EXHIBIT 10.32
Dated 2000-09-26
DISTRIBUTIONS AGREEMENT - USA
BETWEEN
XXXXXXX XXXXXX MANUFACTURING COMPANY LIMITED
AND
XXXXXXXXXXXXXX.XXX
DISTRIBUTION AGREEMENT - Xxxxxxx Xxxxxx and Xxxxxxxxxxxxxx.xxx
This Agreement is made on the day of 2000
"Earlychildhood" means Xxxxxxxxxxxxxx.xxx L.L.C., a limited liability company
organized in California, U.S.A. and having its principal address at 0 Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, X.X.X. (hereinafter referred to as
EC.)
XXXXXXX XXXXXX MANUFACTURING COMPANY LIMITED, a company registered in England
and having its Registered Office at Sterling House, 0 Xxxxxxxxxxxx Xxxx, Xxxx
Xxxxxxxxx, Xxxxxxxxxx XX0 0XX and its principal place of business at Xxxxxx
Xxxx, Xxxxxx Xxxxxxx, Xxxxxxxxxxxxxx XX00 0XX (hereinafter referred to as `AP')
WHEREAS the parties have agreed that EC will distribute certain toys produced by
ELC under the following terms and conditions:
THEREFORE it is agreed as follows:
1. DEFINITIONS
"Brand Guidelines" means the guidelines to be produced by ELC and AP and
agreed by EC (such agreement not to be unreasonably withheld or delayed)
setting out the criteria for the marketing of ELC branded product `ELC'
means Early Learning Centre, a trading division of Xxxx Xxxxxxx (UK)
Limited, a company incorporated in England and having its principal place
of business at Xxxxx Xxxxxxx Xxxx, Xxxxxxx, XX0 0XX, XX.
'ELC Toys' means ELC owned products, or any of them, manufactured in Hong
Kong or China, as being marketed now or in the future or have been
marketed in the UK under the ELC label and for which ELC has all
requisite rights of distribution in the Territory.
'Market' means the educational market for children, parents and schools,
which is accessed through direct marketing, catalogue, and Internet
sales.
'Territory' means the United States of America.
'Trademarks' means the United States common law and registered trademarks
of ELC and design and Early Learning Centre and any similar designations,
such as "Early Learning".
2. TERM
Subject to the terms of clause 5 below, this Agreement shall endure from
the date hereof until 31* December 2003 (the `First Term') and, provided
that:
(a) the targeted purchase levels as specified in clause 3.5 below have
been met by EC and
(b) EC has produced to AP by 30th June 2001 a business plan showing
EC's intentions for the remainder of the First Term and for a
second term of 3 years which shall continue from 1st January 2004
to 31st December 2005 (the `Second Term') which plan shall
include, but not be limited to, details of the Market and the
direct, education, internet and any other channels within the
Market, performance by EC, customer profiles and any other
information which AP may consider relevant to setting targeted
purchase levels for the Second Term and which plan is reasonably
acceptable to AP; and
(c) The parties have reasonably agreed on targeted purchase levels for
the Second Term.
this Agreement shall, unless (a), (b), or (c) above have not been
met, be automatically renewed for the Second Term on expiry of
which this Agreement shall cease and terminate without notice by
either party.
If AP exercises its rights under clause 5.3 below within 60 days
after 31 December 2003, the Second Term shall be deemed not to
have started.
3. APPOINTMENT AND AUTHORIZATION
3.1 AP hereby appoints EC to distribute the ELC Toys within the Market in the
Territory during the term of this Agreement.
3.2 It is a precondition of this contract that ELC shall approve in writing
the terms and conditions agreed herein. No variations to any of the terms
and conditions herein shall be made without the consent in writing of ELC
and EC.
3.3 Subject to the terms of this Agreement all rights to market, distribute
and sell the ELC Toys in the Territory are reserved to ELC. AP and ELC
acknowledge the importance of maintaining the integrity of the ELC brand
and therefore will not undermine EC's efforts in the Market by charging
EC higher prices than ELC and AP would offer to a third party
distributor, except that any such prices would be based on volume of
trade. EC shall not set up any web-site or other online trading or
information facility under the name `ELC'; "Early Learning Centre';
`Early Learning' or any other similar name. It is also agreed that ELC
shall retain exclusive rights to set up or operate any web-site or other
online trading or information facility using the name `ELC'; `Early
Learning Centre'; `Early Learning' or any other substantially similar
name and to accept orders from, and supply direct to the Territory.
