MASTER SERVICES AGREEMENT

This Master Service Agreement (this “Agreement”) is between SELLERSFLOW LLC, (“SellersFlow”); and the company filling out the “Onboarding Forms” at https://SellersFlow.com/clients/onboarding (“Customer”).  This Agreement is effective as of the date Customer clicks “Finish” on the Onboarding Forms and first submits them to SellersFlow (the “Effective Date”).

 

SellersFlow provides “Supply Chain Management Services” (the "SCM Services”), by which SellersFlow will provide supply chain management services for specified Customer products (“Products”).  Customer desires to subscribe to the SCM Services on the terms of this Agreement.

 

This “Agreement” consists of the below Terms and Conditions (the “Terms”) and each Order and SOW (defined below) agreed upon hereunder, all of which are incorporated herein by this reference.

             

By clicking “Finish” on the Onboarding Forms, Customer acknowledges that it has read, understands and agrees with SellersFlow to be bound by all of the terms and conditions of this Agreement as of the Effective Date.  If Customer does not agree to this Agreement, Customer should not click the Finish button on the Onboarding Forms.

 

TERMS AND CONDITIONS

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1. SERVICES

   1. Orders.  From time to time during this Agreement term, Customer may request from SellersFlow, SCM Services with respect to particular Products identified in such Order.  The process for requesting and agreeing upon the SCM Services and the related Products shall be in writing, but otherwise as agreed by SellersFlow and Customer.  Each such agreed request shall be an “Order.”  Orders are non-cancellable.  Any specific terms on an agreed Order that conflict with these Terms will prevail with respect to such Order, but only if the Order identifies those portions of these Terms that are to be superseded.

   2. SCM Services.  Subject to the terms of this Agreement, SellersFlow will use commercially reasonable efforts to perform the SCM Services in accordance with the applicable Order.  The scope, features and terms of the SCM Services shall be as described in the Order and any related materials referenced in such Order.  The SCM Services shall involve coordination and communications between SellersFlow and Customer and each of Customer’s relevant Product marketplaces, Customer personnel, Product manufacturers, component suppliers, trading or other financing companies, and other contractors (collectively “Customer-Related Parties”).  All communications between SellersFlow and Customer-Related Parties shall be through use of the applicable group e-mail address provided by SellersFlow to Customer (the “Group Email”).  SellersFlow hereby grants Customer access to the Group Email during the term of this Agreement, solely to enable Customer to monitor such communications and interact with SellersFlow and Customer-Related Parties. 

   3. Customer Obligations.  Customer shall cooperate fully with SellersFlow and timely and in good faith perform such duties and tasks as are specified to be performed by Customer. Without limiting the foregoing, Customer is responsible for establishing, maintaining and performing all necessary agreements related to the sourcing, manufacture, delivery, and sale of Products (collectively “SCM Agreements”).  Customer hereby appoints SellersFlow as Customer’s agent to initiate and respond to communications with the Customer-Related Parties in connection with the Products and SCM Agreements.  Customer agrees to (a) provide SellersFlow access to all relevant Product marketplaces (including automated access through APIs), (b) enable communications between SellersFlow and Customer-Related Parties, (c) provide SellersFlow complete and accurate copies of all documents and other materials necessary to fully understand the terms and scope of all SCM Agreements and any other documents or agreements related to the sourcing, manufacture, delivery, and sale of Products, and (d) take such other actions as are reasonably necessary to enable SellersFlow to perform the SCM Services and ensure that the Customer-Related Parties understand SellersFlow’s role and authority in connection with the SCM Services.  Customer understands and agrees that it is responsible for the performance of all of its obligations under the SCM Agreements or any other commitment arising out of the SCM Services.  Customer agrees to promptly address all information and other requests made by SellersFlow. Customer undertakes to regularly monitor the Group Email and other communications regarding its Products and to promptly notify SellersFlow of any communications or decisions with which Customer disagrees.  SellersFlow will use reasonable efforts to address such disagreements or other Customer concerns or questions in a timely manner.

   4. Professional Services.  The parties may, from time to time, agree that SellersFlow will perform other services (“Professional Services”) for Customer as described in statements of work to be agreed hereunder (each a “SOW”).  Each SOW shall specify:  the services, items to be provided by Customer, items to be delivered by SellersFlow under a SOW (“Deliverables”), intellectual property rights, and such other terms as the parties agree.  SOWs are non-cancellable.  Any specific terms in an agreed SOW that conflict with these Terms will prevail with respect to such SOW.

