[* SIGNIFIES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.]
EXHIBIT 10.7
October 1, 2002
The Peoples Publishing Group, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
This letter when counterexecuted and delivered to us, shall constitute an
agreement effective as of the above date between Xxxx Xxxxx & Sons, Inc.
("Publisher") and The Peoples Publishing Group, Inc. ("Distributor").
1. APPOINTMENT.
a) Publisher hereby appoints Distributor, and Distributor accepts
appointment to be, Publisher's sole and exclusive distributor in the
areas and markets set forth on Schedule 1 (the "Market") for the
promotion, sale, and distribution of the print materials set forth on
Schedule 1 (the "Works") provided, however, that Distributor's rights
with respect to works which are not college textbooks shall be
non-exclusive. Publisher shall have the right, in its sole discretion
to withdraw selective Work(s) from this Agreement so long as such Works
constituted [*]% or less of the Distributor's prior fiscal year total
purchases and commissions from all the Work(s), and thereby to
terminate Distributor's distribution rights with respect to such
Work(s). In the event of such partial withdrawal of the Works,
Publisher will provide a minimum of nine months written notice.
However, if Publisher gives notice of withdrawal during the period from
October 1 through December 31, Distributor may continue to sell such
Works through September 30 of the following year. Publisher shall give
Distributor timely advance notice and information concerning all new
Works it plans to publish that Publisher determines would be
appropriate for distribution in the Market, including notice of any
sales restrictions, and one free copy of each new Work on availability.
b) All rights not specifically granted herein are retained by Publisher.
2. DISTRIBUTOR. Distributor shall perform, at Distributor's expense, the
following duties as well as any other services reasonably necessary to fulfill
its obligations as Distributor hereunder:
a) Use its reasonable efforts to sell the Works to the Market;
b) Execute at Distributor's sole expense a sales and marketing effort as
described in Schedule 2 and provide sales and marketing management for
its staff, inclusive of ongoing training programs;
c) Provide all normal and customary pre-sale and post-sale presentations
and product training requested by schools; that are reasonable and
consistent with the industry practices of school publishers selling
college textbooks to secondary schools.
d) Submit to Publisher quarterly written reports to advise Publisher on
its selling program for the Works, pending sales and complementary
copies distributed, and attend quarterly meetings with Publisher to
discuss all aspects of the parties' relationship, including inventory,
participation in state adoptions, bids, adoption contracts, sales and
complementary copies. Distributor also shall submit, broken down by
title, formal inventory forecasts, in May and November of each year
during the term of this Agreement, an adoption forecast broken down by
state and an open State forecast including significant adoption
opportunities for the two year period commencing on the date of this
Agreement and for each two year period thereafter during the term, and
a fiscal year sales forecast to aid Publisher and Distributor in
mutually setting reasonable inventory and sales targets. Distributor
shall provide Publisher with updates to these forecasts on a quarterly
basis;
e) Attend, at Publisher's request, sales meetings and conventions at which
Publisher has sponsored exhibits. Publisher agrees to discuss with the
Distributor the merits of attending such meetings and conventions
before requesting the Distributor's attendance. Distributor shall pay
the expenses associated with attending such meetings and conventions;
f) Xxxxxx Publisher, upon reasonable notice, to inspect Distributor's
premises;
g) [*];
h) [*]; and
i) Bill customers for the Works and collect on invoices.
3. PUBLISHER'S DUTIES. Publisher shall perform, at Publisher's expense, the
following duties as well as any other services reasonably necessary to fulfill
its obligations as Publisher hereunder:
a) Provide Distributor with leads and information on front and back lists,
such material to remain the Publisher's property;
b) Provide access to all Publisher's appropriate editorial and marketing
personnel for information on the Works. The primary contact for such
information shall be the Marketing Systems Support Manager for the
Publisher's educational division;
c) For every year of the term of this Agreement, supply Distributor with
free copies of the Works solely for demonstration, examination and
selling purposes, the cost of such copies not to exceed a value of [*]
percent ([*]%) of the annual net sales of Works by the Distributor, to
be estimated by Distributor and Publisher. The cost of such free copies
shall be determined by multiplying the average cost of Works in
Publisher's inventory by the number of free copies to be supplied to
Distributor. Such free copies shall remain Publisher's property. Under
no circumstances shall Distributor sell such free copies to any third
party;
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d) Supply Distributor with reasonable amounts of sales literature,
brochures, and other materials on a regular basis, as available and
requested by Distributor;
e) Xxxxxxx orders submitted by Distributor and bear costs related to
shipping orders and free copies;
f) Enter into State Adoption Contracts and contracts with counties, school
districts and other local authorities within the state adoption states,
taking into consideration the Distributor's recommendations and the
commercial interests of both of the parties; and
g) Provide prior and current fiscal year monthly, quarterly and annual
purchase reports and commission statements, broken down by title and
presented in a format providing the Distributor with the information
needed to provide Publisher with the reports and other requirements for
formal inventory forecasts, adoption forecasts, open state forecasts,
quarterly sales forecasts and sales targets. Publisher reporting will
be inclusive to the Work(s) and will exclude other works sold by the
Publisher to schools.
