EXHIBIT 10.25
DISTRIBUTION AND FULFILLMENT
SERVICES AGREEMMNT
This agreement is made and entered into as of this 5th day of February,
1999 (the "Effective Date") by and between Macmillan Distribution, Macmillan
Digital Publishing USA, a division of Pearson p1c., with offices at 000 Xxxx
000xx Xxxxxx, Xxxxxxxxxxxx, XX 00000 ("MD") and Sound Source Interactive, a
Delaware corporation with offices at 00000 Xxxxxx Xxxx, Xxxxx X. Xxxxxxxxx, XX
00000 ("Company").
WHEREAS, MD is in the business of. among other things, distributing
software products;
WHEREAS, Company is in the business of developing and publishing software
products for interactive media and Company desires to grant to MD the right to
distribute its products;
WHEREAS, MD desires to distribute for Company its Licensed Products.
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and other good and valuable consideration, the receipt and sufficiency of which
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is hereby acknowledged, MD and Company agree as follows:
1. Certain Definitions.
1.1 "Licensed Products" means those SKU's of software products described in
Schedule A
(as such Schedule A shall be updated from time to time as set forth in
Paragraph 7 hereof), including related end-user documentation and
manuals, and such other artwork.. promotional and other materials
prepared by Company and included in such software products, and
provided to MD hereunder.
1.2 "SKU" means a version of a Licensed Product designed for DOS, WINDOWS,
Macintosh and am, other software or electronic versions (limited to CD-
ROM, not withstanding MD shall have right of first refusal for DVD ROM)
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of such Licensed Products. including without limitation versions
designed for set-top boxes and downloadable upgrades.
1.3 "Gross Revenue" means the actual amount billed by MD when converted
into U.S. dollars for Licensed Products shipped by MD (exclusive of
freight, insurance and taxes).
1.4 "Territory" means North America (including its territories and
possessions). "Additional Territory" means the world, excluding the
Territory.
1.5 "Returns Credit"means the amount credited or refunded by MD when
converted into U.S. dollars for actual returns of Licensed Product.
1.6 "Launch" means the sales process and effort associated with the
distribution of an SKU, within sixty (60) days of a pre-determined
release date for such SKU.
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1.7 "All Markets" means the following accounts; Office Superstores,
Computer Superstores, Mall Electronic Stores, (such as Electronic
Boutique and Babbages) Bookstores, Electronic Retail Outlets, General
Merchandise Discounters (such as Wal*Mart, Target etc.) with the
exception of TJ Max, Ross, Avon and Marshalls, Wholesaler Clubs, (such
as Costco and Xxxx Club) Toy Stores, Wholesalers Books, (Such as Inc-
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Tam and Xxxxx and Xxxxxx) ) Wholesale Software, (Such as Navarre and
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Merisel) On-line retailers, (Such as Xxxxxx.xxx and Xxxxxxxx.xxx)
Software Clubs, (excluding Family Software and Software of the Month
Club) Book Clubs, Video Clubs and Military Retail Stores
1.8 "Non-Exclusive Channels" includes the following but is not limited to;
The direct-to-consumer programs such as direct mail, telemarketing
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(such as 800 number sales), in-box coupon fulfillment and infomercials,
OEM sales, "soft bundles" of the Licensed Products -with non-software
products designed to generate a secondary market for the Licensed
Products, and non-traditional channels such as grocery stores.
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1.9 "Studio Licensor" shall mean a movie studio or other entertainment
company that has licensed to Company the primary content on which
certain Licensed Products may be substantially based and, in addition,
may have granted to Company and its designee the right to use its name.
logo and trademark in connection with such Licensed Product.
2. Grant of Rights/Services.
2.1 Distribution. Company hereby grants to MD the exclusive right to sell,
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distribute and provide inventory. warehousing and fulfillment sen,1ces
for Company's Licensed Products, in All Markets in the Territory except
the Non-Exclusive Channels. The parties acknowledge and agree that the
Company may from time to time throughout the Term grant to MD: (a) the
non-exclusive right to distribute and provide inventory, warehousing
and fulfillment services for any or all of the Licensed Products in the
Non-Exclusive Channels in the Territory- and (b) the exclusive or non-
exclusive right to distribute and provide inventory, Warehousing and
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fulfillment services for any or all of the Licensed Products, in all or
certain markets, in the Additional Territory. In addition, the parties
agree to consult with each other with respect to their solicitation of
sales in the Non-Exclusive Channels.
2.2 Trademark License.
a) Subject to the terms of this Agreement, Company hereby grants to
MD the non-exclusive Tight to use the name and logo of Company and
the applicable trademarks of Company alone or in conjunction with
MD's name, logo and marks in connection with the distribution of
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the Licensed Products. Company shall have prior approval of
materials incorporating the name, logo or trademark of Company,
such approval not to be unreasonably withbeld or delayed. A
failure by Company to respond to MID in writing within five (5)
business days of Company's receipt of
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material incorporating its name.. logo or trademark shall
constitute Company's approval of such material (as pertains to the
Company only and notwithstanding the applicability of subparagraph
(b) below) submitted to by MD.
b) The parties understand that, in some instances, Company may have
the right to include in certain marketing, packaging, promotion,
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advertising, sales and distribution materials the name, logos and
trademarks of Company's Studio Licensors. In connection therewith.
Company hereby grants to MD the non-exclusive right to use the
name and lo2o of such Studio Licensors alone or in conjunction
with MD's and/or Company's 3-xxxxxx, logo and marks in connection
with the distribution of Licensed Products. Company shall inform
MD of its rights With respect to the name, logo and trademarks of
its Studio Licensors and any requirements pertaining to Studio
Licensor approval of such materials. In all cases in which MID
submits such materials to Company for approval, Company will
inform MD that it has received such materials within twenty-four
(24) hours of receipt and AU use best efforts to expedite and gain
such Studio Licensor approval within ten (10) business days of
company's receipt of materials incorporating licensors name, logo
or trademark. At a minimum, Company shall respond to MD in writing
within ten (10) business days of Company's receipt of material
incorporating third-party names, 1020S or trademarks to advise MID
of the status of such Studio Licensor approval.
3. Obligations of MD.
3.1 Marketing and Promotion. IMD shall use commerically reasonable efforts
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to actively promote and sell the Licensed Products. MID shall consult
'With COMPANY on a periodic basis regarding sales and marketing
opportunities for the Licensed Products, provided that final decisions
regarding such advertising and promotion practices shall remain at
MD's discretion. Subject to the prior consent of COMPANY. which shall
not be unreasonably withheld or delayed, y NO shall in its discretion
include Licensed Products in NO sales and marketing literature at MD's
expense.