   5. Assigned Persons.  SellersFlow will provide the SCM Services and Professional Services (collectively, “Services”) using such resources, including SellersFlow employees and third-party contractors (“Assigned Persons”), as SellersFlow in its sole discretion deems appropriate to perform the Services.  SellersFlow, not Customer, shall determine the manner and means by which the Services will be performed.  SellersFlow confirms that it is responsible for and must pay or cause to be paid, all employment and other similar taxes for Assigned Persons.  SellersFlow agrees that as between the parties, Assigned Persons are under SellersFlow’s control and are not entitled to any benefits of employment provided by Customer to its employees.

2. PAYMENT OF FEES

   1. SCM Services Fees and Professional Services Fees. 
      Customer agrees to pay SellersFlow a subscription fee for the SCM services as specified in the related Order.  In addition, following actual delivery of each Product Delivery to the applicable Final Inventory Destination, SellersFlow shall provide to Customer a report calculating the applicable Product Fee for such Product Delivery (all as defined and calculated in accordance with Exhibit A), and an invoice for such fee.  Customer agrees to pay such Product Fee as provided below.  Customer agrees to ensure that SellersFlow has complete and accurate copies of all materials necessary for SellersFlow to accurately calculate the Product Fee.  The fees and payment terms for Professional Services shall be as set forth in the related SOW. 
       

   2. Other Payment Terms.   If Customer agreed to pay amounts due hereunder by credit card, ACH or direct withdrawal, then SellersFlow or its payment processor is authorized to so charge, debit or deduct the applicable card or account on or after the first day the related payment is due or when otherwise agreed.  Except as provided above or as otherwise agreed, Customer will pay the fees and amounts payable under this Agreement within 15 days after receipt of the applicable invoice.  All fees are quoted and payable in US dollars.  Unpaid amounts are subject to a finance charge of 1.5% per month on any outstanding balance, or the maximum permitted by law, whichever is lower, plus all expenses of collection.  All fees and other amounts are non-refundable (except as otherwise expressly provided in this Agreement).  All fees and other payments hereunder are exclusive of any applicable sales, use, value added, withholding, and other transaction related taxes, and Customer will pay all such taxes levied or imposed by reason of the transactions hereunder, except for taxes based on SellersFlow’s net income or related to Assigned Persons.

   3. Disputes.  If Customer believes that SellersFlow has billed Customer incorrectly, Customer must contact SellersFlow’s billing department, no later than 30 days after the closing date on the first invoice or billing statement in which the error or problem appeared, in order to receive an adjustment or credit. Otherwise, Customer will be deemed to have waived the right to receive such an adjustment or credit.

3. SAGE DATA; CONFIDENTIALITY; OWNERSHIP; SECURITY

   1. Usage Data.  Notwithstanding anything to the contrary, but subject always to the obligations of confidentiality as set forth in Section 3.2, SellersFlow may collect and analyze usage data and other information relating to the provision, use and performance of various aspects of the SCM Services and related systems and technologies (including information concerning Customer and data derived therefrom) (“Usage Data”), and SellersFlow may (during and after the term of this Agreement) (a) use such Usage Data to improve and enhance the SCM Services and for other development, diagnostic and corrective purposes in connection with the SCM Services and other SellersFlow offerings, and (b) disclose such Usage Data solely in aggregate or other de-identified form in connection with its business. 

   2. Confidentiality.

      1. Proprietary Information Defined.  Each party (the “Receiving Party”) understands that the other party (the “Disclosing Party”) has disclosed or may disclose business, technical or financial information relating to Disclosing Party or its affiliates, customers or suppliers and their respective businesses which, from the circumstances surrounding disclosure should reasonably be understood to be confidential or proprietary information (“Proprietary Information”).  Proprietary Information of SellersFlow includes non-public information regarding the SCM Services, including the features, structure, functionality and performance thereof.  Proprietary Information of Customer includes the existence and terms of each SCM Agreement. 

