EXHIBIT 10.8
[* SIGNIFIES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.]
November 1, 2004
X.X. Xxxxxx & Company
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
This contract, when counter executed and delivered to us, shall constitute an
agreement effective as of the above date between X.X. XXXXXX & COMPANY, INC.
("Publisher") and THE PEOPLE'S PUBLISHING GROUP INC. ("Distributor").
1) APPOINTMENT.
a) Publisher xxxxxx 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. Schedule 1
shall be deemed amended from time to time to include all
Norton, Liveright and Countryman books in print and such
other distributees as the Publisher shall time-to-time
permit unless specific written notice of an exception is
provided to Distributor, which notice shall include a
statement of the reason for the exception. (All such
materials are referred to as "Works") Publisher will give
Distributor timely advance notice and information concerning
all new Works it plans to publish, 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.
c) This agreement shall be effective on the above date and shall
continue until September 30, 2007 unless earlier terminated as
provided in section d)(i) and d)(ii). The Agreement shall
thereafter be automatically renewed from year to year unless
either party gives notice of termination on or before March
31st of any year commencing with 2008 to be effective the
immediately following September 30th. References in this
Agreement to "year" "fiscal year" or to "FY" shall mean the
twelve-month period ending on March 31st.
d) This agreement may be terminated prior to September 30, 2007
in the event of any of the following occurrences:
i) If Distributor fails to increase its purchases on a
year to year basis in order to sustain an average of
[*] over two fiscal years, then Publisher may
terminate this agreement on December 31st of the
fiscal year following that in which the shortfall
took place provided notification is given by June
15th. Purchases are defined as net purchases after
discount in the [*] percent discount categories, (see
Section 2) (i) - (iii)) plus purchases by resellers
less commission, Section 2) (v), and claimed sales
less commission, Section 2) (vi).
ii) If in the period prior to September 30, 2007
Distributor undertakes to act in a like capacity for
a publisher other than Publisher, and Publisher
reasonably determines that such joint representation
is antithetical to Publisher's best commercial
interests, then Publisher may by written notice
terminate this agreement effective the September 30th
that is at least 12 months from the date of notice.
Notwithstanding the foregoing, nothing in this
Agreement shall be deemed to limit any right, or
mandate any obligation on the part of Distributor to
sell to customers of its choosing.
2) TERMS OF SALE.
(a) Distributor may purchase Works from Publisher's available
inventory on the following terms, in each case payable in U.S.
dollars within [*] days of invoice:
COLLEGE TEXT PURCHASES
i) In each period, Purchases by Distributor of Works for
sale directly to schools shall be at a discount of
[*]% from Publisher's net price.
ii) Purchases by Distributor of Works for resale to
school bookstores, and to enterprises that act as
resellers to secondary schools shall be at a discount
of [*]% from the Publisher's net price.
iii) Purchases by Distributor of Works for Local Authority
Adoptions as defined in Schedule II shall be at a
discount of [*]% off Publisher's net price.
iv) Purchases by Distributor of Works for State Adoptions
as defined in Schedule II shall be at the larger of a
discount of [*]% off Publisher's net price or [*]%
off Distributor's negotiated list price to the State
authority. Distributor will enter a State Adoption
only upon agreement with Publisher as outlined in
Schedule II.
v) In each period, the Publisher will pay to the
Distributor a commission of [*]% of the net sales of
Works by resellers in the secondary school market who
buy direct from Publisher, as outlined in Schedule 1.
The commission will be paid only upon [*]. Publisher
will assist the Distributor in obtaining reseller
sales reports by school.
vi) Distributor can claim [*]% commission on documented
orders to resellers in the Distributor's market as
defined in Schedule 1 provided that Distributor
actively sells to the school where the texts were
ultimately used. Publisher will calculate commission
on net sales after returns.
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TRADE TITLES
(a) Purchases will be at the discounts and terms established, from
time to time, by Publisher for its trade wholesaler accounts.
Trade titles are not included in the definition of works in
Schedule 1. Publisher does not grant an exclusive to
Distributor on sales of Trade titles to the secondary market.