3.2 Further, subject to the prior consent of COMPANY, which shall not be
unreasonably, withheld or delayed, MD shall in its discretion include
Licensed Products in direct mail materials, retail and consumer
promotion materials, advertising materials. public relations efforts.
telemarketing programs and trade shows as MD deems appropriate to
effectively carry out the terms of this Agreement, and all the costs
of including Licensed Products in such materials, efforts. programs
and trade shows shall be borne by COMPANY.
3.3 Books and Records: Audit Rights. MD shall maintain and retain complete
and accurate books and records relating to any obligation assumed by
MD under this Agreement, for a period of not less than two (2) years
following expiration or termination of this agreement. Company. or its
designee through the use of a certified public accountant, upon two
(2) weeks prior notice and during business hours, shall have the right
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once a year during the Term of this Agreement and for one (1) year
following the expiration or termination of this Agreement to inspect
and examine and make copies of such books, records, and
correspondence, as Company may deem appropriate to determine the
accuracy of accountings and reports made pursuant to this Agreement.
All accountings and reports rendered by NO under this A2reement shall
be deemed binding on Company unless objected to in writing by
Company:, within one (1) year of the statement's being rendered.
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3.4 Solicitation and Shipment of Orders. With respect to MD's distribution
rights hereunder. NO shall have the sole Tight and obligation to
solicit orders.. prepare shipping documents, manage transportation of
the Licensed Products, including shipping copies thereof., receive and
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process returns of the Licensed Products, xxxx all orders at discounts
and on such terms as are in accordance with standard MID terms and
conditions and practice, and collect all invoices.
3.5 Delivery of Licensed Products. Subject to Section 4.7, Company shall
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deliver from time to time copies of the Licensed Products f.o.b. MD's
warehouse in quantities and on dates mutually agreeable to the parties
and as necessary for MD to perform properly hereunder. Company shall
assume all risk of loss or damage to such Licensed Products until
delivered to and accepted by MD. The freight for shipping copies of
such Licensed copies to MD's warehouse facility or other designated
warehouse facilities shall be the responsibility of Company. All
freight costs associated with the fulfillment of all Licensed Products
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to retailers and distributors shall be borne by Company. MD shall not
make any changes or alterations to the Licensed Products delivered to
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it by Company.
4. Obligations of Company.
Company represents to MD that it is or intends to be the developer or
publisher of the Licensed Products. Company acknowledges that MD is assuming no
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responsibilities for any obligations With respect to the Licensed Products
except such as are expressly set forth in this Agreement. Company, farther
represents. covenants and agrees as follows:
4.1 Packaging. Company shall be responsible for manufacturing of all
packaging and associated materials for the Licensed Products.
4.2 Product and Packaging Design. All Licensed Products will be legibly
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marked on the outside as to machine, medium and other operating
requirements such as memory, and AU be marked clearly either on the
outside or within the packaging to indicate that Company is solely
responsible for customer support and for any warranties with respect
to such Licensed Products. Company shall place on all packaging
information for the Licensed Products delivered to MD hereunder such
bar code information, I.S.B.-INT. numbers or other data as MI) has
requested as desirable to customers of the Licensed Products. In
addition, Company shall place the following designation on all
Licensed Products distributed hereunder beginning with The Land Before
Time Preschool Adventure, that have not been previously distributed
and on all reprints of existing Licensed Products, in a typeface
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consistent with the other packaging descriptive copy and in no event
smaller than I 0-point typeface: "Distributed by Macmillan
Distribution".
4.3 Product Maintenance. Company will inform MD Promptly of any known
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defects or operational errors in the Licensed Products. If such
material defects or operational errors result in a substantial
reworking of MD's existing inventory, Company shall bear the
reasonable labor and material costs for such handling at a cost to be
mutually agreed upon by the parties.
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4.4 Product Changes. Company shall use it best efforts to give MD a
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minimum of forty five (45) days prior written notice of any changes in
the Licensed Products, including, without limitation, any decision to
discontinue or materially enhance any Licensed Product.
4.5 Technical Support . Company shall be solely responsible for 0 customer
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and technical support in connection with the Licensed Products
("Technical Support Services"). Company shall provide Technical
Support Services at least as comprehensive as that which Company
customarily provides for other software products made by it. Such
Technical Support Services provided by Company shall include. at a
minimum. making available a representative of Company or of the
Licensed Product's developer to answer questions regarding the
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Licensed Product during normal business hours.
4.6 Marketing Support. Company hereby agrees to all standard CO-OP
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Practices of accounts covered by this agreement as outlined in
Schedule E. Company will also provide MD with reasonable cooperation
and support in MD's efforts hereunder, including without limitation
setting up an adequate pool of funds to ensure that it can accommodate
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cooperative advertising and other promotional expenses to support the
Licensed Products. 'N[D agrees to discuss and obtain approval of all
marketing co-op initiatives above and beyond Schedule with the Vice
President of Sales of Company, or any other individual designated by
the Chief Executive Officer of Company.
4.7 Purchase Orders. Company shall be solely responsible for maintaining
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inventory levels and shall use reasonable best efforts to maintain
inventory levels of the Licensed Products at the MD warehouse (or that
of its designee) sufficient to process Company's purchase orders for
the Licensed Products within three (3) working days of receipt of the
order.
4.8 Insurance. During the Term of this Agreement, each party shall at all
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times maintain at its own cost the following minimum insurance
coverage in a form reasonably acceptable to the other and, upon the
request of the other, shall furnish certificates evidencing such
insurance: (i) comprehensive general liability insurance with a
combined single limit of at least One-Half Million Dollars (S500,000):
and (Iii) any other insurance coverage which the parties consider
necessary, or appropriate under the circumstances in the event there
are claims against any existing insurance policy with respect to the
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Licensed Products.
4.9 Distribution Outside of this Agreement. Company shall have full
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responsibility for all aspects of its products distributed by anyone
other than MD (whether prior to or as expressly permitted by this
Agreement). Such responsibility shall include, without limitation, the
financial and administrative burden of distribution and return of such
product. 'Without limiting the foregoing, Company agrees that, upon
execution of this Agreement it will provide MD with a best-estimate of
the inventory of the Licensed Products in wholesale and retail
accounts or otherwise f manufactured but not sold. In addition,
Company shall notify all resellers that NO shall be its authorized
distributor
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as set forth in this Agreement, and shall designate itself or another
entity responsible for all product distributed prior to the Effective
Date of this Agreement or outside of this Agreement and make all other
reasonable efforts necessary to ensure that distribution/ return of
such products does not impair or conflict in any way with the rights
granted to MD hereunder.