4. TERMS OF SALE.
a) Distributor may purchase Works to complete orders, from open territory
states, private and parochial schools and from adoption states, other
than State Adoption Contracts, from Publisher's available inventory on
the following terms, in each case payable in U.S. dollars within [*]
days of invoice: [*].
b) Sales shall be f.o.b. Publisher's bindery or warehouse, as applicable.
Publisher shall bill Distributor for the discounted sales price plus
postage or other transportation charges.
c) Sales under State Adoption Contracts shall be made directly between the
Publisher and the States. On State Adoption Contracts, the Publisher
shall pay the Distributor a standard sales commission of [*]. Based on
the adoption requirements and the commission potential related to a
particular State Adoption, the parties shall agree on the exact
commission rate prior to the decision to enter a State Adoption.
[*].
5. RETURNS. Distributor shall have the right to return Works in saleable
condition, for full credit against amounts due Publisher from Distributor or, if
there are no such amounts due, for refund. Works received by Distributor
containing manufacturing defects may be returned pursuant to the applicable
provisions of the Uniform Commercial Code.
Distributor shall enact a returns policy for its customers with respect to
Publisher's products that is substantially similar to the policy attached hereto
as Schedule 3.
Publisher shall be responsible for returns resulting from State Adoption
Contracts.
Independent of returns or manufacturing defects, on termination for any reason
including the end of the Term, the Publisher shall use reasonable efforts to
resolve concerns raised by Xxxxxxxxx, who purchased Work(s) from the
Distributor, related to the durability of college textbooks compared to high
school textbooks, which are manufactured to NASTA specifications.
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6. SALES REPORTS AND GOALS. Distributor shall semi-annually report to
Publisher its estimated needs by title for Works in the forthcoming 6-month
period. These reports shall be given to Publisher on October 1 and April 1 of
each year during the term. By November 1 of each year during the term,
Distributor shall submit its proposed sales targets for the upcoming fiscal year
to Publisher (the "Original Forecast"). By May 15 of each year during the term,
Distributor and Publisher shall do a re-forecast to determine the overall sales
target for Distributor for the upcoming fiscal year as well as the sales target
for Distributor for specific titles, including the Works that are competitive
with the X.X. Xxxxxx works and any other works that Publisher approves for
distribution pursuant to Section 8. If Distributor fails to meet the overall
target set in the Original Forecast in any fiscal year by [*]% or fails to meet
the overall target set in the Original Forecast by [*]% in two fiscal years in a
row, Publisher shall have the option to terminate this Agreement on 150 days
notice or to make Distributor's rights hereunder non-exclusive.
7. HANDLING OF ORDERS.
a) Orders received by Distributor for Works covered under State Adoption
Contracts shall be promptly turned over to the Publisher. The Publisher
shall be responsible for all order processing, invoicing, fulfillment,
collection and bad debt of works sold under State Adoption Contracts.
b) In the event Publisher receives any orders or inquiries for Works that
would fall within the Market, except for State Adoption Contracts,
Publisher shall promptly turn such orders and inquiries over to
Distributor. In the event Distributor receives any orders or inquiries
for Works outside the Market, Distributor shall promptly turn such
orders and inquiries over to Publisher.
c) Distributor shall be responsible for invoicing and for providing to
Publisher all shipping documents reasonably necessary for fulfillment.
d) Publisher shall be responsible for picking, packing and shipping
orders.
