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THIS MASTER SERVICES AGREEMENT (this “Agreement”) is made and entered into as of (the “Effective Date”) by and between Lost Boys Industries, LLC, an Arizona limited liability company (“Company”), and (“Customer”).


WHEREAS, Customer and Company have agreed to enter into this Agreement pursuant to which Company shall manufacture for, and supply to (as applicable pursuant to any Accepted Purchase Order (as defined below)), Customer for the Term (as defined below) certain Product (as defined below) and Customer shall accept and pay for those certain Products;

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and each Customer agree as follows:


1. Definitions.

(a) “Customer-Supplied Materials” means the materials, designs, specifications, artwork, text, logos, and similar materials supplied by Customer to Company under this Agreement and/or related to an Accepted Purchase Order.

(b) “Purchase Order” means a written or electronic order form submitted by Customer in accordance with the terms of this Agreement to Company authorizing the manufacture of the Product. Accepted Purchase Orders (as defined) shall be made part of this Agreement.

(c) “Price” means the price of the Products and Services set forth in the applicable Price Exhibit.

(d) “Product” means, on a product-by-product basis, the product(s) identified in the applicable Accepted Purchase Order.

(e) “Terms” means the terms of payment set forth in the applicable Terms Exhibit.

(f) “Price Exhibit” means that Exhibit A Price Exhibit attached hereto and incorporated herein that sets forth Product and Services pricing and other relevant terms.

(g) “Terms Exhibit” means that Exhibit B Terms Exhibit attached hereto and incorporated herein that sets forth terms and other relevant terms.

(h) “SLA Exhibit” means that Exhibit C Service Level Agreement attached hereto and incorporated herein, provided, however, the terms of this Agreement shall control in the event of any inconsistency between this Agreement and the Exhibit C SLA.

2. Scope; Services; Purchase Orders.

(a) Scope of Agreement. This Agreement, its exhibits, and the Accepted Purchase Orders constitute the entire

agreement for the purchase, sale and provision of the Products between Company and Customer, and supersede all

previous communications, representations and agreements, whether oral or written, between the parties. This

Agreement (including any and all exhibits and Accepted Purchase Orders) sets forth the terms and conditions

which apply to the Products, notwithstanding any other forms transmitted by Customer to Company.

(b) Purchase Orders. Customer shall send Purchase Orders to Company via a mutually agreeable method, which may

change from time to time.

(c) Acceptance of Purchase Orders. Upon receipt of a Purchase Order, Company has two (2) business days to reject

such Purchase Order, and if such Purchase Order is not rejected during this period, it shall thereafter be deemed

accepted (the “Accepted Purchase Order”); provided, however, if Customer is above its credit limit, then all

Purchase Orders shall not be deemed accepted until Company accepts any such Purchase Order, which it may

accept or reject in its sole discretion. Only Accepted Purchase Orders shall be binding. In the event Company

cannot produce the Products set forth in an Accepted Purchase Order (e.g., overcapacity, shortage of materials,

etc.), the parties shall work in good faith to modify the Accepted Purchase Order.

3. Production and Purchase Terms.

(a) During the Term, Manufacturer agrees to manufacture the Products according to the terms and conditions as set forth in this

Agreement; provided, Company has no obligation to produce products set forth in an Accepted Purchase Order.

(b) During the Term, Customer agrees to purchase and accept the Products, for the Price, according to the terms and conditions

as set forth in this Agreement.

(c) In the event of a conflict between the terms of any Accepted Purchase Order and the terms of this Agreement, the terms of

this Agreement shall prevail, except to the extent that the applicable Accepted Purchase Order expressly and specifically

states an intent to supersede this Agreement on a specific matter. Any amendment to the terms of this Agreement contained

in an Accepted Purchase Order shall be effective solely with respect to the terms of this Agreement as incorporated in such

Accepted Purchase Order, and not to the terms of this Agreement or the terms of any other Purchase Order. Any amendment

to the terms of this Agreement, including without limitation the Price Exhibit and Terms Exhibit, shall be effective for all

Accepted Purchase Orders, unless such amendment specifies otherwise.

(d) Price Exhibit. The Price Exhibit shall be applicable throughout the Term; provided, however, Company may modify the

Price Exhibit, upon notice to Customer, in the event market conditions result in an increase in price/cost of materials, labor,

freight, or similar matters.