5. Damaged Products; Returns; Inventory.
5.1 Damaged Products. Copies of the Licensed Products in MD's inventory
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which are not in salable condition (as determined by MD in accordance
with its standard terms and conditions and practice) shall.. at
Company's election to be exercised within thirty (30) days of MD's
request thereof, be returned to Company at Company's cost and expense
(and pursuant to its shipping instructions), sold as damaged
merchandise by Company7 . or destroyed at Company's sole cost and
expense. Company shall be entitled to physically inspect the Licensed
Products within the thirty (30) day period prior to making such
election. Upon the failure of Company to provide instructions to MD
within thirty (30) days following receipt of MD's notIce,N4D shall
return such inventory to Company at Company's sole cost and expense.
NO shall follow the same policies and practices regarding returned
and/or dama2ed Licensed Products as it does for its own products
and/or its other distributed lines. The distribution fees payable by
Company to NO on any sale of the Licensed Products as damaged
merchandise hereunder shall be based upon the mutual agreement of the
parties, and any proceeds of such sale shall be paid to Company in
accordance with the terms hereof.
5.2 Returns. MD shall send a \written notification (email, fax) to the
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designated Company representative of MD's acceptance of any one single
return in excess of two hundred and fifty, (250) units of Licensed
product. This notification shall be sent to NO within three (3)
business days of acceptance of an RA from one of MD's customers.
Company \),ill make its best effort to respond to that request (email
fax) within three (3) business days. MD reserves the right to
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process a return in the event that the Company does not respond within
the period of time set forth in this agreement [three (3) business
days). Company shall pay the cost of freight on all returns of
Licensed Products if freight would not otherwise be paid by the party
returning such Licensed Products. Company shall be solely responsible
for all deductions for returns taken by customers of the Licensed
Products and for resolving any disputes regarding such returns. MD
shall not be responsible for resolving any disputes regarding any
returns taken by customers.
5.3 Inventory The inventory of Licensed Products and materials supplied
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by Company shall belong exclusively to Company. Company may remove
such inventory of Licensed Products from MD's warehouse at its 0,Am
expense and as it sees fit, subject to Company's obligations under
this Agreement. Except for copies of the Licensed Products received by
NO in damaged or otherwise non salable condition, MD shall assume all
risk of loss or damage, up to the per unit manufacturing cost, for all
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copies of the Licensed Products in its custody and
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control, provided that MD shall not be responsible for (i) any
Licensed Products returned in a hurt condition, or (ii) inventory
shrinkage that does not exceed 1.5% of the units inventoried
(including returns in inventory), it being understood that MD shall
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perform a physical inventor), of the Licensed Products in its
%warehouse at the end of the initial Term of this Agreement and
annually thereafter for so long as this Agreement remains in effect in
order to determine the level of inventory shrinkage.
6. Payment.
6.1 Compensation- In consideration for the performance of the
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distribution, services performed by MD hereunder. ' D shall be
~A7ajehousina and fulfillment s . MD entitled monthly to a
Distribution Fee (as defined in Schedule C hereto) and to a
warehousing fee ("Warehousing- Fee"), which Warehousing Fee shall be
equal to the sum of twenty-five cents ($.25) per unit of Licensed
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Product shipped by MD or its agents during such month plus forty cents
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($.40) per unit of Licensed Product returned during such month. At the
time specified in Paragraph 6.2 below, MD shall pay Company a Monthly
Payment, which shall be an amount equal to Gross Revenue less: (i) the
Distribution Fee, (ii) the Warehousing Fee, and (iii) the Authorized
Deductions (as defined in Schedule C hereto). Cancellations of orders
are not subject to Distribution or Warehousing Fee's. Drop Shipments
direct to MD customers that do not enter MD's warehouse are not
subject to Warehousing Fees.
6.2 Payment/Statements. 'Within seven (7) business days of the end of each
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month. shall issue to Company a report of Gross Revenue for the
Licensed Products. In addition. within fifteen (15) business days of
the end of each month, MD shall issue to Company a statement of Gross
Revenues for the Licensed Products for such month, as -well as an),
other charges or payments due under this Agreement, substantially in
the form of Schedule B hereto. The statement shall include the number
of copies of each of the Licensed Products shipped during the month,
the number of actual returns during the month, the amount of the
reserve for returns, the manner in which past reserves have been
applied, and an itemized listing of any other charges and fees charged
to Company pursuant to the terms hereof in connection with such
shipments.
Within sixty (60) business days after it renders such statement, MD
shall pay to Company the amounts set forth in Paragraph 6.1 above by
issuing a check to Company or, to the extent commercially feasible, by
directly depositing such amount in Company's bank account, as
specified by Company in writing in advance. In the event that the
Distribution Fee, the Warehousing Fee and/or the Authorized Deductions
in any given month exceed the Monthly Payment for such month, MD shall
issue an invoice to Company-for the-amount of such excess within
fifteen (15) business days of the end of such month, which invoice
shall be payable within sixty (60) days of receipt of such invoice by
Company and shall be payable by issuing a check to MD or, to the
extent commercially feasible, by directly depositing such amount in
MD's bank account, as specified by MD in writing in advance.
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6.3 Return Reserve. MD shall maintain a reserve against customer returns
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("Return Reserve") equal to the amount set forth on Schedule C. MD
shall perform periodic return reserve reconciliation reports in order
to maintain the proper reserve balance, as determined in consultation
with Company. MD shall refund any return reserve overages in a timely
and appropriate manner, as is mutually agreed by the parties. In
addition, three (3) months after expiration or termination of this
Agreement (except as otherwise provided in Paragraph 9.3), MD shall
refund any balance remaining in this reserve unless MD is made aware
of upcoming returns that would be in excess of the return reserve
balance, in which case MI) w0tld retain the reserve in order to cover
the cost of such returns. MD reserves the right upon approval from
Company (which will not be unreasonably withheld or delayed) to retain
a return reserve greater than the amount set forth on Schedule C in
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such case that MD is made aware of upcoming returns that would be in
excess of the return reserve balance.
6.4 Demonstration./Promotional Copies. No payments shall be owing to
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Company, nor shall MD be entitled to a Distribution Fee, in connection
with Products furnished on a so-called "no charge" basis (not to
exceed 500 units per sku without written consent of Company) to
distributors, sub-distributors, dealers and others for demonstration
and promotion purposes. Any Licensed Products furnished for
demonstration and promotion purposes shall be done so in a reasonable
and customary manner and only to promote Company products.
6.5 Price Protection/Stock Balancing. If MD decides to issue price
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protection credits (all price protection/stock-balancing actions must
meet with prior COMPANY approval which shall not be unreasonably
withheld or delayed), the credits to be reimbursed shall be based on-
the difference-between the new price and the former price for the
portion of units distributed by MD which remain as unsold inventory of
MD's customers on the effective date of the price protection/stock
balancing action.