In the event that ELC requires a distribution network anywhere within the
Territory for transactions completed directly with ELC by way of
electronic trading, ELC and AP agree to offer EC the right to supply such
distribution network provided that reasonably satisfactory commercial
terms can be agreed between the parties, before offering such rights to
any third party. EC shall include on any Web-site offering ELC Toys, a
disclaimer, which shall state that the ELC Toys may only be supplied or
sold to parties within the Territory.
3.4 The ELC Toys shall be delivered to a place or places within the Territory
as agreed between the parties.
3.5 EC agrees to purchase from AP at least the following targeted quantities
of ELC Toys, during each of the periods undernoted, the value being
calculated as the ELC FOB Hong Kong price prevailing at the time of any
order by EC, hereinafter referred to as the `Value'.
3.5.1 During the period from the start of the Agreement until 30th June 2002
US$ 3 Million.
3.5.2 By the end of the First Term (31st December 2003) the total Value from
the start of the agreement to be US$ 10.5 Million or else AP has the
right to terminate the agreement as set forth in 5.3 below.
3.6 For the purposes of 3.5 above, a purchase is made at the time a purchase
order is received for the products. Payment for all goods to be made by
Direct Bank Transfer at least seven days prior to shipment. All rights to
goods to remain with ELC until payment has been received in full. Any
additional charges incurred in transport or warehousing due to late
payment to be the responsibility of EC.
4. OBLIGATIONS BY EC AND LICENSE TO USE ELC RIGHTS
4.1 AP sub-licenses EC to use such ELC trade marks on the ELC toys and other
intellectual property rights as ELC has (the `ELC Rights') for the
purposes only of marketing and distributing the ELC Toys during the term
of this Agreement within the Market in the Territory. This sub-license
will immediately cease, on the expiry or termination for whatever reason
of this Agreement or any Agreement between ELC and AP relating to the
distribution of ELC Toys in the Market in the Territory. EC will be
permitted, without liability, a reasonable time thereafter to discontinue
its use of such ELC trademarks. (E.g., EC will not be in breach of this
agreement if it continues to use such ELC trademarks until the next
scheduled publication of any of its catalogs or brochures where such ELC
trademarks are used.)
4.2 EC will not use the sub-license of the ELC Rights granted in 4.1 except
in accordance with the Brand Guidelines and with ELC's prior written
approval, such approval not to be unreasonably withheld or delayed.
4.3 EC will use the normal packaging as supplied by ELC but EC is responsible
for providing any further information on the packaging that may be
legally required in any part of the Territory or for any particular
channel in the Market. All such changes to packaging, or any other
variations to ELC's packaging, together with any proposed catalogues or
promotional material to be produced or used by EC must be submitted to
ELC for its prior written approval which approval shall be based on the
consistency of such packaging, catalogues or material with the Brand
Guidelines, such approval not to be unreasonably withheld or delayed. ELC
to respond to all requests within 7 working days.
4.4 For the avoidance of doubt the parties agree that ELC Rights are and will
remain the property of ELC. EC shall not register or attempt to register
any of the ELC Rights or assist any third party in registering such
rights. In the event of any breach of this provision, and in addition to
other rights and remedies of AP, Earlychildhood shall assign back or make
reasonable efforts to procure the assignment back, to ELC of all such
rights and shall indemnify AP against any legal expenses incurred in
relation thereto.
4.5 EC agrees that it will assist AP and ELC, at ELC's sole cost and expense,
to the extent reasonably necessary to protect ELC's rights in the event
of infringements by third parties of the Trademarks or ELC's intellectual
property rights. ELC may commence or prosecute any claims or suits in its
own name or, subject to EC's consent not be unreasonably withheld, in the
name of AP and/or EC or may join AP and/or EC as a party or parties
thereto. EC shall promptly notify AP in writing of any infringements or
imitations by products similar to those covered by this Agreement which
may come to EC's attention and ELC shall have the sole right to determine
whether or not any action shall be taken on account of such infringements
or imitations. EC shall not institute any suit or take any actions on
account of any such infringements or imitations without the prior written
consent of ELC, such consent not to be unreasonably withheld.
5. TERMINATION
5.1 Either party, in addition to any other rights available to it, may
terminate this Agreement forthwith by written notice to the other party
in the event of an act of default by the other, as defined in clause 5.2
below.