      2. Protection of Proprietary Information. The Receiving Party agrees: (i) to take reasonable precautions to protect such Proprietary Information of the Disclosing Party, and (ii) not to use (except in performance of, or exercise of rights under, this Agreement) or divulge to any third person any such Proprietary Information.  Each party will only disclose the Proprietary Information of the other to such of its employees and contractors who are required to have the information in connection with this Agreement and who have signed a confidentiality agreement at least as protective as this Section 3.2.  Customer understands and agrees that SellersFlow may communicate with, and convey to, Customer-Related Parties such Customer Proprietary Information as SellersFlow deems necessary to perform the SCM Services.  Customer is responsible for ensuring that such Customer-Related Parties are bound by appropriate confidentiality agreements.  The Disclosing Party agrees that the foregoing shall not apply to any information that the Receiving Party can document (A) is or becomes generally available to the public; or (B) was in its possession or known by it prior to receipt from the Disclosing Party; (C) was independently developed by persons who did not have access to any Proprietary Information of the Disclosing Party; or (D) was rightfully disclosed to it without restriction by a third party.  This Section shall not preclude disclosure of Proprietary Information to the extent required to be disclosed by applicable law; provided that the Receiving Party will provide prompt notice thereof to enable the Disclosing Party to seek a protective order or otherwise prevent such disclosure.  Within 30 days of the termination of this Agreement, each party will return or destroy, all copies of the Proprietary Information disclosed by the other party, except for a limited number of electronic backup copies of such information as are automatically created and retained by the receiver’s standard backup processes and systems for purposes of disaster recovery.  In addition, and notwithstanding the foregoing, SellersFlow may retain and continue to use as provided herein, all Usage Data.

      3. Terms of this Agreement.  Each party agrees to keep confidential and not to disclose the terms and conditions of this Agreement to any third party, other than (i) in confidence to its affiliates, actual or potential investors, banks, lawyers, accountants and other professional advisors; (ii) in connection with the enforcement of its rights under this Agreement; (iii) as may be required by law, including in connection with the requirements of a public offering or securities filing; and (iv) in confidence in connection with an actual or proposed merger or acquisition. 

   3. Intellectual Property Rights.

      1. Ownership.  Subject to the licenses granted hereunder, all intellectual property, including related intellectual property rights (a) owned or controlled by a party at the commencement of this Agreement or independent of this Agreement (“Background IP”) or (b) developed by a party in connection with this Agreement, in each case shall remain under the ownership or control of such party.  Notwithstanding the foregoing, Customer agrees to assign, and does hereby assign, to SellersFlow, all right, title and interest in and to all suggestions, feedback, modifications or improvements (and related intellectual property rights) (collectively “Improvements”) to the SCM Services or other to Background IP of SellersFlow or any Deliverables provided hereunder, which Improvements are provided by Customer to SellersFlow or developed solely or jointly by Customer hereunder.  Customer agrees to execute such additional documents as may be requested by SellersFlow to evidence such assignment.

      2. Use of Customer Materials.  If the Services involve the use or modification of Customer Materials (defined below), Customer hereby grants to SellersFlow, a royalty free, non-exclusive, worldwide license to use, make, have made, copy, modify and prepare derivative works of the Customer Materials, solely for the purpose of SellersFlow performing the Services and exercising its rights under this Agreement.  SellersFlow may allow Assigned Persons to use such materials to the extent necessary to perform the Services.  Such right shall continue in effect for so long as necessary to perform the related Services.  Customer shall obtain, at its expense, any consents, licenses and rights from third parties that are required for Customer to provide the Customer Materials to SellersFlow and for SellersFlow to use such Customer Materials as set forth above.  “Customer Materials” means SCM Agreements and any software, materials or technology of Customer or provided by Customer to SellersFlow, which SellersFlow requires to perform the Services or on which Services will be performed by SellersFlow, including all related intellectual property rights.

      3. Rights Under SOWs.  Subject to payment of the associated fees, for any Deliverable provided by SellersFlow under a SOW, SellersFlow hereby grants to Customer a royalty free, non-exclusive, worldwide license to use, such Deliverable for the purpose for which it was provided.  For clarity, such license does not include the right to reproduce, make, have made, copy, modify or prepare derivative works of, such Deliverable.