In connection with granting such price protection credits to its
customers, MD shall (i) give a good faith estimate of the inventory of
its customers (based upon documentation supplied by such customers)
and base its refund or credit on such estimate, and (~) update such
estimate on a periodic basis as it receives information from its
customers and (iii) process claims for price protection at any time
subsequent to a price protection/stock balancing action. MD shall make
reasonable efforts minimize the impact of such price protection
credits.
7. Future Licensed Products.
Company shall grant to MD, as set forth in Paragraph 2.1 hereof, the right
to distribute any and all other SKU products that Company develops. publishes or
for which Company gains distribution Tights (whether due to expiration of a
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previous grant of distribution rights or otherwise) throughout the Term of this
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Agreement unless either (1) its contractual obligations as of the Effective Date
do not so permit, (ii) such product is developed jointly with or under license
to or with a Studio Licensor or another party that provides distribution
services itself (which in no event shall be more than four (4) products per
year), Or (iii) the parties otherwise agree in writing not to include such
product as a Licensed Product hereunder. Schedule A shall be amended to include
all such additional products as Licensed Products hereunder, and MD's
distribution of such new Licensed Products shall be governed by the terms of
this Agreement. In
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addition, Company shall inform '.MD of those products that fall within the
exceptions (i) - (iii) above and which, according]y, shall not be Licensed
Products hereunder.
8. Product Returns.
8.1 Defective Product. Company will inform MD and MD will inform Company
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promptly of any known defects or errors in the Licensed Products.
Company. at its option, will repair or replace, at no charge to MD,
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all Licensed Products that are considered to be materially defective
or to contain material errors in the reasonable discretion of Company,
MD and MD's distributors and dealers. For purposes of this Agreement
material software defects and errors shall include, but not be limited
to: Licensed Products, when properly used in accordance with Company's
documentation, that do not operate in substantial conformity with the
description of the Licensed Products set forth in the documentation
accompanying the Licensed Products; Licensed Products, packaging or
accompanying documentation destroyed during shipment and defective
stickering during retail. Company will pay any and all out-of-pocket
expenses associated with correcting the material defects or error,
including the cost of delivering modified product, plus a reasonable
handling fee for such labor as may be necessary to process and handle
such defects; provided, however, that respect to Licensed Product,
packaging or documentation destroyed during shipment, Company's
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payment obligations as set forth in this Paragraph 8.1 shall be offset
by the amount of payment or other compensation received by MD, if any,
from any shippers or their insurers with respect to such damaged
Licensed Products.
If Company refuses to make necessary corrections, then, without
limiting and remedies of MD or obligations of Company hereunder, MD
shall have the right to withdraw the specific Licensed Products from
sale and Company shall reimburse MD for any actual and direct costs
associated with such withdrawal.
9. Term and Termination.
9.1 Term. The term (the "Term") of this Agreement shall commence on the
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Effective Date and shall continue until January 31, 2001. Thereafter,
this Agreement shall be renewable only upon mutual --A7irten consent
of both parties.
9.2 Termination.
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(a) Termination Without Cause. Either part), may terminate this
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Agreement without cause upon ninety (90) days prior written
notice to the other party.
(b) Termination With Cause. Upon breach of a material obligation
hereunder by either party, the other part), may make written
notice of such material breach. If, after fifteen (15) days from
notice of such breach, the party in breach has failed to cure
such breach, the party having given notice may terminate the
Agreement.
(c) In addition, either part), may, at its option, immediately
terminate this Agreement without liability -upon occurrence of
any of the following events: if the other party has a receiver
appointed for it or its property: becomes insolvent
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or unable to pay its debts as they mature, or makes an assignment
for the benefit of its creditors; seeks relief or if proceedings
are commenced against MD or on its behalf under an), bankruptcy,
insolvency or debtor's relief law, and such proceedings have not
been vacated or set aside within sixty (60) days from the date of
commencement thereof, or is liquidated or dissolved.
9.3 Effect of Termination. The following provisions shall be in effect
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upon the effective date of the termination of expiration of this
Agreement:
(a) MD shall discontinue distribution of the Licensed Products.
(b) As soon as feasible after the effective date of termination or
expiration of this Agreement. MD will cease the use of any forms.
Promotional materials, or advertising referring to any titles of
the Licensed Products or to Company or any of its trademarks and
service marks.
(c) MD shall immediately f6m,ard to Company any and all unfilled
orders for the Licensed Products then in hand.
(d) Company shall be free to sell the Licensed Products to customers
by any means and by its own personnel or through any other
distributor.
(e) Each party's obligation to pay the other party for any amounts
which have become due shall continue.
(f) For a period of two (2) months after expiration or termination of
this Agreement (the "Returns Processing, Grace Period"), MD shall
continue to receive and process returns, to render receiving
reports and credits in accordance with its usual practices and to
render required statements and reports. After the end of the
Returns Processing Grace Period, MD shall have no responsibility
for processing returns. At that time Company shall be responsible
for processing all returns and shall reimburse customers of the
Licensed Products for all such returns.
(g) Upon expiration of this Agreement. MD may withhold amounts
otherwise due under this Agreement until the final accounting
settlement, ,which shall be rendered one (1) month after the end
of the Returns Processing Grace Period: provided, however, that
MD shall continue 10 Tender Its month.]y statements to Company
during, the period from expiration through the end of returns
processing.
(h) In the event of termination of this Agreement by MD due to
material breach by Company, MD will withhold amounts otherwise
due under this Agreement upon notice of termination until the
final accounting settlement, which shall be issued three (3)
months after the end of the Returns Processing Grace Period.
(i) In the event of termination by Company due to material breach by
MD, MD shall not be entitled to withhold amounts otherwise due
hereunder and shall continue to render statements and
accountings, along with payments to Company. for all sales and
support activity through the month of termination, with the final
accounting settlement to be issued one (1) month after the end of
the Returns Processing Grace Period.
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(j) If Company contracts with a new distributor who will begin
accepting returns immediately after the effective date of
expiration or termination, MD shall not withhold monies under
subparagraphs (g) and (h) above. In such event, MD shall continue
to issue accountings and payments due in accordance with the
terms of this Agreement for all sales and support activity
through the month of expiration or termination, with a final
accounting- to be issued three (3) months after the end of the
Returns Processing Grace Period.