8. XXXXXX-XXXXXXX CALCULUS AND XXXXXXXX PRECALCULUS TRAINING FUND. The
Publisher and Distributor shall establish a program to train teacher and
administrator to successfully implement the Xxxxxx-Xxxxxxx Calculus and Xxxxxxxx
Precalculus program in high schools. The training program shall be conducted by
Distributor trained and certified instructors. The Distributor shall fund the
training program for Fiscal Year 2003 with a unilateral non-matching $[*] to
train and certify instructors and to pay the expense of a dedicated FRN high
school person. In Fiscal Year 2004 and subsequent years during the Term, the
parties shall agree on an amount to be dedicated to the training program based
on the previous year's sales and sales projections for the upcoming year and [*]
shall [*] be responsible for [*]% of the agreed upon amount for the training
program. The Distributor in consultation with the Publisher and the authors of
the Training Works shall be responsible for developing and executing the
certification and training program. The Publisher shall be provided with
quarterly reports, detailing expenses and shall be given reasonable access to
the records to verify the Distributor reporting. The Publisher shall pay the
Publisher's portion of the expenses so long as such amount does not exceed the
agreed upon total for the year. The use of training funds is limited to direct
expenses related to the certification and training program and the Publisher and
Distributor shall
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not be reimbursed for any expense related to the administration, including
personnel, of the fund. Thirty days following the close of fiscal year April 30,
2005, the Publisher and Distributor shall evaluate the results and funding of
the training program and make a decision to continue, modify or terminate the
training program.
9. DISTRIBUTOR PRODUCT: NON-COMPETE. Distributor may market and sell in the
Market publications and products designed and published expressly for the high
school market, including its own publications as well as publications and
products acquired by Distributor after the date hereof. In this context, it is
understood that the Distributor is actively engaged as a distributor for high
school publishers and nothing in this Agreement shall prohibit the Distributor
from distributing products of any kind, including electronic products, that have
been designed and published expressly for the high school market. Distributor
shall not, however, during the term of this Agreement, act as sales
representative or distributor or sell books or other products for any other
college publisher which publishes books or other products which compete with the
Works in the product lines published by Publisher without the prior written
consent of Publisher. [*].
10. PROVISIONS FOR CROSS CLAIMING ACCOUNTS. Accounts are occasionally miscoded
as high school or post secondary accounts resulting in the wrong sales
attribution to the Publisher or Distributor. Twice each fiscal year, for the six
month period ending October 31 and April 30, the parties shall make available,
on their respective premises and under supervision, lists of all the active
customers and distributors during the prior six month period for the purpose of
cross claiming, including period sales, and recoding accounts. Payments or
credits, as set forth in Section 4, resulting from the claiming process shall be
due [*] days from the claim date.
11. WARRANTIES; INDEMNITIES. Publisher represents and warrants to Distributor
that it has full power and authority to enter into this Agreement and to make
the grants herein contained, [*]. Distributor warrants that it has full power
and authority to enter into this Agreement, that it shall make all payments for
salaries, commissions and fees to its employees and independent contractors and
all applicable social security, unemployment insurance, income tax or other
deductions required by law and that it shall not take any action in performing
this Agreement which is illegal or infringes on the rights of any third party.
The parties agree to indemnify each other ("Indemnitee") against and hold the
Indemnitee harmless from any loss (including without limitation counsel fees and
costs), expense or damage occasioned by any claim, demand, suit or recovery
arising out of a breach of any of the foregoing warranties. [*].
12. TERM AND TERMINATION. This Agreement shall be effective on the above date
and shall continue until September 30, 2005 unless earlier terminated as
provided below. The Agreement shall thereafter be automatically renewed from
year to year unless either party gives notice of termination on or before
January 15th of any year, to be effective the September 30th of
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such year. References in this Agreement to "year," "fiscal year" or to "FY"
shall mean the twelve-month period ending on April 30th.
Notwithstanding the foregoing, this Agreement shall terminate immediately in the
event of:
a) a substantial breach by a party of any of the terms or conditions of
this Agreement upon prior written notice if the party breaching this
Agreement fails to cure such breach within sixty (60) days after
receipt of such notice;
b) upon Publisher's written notice upon Distributors' acquisition and/or
marketing of books which compete directly with Works identified in
Schedule 1 except as expressly provided in Section 8 above;
c) any receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, or arrangement with creditors whether or not
pursuant to bankruptcy law, dissolution, or any other similar
proceeding, whether voluntary or involuntary (any such condition is
hereinafter referred to as "Bankruptcy") of either party to this
Agreement;
d) on the one-year anniversary of Publisher's written notice to
Distributor advising that Publisher has acquired all or substantially
all of the assets related to another publisher's higher education
business and therefore intends to terminate this Agreement.
e) In the event of termination pursuant to subsection (a) above as a
result of a breach by Distributor or Publisher or pursuant to
subsection (c) above as a result of the Bankruptcy of Distributor or
Publisher, all payments due to the respective parties hereunder shall
become due and payable immediately without regard to any terms of
payment set forth elsewhere in this Agreement. Upon expiration or
termination for any reason, Distributor shall provide Publisher with
information and existing documentation on any pending or prospective
sales and adoptions of the Works.
13. WINDING UP. On termination, Distributor and Publisher shall remain
responsible for any payments due in connection with Works shipped prior to the
termination date. Publisher shall accept returns from Distributor pursuant to
Section 5 for [*].
