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES OR THE PRODUCTS, AND ANY AND ALL WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED AND EXCLUDED. Reapbusiness SHALL NOT BE LIABLE TO CLIENT OR ANY OTHER THIRD PARTY FOR DAMAGE OR INJURIES ON ACCOUNT OF DEFECTS IN ANY OF THE PRODUCTS, OR ON ACCOUNT OF DAMAGE OR INJURIES RESULTING IN WHOLE OR IN PART FROM PRODUCT USE OR MISUSE BY THIRD PARTIES.
Section 2.5. Limitation of Liability.
Reapbusiness’S LIABILITY FOR CLAIMS ARISING OUT OF, RESULTING FROM, OR IN ANY WAY CONNECTED WITH THIS AGREEMENT SHALL BE LIMITED TO THE AMOUNTS ACTUALLY PAID BY CLIENT ALLOCABLE TO THE SERVICES INVOLVED IN THE CLAIM FOR THE THREE (3) MONTHS PRECEDING THE EVENT OR EVENTS FIRST GIVING RISE TO SUCH CLAIM. IN NO EVENT SHALL Reapbusiness BE LIABLE TO CLIENT FOR ANY CONTINGENT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXTRA-CONTRACTUAL OR EXEMPLARY OR PUNITIVE DAMAGES, OR FOR DAMAGES FOR LOST SALES OR PROFITS OR COST OF COVER, REGARDLESS OF WHETHER Reapbusiness HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE LIMITATIONS ABOVE APPLY TO ALL CAUSES OF ACTION IN THE AGGREGATE, WHETHER BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR ANY OTHER LEGAL THEORY (INCLUDING STRICT LIABILITY). UNDER NO CIRCUMSTANCES SHALL Reapbusiness BE LIABLE FOR ANY LOSSES INCURRED ATTRIBUTABLE TO ANY ELECTRONIC DATA TRANSFERS, UNLESS SUCH LOSSES RESULT FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF Reapbusiness.
Section 2.6. Indemnification.
Reapbusiness shall indemnify, defend and hold Client and its divisions, subsidiaries, and affiliates and their respective officers, directors, employees, agents, successors and assigns harmless from and against any and all claims, liability, loss, damage or injury and costs and expenses (including reasonable attorneys’ fees, costs of any suit, and amounts paid in settlement of any such claims) (“Claims”) arising out of, relating to, or in connection with (a) the breach of any warranty, representation or covenant on the part of Reapbusiness hereunder; (b) the performance or nonperformance of this Agreement by Reapbusiness, and any negligent acts or omissions associated therewith; or (c) violations of any patent, trademark, copyright, trade secret or other intellectual property rights relating to the Services, or distribution of any of the Products; or (d) data privacy violations. The foregoing indemnification shall not apply to any Claims resulting solely from the gross negligence or willful misconduct of Client.
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Client’s Representations and Responsibilities
Section 3.1. Corporate Power and Authority.
Client represents that it is a business entity duly organized and existing under the laws of the State of Florida, with lawful power and authority to enter into this Agreement. Client is duly qualified and in good standing and is authorized to do business in each jurisdiction where such qualification is required. The individual executing this Agreement on behalf of the Client has full power and authority to bind Client.
Section 3.2. Payment Obligations.
Client agrees to pay Reapbusiness as follows:
(a) Start-Up Fee. Client agrees to pay a one-time Start-Up Fee as set forth in Exhibit A.
(b) Payment for Services.