(k) During the last month of the term of this Agreement, Company
shall instruct MD in writing as to the disposition of inventory
(including inventory received during the Returns Processing Grace
Period), and shall pay any crating or shipping expenses attendant
thereto at MD's cost. MD shall receive full credit in accordance
with Company's written instructions. Upon the failure of Company
to provide such instructions, MD shall return such inventory to
Company at Company's sole cost and expense. In the event Company
fails to accept such returns or to pay for such returns and/or
the inventory is returned to MD, MD may destroy such inventory
without liability. provided that no such destruction shall take
place sooner than thirty (30) days following the mailing of a
request, by certified or other receipted form of mail delivery,
advising Company of MD's intention to destroy a stated number of
copies absent written instructions from Company to the contrary.
10. Warranties and Indemnification.
10.1 Company Warranties. Company represents and warrants that:
(a) it has all necessary rights and authority to execute and deliver
this Agreement and perform its obligations hereunder. and to
grant to MD all rights purported to be granted herein and nothing
contained in this Agreement or in the performance of this
Agreement will place Company, in breach of any other contract or
obligation;
(b) the Licensed Products and all other materials delivered to MD
hereunder are and will be original to Company, except for (i)
material in the public domain or (ii) material as in which
permission has been obtained from the proprietary Tights owner
for Company to grant rights to MD hereunder and for MD to perform
to the full extent contemplated by this Agreement;
(c) it has not granted and will not grant any Tight in the Licensed
Products to any third party which are inconsistent with the
rights granted to MD in this Agreement.
(d) the Licensed Products and all other materials delivered to MD
hereunder, the audiovisual aspects of the Licensed Products and
any Company trademarks licensed to MD hereunder do not (i) invade
the right of privacy of any third person; (ii) contain any
libelous, obscene or otherwise unlawful material: (iii) infringe
an), patent, (iv) infringe any statutory or common law copyright
or (v) otherwise contravene any rights of any third
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person the Licensed Products do not contain ' any virus, Trojan
horse, worm or other software routine or hardware component
designed to permit unauthorized access, to disable, erase or
otherwise harm software, hardware or data, or to perform any
other such actions; and
(e) the Licensed Products shall be Year 2000 Compliant. "Year 2000
Compliant" shall mean that the Licensed Products shall not
experience any abnormality. malfunction or degradation in their
operation simply as a result of changing date values in
--------
connection With moving from the 20th to the 21st Century.
10.2 MD Warranties. MD represents and warrants that:
--------------
(a) it has all necessary rights and authority to execute and deliver
thisAgreement and perform its obligations hereunder;
(b) it shall not reverse engineer, reverse compile, or other-wise
disassemble the software relating to the Licensed Products; and
(c) it shall not sell, use, reveal, disclose or distribute the
Licensed Products: or any component thereof, to any person.
company or institution other than for the purposes set forth in
this Agreement.
10.3 Company Indemnification. Company shall indemnify and hold MD and any
-------------------------
purchaser of the Licensed Products from MD harmless against any loss,
-------
liability, damage. cost or expense (including without limitation fees
-------
and disbursements of counsel incurred by MD in any action or
proceeding between Company and MID or between 'MD and any third
party), judgments and other expenses arising out of any breach Or
alleged breach by Company of this Agreement or an), covenant,
representation or warrant), made by it herein, or otherwise arising
out of the content of an), materials provided or prepared by Company
with respect to the Licensed Products. MD shall be entitled to assume
and control the defense and settlement of any such claim, and Company
shall Provide reasonable cooperation and assistance in defending
against any such claim. In addition to, and not in limitation of any
other rights of MD. Company shall bear all costs and expenses
incurred by MD as a result of the recall of an), Licensed Product
necessitated by any breach or alleged breach of this Agreement or any
covenant, representation or Warranty made by Company herein. Company
shall consult in good faith with MD regarding the necessity for
recalling any Licensed Product or providing substitute or
supplemental materials prior to instituting such a recall,
substitution or supplementation. MD shall have the right, in its sole
discretion, to demand immediate reimbursement of all costs and
expenses of any such actions or to charge them against Company's
account.
10.4 MD Indemnification. MD agrees to indemnify, hold harmless and defend
--------------------
Company against any loss, liability, damage, cost or expense
(including without limitation fees and disbursements of counsel
incurred by Company in any action or proceeding between Company and
MD or between Company and any third party), judgments and other
expenses relating to or arising out of any breach or alleged breach
-------
by MD of this Agreement or any covenant, representation or warranty
made by it herein. MD shall be entitled to assume and control the
defense and settlement of any such claim. MD's obligation to
indemnify is conditioned on Company notifying MD promptly of any
claim as to
12
which indemnification will be sought. The par-ties agree to provide
each other with reasonable cooperation in the defense and settlement
of any such claim.
11. Confidentiality.
Each party agrees to treat the terms and conditions of this Agreement as
confidential information. In addition, each party ("Recipient") acknowledges
that, pursuant to the terms of this Agreement, it will come into possession of
certain financial information and records relating to the business of the other
party ("Disclosure"). Recipient agrees that any such information shall be
-------
treated as the confidential property of Discloser. Recipient agrees that it
shall take every reasonable precaution to safeguard the confidentiality of such
information with the same degree of care that it so exercises to protect the
confidentiality of its own proprietary information. Except as necessary to carry
out or enforce the terms of this Agreement, such confidential information shall
not be disclosed to others. Financial information provided or approved by
Discloser for distribution without restriction to third parties, information
already in Recipient's possession or in the public domain, or information
received by Recipient from third parties whether authorized or not to divulge
same, shall not be subject to this prohibition. Further. to the extent Recipient
is lawfully required to disclose such confidential information in the context of
any administrative or judicial proceeding, Recipient shall provide to Discloser
prior written notice of such required disclosure and an opportunity to oppose or
limit such disclosure.
12. Use of Trademarks; Tradenames; and Copyrights
12.1 Use by MD. MD hereby recognizes and concedes for all purposes that
----------
any copyrights, trademarks, trade names, or identifying slogans
affixed to, relating to, or contained in the Licensed Products as
prepared pursuant to the terms of this Agreement, or any accompanying
labels, containers and cartons, whether or not registered, constitute
the exclusive property of Company or its licensors'. MD agrees that
it shall only use, make reference to, or otherwise designate, either
orally or in writing, Company's trademarks or its licensors'
trademarks in the distribution of he Licensed Products, and shall not
transfer such right to use, reference, and designate such trademarks
to any other party. Upon termination of this Agreement in any manner
provided herein, MD will cease and desist from using all Company
copyrights, trademarks, trade names, or identifying slogans, and
furthermore, MD will at no time adopt for use, without Company's
prior written consent any word or xxxx which is similar to or likely
to be confused with said identifying marks.