   4. Data and System Security.

      1. Information Security Management. SellersFlow represents and warrants that it has implemented, maintains, and will maintain throughout the term of this Agreement, a comprehensive, written information security management program designed to protect Customer Proprietary Information and prevent a security breach, which includes administrative, technical, and physical safeguards to (i) ensure the security and confidentiality of such information; (ii) protect against any anticipated threats or hazards to the security or integrity of such information; and (iii) protect against unauthorized access to or use of such information which could result in harm or issues to Customer or any of its clients, agents, or employees.  The information security management program will be kept current based on changes in applicable legal and regulatory requirements related to privacy and data security, best practices and industry standards.

      2. Customer Responsibilities.  Customer is responsible for maintaining the security of all equipment used by Customer to access Group Email, passwords and files, and for all uses of Customer’s account or such equipment, with or without Customer’s knowledge or consent.

4. Indemnity

   1.   Indemnity.  SellersFlow agrees to (a) defend or, at its option, to settle, any third party claim (a “Claim”) brought against Customer asserting that the SCM Services infringe any patent or copyright, or misappropriate any trade secret, of any third party; and (b) indemnify and hold Customer harmless against all damages and costs finally awarded against Customer under any such Claim or agreed upon in settlement thereof.  Customer agrees to (1) defend or, at its option, to settle, any Claim brought against SellersFlow (A) asserting that any Product or the Customer Materials or any other materials it provides to SellersFlow infringe any patent or copyright, or misappropriate any trade secret of a third party or otherwise violate any third party proprietary rights, or rights of privacy and publicity, (B) by any Customer-Related Party under an SCM Agreement or otherwise related to the Products or SCM Services, except to the extent based on SellersFlow’s gross negligence or willful misconduct, or (c) asserting that any Product caused personal injury or death or any other product liability claim; and (2) indemnify and hold SellersFlow harmless against all damages and costs finally awarded against SellersFlow under any such Claim or agreed upon in settlement thereof. 

   2. Process.  The parties agree that each indemnifying party’s obligations under Section 4.1 are subject to the indemnified party under such section taking all reasonable steps to mitigate any potential expenses and providing the indemnifying party with (a) prompt written notice of any such Claim, or possibility thereof; (b) sole control and authority over the defense or settlement of such Claim; and (c) proper and full information and assistance, at the indemnifying party’s expense, to settle or defend any such Claim.

   3. Potential Claim.  If the SCM Services is, or in SellersFlow’s opinion might be, held to infringe as set forth above, SellersFlow may, at its sole option and expense procure for Customer the right to use such infringing item as provided herein or replace or modify such items so as to avoid infringement.  If neither of such alternatives is, in SellersFlow’s opinion, commercially reasonable, Customer’s rights in such item shall terminate.  In such a case, SellersFlow’s sole remaining liability, in addition to its obligation to reimburse awarded damages and costs or amounts agreed in settlement set forth above, will be to refund to Customer any prepaid and unused fees.

   4. Exceptions.  Notwithstanding the provisions of Section 4.1, SellersFlow assumes no liability for infringement claims arising from any portion of SCM Services consisting of Customer Materials or other customer or third party materials.  Notwithstanding the provisions of Section 4.1, Customer assumes no liability for infringement claims to the extent covered by SellersFlow’s indemnity under such section. 

   5. No Other Liability.  This Section 4 states the entire liability and obligations of each party, and the exclusive remedy of the other party, with respect to any actual or alleged infringement of any patent, copyright, trade secret, trademark or other intellectual property right by the Services, Products, Customer Materials or other information.

5. WARRANTY AND DISCLAIMER

SellersFlow warrants that (a) the SCM Services and Professional Services shall be performed in a manner at least consistent with prevailing industry standards during the then current term of this Agreement.  If, within 30 days of SellersFlow’s delivery of a particular Service, Customer notifies SellersFlow that Customer believes SellersFlow has breached the foregoing warranty, then, SellersFlow’s sole obligation, and Customer’s sole remedy, shall be for SellersFlow, at its election, to either correct such breach within 15 days or refund to Customer the amounts paid for the applicable Service.  Except as set out in this Agreement, (a) SellersFlow does not warrant that the Services or any Deliverable will be error free, and (b) the Services and Deliverables are provided “as is” and SellersFlow disclaims all warranties, express or implied, including implied warranties of merchantability, fitness for a particular purpose, satisfactory quality, accuracy of information, and noninfringement.

