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EXHIBIT 10.3.1
Information marked with "*****" has been omitted from the public filing and
filed separately with the Commission pursuant to a request for confidential
treatment filed by Easyriders, Inc.
XXXXXX CIRCULATION COMPANY
DISTRIBUTION AGREEMENT
DATED APRIL 1, 1987
Between Xxxxxx Circulation Company, 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx
Xxxxxx 00000 (hereinafter called "Xxxxxx") and Paisano Publications, Inc.,
00000 Xxxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxxxx 00000 (hereinafter called
"Publisher").
1. Xxxxxx shall be the exclusive distributor in the United States and
Canada of the English language publications published, under this agreement, by
Publisher, its subsidiaries or affiliates at any time during the term of this
agreement, (hereinafter called "Publications").
In all other countries of the world where Publisher can give Xxxxxx
such rights, provided Publisher and Xxxxxx mutually agree to all terms (e.g.
brokerage, advance, settlement dates and cover price) and said specific terms
of each country are documented and attached hereto, as they are agreed upon,
Xxxxxx shall also be exclusive distributors of the English language
publications published by Publisher under this agreement in said countries.
Xxxxxx'x distribution shall be exclusive under the terms of this
agreement except that the publisher may solicit and fill orders to retailers
(not serviced by wholesalers or Xxxxxx), single copy orders, as well as sell
copies to subscribers.
2. The Publications to be distributed under this agreement, the issues
thereof to be so distributed and the frequency of 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
Publications covered by this distribution agreement, (ii) the logos and/or
(iii) trademarks to be used in connection with such Publications and there are
no liens or 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
Publications covered by this
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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, without
any mortgages, liens or encumbrances of any kind and without rights being in
other persons not party hereto;
(e) Upon completion and delivery of each issue of the publications
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
(f) Publisher will regularly issue each issue of the Publications
covered by this agreement during the term of this agreement and any renewal
thereof and will cause its printer(s) to send to Xxxxxx written notice
confirming that all copies of the respective issues of each Publication have
been printed and shipped to Xxxxxx'x wholesalers and/or retailers ("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").
4. If Publisher desires to change the frequency of publishing issues of
any Publications, it shall first obtain the consent of Xxxxxx at lest 60 days
before the proposed shipping date of any affected issue. Publisher will supply
to Xxxxxx a schedule of shipping and on-sale for each issue of the Publication
at least 6 (six) months in advance of the on-sale date and at such times
thereafter as requested.
5. The colophon of the Xxxxxx Circulation Company shall be printed on
the cover of each magazine distributed by Xxxxxx hereunder. The publication's
code number assigned by Xxxxxx shall also appear on each cover. The print order
for distribution hereunder will be mutually agreed upon by
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Xxxxxx and Publisher. Publisher hereby authorizes Xxxxxx to adjust claims made
by any of Xxxxxx'x customers for delivery shortages or damages to copies of the
issues of the Publications upon proper claims being received by Xxxxxx.
6. Publisher shall be responsible for shipping and traffic costs
(including, without limitation, import and other duties) incurred to ship
copies of the Publications to all customers of Xxxxxx located throughout the
world.
7. Individual shipments to Xxxxxx'x 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 approximately 10 (ten) days prior to the
Publications' on-sale dates. Any cost incurred for reshipping copies at
Publisher's request while a Publication is on sale will be borne by Publisher.
All copies of Publication shall be fully returnable. Publisher will accept
whole copies, front covers, headings, Xxxxxx'x certification or customers'
affidavit 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 15
(fifteen) days prior to off-sale date. Xxxxxx will use its best 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 for Xxxxxx'x agents in connection
therewith. Publisher shall bear the risk of loss for all copies of Publications
until the time they are received by Xxxxxx'x customers and during any time they
are being returned or reshipped at Publisher's instructions. Publisher shall
keep all returned whole copies from entering the stream of commerce for at
least 180 days after off-sale date, except to fill subscriptions and mail
order requests, or such other sale as is mutually agreed upon.