12.2 Ownership by Company. MD shall not obtain or try to obtain for itself
---------------------
anywhere in the world, any trademarks, trade names, copyrights or
patents associated with the Licensed Products. MD acknowledges and
agrees all such items are the exclusive property of Company or its
licensors and agrees to immediately notify Company in writing of any
actual or suspected infringement. MD acknowledges that all rights
------
(including good Ail]) in Company's trademarks vest in Company and MD
shall, if and when requested by Company, enter into a "user
agreement" in the form reasonably required by Company without cost or
charge to MD. MD agrees not to use any of Company's trademarks as any
part of the name under which conducts its business; provided,
however, that MD may refer to itself as an authorized distributor of
The Licensed Products. MD agrees that it has or will acquire no right
-----
in Company's
13
trademarks by virtue of its performance under this Agreement except
for the limited rights of use as provided by this Agreement, and MD
------
acknowledges and agrees that it has no rip-ht to and shall not use.
except as provided by this Agreement, any trademark consisting of or
including Words, signs, color combinations, or other distinctive
features identical with or similar to those used, applied for or
registered by Company.
13. General.
13.1 Exclusion of Certain Damages. EXCEPT TO THE EXTENT OF ANY
-----------------------------
INDEMNIFICATION OBLIGATION FOR THIRD PARTY CLAIMS UNDER SECTIONS 10-
3).AND 10.4, NEITHER PARTY SHALLUTINTIDER ANY CIRCUMSTANCES BE LIABLE
TO THE OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
PUNITIVE DAMAGES OR LOST OR IMPUTED PROFITS OR ROYALTIES ARISING OUT
OF THIS AGREEMENT OR ITS TERMINATION, WHETHER FOR BREACH OF WARRANT
OR.ANY OBLIGATION ARISING THEREFROM OR OTHERWISE, WHETHER LIABILITY
IS ASSERTED IN CONTRACT OR TORT (INCLUDING NEGLIGENCE AND STRICT
PRODUCT LIABILITY) AND IRRESPECTIVE OF WHETHER THE PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE. EACH PARTY
HEREBY WAIVES ANY XXXX.XX THAT THESE EXCLUSIONS DEPRIVE SUCH PARTY OF
ANT ADEQUATE REMEDY.
13.2 Notices. All notices or requests, including communications and
--------
statements which are required or permitted under he rems of this
Agreement, shall be in writing and shall be sent by telex or
facsimile, or sent by recognized commercial overnight courier, or
mailed by United States registered or certified mail.
Notices shall be effective upon receipt. Notices shall be sent to the
parties at the following addresses:
For MD:
Macmillan Distribution
Macmillan Publishing
000 Xxxx 0 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
FAX 4: (3 17) 5 81-4 92 0
With a copy of notices to:
Legal Department
0000 Xxxxxxxx
XxxXxxx, XX 00000
Attention: General Counsel
FAX :~: (000) 000-0000
14
For Company:
Sound Source Interactive
00000 Xxxxxx Xxxx, Xxxxx X
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
FA.X4: (000) 000-0000
13.3 Governing Law. THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION OF
--------------
ITS TERMS AND THE ENITERPRETATION OF THE RIGHTS AND DUTIES OF THE
PARTIES HERETO SHALL BE GOVERNED BY.,VMD CONSTRUED EN' ACCORDANCE
WITH THE SUBSTANTIVE LAWS OF THE STATE OFNEW YORK, NOTW~JTHSTANDING
THE APPLICATION OF ANY CHOICE OF LAW OR RULE TO THE CONTRARY. THE
PARTIES AGREE TO SUBMIT TO THE EXCLUSIVE JUPJSDICTION OVER ALL
DISPUTES XXX.XX`.NDER IN THE FEDERAL AND STATE COURTS IN THE STATE OF
NEW YORK LOCATED IN' NEW YORK COUNTY.
13.4 Force Maieure. Neither party will be deemed in default of this
--------
Agreement to the extent that performance of prevented by reason of
any act of God, fire, natural disaster, accident, act of government,
shortages of material or supplies or any other cause beyond the
control of such party; provided that the party interfered gives the
-----
other written notice thereof within ten (10) working days of any such
event or occurrence. In the event of such a Force Mailer, the time
for performance or cure will be extended for a period equal to the
duration of the Force Maieure, but not in excess of six (6) months.
13.5 Captions. All indices, titles, subject headings, section titles and
----------
similar items contained in this Agreement are provided for the
purpose of reference and convenience only and are not intended to be
inclusive, definitive or to affect the meaning, content or scope of
this Agreement.
13.6 Amendment. No amendment or modification of this agreement will be
made except by an instrument in writing signed by both parties. of
either party hereto to prosecute its right with respect to any single
or continuing breach of this Agreement act as a waiver of the right
of that party to later exercise any right or remedy granted hereunder
with respect to that same or any other breach of this Agreement by
the other party hereto.
13.7 Relationship. The relationship between MD and Company with respect to
--------------
all matters relating to this Agreement, will be that of independent
contractors. Each party agrees that under no circumstances is it an
------
agent, partner, franchisor/franchisee or joint venturer of the other,
and neither parry has or owes the other an), special or fiduciary
responsibility. Each part), acknowledges that it is not relying on
the other for legal advice of any kind and has had the opportunity to
review this Agreement with legal counsel of its own choosing.
15
13.8 Severability. If any provision of this Agreement is found invalid or
--------------
unenforceable pursuant to judicial decree, such provision shall be
enforced to the maximum ex-tent permissible and the remainder of This
Agreement shall remain in full force and effect according to its
terms.
13.9 Binding Agreement./Assignment. The parties intend to be bound only
-------------------------------
upon full execution of a written agreement and no negotiation,
exchange of draft or partial performance shall be deemed to imp]y an
agreement. This Agreement, upon execution by both parties, will be
binding upon the parties hereto. This Agreement shall not be assigned
by either party, nor its rights or obligations hereunder assigned or
delegated, without the prior written consent of the other.
Notwithstanding the provisions of the preceding sentence. MD may
assign its rights or delegate its obligations under this Agreement
------ --------
without the consent of Company to any affiliated entity or to its
successor or the transferee(s) of all or substantially all of its
stock or all or substantially all of its business assets by reason of
merger. consolidation or sales or exchange of assets or other
------- --------
corporate reorganization.
13.10 Absence of Limitations. Nothing in this Agreement shall limit in any
---------------
way MD's right to undertake and carry out is development, publishing,
-----
distribution and/or marketing of its own or other party's software
products regardless of content or target market, including but not
limited to products that may be competitive With the Licensed
Products.
13.11 Entire Agreement. This Agreement and the Schedules hereto (Which are
----------
incorporated herein by this reference) constitute the entire
agreement between the parties and supersede all prior negotiations,
understandings, correspondence and agreements with respect to the
same subject matter.
13.12 Survival. The pro-6sions of Sections 9.3, 10, 11, 12 and 13 shall
---------
survive termination or expiration of this agreement.