(e) Terms Exhibit. The Terms Exhibit shall be applicable throughout the Term; provided, however, Company may modify the

Terms Exhibit, upon notice to Customer, in the event there is a change to Customer’s creditworthiness, financial market

forces, order volume, or similar matters.

(f) Invoice and Payment Terms.

(i) Customer shall pay each invoice for the Products in United States Dollars COD, unless otherwise agreed upon in

the Terms Exhibit. In the event Customer fails to make any payments when due, late fees will be charged as

follows: a two percent (2%) late fee and interest of one and one half percent (1.5%) of the outstanding balance per

month, or the maximum allowed by law, whichever is lower. Company shall recover any and all expenses

incurred in collecting payments due, including, without limitation, any bank charges, collection agency fees, and

any legal expenses, including court costs and attorneys’ fees. Notwithstanding anything to the contrary in this

Agreement and/or Purchase Order, in the event of any late payment by Customer that is not cured within ten (10)

days from the date of notice thereof, Company may (a) suspend production of any Products, and (b) elect that any

and all Product Orders, up to the credit limit, become immediately due and payable.

4. Production and Quality Control.

(a) Quality. Company shall exercise commercially reasonable efforts to utilize equipment, machinery, production methods and

manufacturing quality control procedures that meet the generally accepted industry criteria for the production of Products.

The parties acknowledge that it is typical for slight garment color variations in Products and such variations shall not

deemed an incorrect color or be included in the Damage Allowance (as defined).

(b) Subcontractors. Company may utilize one or more subcontractors to produce the Products.

5. Shipment and Delivery.

(a) Packaging and Shipment. Products shall be shipped in a commercially reasonable manner. Company will use its discretion

in choosing suitable packaging materials, unless otherwise agreed by Parties.

(b) Under Shipment. The Damage Allowance (as defined) shall apply to under shipments. Company shall notify Customer of

units in Purchase Order that will not be shipped out. For the avoidance of doubt, under shipment that falls within the

Damage Allowance, shall not be subject to rejection and shall be considered full delivery under the Accepted Purchase Order.

(c) Production Time. Accepted Purchase Orders shall have a production time of four (4) business days; provided, however, if

such timeline is not reasonably achievable due to factors such as over capacity, shortage of materials or labor, the parties

shall work in good faith to modify the Accepted Purchase Order.

(d) Service Level Agreement. Company will meet the terms of the Service Level Agreement attached as Exhibit C to this

Agreement, subject, however to this Agreement.

(e) Title. Unless otherwise set forth, title and risk of loss on Products shall pass to Customer upon Product’s shipment on common carrier.

6. Acceptance and Rejection of Product.

(a) Acceptance. Customer may reject any Products (but only those Products) which fail to meet the Acceptance Criteria (as

defined); provided, however, Customer is deemed to accept the Product and waives its right to reject such Product unless it

has rejected product, in writing, within the shorter of the following time period: (i) fifteen (15) days from receipt of the

Product to its end-consumer (the party that the Product is shipped to), (ii) ten (10) days from receipt of the Product to

Customer’s own or contracted warehouse; or (iii) the expiration of the consumer’s return period with Customer.

“Acceptance Criteria” shall mean substantial conformance to the Accepted Purchase Order, subject, however, to the terms of this Agreement.

(b) Damage Allowance. Notwithstanding anything to the contrary herein, a one percent (1%) damage allowance on all

Products aggregated for each calendar month will be allowed (the “Damage Allowance”). For the avoidance of doubt, such Damage Allowance is the amount of damaged product that is acceptable by Customer and which is not subject to rejection,

return, chargeback or similar remedy. To calculate the Damage Allowance, all Products for each calendar month shall be

aggregated. For Customer supplied materials, please refer to Exhibit D.

(c) Charge Backs. Charge backs will be assessed by unit, and on problem units only (units that are subject to rejection), for

any such units that surpass the Damage Allowance. Charge backs shall be the actual reasonable cost of the damaged units

to Customer. Charge backs shall not include consequential damages, lost profits, or other indirect costs. Customer shall be

responsible for the cost of shipment to Customer or Customer’s end-consumer of replacement Product.








LIABILITY (INCLUDING NEGLIGENCE) OR OTHERWISE. Except for the indemnity obligations herein, no party

shall be liable to the other party for damages, losses and causes of action (whether in contract, tort (including but not

limited to negligence)) or otherwise in excess of the aggregate amount paid by Customer to Company for Products within

a six (6) month period prior to the event that gives rise to such claim.

