CONFIDENTIAL
XXXXXX CIRCULATION COMPANY, LLC
DISTRIBUTION AGREEMENT
DATED June 15, 2004
Between Xxxxxx Circulation Company, LLC, 000 Xxxxx Xxxx, Xxx Xxxxxxxx, Xxx
Xxxxxx 00000 (hereinafter called "Xxxxxx") and Sobe Life, LLC, 000 Xxxx Xxxxxx
Xxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 (hereinafter called "Publisher").
1. Xxxxxx shall be the exclusive newsstand distributor in the United
States, Canada and overseas of all present and future publications published by
the Publisher, its subsidiaries or affiliates at any time during the term of
this agreement (hereinafter called "Publications"), except when Publisher
obtains a license to publish a magazine and said magazine is obligated to a
prior Distribution Agreement with another Distributor. For purposes of this
agreement, "exclusive distributor" means and is intended to: (i) give Xxxxxx the
right to distribute the Publications to the exclusion of all other persons and
entities, including the Publisher, except for issues of the Publications sold by
subscription, and (ii) give Xxxxxx the sole control over the manner and means of
distribution of the Publications, including, but not limited to, Xxxxxx being
the sole entity to select the various wholesalers, retailers and other agents to
sell and distribute the Publications to the exclusion of all other persons and
entities, including the Publisher, except for issues of the Publications sold by
subscription.
2. The initial Publication(s) to be distributed under this agreement, the
initial issues thereof to be so distributed and the frequency of each
Publication are listed on Attachment A.
3. Publisher warrants and represents to Xxxxxx the following
(a) Publisher is the owner of (i) each of the titles to the
Publication(s) covered by this distribution agreement, (ii) the
logos and or (iii) trademarks to be used in connection with such
Publication(s) and there are no liens of encumbrances on those
titles, logos and trademarks;
(b) Publisher has the ability and authority to deliver to Xxxxxx
without liens or encumbrances, sufficient copies of each issue of
the Publication(s) covered by this agreement in salable condition
to comply with the terms contained herein;
(c) Publisher has the full right, power and authority to enter into
this agreement and neither the execution or delivery of this
agreement nor the consummation of the transactions contemplated
by this agreement shall constitute or result in a breach of any
agreement to which the Publisher is a party;
(d) Upon completion and delivery of each issue of each Publication
covered by this agreement, Publisher will own or control to the
fullest extent permitted by applicable law all rights of
whatsoever kind and character in and to: (i) the title of the
Publication, (ii) its logo, (iii) trademark, (iv) copyright for
each issue and (v) the material contained in each issue and (vi)
all proceeds derived therefrom, without any mortgages, liens or
encumbrances of any kind and without rights being in other
persons not party hereto; subject to its publishing agreement
with Xxxxx World Publications, LLC.
(e) Upon completion and delivery of each issue of the Publication(s)
covered by this agreement, nothing contained in each of such
issues will be grounds for an action either to prevent
distribution thereof or for damages by reason of the fact that
the material contained therein is libelous, slanderous, obscene,
invades any right of privacy, a violation of any copyright or
other personal or property rights or for any other reason
whatsoever; and
1
(f) Publisher will regularly issue each issue of the Publication(s)
covered by this agreement during the term of this agreement and
any renewal thereof and Publisher will ensure its printer(s) send
to Xxxxxx an accurate and valid written notice confirming that
all copies of the respective issues of each Publication have been
printed and shipped to Xxxxxx' wholesalers, retailers and/or
other agents ("customers") in accordance with the galleys
prepared by Xxxxxx pursuant to Paragraph 7 (hereinafter such
notice shall be referred to as "Notice of Completion of
Shipment"). In the event that said printer(s) should issue an
invalid Notice of Completion of Shipment to cause Xxxxxx to make
an advance payment to the Publisher, and upon notification by
printer, Xxxxxx or any other party, Publisher shall immediately
make payment to Xxxxxx in repayment for said advance payment, or
at the option of Xxxxxx, said repayment will be deducted from the
next payment due Publisher.
4. If Publisher desires to change the frequency of publishing issues of any
Publication(s), it shall first obtain the consent of Xxxxxx at least 120 days
before the proposed shipping date of any affected issue. If Publisher changes
such frequency without first obtaining such consent, Xxxxxx will xxxx and
Publisher shall pay to Xxxxxx all costs and damages which Xxxxxx may incur by
reason thereof. Publisher will supply to Xxxxxx a schedule of shipping and
on-sale dates for each issue of the Publication at least nine (9) months in
advance of the on-sale date and at such times thereafter as requested.