Sound Source Interactive Macmillan Distribution
By: _________________________________ By: _________________________________
Title: ______________________________ Title: ______________________________
Date: ______________________________ Date: ______________________________
16
SCHEDULE A
LICENSED PRODUCTS
[To Be Inserted]
17
SCHEDULE B
STATEMENT TEMPLATE
[To Be Inserted)
18
SCHEDULE C
CERTAIN PAYMENT TERMS DEFINED
Distribution Fee: an amount equal to (i) twelve percent (12%) of Gross Revenue
-------------
for the Licensed Products for the month, (representing a 6% distribution fee and
a 6% affiliate management fee) less (ii) eight percent (8%) of the Returns
------
Credit for the Licensed Products for such month (the "Distribution Returns
Credit").
Authorized Deductions:
----------------------
i. the reserve for anticipated returns as provided for in Paragraph 6.3,
against which actual returns shall be applied;
ii. the price protection or stock balancing credit described in Paragraph
6.5. if any, for credits granted in the preceding month;
iii. the amount of costs associated with inventory and fulfillment, as set
forth in Paragraph 6. 1;
iv. an amount equal to actual bad-debt write-offs taken by MD for sales
of Licensed Product in the preceding months; and
v. the amount of any other deduction approved by Company (such as
promotional expenses or cooperative expenses set forth in Paragraph
4.6) that the parties have agreed shall be paid for or Credited by
------
Company which approved deduction shall be taken by MD in the month in
which such expenses are actually paid by MD or otherwise credited to
customers.
Return Reserve: Seventeen and one half percent (17.5%) of Gross Revenues.
--------------
19
SCHEDULE D
MACMILLAN DISTRIBUTION
1998 TERMS AND CONDITIONS
Distributor Program
Payment Terms: Net 60 days from invoice date.
Distribution Rights: North America only. The Company Vice President of Sales
must approve distribution beyond these areas, in writing.
Minimum Order: (1) case-pack
Discounts: MACMILLAN DISTRIBUTION reserves the right to decide, in
its sole discretion, at any time, which distributors it
shall sell its products through and whether any entity
qualifies or continues to qualify as a distributor. Two
additional discounts will be offered to distributors in
exchange for specific services listed below:
A. Distributor services discount of 3% off net software purchases (net software
-----------------------------------
purchases are defined as: purchases less returns). This discount is
identified on each invoice and reflects the distributor services
including, one or more of, but not limited to, the following:
[_] Advertising co-op assistance
[_] Electronic ordering (EDI)
[_] Mix assistance
[_] Pre-ticketing
[_] Plan-o-gramming
[_] Shipping and/or storage charges
To receive this discount, distributor must provide MACMILLAN
DISTRIBUTION with the following reports on a monthly basis within 10
business days from the close of each month:
[_] Inventory report with net sales by sku
[_] Net sales report by customer and by sku
20
If the distributor fails to provide these reports within the required time,
MACMILLAN DISTRIBUTION at its sole discretion can chargeback the distributor the
total discount dollar amount given for that period.
B. Racking Services discount of 6% off net software purchases (net
-------------------------------
software purchases are defined as: purchases less returns), will only
be credited to distributors for sales to those retail accounts-to
which-distributor provides full racking services.
To receive credit for the racking service, the distributor must supply
MACMILLAN DISTRIBUTION with a written request for each account (and
all included products) that they are providing racking services to.
MACMILLAN DISTRIBUTION reserves the right to require proof of
performance for all racking claims. Credit for all racking claims will
be issued within 30 days following the close of the month provided
that MACMILLAN DISTRIBUTION receives the monthly reports outlined in
paragraph "A" of the section entitled "Discounts" above. Credits are
based on monthly net units to customers for which racking services
were provided, reflected on the monthly reports, calculated at the
distributor's net cost. THERE WILL BE NO DEDUCTIONS FROM INVOICE FOR
RACKING DISCOUNTS.
Please note, MACMILLAN DISTRIBUTION defines racking as monthly, in-store
personnel providing physical inventory management of MACMILLAN D7STRIBUTTGN
skus.
Freight Policy: F.O.B. destination via surface carrier,- retailer can
upgrade freight at their expense.
Defective Returns: Please follow the procedure listed below:
. 100% with MD approval.
. Freight F.O.B. origin.
. Returns must be received within 60 days of RA authorization.
Non-Defective Returns:
. 1 for 1 stock balancing with MD approval.
. Order must be received within 30 days of RA approval.
. Freight F.O.B. Destination.
. Return must be received within 60 days of RA authorization.
Price Changes:
. There will be a 30-day written notice of the pending price change.
. Return requests must be in writing and should be faxed to MACMILLAN
DISTRIBUTION, Attn: Xxxxx Xxxxx at (000) 0000000.
. Upon review and approval, an RA form will be sent to you. No
deductions are allowed against open invoices or from invoice payments.
Use the RA form we provide and return to the MACMILLAN DISTRIBUTION
designated warehouse: MACMILLAN DISTRIBUTION, c/o Macmillan Returns
Department, 000 Xxxxx Xx. Xxxx Xxxx, Xxxxxxx XX 00000.
21
. Returns must be received within 60 days of R.A authorization.
. Freight for returns must be prepaid.
. Unauthorized returns will be refused. Returns of non-MACMILLAN
DISTRIBUTION product will be refused. Returns sent freight collect
will be refused.
Price Changes: MACMILLAN DISTRIBUTION reserves the right to change the price it
charges its customers for any product (sku). UPON WRITTEN
NOTIFICATION OF A PRICE CHANGE THAT IS A REDUCTION, MACMILLAN
DISTRIBUTION will provide price protection for existing
inventories at each retailer (in-store and warehouse inventory).
All requests for price protection must be received within 90 days
from the written notification date with appropriate proof of
inventory. Proof of inventory will be a report generated by the
customer that reflects their current inventory position at the
time the request is made. MACMILLAN DISTRIBUTION reserves the
right, at its sole discretion, to audit the customer's inventory
records.
Discounts: EDI
---
MACMILLAN DISTRIBUTION offers retailers a discount of 1 % off
net software purchases (net software purchases are defined as:
purchases less returns) in exchange for electronic ordering/
reporting (EDI). To receive the EDI discount, retailer must also
provide MACMILLAN DISTRIBUTION with an inventory report with
net sales by sku on a weekly or monthly basis within 10 business
days from the close of each month.
Retail Distribution Center (RDC) Discount Program
-------------------------------------------------
MACMILLAN DISTRIBUTION offers qualifying retailers a discount
of 2% off net software purchases (net software purchases are
defined as: purchases less returns). To qualify for this program,
the following qualifications must be met:
Retailer must maintain a distribution center with truck-height loading
and receiving dock capable of receiving multiple cartons on skids.