(e) Warranty Disclaimer. Except as otherwise stated herein, Company hereby specifically disclaims any and all warranties,

express and/or implied, including, but not limited to, the implied warranties of merchantability of Products, fitness for a

particular purpose of Products, title and non-infringement.

7. Term and Termination.

(a) Term. The term of this Agreement shall commence upon the Effective Date and shall continue for a period of two (2)

years (the “Term”), unless terminated as provided in this Agreement. At the time of expiration of the Term, unless notice is

provided in writing by either party to the other party of its intent not to renew, this Agreement shall be renewed for

additional one-year (1-year) periods.

(b) Termination. This Agreement may be terminated by the parties at any time by mutual written consent; provided, however,

Customer may only terminate this Agreement for convenience upon ninety (90) days prior written notice to Company;

provided, further, Customer may only terminate this Agreement for cause if Company materially breaches this Agreement

and it has not cured such breach within thirty (30) days after written notice is provided by Customer.

(c) Effect of Expiration or Termination. All sections of this Agreement, shall survive any termination or expiration of this

Agreement; provided, further, upon expiration or termination of this Agreement, Company is deemed not to accept any

additional Purchase Orders unless agreed upon in writing.

8. Insurance.

Customer agrees to maintain, at all times during this Agreement and for a period thereafter until all potential claims would be barred by the applicable statute of limitations, insurance to cover its risks under this Agreement (including without limitation Customer’s indemnity obligations herein) with coverage amounts commensurate with customary levels in the market. Such insurance shall be on an occurrence, not claims-made, basis. Customer’s insurance shall be primary to Company’s insurance. Each such policy required herein shall be primary and non-contributory as to any/all Company policies of insurance. Company agrees to maintain, at all times during the Term, insurance it deems reasonably necessary to perform the Service.

9. Indemnity.

Customer agrees to defend, indemnify and hold harmless, Company each of its officers, directors, employees, affiliates, agents and representatives from and against all claims, actions, losses, expenses, suits, demands, damages or other liabilities including reasonable attorney’s fees related to or arising out of any alleged infringement of any patent, trademark, copyright or other intellectual property or proprietary of Customer and/or the Customer-Supplied Materials.

10. General.

(a) Force Majeure. Neither party will be liable for any failure to perform any obligation under this Agreement, or for delay in

such performance, to the extent such failure to perform or delay is caused by circumstances beyond its reasonable control

that make such performance commercially impractical, including without limitation fire, storm, flood, earthquake,

explosion, accident, war, acts of a public enemy or rebellion, insurrection, sabotage, epidemic, quarantine restrictions,

labor disputes, labor shortages, transportation embargoes, delays in transportation, shortages of materials, fuels or power,

acts of God, acts of any government or any agency thereof, and judicial action; provided, however, any suspension of

performance by reason of this Section will be limited to the period during which the cause of suspension exists.

(b) Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable, then and in that event

such provision will be reformed (made less restrictive) to make this Agreement and such provision or application, valid

and enforceable, and the Agreement, as reformed, will remain in full force and effect. If such illegal, invalid or

unenforceable provision cannot be reformed, then and in that event it will be fully severable and this Agreement will be

construed and enforced as if such illegal, invalid or unenforceable provision had never been a part of this Agreement.

(c) Arbitration; Governing Law. Any dispute, controversy or claim arising out of or relating to this Agreement, including the

formation, interpretation, breach or termination thereof and the Product Addendums, including whether the claims asserted

are arbitrable, will be referred to and finally determined by arbitration in accordance with the Commercial Arbitration

Rules of the AAA, applying Arizona Law, and such arbitration shall take place in Maricopa County, Arizona. The

arbitral award shall be final and binding. The parties agree to share equally the fees and expenses of any arbitrator, and

any administrative charges and expenses. Nothing in this Section shall limit the rights of one party in seeking injunctive

relief from a court of competent jurisdiction within the State of Arizona or in the state, or jurisdiction, where injunctive

relief is necessary. In the event that any action or proceeding, including arbitration, is commenced by any party hereto for

the purpose of enforcing any provision of this Agreement, the parties to such action, proceeding, arbitration or appeal of

any award, judgment, decision or resolution may receive as part of any award, judgment, decision or other resolution of

such action, proceeding, arbitration or appeal their costs and reasonable attorneys’ fees as determined by the person or

body making such award, judgment, decision or resolution. Should any claim hereunder be settled short of the

commencement of any such action or proceeding, including arbitration, the parties in such settlement shall be entitled to

include as part of the damages alleged to have been incurred reasonable costs of attorneys or other professionals in

investigating or counseling on such claim. TO THE FULLEST EXTENT PERMITTED BY LAW THE PARTIES WAIVE


(d) Independent Contractors. Each Party acknowledges and agrees that the other Party is an independent contractor in the

performance of each and every part of this Agreement and is solely responsible for all of its employees, contractors and

agents and its labor costs and expenses arising in connection therewith. The Parties are not partners, joint ventures,

franchisor-franchisee or otherwise affiliated, and neither has any right or authority to make any statements, representations

or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior written

consent of the other Party.