1. TERM AND TERMINATION

   1. Agreement Term.  The term of this Agreement commences on the Effective Date and continues until the first anniversary thereof.  At the end of the initial term and each extension, this Agreement shall automatically be extended on the same terms for an additional 1 year period, unless either party provides the other with at least 90 days’ prior written notice of its intent to not so extend the term of this Agreement. This Agreement may be sooner terminated as specified in this Section 6.

   2. Termination for Cause.  In addition to any other remedies it may have, either party may terminate (a) any Order or SOW, if the other party materially breaches such Order or SOW and fails to cure such breach within 30 days of notice of such breach; and (b) any or all Orders, SOWs or this Agreement, if the other party materially breaches this Agreement and fails to cure such breach within 30 days of notice of such breach.

   3. Effect of Termination.  Except as set forth herein, upon the termination or expiration of any Order, SOW or this Agreement for any reason, the rights and obligations of the parties under such Order, SOW or this Agreement, as applicable, shall terminate.  The termination of this Agreement or any Order or SOW shall not affect any other Orders or SOWs, each of which will remain in effect.  Unless an Order is terminated by Customer under Section 6.2, Customer is obligated to pay, within 30 days of the date of termination of such Order, the Product Fee for all Products as to which SellersFlow has provided any SCM Services, even if delivery to the Final Inventory Destination has not occurred.  In such case, costs not yet finally known will be reasonably estimated to calculate the Product Fee.  The expiration or termination of this Agreement will not (a) affect Customer's obligation to pay all amounts due to SellersFlow accrued prior to termination (or, where applicable, after termination), nor (b) entitle Customer to reimbursement or refund of any amounts already paid to SellersFlow.  However, if requested by Customer in writing within 15 calendar days of the termination or expiration of this Agreement, SellersFlow will make available to Customer, for a fee, access to all Customer Materials then in SellersFlow’s possession or control.  Such access shall be by delivery of a file containing such Customer Materials.  In addition, Sections 2, 1.1, 4, 5, 6, 7 and 8 will survive the expiration or termination of this Agreement.

2. LIMITATION OF LIABILITY

Notwithstanding anything to the contrary, except for breach of or liability under Section 3.2,  fraud or bodily injury of a person (collectively, “Exclusions”), neither party, nor its officers, affiliates, representatives, contractors or employees shall be responsible or liable with respect to the Services or any other subject matter of this Agreement under any contract, negligence, strict liability or other theory: (a) for error or inaccuracy or corruption of data or cost of procurement of substitute goods, services or technology, or loss of business; or (b) for any indirect, exemplary, incidental, special or consequential damages.  For all other claims except for Exclusions and Customer’s obligation to pay fees hereunder, neither party shall be liable under this Agreement for any amounts exceeding the fees paid by Customer to SellersFlow hereunder in the 12 months prior to the act that gave rise to the liability, in each case, whether or not the party has been advised of the possibility of such damages.

1. MISCELLANEOUS

   1. Severability.  If any provision of this Agreement is found to be unenforceable or invalid, that provision will be limited or eliminated to the minimum extent necessary and the remainder of this Agreement will otherwise remain in full force and effect and enforceable. 

   2. Assignment.  This Agreement is not assignable, transferable or sublicensable by Customer, including by operation of law, except with SellersFlow’s prior written consent.  SellersFlow may transfer and assign any of its rights and obligations under this Agreement without consent.  Any attempted assignment in violation of the foregoing is void.

   3. Entire Agreement.  This Agreement constitutes the entire, final, and complete agreement between the parties with respect to the subject matter hereof.  The preprinted terms and conditions contained in any Order or other document submitted by either party will be of no effect, notwithstanding any contrary provisions in such terms.  Except as expressly provided herein, no modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by both parties.  

   4. No Agency.  Except for Customer’s appointment of SellersFlow as its agent in accordance with Section 1.3, no agency, partnership, joint venture, or employment relationship is created as a result of this Agreement and Customer does not have any authority of any kind to bind SellersFlow in any respect whatsoever. 

   5. Force Majeure.  Nonperformance of either party shall be excused to the extent that performance is rendered impossible by strike, fire, flood, governmental acts, orders or restrictions, or any other reason where failure to perform is beyond the control of, and not caused by the negligence of, the non-performing party.