8. Publisher authorizes Xxxxxx to offer on Publisher's behalf, a Retail
Display Allowance ("RDA") to any retailer which engages in the sale of
Publications and agrees to be bound by the terms of Publisher's RDA program.
Publisher further warrants that it will give notice at least once a year to
retailers of the availability of this allowance. Publisher hereby authorizes
Xxxxxx to charge against the account of Publisher, Xxxxxx'x expense for
administering this plan and also the Retail Display Allowance listed in
Attachment C of the cover price of each copy sold of Publications to the extent
that such Retail Display Allowance shall become payable by Xxxxxx.
9. Publisher shall pay Xxxxxx for its distribution service ***** of cover
price in the United States and Canada of
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each copy of each issue of any Publication sold through primary wholesalers
(the "distribution fee"). Xxxxxx'x distribution fee for sale through Xxxxxx'x
Specialty Sales Operation (sales to retail accounts and secondary wholesalers)
will be the difference between the amount per copy remitted to Publisher for
sales to primary wholesalers and the price per copy charged accounts serviced
by the Specialty Sales Operation, as provided on Attachment X. Xxxxxx'x
distribution fee on sold copies in countries other than the United States and
Canada will be mutually agreed to on a country by country basis.
10. For all copies distributed in certain wholesaler areas 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 hereto or (b) the amount(s) presently paid by Publisher. Xxxxxx will
attempt to limit areas and amounts to those specified in Attachment "B".
Payment to Publisher for copies of Publications sold other than in
the United States will be paid by Xxxxxx to Publisher in United States funds at
the exchange rates Xxxxxx is charged by its banks. Distribution fees will be
the agreed upon percentage of cover price per country and paid at the same
exchange rate.
11. Xxxxxx shall advance to Publisher the following amounts at the
following times with respect to each issue of each Publication distributed
hereunder:
(a) FIRST ADVANCE: ***** of gross billing plus transportation paid 10
days after receipt of completion of shipment notice for all publications other
than the calendar, the advance on which will be 30% of gross xxxxxxxx plus
transportation.
(b) SECOND ADVANCE: ***** of Xxxxxx'x ENS less any previous
advance(s) and Xxxxxx'x distribution fee paid 30 days after on-sale date.
(c) THIRD ADVANCE: ***** of Xxxxxx'x ENS less any previous advance(s)
and Xxxxxx'x distribution fee paid 60 days after off-sale date.
(d) Payment for all copies sold in countries other than the United
States and Canada, will be mutually agreed to on a country by country basis.
12. (a) Final Settlement for each issue of each Publication distributed
hereunder shall be made 120 days after off-sale date except for copies sold in
countries
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other than the United States and Canada, for these sales the final settlement
date will be mutually agreed to. Publisher agrees to accept returns thereafter
until 360 days after the off-sale date and hereby authorizes Xxxxxx to charge
such returns against any other open or subsequent issues of Publications.
(b) The balance due to Publisher, or overadvances due 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.
(c) Publisher's suggested price per copy to Xxxxxx'x customers will
be the cover price less those discounts as described on Attachment A and B and
other attachments (or as otherwise provided by Paragraph 10 hereof). Any
exceptions shall be mutually agreed upon.
(d) (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 (e.g. reship allowances, special discounts and return handling
allowances, RDA Administration, RDA audits, shortages) and (iii) all other
costs, expenses and charges incurred by Xxxxxx on behalf of Publisher, (e.g.
RDA payments) may be deducted from any advances or payments due Publisher on
any issue of any Publication distributed hereunder.
(e) 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 items to which Publisher
may object in writing within 60 (sixty) days from the date of the mailing of
such statements.
13. In the event a customer of Xxxxxx shall take advantage of any federal
or state insolvency statute or shall cease its business operation with the
effect that such customer shall not return its unsold copies of the
Publication(s), Xxxxxx shall use the average net sale percentage of the
Publication(s) as reported by such retailer, distributor or customer for the 12
(twelve) months (or lesser period if applicable) prior to those months for
which such retailer, wholesaler or customer shall not have submitted unsold
copies of the Publication(s). This average
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shall be used in determining and computing the net sales of the Publication(s)
shipped to such retailer, wholesaler or customer for said months.