(i) Client agrees to pay Reapbusiness for Services provided hereunder in accordance with the Prices set forth in Exhibit A (subject to increase in accordance with Section 1.2 above). Reapbusiness shall send invoices for Services to Client bi-monthly. Client shall make payment of all invoices net twenty-five (25) days from the date of the invoice. If Client does not pay any invoices within said twenty-five (25) day period, Reapbusiness may, at its discretion (1) discontinue providing all or any Services until payment in full is made, and (2) Client shall pay Reapbusiness interest on all unpaid amounts at the rate of 1.5% per month or the maximum amount allowed by law. In the event Client elects to use Reapbusiness’s carrier(s) for freight services, Reapbusiness shall send invoices to Client bi-monthly for freight expenses (the “Freight Invoice”). Client shall make payment of the Freight Invoice net fourteen (14) days from the date of the Freight Invoice. If Client does not pay any Freight Invoices within said fourteen (14) day period, Reapbusiness may, at its discretion draw against the Freight Deposit as provided in Section 3.2(d) herein.
(ii) Upon termination of this Agreement for any reason, Client shall remain fully responsible for payment of all outstanding invoices for Services property and fully rendered, as well as invoices not yet prepared respecting Services properly and fully furnished prior to the date of termination.
(c) Expenses. Client shall be solely responsible for payment of all costs and expenses set forth in Exhibit A which are incurred by Client in connection with the Services rendered hereunder, or that Reapbusiness otherwise properly (and at the written request of Client) incurs on behalf of Client that are not specifically set forth in Exhibit A, other than expenses payable by Reapbusiness under Section 1.2 above. Such costs and expenses may include, but are not limited to, freight surcharges incurred at either the time of shipment or anytime after shipment billed to Reapbusiness by freight or common carrier, facsimile charges, postage, express delivery service used to transmit labels, listings and reports to Client, taxes, and import duties. Reapbusiness shall not bill Client for any costs and expenses not set forth in Exhibit A unless Client has consented to such charges in writing.
Freight Deposit. In the event Client elects to use Reapbusiness’s carrier(s) for freight services, Client shall pay a freight deposit (the “Freight Deposit”) to Reapbusiness in an amount as estimated by Reapbusiness and determined in accordance with Exhibit A, as security for Client’s payment obligations with respect to Freight Invoices hereunder. Reapbusiness reserves the right to request an additional Freight Deposit should Client’s freight expenses exceed the initial Freight Deposit. If Client defaults in any of its payment obligations with respect to Freight Invoices hereunder, and such default continues beyond the applicable notice and cure period, then Reapbusiness may use all or part of the Freight Deposit for the payment of any outstanding amounts due to Reapbusiness with respect to Freight Invoices. If Reapbusiness uses such Freight Deposit as provided herein, then Client shall restore
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the Freight Deposit to its original amount within fifteen (15) days after written demand from Reapbusiness. The Freight Deposit is not a limitation on any of Reapbusiness’s rights and remedies hereunder or at law, or liquidated damages, or an advance payment of expenses. Client shall not be entitled to any interest on any amounts held by Reapbusiness as the Freight Deposit. Following the termination of this Agreement, Reapbusiness shall refund to Client any Freight Deposit not used by Reapbusiness as provided herein. Reapbusiness shall not use the Freight Deposit except in the event Client defaults on its payments as provided in section 3.2.
(e) Security Deposit. Solely as security for Client’s payment obligations under Section 3.2(b) (i) and 3.2(c), Client shall deposit with Reapbusiness the sum of $17,500 (the “Security Deposit”). If Client defaults in payment of any undisputed amount invoiced for Services, and such default continues beyond the applicable notice and cure period, then Reapbusiness may apply all or part of the Security Deposit toward payment of such outstanding balance of such invoice for Services. If Reapbusiness uses such Security Deposit as provided herein, then Client shall restore the Security Deposit to its original amount within fifteen (15) days after written demand from Reapbusiness. If after six (6) months of on-time payment history paid as outlined in Section 3.2(b)(i) and 3.2(c), Reapbusiness shall reduce the sum of the deposit to $10,000 (the “Revised Security Deposit”). The Security Deposit or Revised Security Deposit is not a limitation on any of Reapbusiness’s rights and remedies hereunder or at law, or liquidated damages, or an advance payment of fees or expenses. Client shall not be entitled to any interest on any amounts held by Reapbusiness as the Security Deposit or the Revised Security Deposit. Following the termination of this Agreement, Reapbusiness shall refund to Client the entire amount of the Security Deposit or Revised Security Deposit not used by Reapbusiness as authorized herein. Reapbusiness shall have no right to use any of the Security Deposit or Revised Security Deposit except as expressly provided in this Section 3.2(d).