5. The Publication's code number owned and assigned by Xxxxxx shall appear
on each cover of each magazine distributed by Xxxxxx. The print order and cover
price for distributions hereunder will be mutually agreed upon by Xxxxxx and
Publisher, providing, however, that if Publisher and Xxxxxx do not agree, then
Xxxxxx shall not be required to advance the Publisher any money under Paragraph
12 hereof. Publisher hereby authorizes Xxxxxx to adjust claims made by any of
Xxxxxx' customers for delivery shortages or damages to copies of the issues of
the publication(s) and agrees to pay to Xxxxxx on demand all such shortages and
damage allowed or granted by Xxxxxx to its customers.
6. Publisher shall be responsible for shipping and traffic costs
(including, without limitation, import and other duties) incurred to ship copies
of the Publications(s) to all customers of Xxxxxx located throughout the world.
7. Individual shipments to Xxxxxx' customers shall be specified on a galley
which, with the Publisher's cooperation, Xxxxxx shall supply to the Publisher
sufficiently in advance so that shipments can be prepared and shipped to arrive
at customers' locations sufficiently in advance to meet each Publication's
on-sale date; based upon the requirements of each customer. Any cost incurred
for reshipping copies at Publisher's request while a Publication is on sale will
be borne by Publisher. All unsold copies shall be fully returnable. Publisher
will accept whole copies, front covers, headings, Xxxxxx' certification, scanned
sales data or customers' affidavited statements as the basis for the adjustment
of unsold copies covered by such acceptance. Should Publisher require whole copy
returns, notice of the quantities and full return address must be supplied to
Xxxxxx at least thirty (30) days prior to on-sale date. Xxxxxx will use
reasonable efforts to comply with Publisher's request for whole copy returns,
for which Publisher shall pay Xxxxxx the actual charge made by its customers,
and pay all freight, shipping and other charges incurred by Xxxxxx (or Xxxxxx'
customers) in connection therewith. Publisher shall bear the risk of loss for
all copies until the time they are received by Xxxxxx' customers and during any
time they are being returned or reshipped at Publisher's instructions. Publisher
shall keep all returned whole copies of each issue from entering the stream of
commerce for
2
at least 180 days after off-sale date of each issue, except to fill
subscriptions and mail order requests, or such other sale as is mutually agreed
upon.
8. It is understood by both parties that Xxxxxx shall be responsible for
only those returns of those issues of the publication(s) that Xxxxxx has billed
and distributed, it being distinctly understood that any and all returns of any
issues not billed and distributed by Xxxxxx shall remain the responsibility of
Publisher and/or that of Publisher's prior distributor. In the event that Xxxxxx
does credit its customers for returns not originally billed and distributed by
Xxxxxx, Publisher hereby authorizes Xxxxxx, at its option, to (i) charge such
returns against any other open or subsequent issues of Publication(s) or (ii)
xxxx the amount of such returns to Publisher for payment within five (5) days of
billing.
9. Xxxxxx shall be the exclusive administrator of Publisher's Retail
Display Allowance ("RDA") Program and Publisher authorizes Xxxxxx to pay on
Publisher's behalf, an RDA to any retailer which engages in the sale of the
Publication(s), submits a claim for such RDA and agrees to be bound by the terms
of Publisher's RDA program and RDA Agreement. Publisher further agrees to timely
and proper notice, as stipulated in Publisher's RDA Agreement, to both Xxxxxx
and retailers in the event that Publisher should change, terminate, or cease
payment for any RDA Agreement with any Retailer. Publisher further warrants
that it will give notice at least once a year to retailers offering the
availability of this allowance. Publisher hereby authorizes Xxxxxx to charge
against the account of Publisher, Xxxxxx' expenses for administering this
program, RDA Auditing and also the Retail Display Allowance of 10% of the cover
price of each copy sold of Publications to the extent that such Retail Display
Allowance shall become payable by Xxxxxx.
10. Publisher shall pay Xxxxxx for its distribution services as listed on
Attachment C for each copy of each issue of any Publication sold through
wholesaler (the "distribution fee"). Xxxxxx' distribution fee for direct sales
to retail accounts serviced by Xxxxxx' Specialty Sales Operation will be the
difference between the amount per copy remitted to Publisher for sales to
wholesalers and the price per copy charged accounts serviced by Xxxxxx'
Specialty Sales Operation, as provided on Attachment A.