(e) No Waiver. The failure of either Party to enforce its rights under this Agreement at any time for any period shall not be

construed as a waiver of such rights.

(f) Assignment. This Agreement may be transferred or assigned by both Customer and Company with the prior written

consent of both parties. Subject to the foregoing limitation, this Agreement shall be binding on, inure to the benefit of, and

be enforceable by the parties and their respective heirs, successors and valid assigns.

(g) Construction and Interpretation. Headings and captions are for convenience only and are not to be used in the

interpretation of this Agreement. This Agreement is in English only, which language shall be controlling in all respects,

and all versions hereof in any other language shall not be binding on the Parties hereto. All communications and notices to

be made or given pursuant to this Agreement shall be in the English language. The terms and conditions as set forth in this

Agreement have been arrived at after mutual negotiation, and it is the intention of the parties that its terms and conditions

not be construed against any party merely because it was prepared by one of the parties.

(h) Notices. All notices required or permitted under this Agreement will be in writing and will be deemed received (i) when

delivered personally; (ii) when sent by confirmed facsimile or electronic mail; or (iii) seven (7) days after having been sent

by registered or certified mail, return receipt requested, postage prepaid. All communications will be sent to the addresses

set forth below or to such other address as may be designated by a party by giving written notice to the other party

pursuant to this section.

(i) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which

together shall constitute one and the same instrument. This Agreement may be executed by facsimile


Subject to Section 3(d) of the Agreement

See current pricing tables for use in this agreement.


Subject to Section 3(d) of the Agreement

1. Credit Terms.

Manufacturer is currently willing to extend a Credit to Customer. At no point shall an outstanding balance be paid more than ten (10) calendar days from shipment of Products.

Personal Guarantees from all individuals and entities with more than 5% ownership of Customer are required to establish Credit.

Any orders passing credit limit will require a deposit, if credit has not become available via payment on previous orders.



(a) Timeframe for Fulfillment. Subject to Section 5 of the Master Services Agreement (MSA) that this is an Exhibit

thereto, except for invalid Purchase Orders, and subject to the exceptions set forth in Section 1(b) of this exhibit,

Company will fulfill all Accepted Purchase Orders within four (4) business days for all Products. For purposes of this

Production SLA, an order shall be deemed “fulfilled” when it is marked as “shipped” in Company’s automated system.

It is expected that DTG and stocked products will ship within two (2) business days, and that Screen printed or

embroidered products will require four (4) business days, for stocked products. Orders received by twelve o’clock

(12:00 CST) will be considered received on that day.

(b) Exceptions. The production times set forth in Section 1(a) above shall not apply to the following:

(i) If in any twenty-four (24)-hour timeframe, the amount of Purchase Orders exceeds the Production

Forecast (as defined below) by twenty percent (20%) or more;

(ii) Any individual Purchase Order that is ten percent (10%) or more of the total dollar value of Purchase

Orders received by Company in a twenty-four (24)-hour timeframe;

(iii) Any Purchase Order that is a complex multi-part order that requires special handling, packaging, non

inventoried items, and/or outsourcing;

(iv) If in any calendar month, the amount of Purchase Orders exceeds the Production Forecast (as defined

below) by twenty percent (20%) or more;

(v) Any Purchase Order delayed due to mutually agreed-upon maintenance or system redesign issues;

(vi) Any Purchase Order delayed due to factors not reasonably within Company’s control (such as volume

of traffic on the Internet; software or hardware malfunctions not within the reasonable control of

Company or that delay Company’s receipt of a Purchase Order, ability to fulfill a Purchase Order or

ship a Purchase Order; supply issues by vendors; acts of God; force majeure events or otherwise); or

(vii) As otherwise set forth in the MSA.

Company and Customer agree to timely notify each other if Purchase Order volume may contribute to a failure to comply with the production terms set forth in Section 1(a) to this exhibit.