   6. Construction.  This Agreement is the result of negotiations among, and has been reviewed by, SellersFlow and Customer.  Accordingly, this Agreement shall be deemed to be the product of both parties, and no ambiguity shall be construed in favor of, or against, either party.

   7. Export Controls.  Customer may not remove or export from the United States or allow the export or re-export of the Deliverables or anything related thereto, or any direct product thereof in violation of any restrictions, laws or regulations of the United States Department of Commerce, the United States Department of Treasury Office of Foreign Assets Control, or any other United States or foreign agency or authority. 

   8. Notices.  All notices under this Agreement shall be in writing and will be deemed to have been duly given when received, if personally delivered; when receipt is electronically confirmed, if transmitted by e-mail; the day after it is sent, if sent for next day delivery by recognized overnight delivery service; and upon receipt, if sent by certified or registered mail, return receipt requested.  Such notices shall be sent to the parties at the respective address indicated below (as it may be updated from time to time) in the case of SellersFlow, or at the address then on record in Customer's account information with SellersFlow, in the case of Customer.

15655 Citrus Harvest Rd

Winter Garden, FL 34787

E-mail: hello@SellersFlow.com

 

1. Governing Law; Jurisdiction.  Prevailing Party.  This Agreement shall be governed by the laws of the State of Florida, without regard to conflict of laws provisions. Any suit under this Agreement (other than to enforce a judgment or award) will be brought in the federal or state courts in the districts which include Winter Garden, Florida.  Customer agrees and submits to the personal jurisdiction and venue of such courts.  In any action or proceeding to enforce rights under this Agreement, the prevailing party will be entitled to recover costs and attorneys’ fees. 

2. Publicity.  SellersFlow may include Customer’s name and logo on lists of customers of the SCM Services, including SellersFlow’s website.  Customer also agrees to reasonably cooperate with SellersFlow to serve as a reference account upon request.

3. Other Interpretive Provisions.  References in this Agreement to “Sections” are to sections herein unless otherwise indicated.  The words “include” and “including” and words of similar import when used in this Agreement shall not be construed to be limiting or exclusive.  For purposes of this Agreement, the word “will” shall be equivalent in meaning to the word “shall,” both of which describe an act or forbearance which is mandatory under this Agreement.  Except as provided in a particular context, the word “or” when used in this Agreement may mean each as well as all alternatives.  Headings in this Agreement are for convenience of reference only and are not part of the substance hereof. 

 

 

 

 

exhibit A

product fee

 

For each Product Delivery delivered to a Final Inventory Destination, Customer shall pay to SellersFlow a fee (the “Product Fee”) equal to the greater of (a) the “Minimum Product Delivery Fee” specified in the related Order for the related Product; and (b) the “Product Fee Percentage” specified in the related Order for the related Product times the Total Cost of such Product Delivery. 

As used in this Agreement, the following terms have the indicated meanings:

“Final Inventory Destination” means, for each Product Delivery, the ultimate destination agreed with Customer to which SellersFlow arranges delivery of such Product Delivery.

“Product Delivery” means a grouping of one or more units of a particular Product shipped in the same package or container and delivered to the same Final Inventory Destination.  For clarity, different Products types, even if included in the same package or container and delivered to the same Final Inventory Destination, constitute different Product Deliveries.    

“Total Cost” means, with respect to each Product Delivery, the sum of all costs incurred by or on behalf of Customer in connection with the Product procurement and delivery process (from manufacture through delivery to the Final Inventory Destination of such Product Delivery), but excluding amounts payable to SellersFlow hereunder.  Without limiting the forgoing, Total Cost for a particular Product Delivery includes the commercial invoice amount paid or payable by Customer in connection with such Product Delivery for (a) the related Product units, whether purchased from the manufacturer, a trading or financing company, or otherwise; (b) any components supplied by Customer for the related Product units, (b) shipping charges and duties for the related Product units or components; (c) warehousing and other logistics charges; (d) fees for Product inspection, testing or certification; and (e) other transportation-related charges.  To the extent a particular cost is allocable to multiple Product Deliveries, SellersFlow shall reasonably allocate such cost across all such Product Deliveries in calculating the Total Cost for each such Product Delivery.  For any Products in a Product Delivery provided at a discounted or zero cost as samples or due to warranty return or other similar circumstance, Total Cost shall be calculated based on the standard cost of such item.