11. For all copies of the Publication(s) distributed to certain
wholesalers as listed on Attachment B and other such areas as may be so
classified from time to time by Xxxxxx, or to wholesalers which Publisher
presently pays subsidies or grants discounts of any kind, Xxxxxx may xxxx
Publisher and Publisher will pay to Xxxxxx the greater of (a) such additional
amounts per copy as shown on the Attachment B hereto or (b) the amount(s)
presently paid by Publisher. Xxxxxx will attempt to limit wholesalers and
amounts to those specified in Attachment B.
Payment to Publisher for copies of Publication(s) sold other than in the
United States will be paid by Xxxxxx to Publisher in United States funds.
12. Xxxxxx shall advance to Publisher, providing Publisher does not then
owe Xxxxxx any monies under this agreement, the following amounts at the
following times with respect to each issue of each Publication distributed
hereunder.
(a) FIRST ADVANCE: 50% of Xxxxxx' Estimated Net Sale (xxxxxxxx to
Xxxxxx' customers less allowance for unsold copies) ("ENS") less
Xxxxxx' distributor fee to be paid at 30 days after the on sale
date.
(b) SECOND ADVANCE: 100% of Xxxxxx' ENS less any previous advance(s)
and Xxxxxx' distribution fee to be paid at 180 days after the off
sale date,
(c) Payment for all copies sold outside the United States and Canada,
and through Xxxxxx' Specialty Sales Operation shall be made 90
days later than each payment described un 12 (a) and (b) above.
3
13. (a) Final Settlement for each issue of each Publication distributed
hereunder shall be made 180 days after off-sale date for both
United States and Canadian sales and 90 days later for sales
outside the United States and Canada and through Xxxxxx'
Specialty Sales Operation; the Publisher agrees to accept returns
thereafter until 360 days after the off sale date and Publisher
hereby authorizes Xxxxxx to (i) charge such returns against any
other open or subsequent issues of Publication(s) or (ii) xxxx
the amount of such returns to Publisher for payment within five
(5) days of rendering of xxxx for returns.
(b) The balance due to Publisher, or overadvanced to Xxxxxx, as the
case may be, as of Final Settlement, shall be determined by
multiplying the price per copy charged by Xxxxxx to its customers
by the number of copies sold and not returned and subtracting
therefrom to the extent same have not been previously paid, (i)
the fees of Xxxxxx for distribution, (ii) all other costs,
expenses and charges for which Publisher is responsible under the
terms of this agreement, and (iii) all other costs, expenses and
charges incurred by Xxxxxx on behalf of Publisher. In no event
xxxx Xxxxxx be prevented from recouping any fees, costs,
expenses, and charges for which Publisher is responsible under
the terms of this agreement from any future advances or
settlements if said items are incurred or become known subsequent
to Final Settlement:
(c) Publisher's suggested price per copy to Xxxxxx' Customers will be
the cover price less those discounts as described on Attachment A
and B (or as otherwise provided by Paragraph 11 hereof). Any
exceptions shall be mutually agreed upon.
(d) (i) Xxxxxx' distribution fee, (ii) all other costs, expenses and
charges for which Publisher is responsible under the terms of
this Agreement, and (iii) all other costs, expenses and charges
incurred by Xxxxxx on behalf of Publisher, shall be paid by
Publisher to Xxxxxx within five (5) days after notification by
Xxxxxx or at the option of Xxxxxx may be deducted from any
advances or payments due Publisher on any issue of any
Publication distributed hereunder.
(e) Regardless of (i) Xxxxxx' ongoing method for accounting for
copies received, copies unsold and copies sold, (ii) the basis
for any advances made by Xxxxxx to Publisher, be it upon draw,
copies shipped or estimated net sales or otherwise, or (iii) any
other provision in this agreement, the obligation of Xxxxxx to
make payment to Publisher shall be based solely upon the
calculation made upon Final Settlement pursuant to subparagraph
xx of this Paragraph 13.
(f) The Final Settlement for each issue of each publication shall be
shown by a written statement prepared by Xxxxxx, setting forth
the totals of all items debited and credited and the resultant
balance and Publisher agrees to accept such statement as an
account stated and the items therein enumerated as true and
correct, except as to any specific item or matters to which
Publisher may object in writing within fifteen (15) days from the
date of the mailing of such statements.