(c) Forecasts. At least thirty (30) days prior to each calendar quarter during the Term, Customer will supply to Company a

written monthly forecast of the Product Orders, subdivided by SKU, that it expects to be placed by End Users during

such calendar quarter (the “Production Forecast”). Customer agrees to update the Production Forecast at least four (4)

weeks prior to any marketing campaign or peak or holiday periods. At least ten (10) days prior to the beginning of each

calendar quarter during the Term, Customer will also provide Company with a written daily Production Forecast. If

Customer fails to provide any Production Forecast by the applicable deadline set forth above, the Production SLA will

not apply to any Product Orders placed during such time period.

(d) Quality of Production. All Products shall be free from defects in material and workmanship. Notwithstanding the

foregoing, Company shall not be responsible for the print quality or content that is a result of the Image submitted by

Customer’s end users as determined in good faith by Company and the already agreed upon quality criteria. Upon

receipt of the Product Order by Company, such Product Order shall be irrevocable by Customer and not subject to

cancellation or any change made by Company or any of Company’s end users.

(e) Method of Production. The method of production of any Product Order will be decided upon by the Customer, unless

otherwise agreed. Any products that customer may wish to screen print, will need to be submitted to Company five (5)

business days in advance of that Product Order.

(f) Remedies.

(vi) Quality Issues. Subject to the MSA, Company shall be responsible for returns of a Product if such

Product is rejected, and Company’s sole responsibility will be to credit the cost of that unit if in

excess of the Damage Allowance. In the event that Product returns exceed five percent (5%),

Company and Customer agree to review the end user support process and issues to determine the

cause, if any, of such end user dissatisfaction and correct or rectify any determined causes. Customer

agrees that such an instance shall not be deemed a material breach for purposes of this Agreement.

Customer shall cooperate with Company to determine the cause of end user complaints regarding the


(vi) Fulfillment Issues. In the event Company fails to fulfill an Accepted Purchase Order in accordance

with Section 1(a) of this Exhibit (subject to the limitations set forth herein), Company shall, at no

additional cost to Customer, work to remedy the situation for the end user including but not limited to

expediting the Accepted Purchase Order and/or upgrading shipment for such Accepted Purchase

Order. Notwithstanding the foregoing, Company shall not be responsible for paying to upgrade

shipment of Accepted Purchase Orders (1) until the shipping delay affects twenty five percent (25%)

or more of Accepted Purchase Orders on any particular Business Day (excluding those Purchase

Orders exempted from the Production SLA as set forth herein) or (2) if the delay is the result of force

majeure, as described in Section 10(a) of the (MSA).

(vi) Return Issues. In the event an item is returned in excess of the Section 6(b) of the MSA, the financial

responsibility shall pass to the parties as follows:

1. Customer takes financial responsibility when:

a. Returned for incorrect size due to end user error

b. Returned from carrier

i. If a package is returned to Company due to incorrect address, customs denial, or

any other scenario arising from Customer or end user error and Customer

wishes to resend package, Customer is responsible for the cost of additional


c. Returned due to poor quality of the actual digital image itself

2. Company takes financial responsibility when:

a. Quality issue

i. If the merchandise is returned if the end user was sent incorrect merchandise

(garment or design), Company will credit the cost of that unit if in excess of the

Damage Allowance. Company is not responsible for reprints if the original

image itself is low quality.

b. Returned for incorrect size or address or any other fault due to Company error.

In the event of any inconsistency between this SLA Exhibit and the MSA, the terms of the MSA shall control.


1. Service.

All garments will be inspected upon receiving to warrant if usable for production before initiating production. Lost Boys Industries, LLC cannot accept responsibility for the product after goods have been shipped to the customer, as each end user of the product will care for it differently.

2. Testing.

Manufacturer will ensure that the embellishment will be applied to the product properly and will be assessed by in-house testing, but will not be responsible for any additional testing. It is customers responsibility to test their own goods prior to production to ensure that the particular product meets their own requirements. Each customer has their own individual quality and performance standards, and the bonding of screen printing, heat-transfer, appliqué, embroidery, and welding varies from fabric to fabric

3. Damage Allowance.

Manufacturer will perform at best to deliver, at minimum, the ordered quantity for each and every size on the Purchasing Agreement. Damage allowance accepted at a 2% ratio on standard printing and a 5% ratio on special treatments and applications. Embellishment services on misprint and damaged products will not be billed and will be refunded and/or credited to the customer.

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