(b) Publisher shall provide to Distributor each month an
electronic listing of all titles and their respective net
prices. It is Distributor's responsibility to notify Publisher
of any such listings not received.
(c) Sales shall be F.O.B. Publisher's bindery or warehouse, as
applicable. Publisher shall bill Distributor for the
discounted sales plus actual postage or other transportation
charges.
(d) Distributor will use reasonable efforts to batch orders.
(e) Distributor can qualify for the following incentive discounts.
"BASE SALES AMOUNT" is established as follows for each
12-month period ended March 31st, 2005 through March 31st,
2008.
The "Base Sales Amount" equals [*]% of the highest year's net
Purchases, from FY04 to FY08, by Distributor at the [*]%,
[*]%, and [*]% levels plus net sales less commission to
purchases of Works by resellers in the secondary school market
who buy direct from Publisher, as outlined in Schedule 1.
If the returns from Distributor to Publisher in the period
from which the Base Sales amount was calculated exceed [*]% of
gross purchases (net plus returns), then the Base Sales amount
will equal [*]% of the highest year's total as described
above.
Purchases by Distributor from Publisher after the Base Sales
amount is reached in a 12-month period ending March 31st, will
qualify for an extra discount of [*]% in each applicable
category -- [*]% will rise to [*], [*]% will rise to [*]%,
[*]% will rise to [*]%.
The extra discount earned after reaching the Base Sales amount
will not be calculated at purchase. The extra discount will be
paid after the end of the respective period ending March 31st.
3) RETURNS.
For so long as Distributor is not in breach of this Agreement,
Distributor will 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.
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Returns of superceded editions will only be accepted for [*] following
the publication of a new edition. Continuing purchases of previous
edition texts made in order to fulfill contractual obligations may be
returned up to [*] from date of purchase.
When Publisher determines that damaged returns are due to use of the
text and not to defect, the Publisher may decline to accept the return.
Publisher will not accept claims of damaged books after [*] months from
date of the first use of the text. Distributor may buy replacement
copies at the unit cost of the text.
Distributor will enact a returns policy for its customers with respect
to Publisher's products that is substantially similar to the policy in
effect at that time with respect to Publisher's sales to the Market.
4) RESPONSIBILITIES FOR PROMOTION.
(a) Distributor will use reasonable efforts to promote Works in
the Market by means of telemarketing, catalogues and other
appropriate means. Distributor's responsibilities shall be as
set forth on Schedule 3. In the events of any alleged breach,
Distributor shall have ninety days from receipt of written
specific notice to affect a cure.
(b) At Distributor's reasonable and timely request, Publisher will
provide Distributor, without charge except for transportation,
reasonable numbers of catalogues and samples of sales
promotional materials as issued. Publisher will provide PDFs
of its promotional materials, for which it owns the rights, at
no cost to Distributor. Publisher will provide book cover
scans in electronic format at no charge to Distributor. Such
scans may only be used in whole, and not be cropped or
otherwise modified. Publisher assumes no liability or cost for
use by Distributor of such scans.
5) FREE COPIES
a) Publisher will supply to Distributor a reasonable number of
desk copies, free copies for conventions and displays and
sample copies to be sent to customers for review and
inspection of Works (collectively, "Samples"). The Publisher
will be responsible for postage or shipping charges and paper,
printing and binding on Samples, to a limit of [*]% of its net
sales to Distributor. Under no circumstances may Distributor
knowingly sell such copies to any other party. Such expenses
in excess of [*]% will be the responsibility of Distributor.
The Publisher will not charge Distributor for packing and
fulfillment.
i) Distributor and Publisher will agree upon annual
budget amounts for formal State adoptions that shall
be excluded from the [*]% limit.
ii) Distributor and Publisher will agree upon annual
budget amounts for official College Board Sponsored
AP Workshops that shall be excluded from the [*]%
limit.