14. In the event a customer of Xxxxxx shall take advantage of any federal
or state insolvency statute or any involuntary proceeding under any such statute
shall be filed or convened against such customer, or in the event such customer
shall cease its business operation or no longer does business with Xxxxxx with
the effect that such customer shall not return its unsold copies of the
4
Publication(s), Xxxxxx shall use the average net sale percentage of the
Publication(s) as reported by such customer for the twelve (12) months (or
lesser period if applicable prior to those months for which such customer shall
not have submitted all unsold copies of the Publication(s). This average shall
be used in determining and computing the net sales of the Publication(s) shipped
to such customer for said months. Publisher shall be charged for all
uncollectible balances due from customers, plus any legal and other expenses
incurred in the collection of same, calculated on the basis of Publishers net
xxxxxxxx as a percentage of the total net xxxxxxxx to any such customer.
Uncollectible balances are balances owed by a customer of Xxxxxx upon the
occurrence of any of the events specified in the first sentence of this
paragraph. Publisher will share in any future recoveries of the amount charged
in the same pro-rata share as Publisher has been charged with, less any legal
fees and collection costs not previously charged to Publisher.
15. If for any reason, Xxxxxx makes an overadvance or overpayment to
Publisher, on any one or more issues of any Publication it distributes for
Publisher, such overadvance or overpayment, at the option of Xxxxxx, shall (i)
be deducted by Xxxxxx from any subsequent advances or payments due on any issue
of any Publication which Xxxxxx distributes for Publisher will be paid to Xxxxxx
within five (5) days after Xxxxxx' demand for payment. In any event, any and all
such overadvances and overpayments shall promptly be remitted by Publisher to
Xxxxxx upon termination of this agreement or at such time as Xxxxxx shall
have discontinued distributing any Publication or issue for Publisher for any
reason whatsoever.
16. Publisher hereby authorizes Xxxxxx to charge against the account of
Publisher an administration fee of $3,500.00 for Audit Bureau of Circulation
("A.B.C.") or Business Publications Audit of Circulation, Inc. ("B.P.A."} county
reports and $600.00 for A.B.C., or B.P.A. State Circulation analyses for each of
Publisher's requests for each Publication.
17. At no cost to Publisher, Xxxxxx shall give such space as it deems
reasonable in its house magazine and/or bulletins for the promotion of the
Publication(s). However, the cost of all special promotions authorized by
Publisher shall be borne by Publisher. Publisher agrees that in all trade press
advertising pertaining to single copy circulation, it will include a phrase
substantially as follows: "Exclusively distributed by Xxxxxx Circulation
Company, LLC, New Milford, New Jersey."
18. Publisher shall indemnify and hold harmless Xxxxxx, its parent,
subsidiary or affiliated corporations, their officers, agents, representatives
or any of its customers, wholesalers, and their respective retailers against any
loss, damages, fines, judgments, expenditures or claims including counsel fees,
legal expenses and other costs, actually incurred by them or any of them in
connection with any claim arising out of a relationship which exists or may have
existed between Publisher and another distributor, or in connection with the
distribution of any Publication(s), or any issue thereof, or any promotional
material provided by Publisher, when same is questioned or objected to by public
authorities, or other authorities, or in defending or settling any claim, civil
action or criminal prosecution against them, garnishment or any of them arising
out of the use of the title of said Publication(s) or the contents and printed
matter, including advertisements, pictures or photographs contained in the
covers or any page of said Publication(s), or in any supplementary questioning
or challenging their right to distribute said Publication(s) or other proceeding
or action. Should any such event occur or reasonably be anticipated, Xxxxxx may
retain a reasonable reserve from any monies payable to Publisher hereunder as
security for this indemnity provision. Publisher will name Xxxxxx as an
additional named insured under any Publisher's liability insurance carried by
Publisher and will deliver a certificate of such insurance to Xxxxxx.
19. (a) Xxxxxx shall not take title to any of the copies of any of the
issues of the Publication(s) covered by this agreement and, for all purposes
covered by this agreement, the parties mutually understand and agree that Xxxxxx
is acting as an agent for the sale of such copies of such issues of such
Publication(s) on behalf of Publisher as its principal, except as specified at
subparagraph (b) of this Paragraph.
5
(b) All monies paid by, or due and owing from Xxxxxx customers for
copies of the Publication(s) not returned to Xxxxxx, are and shall at all
times belong to and remain the absolute property of Xxxxxx, it being
distinctly understood and agreed by the parties that the obligation of
Xxxxxx to make any remittances to Publisher under the terms of this
agreement is that of the obligation of a debtor to a creditor only. Xxxxxx
alone shall xxxx its customers for such monies and Xxxxxx alone shall have
the right to demand payment or institute legal proceedings for collection
thereof.