(f) Invoice Dispute Resolution. Notwithstanding any provision of this Section 3.2 to the contrary, if Client disputes in good faith any amount contained on any invoice and gives Reapbusiness written notice within ten (10) days of receipt of invoice specifying the particular items in dispute and the basis of dispute, Client shall not be obligated to pay the disputed amount until the dispute is resolved as follows, but shall pay all undisputed amounts. Reapbusiness and Client agree to negotiate in good faith any disputed amounts within thirty (30) days after Reapbusiness’s receipt of Client’s written notice. If within ninety (90) days following the date of any disputed Invoice Reapbusiness and the Client have not resolved the items in dispute, Reapbusiness and Client shall submit the matter to binding arbitration in accordance with the provisions of Article VIII.
Section 3.3. Product Supply.
Client shall be solely responsible for acquiring and delivering to Reapbusiness an inventory of Products sufficient in quantity to meet order demand, and all such Products shall be free of any and all defects. Client shall ship Products to Reapbusiness in a timely manner and in quantities sufficient to allow Reapbusiness to fill orders as customer and order demand dictates. If a Product shortage exceeds the time allotted for a Product shipment to be sent by Reapbusiness to a Client customer (as such timeframes are dictated to Reapbusiness by Client), Client shall be solely responsible for any and all additional expenses incurred by Reapbusiness to notify customers (as may be required by regulations of the Federal Trade Commission or otherwise required by law). In the event Products are received late or packaged improperly for shipment to Client’s customers, Client shall be responsible for all costs and expenses, at Reapbusiness’s retail prices, for expediting orders, repackaging Products or providing workarounds as deemed necessary by Reapbusiness.
Client shall notify Reapbusiness promptly. In writing, if any Products have been recalled by Client or any governmental authority or are defective in any manner. Upon receipt of such notice, Reapbusiness shall fully and timely cooperate with Client, at Client’s sole expense, in connection with all actions necessary related to such recall process. In addition. Client shall be responsible for any costs or expenses incurred by Reapbusiness in connection with any actions necessary to comply with any government agency demands involving the Products.
Section 3A Forecasts.
Client will provide Reapbusiness with forecasts (“Forecast(s)”) for inbound and outbound activity (“Activity”) for each thirty (30) day period during the Term. Client will deliver each such Forecast to Reapbusiness fourteen (14) days before the beginning of the
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thirty-day period to which it pertains. Forecasts will specify Activity on a daily basis or, alternatively, on a weekly basis to be converted by Reapbusiness to a daily basis, subject to Client’s approval. The parties agree to participate in a weekly telephone conference to discuss the upcoming week’s anticipated Forecast variance (the “Forecast Call”). If as a result of the Forecast Call, the Activity exceeds the Forecast by at least fifteen percent (15%), then Reapbusiness, at the written request of Client will use best efforts to provide Service(s) for the increased Activity. Any costs resulting from Client’s written request(s), including, but not limited to, overtime labor charges, incurred by Reapbusiness to provide Services for the increased Activity shall be charged to Client. In the event the Activity falls below the Forecast by at most fifteen percent (15%), and such trending below Forecast continues for a period of at least two (2) weeks, then Reapbusiness will use best efforts to adjust (by deploying to non-Client activities) and/or reduce labor costs. If Reapbusiness’s best efforts in the preceding sentence fail, then Client shall be responsible for one half of the fulfillment and customer service fees as set forth in Exhibit A for a maximum of two weeks for which Reapbusiness could not reduce its labor costs.