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b) Publisher shall provide monthly reports of sample copies sent
and postage expense. It is the Distributor's responsibility to
create cumulative reports for any other periods. It is the
Distributor's responsibility to report to publisher a missing
monthly report. The absence of a sample copy expense report
does not absolve the Distributor of responsibility for the
expenses unless Publisher knowingly and willingly withholds
the report.
Publisher shall provide on a quarterly basis a cumulative
report including known free copy expenses and postage expense.
Publisher shall provide on an annual basis a cumulative report
including costs of free copies, manufacturing costs of all
other items, and postage expenses. The annual report will be
used to calculate the free copy budget.
It is Distributor's responsibility to make timely suggestions
about modification of report, or to indicate any missing
expense information. It is the Publisher's responsibility to
make a good faith effort to provide missing expense
information.
c) [*].
6) REPORTS. Distributor shall semi-annually report to Publisher its
estimated needs for Works in the forthcoming 6-month period.
7) HANDLING OF ORDERS.
a) Distributor shall be responsible for invoicing and for
providing to Publisher all shipping documents reasonably
necessary for fulfillment.
b) Publisher shall be responsible for picking, packing and
shipping orders. Distributor will reimburse Publisher for the
expense of postage or other shipping of such orders.
c) In the event Publisher receives any orders or inquiries for
Works that would fall within Distributor's market as defined
in paragraph 1, Publisher will promptly turn such orders and
inquiries over to Distributor. Publisher will inform the
customer of agreement with Distributor. Publisher will make
reasonable efforts to enforce the market as defined in
Schedule 1. If Publisher determines a re-seller has valid
business reasons for buying direct from Publisher, e.g. it
serves additional or multiple markets separate from Secondary
schools, the Distributor can seek commission through Clause 2)
a) vi)
8) WINDING UP. On termination, Publisher will accept returns from
Distributor pursuant to Section 3 for [*].
9) INFRINGEMENT AND PIRACY. Distributor will promptly report to Publisher
all incidents of copyright infringement of the Works that come to its
attention, and will cooperate in civil and/or criminal prosecution of
the entities engaging in such activity.
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10) 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.
11) 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.
12) ARBITRATION; EXCLUSIVE JURISDICTION AND VENUE. In order to provide for
certainty and convenience to the parties, all disputes hereunder shall
be resolved by arbitration in New York, New York pursuant to the
Commercial Arbitration Rules of the American Arbitration Association or
Article 75 of the New York Civil Practice Law and Rules and exclusive
jurisdiction over all matters related to such arbitration shall lie in
the state courts of the State of New York sitting in New York country;
and no other court or tribunal shall have jurisdiction to determine any
controversy or dispute arising under or concerning this Agreement. Each
party agrees to submit to the jurisdiction of such courts in the City
and State of New York and consents to the service or process on it (in
addition to service as provided by law) in the same manner as
prescribed for service of notices under this Agreement.
13) NOTICES. Notices hereunder shall be in writing and delivered by hand or
by express courier as follows:
If to Publisher: If to Distributor:
X.X. Xxxxxx & Company, Inc. The Peoples Publishing Group
000 Xxxxx Xxxxxx 000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxxxxx Xxxxx, XX 00000
Attn.: CFO Attn.: Chairman
Notices shall be effective upon delivery.
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14) RESALE MARKET. During the term of this agreement, distributor will not
engage in the sale or distribution of "used" books of Publisher.
Nothing in this Section shall affect the right of Distributor to
receive and to resell copies of Works pursuant to Section 3.
15) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties and their successors and assigns. Except in connection with the
sale of substantially all of the business of a party, this agreement
may not be assigned by either party without the prior approval of the
other party, which approval will not be unreasonably withheld.
ACCEPTED AND AGREED
PEOPLES PUBLISHING GROUP
By: Xxxxx Xxxxxxx
Title: Chairman
Signature: /s/ Xxxxx Xxxxxxx
ACCEPTED AND AGREED:
X.X. XXXXXX & COMPANY, INC.
By: X. Xxxxx XxXxxxx
Title: President
Signature: /s/ X. Xxxxx XxXxxxx
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SCHEDULE 1.