(c) Xxxxxx shall have the right to withhold all or any portion of any
advance payments or any other payments due in order to protect itself from
any overpaid position.
20. The term of this agreement shall be 5 years from the latest off-sale
date of the Publication(s) listed on Attachment A. This agreement shall be
renewable for additional like terms automatically, unless advance written notice
by certified mail is given to either party to the other at least one (1) year
prior to the commencement of the following renewable term. Provided,
however, (a) that this agreement may be terminated by Xxxxxx at any time in ite
entirety or with respect to any particular issue of any Publication(s), upon
notice to Publisher should any issue of any Publication(s), in the sole judgment
of Xxxxxx, be deemed to be libelous, obscene or indecent, or contain any facts
or statements which are untrue or Publisher fails to abide by the specific terms
of this agreement, copy allotment, payment of its shipping costs or frequency of
issue or (b) that any one (1) year notice not to renew given by Publisher shall
not be operative if at the end of then existing term, or renewal term, Publisher
shall owe any monies to Xxxxxx.
In the event that this agreement is terminated or not renewed, Xxxxxx has
the right to withhold any or all further Advances and Final Settlements (as
described in Paragraphs 12 and 13) from all issues distributed by Xxxxxx in any
event, such withholding shall not exceed the Final Settlement date of the
respective issue(s).
21. Publisher agrees not to assign this contract or any part thereof,
without first obtaining the consent of Xxxxxx to such assignment. Publisher
agrees that any assignment of an advance or payment hereunder shall be made only
on a form, satisfactory to Xxxxxx, which shall include the executed
acknowledgment of any assignee that, among other things such assignee shall be
subject to all rights that Xxxxxx shall have against the Publisher.
22. Xxxxxx shall have the unqualified right to refuse to distribute any
publication published by Publisher not listed in Attachment A, in which event,
Publisher shall be free to distribute said title through other means of
distribution.
23. For purposes of this agreement, the "On-Sale" date shall mean the date
a Publication is placed on sale to the public and the "Off-Sale" date shall mean
the date that Publisher and Xxxxxx agree that a Publication should be removed
from such sale. Further, any Publication which releases two or less issues In a
respective xxxxx annually, will be given an off sale date of 180 days after the
on sale date.
24. Notwithstanding anything contained in this agreement Xxxxxx shall not
be obligated to make any payments hereunder, and shall consider it to be a
material breach of this agreement, unless all copies of each issue of the
Publication(s) are printed and shipped by Publisher's printer(s) to Xxxxxx'
customers in accordance with the galleys prepared by Xxxxxx pursuant to
Paragraph 7 on the date provided in the Notice of Completion of Shipment sent to
Xxxxxx by Publisher's printer(s).
25. This agreement sets forth the understanding of the parties with
respect to the distribution of Publication(s) and may not be amended except in
writing, signed by the parties and shall be binding upon the parties, their
respective successors and assigns; and, in particular, this
6
agreement shall be binding for its terms upon any transferees, successors or
assigns of Publisher who shall publish the Publication(s), it being the intent
of the parties that this agreement run with and apply to all Publications. This
agreement is to be signed In two counterparts, both of which shall be deemed to
be originals.
26. This Agreement and its validity, construction and performance shall be
governed in all respects by the laws of the State of New Jersey without giving
effect to principles of conflicts of laws. The parties consent and agree to the
exclusive jurisdiction of the state and federal courts having jurisdiction over
Bergen County, New Jersey, with respect to any action which any party desires to
commence arising out of or in connection with this Agreement or any breach or
alleged breach of any provision hereof, Service of any paper or pleading in any
such action may be effected by mailing a copy thereof to the party for which it
is intended by certified mail, return receipt requested, to the address
specified above and that any paper or pleading so served shall be deemed served
on the recipient at the time of receipt with the same legal force and effect as
if personally served upon the recipient within Bergen County, New Jersey.
27. Publisher acknowledges that (i) Publisher has received a copy of this
agreement in sufficient time to afford Publisher the opportunity to review the
agreement prior to signing, (ii) Publisher has read the agreement and
understands all of the terms hereof, and (iii) Publisher will receive a fully
executed exact copy of this agreement.
SOBE LIFE, LLC XXXXXX ClRCULATION COMPANY, LLC
BY: /s/ Xxx Xxx BY: /s/ D. Fleet
----------------------------- ----------------------------
TITLE: Manager TITLE: Executive Vice President
----------------------------- ----------------------------
DATE: June 15, 2004 DATE: June 15, 2004
----------------------------- ----------------------------