Retailer must order in carton quantities.
Retailer must order a minimum of 12 cartons per order.
Retailer must provide MACMILLAN DISTRIBUTION with an inventory report
with net sales by sku on a weekly or monthly basis within 10 business
days from the close of each month.
A retail distribution center can service any number of retail
locations. Retailers also have the option of supplementing retail
distribution center orders with orders at our standard terms.
Contact your sales representative for participation request form.
The EDI and RDC discounts are credited following the close of each
MACMILLAN DISTRIBUTION fiscal month.
22
SCHEDULE D Continued
MACMILLAN DISTRIBUTION
1999 TERMS AND CONDITIONS
Retailer Program
Payment Terms: Net 60 days from invoice date.
Minimum Order: No minimum order quantities.
Freight Policy: F.O.B. destination via surface carrier; retailer may upgrade
freight at their expense. It is the customer's responsibility
to notify MACMILLAN DISTRIBUTION of any deadlines, special
handling or invoicing requests. All claims for damaged
shipments must be made within seven days of receipt of
merchandise by all consignees * to MACMILLAN DISTRIBUTION
Customer Service and to the delivering carrier.
Defective Returns: Please follow the procedure listed below:
Return requests must be in writing and should be faxed to:
MACMILLAN Distribution Attn: Xxxxx Xxxxx at (317) 817 - 7287.
Upon review and approval, a RA form will be sent to you. Use the RA
form we provide and return to the MACMILLAN DISTRIBUTION designated
warehouse: MACMILLAN DISTRIBUTION, c/o Macmillan Returns Department,
000 Xx. Xxxx Xxxx, Xxxxxxx XX 00000.
Returns must be received within 60 days of R.A- authorization.
MACMILLAN DISTRIBUTION will pay freight on defective returns.
Unauthorized returns will be refused. Returns of non-MACMILLAN
DISTRIBUTION product will be refused.
Returns: Retailers may return legitimate overstock of product which was
purchased directly from MACMILLAN DISTRIBUTION with approval from MID
management.
Request for the price change credit must be received within 90 days of
notice.
23
SCHEDULE E
-----------------------------------------------------------------------------------------------------------------------------------
ACCOUNT PROGRAM DISCOUNT / FEE PAYMENT COMMENTS
Discounts (Invoice METHOD
Item)
-----------------------------------------------------------------------------------------------------------------------------------
Distributors T & C'S 3% Net Credit Gross less returns monthly
-----------------------------------------------------------------------------------------------------------------------------------
Distributors T & C'S 6% Gross Credit Detailing; reports required
-----------------------------------------------------------------------------------------------------------------------------------
Direct Retailers T & C'S 2% Net Credit Warehousing
-----------------------------------------------------------------------------------------------------------------------------------
Direct Retailers T & C'S 1% Net Credit EDI Ordering
-----------------------------------------------------------------------------------------------------------------------------------
GT Interactive Standard 60% of Net Invoice
-----------------------------------------------------------------------------------------------------------------------------------
Toys R Us Standard 90% of Net Invoice 10% for Detailing
-----------------------------------------------------------------------------------------------------------------------------------
Beamscope* Standard 92% of Net or Parity Pricing Invoice
-----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Micro Canada* Standard 92% of Net or Parity Pricing Invoice
-----------------------------------------------------------------------------------------------------------------------------------
MultiMicro* Standard 92% of Net or Parity Pricing Invoice
-----------------------------------------------------------------------------------------------------------------------------------
EB Canada* Standard 92% of Net or Parity Pricing Invoice Typically older Parity priced
-----------------------------------------------------------------------------------------------------------------------------------
Major Connections Standard 40% of Street Invoice
-----------------------------------------------------------------------------------------------------------------------------------
AOL Standard 35% of Street Invoice
-----------------------------------------------------------------------------------------------------------------------------------
Library Video Standard Buy 4, Get 1 Free Invoice
-----------------------------------------------------------------------------------------------------------------------------------
Scholastic Standard 35% of Street Invoice
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Fees (Co-op)
-----------------------------------------------------------------------------------------------------------------------------------
Office Max Standard 5% Co-op Pass Through; 2 1/2% Pass-Through Product specific advertising is not paid by
Detailing the 5% fee
-----------------------------------------------------------------------------------------------------------------------------------
Staples Standard 5% Co-op Pass Through;2% PM Pass-Through Product specific advertising is not paid by
Funds the 5% fee
-----------------------------------------------------------------------------------------------------------------------------------
Staples Standard $5,000-$15,000 Slotting Per Pass-Through Fee based upon tnix size
Title
-----------------------------------------------------------------------------------------------------------------------------------
AAFES Standard 10% of Gross Purchases Pass-Through Detailing stores
-----------------------------------------------------------------------------------------------------------------------------------
Wal-Mart Canada Standard $500 CDN/$350 US (est) Pass-Through Slotting fee / sku / month
-----------------------------------------------------------------------------------------------------------------------------------
Toys "R" Us Canada* Standard $500 CDN/$350 US (est) Pass-Through Slotting fee / sku / month
-----------------------------------------------------------------------------------------------------------------------------------
Business Depot* Standard $25 CDN/$17.50 US (est) Pass-Through Slotting fee / facing / store / one time
(per store)
-----------------------------------------------------------------------------------------------------------------------------------
Future Shop (Merisel)* Standard $500 CDN/$350 US (est) Pass-Through Slotting fee / sku / month
-----------------------------------------------------------------------------------------------------------------------------------
Toys "R" US Standard 5% Co-op Accrual Credit Issued quarterly as Co-op expense
-----------------------------------------------------------------------------------------------------------------------------------
Office Depot Standard 7% Co-op Pass Through Pass-Through Issued quarterly
-----------------------------------------------------------------------------------------------------------------------------------
Fry's Standard 3% Co-op Pass Through Pass-Through Product specific advertising is not paid by
the 5% fee
-----------------------------------------------------------------------------------------------------------------------------------
Electronics Boutique Standard $1,500 Sell Through Reporting Pass-Through Product specific advertising is not paid by
the 5% fee
-----------------------------------------------------------------------------------------------------------------------------------
Notes
A) These discounts/fees are required to sell into the respective accounts.
B) It is likely that the requirements in any given program can be changed yearly
(if this occurs, we will prvide an update to te program)
C) Parity Pricing In Canada is at the sole discretion of the publisher and can
vary from title to title, the 92% of Net is not in addition to PP is required
if PP is not offered
D) Canadian accounts are noted with an (*)
Approval
____________________
Publisher
____________________
Name
____________________ __________________
Signed Date
24