14. INFRINGEMENT AND PIRACY. Distributor shall promptly report to Publisher all
incidents of copyright infringement of the Works that come to its attention, and
shall cooperate in civil and/or criminal prosecution of the entities engaging in
such activity.
15. COMPLETE AGREEMENT; AMENDMENT. This Agreement sets forth the complete
understanding of the parties and cannot be waived, amended or modified except in
writing signed by Distributor and Publisher. This Agreement cancels and
supersedes all prior Agreements between the parties in respect to the subject
matter hereof
16. NO PARTNERSHIP, AGENCY, FRANCHISE OR JOINT VENTURE. It is understood that
Distributor is and shall remain an independent contractor, operating a
separately established business, and not Publisher's agent, partner or legal
representative and that Distributor has no authority to commit Publisher to any
legal obligation to a third-party
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17. GOVERNING LAW. This Agreement shall be construed and interpreted pursuant
to the laws of the State of New York applicable to contracts wholly entered into
and performed in the State of New York. Any legal action, suit or proceeding
arising out of or relating to this Agreement or the breach thereof shall be
instituted in a court of competent jurisdiction in New York County in the State
of New York and each party hereby consents and submits to the personal
jurisdiction of such court, waives any objection to venue in such court and
consents to service of process by registered or certified mail, return receipt
requested, at the last known address of such party.
18. NOTICES. Notices hereunder shall be in writing and delivered by hand, by
express courier or by facsimile (provided an electronic signal from the
equipment of the recipient indicating receipt is generated), as follows:
If to Publisher: If to Distributor:
Xxxx Xxxxx and Sons, Inc. The Peoples Publishing Group, Inc.
000 Xxxxx Xxxxxx 000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxxxxx Xxxxx, XX 00000
FAX: (000) 000-0000 FAX: (000) 000-0000
Attn: SVP & General Manager, Attn: President and CEO
Higher Education Division
(with a copy to General Counsel)
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(with copy to Counsel):
Xxxx X. Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxx and Xxxxxx L.L.P.
0000 Xx Xxxxx Xxxxx
000 Xx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000)
Notices shall be effective upon delivery.
19. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the parties
and their successors and assigns. This Agreement may not be assigned by
Distributor without the prior approval of Publisher, which approval shall not be
unreasonably withheld. Except in connection with the sale of all or
substantially all of the area of business of Publisher related to this Agreement
or a merger or reorganization, this Agreement may not be assigned by Publisher
without the prior approval of Distributor, which approval shall not be
unreasonably withheld.
20. CONFIDENTIALITY. Each party agrees to keep confidential the terms of this
Agreement. In addition, Distributor agrees to keep confidential and not
disclose, directly or indirectly, to any third person, or use other than for the
purposes set forth in this Agreement, any confidential or proprietary
information relating to Publisher or the Works that Distributor receives from
Publisher or otherwise as a result of the distribution relationship created by
this Agreement.
If this correctly sets forth your understanding of our agreement, please
countersign this letter and return one fully-executed copy to me.
Very Truly yours,
/s/ Xxxxx Xxxxxxxxxx
Xxxxx Xxxxxxxxxx
ACCEPTED AND AGREED:
XXXX XXXXX & SONS, INC.
By: /s/ ________________________
Title: Vice President & National Sales Manager
THE PEOPLES PUBLISHING GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Title: President & CEO
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SCHEDULE I
MARKET
The "Market" is defined as the United States, including its territories and
possessions, The Department of Defense Dependent Schools and The American
International Schools and Bilingual Schools, public and private schools, grades
K-12 (including the day and evening enrollments for such schools) and high
school bookstores and distributors whose primary business is reselling college
books to high schools and who represent that book orders are to supply high
schools and high school bookstores (Xxxxx Book Company, LaSalle, Academic Book
Services, Educational Sales, X.X. Xxxxxxxx, Varsity Books et. al.)
WORKS
All Wiley books and ancillaries in hardcover or paperback format, and other
materials including CDs, tapes, transparencies, web-based and electronic
products, and revisions thereof, suitable to the Market (as determined by
Publisher) published by Publisher.
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SCHEDULE 2
[*]
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SCHEDULE 3
1. We shall accept authorized returns for [*] from date of invoice. Please
call 000-000-0000 for authorization.
2. Unused books in saleable condition may be returned for credit (less
shipping and handling).
3. Please provide the date of purchase and the invoice number.
4. Out-of-print titles are not accepted more than [*] days after publisher's
out-of-print notification.
5. No returns shall be accepted from any customer who has not purchased books
directly from The Peoples Publishing Group.
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