MARKET
The Market will be the United States public and private schools, grades
K-12. The Market also includes XXXXX and International Bilingual
Schools actively marketed by Distributor The audience includes both the
day and evening enrollments in the schools. The Market also includes
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. Home
schooling suppliers are not included in the market.
Both Distributor and Publisher recognize that certain re-sellers will
continue to purchase books direct from Publisher (including but not
limited to Varsity Books, Xxxxx Online, Xxxxx and Xxxxxx, MBS). The
Publisher will make reasonable efforts to direct the purchase of Works
to the Distributor. In cases where Publisher deems it should sell
direct to reseller then sales and commission will be accounted for as
laid out in contract.
The Market does not include secondary school enrollments in courses at
post secondary institutions where Works are purchased by resellers
whose primary business is post secondary enrollments.
WORKS
All Norton and Liveright net price college texts (together with
supplemental and ancillary materials) published by Publisher. Trade
books (list price) in hardcover and paperback format are not included
in definition of works though Distributor may promote and purchase
these for resale on a non-exclusive basis from Publisher.
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SCHEDULE II.
LOCAL AUTHORITY ADOPTIONS
Local Authority Adoptions take place in all states including state
adoption and open territory states. A consistent characteristic of a
Local Authority adoption is the presence of a centralized formal
adoption process that takes place within a school district, county,
city, or dioceses. Local authority adoption share some but certainly
not all, of the following characteristics:
o PPG receives notice of a school district or county adoption.
Usually this information is communicated by letter by the
adopting authority.
o The adoption unit requires multiple exam copies of textbooks
and ancillaries for school administrators and the adoption
committee.
o Formal on-site presentations to the adoption committee or in
some districts meeting with committee members and their school
advisors.
o Requirements to submit book correlations to state and/or AP
standards.
o Extensive pre-work prior to imposed blackout periods where
publishers are not allowed to contact committee members.
o Committee recommends book adoptions often listing multiple
books to provide local schools with purchase options.
o PPG begins selling process to influence school building
decisions.
o Large unit purchases - for our purposes let's agree a LA
purchase must be in excess of [*] units or $[*].
o Contract negotiations related to price, shipping and handling,
and availability.
PPG will be responsible for maintaining and distributing monthly to
Norton a Local Authority Pending and adoption file. In adoptions
requiring a formal contract Peoples will negotiate terms and make
recommendations to Xxxxxx. Final contract approval and administration
will be a Norton responsibility.
Local authority purchases will be identified and the appropriate
discount taken when PPG sends the purchase information to Xxxxxx.
Purchases not contained in the monthly pending report will not qualify
as LA adoptions.
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STATE ADOPTIONS
Formal call issued by the State Board of Education asking for
publishers to submit instructional materials for state evaluation bids,
contracting and purchase. Most but not all Adoption States require
publishers to use a state depository.
Many adoption states, such as GA, VA, FL, provide funding for the
purchase of non-adoption materials by the local schools in a process,
which we have described as Local Authority Adoptions. Other states such
as TX and NC rigorously subscribe to the State Adoption process.
The State Adoption states are:
AL ID NV SC
AR IN MN TN
CA (K-8 only, 9-12 open) KY NC TX
FL LA OK UT
GA MS OR VA
WV
Publishers Duties
o 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.
Distributors Duties
o Distributor is responsible for all expense related to
promotion of Publisher titles to State Adoption contracts
except for free copies. Distributor and Publisher to agree
upon budget for free copy expenses as per Section 5 a) i).
Distributor will be responsible for free copy expenses in
excess of agreed budget.
Terms of Sale
o Sales under State Adoption contracts shall be made directly
between the Publisher and the States. Net sales shall mean
receipts from sales, net of returns, less depository fees,
taxes, and postage and handling charges. Commission shall be
paid [*] days following receipt by Publisher of payments by
the state.
Handling of Orders
o 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.
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SCHEDULE III
Responsibilities for Promotion
[*]
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