14. If for any reason publisher is in an overadvanced position at any
time on any title, based on actual returns, Xxxxxx will notify publisher in
writing, publisher will then have two options: (i) To pay Xxxxxx amounts
overadvanced within 10 days. (ii) To pay six equal monthly payments on the
existing overadvance plus 1% per month interest on the unpaid balance (not to
exceed $150,000 in the aggregate). If publisher is in breach of the preceding
provisions, Xxxxxx may at its option, deduct any amount from any advances or
settlements on any titles distributed by Xxxxxx for publisher, up to the
amount of the overadvance. Any overadvance must be paid prior to the
termination date of the agreement.
If any error in payment is made at any time to you by Xxxxxx or by
you to Xxxxxx and that results ultimately in any overpayment, you and Xxxxxx
mutually agree to verify and adjust such overpayment within 30 days of receipt
of written notice of such overpayment setting forth the calculation, regardless
if this agreement has been terminated.
15. Publisher hereby authorizes Xxxxxx to administer all Publisher
requests for the Audit Bureau of Circulation reports. No charge will be made
for the State Circulation analyses for the Publication(s) or Audit Bureau of
Circulation county reports.
16. 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
Publications. 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, Hackensack, New Jersey".
17. 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 the distribution of any Publications, or any issue thereof,
or any promotional material provided by Publisher, or in defending or settling
any claim, civil action or criminal prosecution against them or any of them
arising out of the use of the title of said Publication or the contents and
printed matter.
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including advertisements, pictures or photographs contained in the covers or any
page of said Publication, or in any supplementary 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.
18. (a) Xxxxxx shall not take title to any of the copies of any of the
issues of any of the Publications 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 Publications on behalf of Publisher as its principal, except as specified
at subparagraph (b) of this paragraph.
(b) All monies paid by, or due and owing from Xxxxxx'x customers for
copies of Publications 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) Notwithstanding anything to the contrary contained in this
agreement (except as provided for in paragraph 14) Xxxxxx shall have the right
to withhold all or any portion of any advance payments in order to protect
itself from a potentially overpaid position, providing it has reasonable
grounds to anticipate that such overpaid position may ultimately exist.
19. The term of this agreement shall be 2 (two) years from the latest
off-sale date of the title(s) listed on Attachment A. This agreement shall be
renewable for additional 3 (three) year terms automatically, unless advance
written notice is given by either party to the other at least 90 (ninety) days
prior to the commencement of the following renewable term.
Xxxxxx shall be under no obligation to distribute the Publications
in any jurisdiction where any claims, litigations, prosecutions, or proceedings
are pending or threatened against the Publications or any seller thereof, or
refusal of any customer, direct or indirect, to offer the Publications for sale.
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20. Publisher and Xxxxxx have mutally agreed upon an assignment form
attached hereto.
21. Xxxxxx shall have the unqualified right to refuse to distribute any
titles published by Publisher not listed in Attachment A.
22. 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.
23. Notwithstanding anything contained in this agreement, Xxxxxx shall
not be obligated to make any payments hereunder on copies of each issue of the
Publication that are not printed and shipped by Publisher's printer(s) to
Xxxxxx'x customers in accordance with the galleys prepared by Xxxxxx pursuant
to Paragraph 7 on the approximate date provided in the Notice of Completion of
Shipment sent to Xxxxxx by Publisher's printer(s).
24. This agreement sets forth the understanding of the parties with
respect to the distribution of Publications and may not be amended except in
writing signed by the parties and shall be binding upon the parties, their
respective successors and assignees; and, in particular, this agreement shall
be binding for its terms upon any transferees, successors or assigns of
Publisher who shall publish any of the Publications, 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.
(PUBLISHER) XXXXXX CIRCULATION COMPANY
BY: /s/ XXXXXX XXXXXX BY: [SIG]
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TITLE: Pres. TITLE: EXEC. VP
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DATE: 4/3/87 DATE: 4/8/87
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