5.2 Any of the following events shall constitute an act of default:
5.2.1 EC fails to pay any sum of money owned under the Agreement when
due, but only upon the expiration of 10 business days following
written notice to EC by AP specifying to EC the amount owing under
the Agreement.
5.2.2 Any breach by Earlychildhood, of either clause 4.2, 4.3 or 4.4 of
this Agreement.
5.2.3 The other party fails to perform any material obligation under
this Agreement, and, if remediable, such failure remains uncured
for more than thirty (30) days after receipt of notice thereof.
5.2.4 In the event of a change of control of EC, EC shall inform AP
immediately of such change of control and, in the event that AP
reasonably considers that such change of control will be
prejudicial to the continuance of this Agreement, AP shall have
the right to terminate this Agreement forthwith by written notice
to EC. For the purposes of this clause, `control' shall mean (i)
the ownership or control directly or indirectly of more than 50%
of the voting share capital of EC; or (ii) the ability to direct
the casting of more than 50% of the votes exercisable at general
meetings of EC on all, or substantially all, matters; or (iii) the
right to appoint or remove directors of EC holding a majority of
the voting rights at meetings of the board on all, or
substantially all, matters.
5.2.5 The other party commits an act of bankruptcy, goes or is put into
liquidation or receivership or has an administrator or
administrative receiver appointed, passes a resolution for its
winding up (otherwise than for the purpose of amalgamation or
reconstruction) or makes any assignment for the benefit of its
creditors.
5.3 In the event that EC fails to meet the targeted purchase levels as
specified in clause 3.5 above as at either 30th June 2002, or 31st
December 2003, then AP's sole recourse will be to decline to renew this
Agreement for a Second Term, if this Agreement continues to a Second
Term, this Agreement shall include any further necessary changes as
agreed to by the parties.
5.4 AP agrees that EC shall be entitled to dispose of ELC Toys in its
possession or for which binding purchase orders have been placed and paid
for following the termination or expiration of this Agreement.
6. CONFIDENTIALITY
The parties agree that this Agreement and all information provided by
either party to the other, or by ELC to EC, hereunder or in connection
herewith shall be Confidential Information and neither party will
disclose to any third party
(excluding ELC to whom such confidential information may be disclosed)
any such Confidential Information.
Confidential Information will not include:
6.1 Information that at the time of disclosure is, or after
disclosure otherwise than as a result of breach of this
Agreement becomes publicly known; or
6.2 Information required to be produced by any court or public or
regulatory authority.
Any breach of this clause will entitle the non-breaching party to
terminate the Agreement immediately and to obtain immediate preliminary
and permanent injunctive relief, together with any damages to which the
non-breaching party may be entitled. The provisions of this clause 6o
survive the termination or expiration of this Agreement.
7. ASSIGNMENT AND SUB DISTRIBUTION
FC may not assign this Agreement or transfer any of its rights hereunder
to a third party without the prior written consent of AP and ELC, such
consent not to be unreasonably withheld or delayed. AP hereby agrees that
EC may assign this Agreement to a wholly owned subsidiary company of EC.
EC may not appoint any sub-distributors or agents. This agreement shall
be binding on any successors or assigns of the parties or of ELC.
8. FORCE MAJEURE
In the event that AP is unable to supply any goods ordered during the
term of this Agreement because of circumstances outwith the control of AP
including, but without prejudice to the generality of the foregoing, any
strikes, lock outs, labour disputes of any kind, industrial action of any
nature whatsoever (whether any of the foregoing relate to AP's employees
or others) fire, floods, storms, acts of God, shortage of materials, EC
will have no claim against AP and AP will not be liable to EC for any
loss or damage howsoever arising or sustained as a result therefrom.
However, all purchase orders received by EC pursuant to this Agreement
shall be credited toward the target quantities in Section 3.5 above, even
if ELC or AP is unable to meet those orders due to the circumstances that
occur in this section titled "Force Majeure."
9. NOTICES
All notices required under this Agreement shall be in writing addressed
to the parties at any of the addresses above, unless notification of a
change of address is given in writing.
10. WHOLE AGREEMENT, GOVERNING LAW
This Agreement forms the whole agreement between the parties and shall
not form part of any other agreement or arrangement between the parties.
Any alterations or amendments to this Agreement shall be made in writing
and signed by an authorized signatory of each party. This Agreement shall
be construed in accordance with the laws of England and the parties
submit to the jurisdiction of the English courts.
11. SEVERABILITY
If any of the provisions of this Agreement is found by any Court or other
competent authority to be void, illegal or unenforceable, such provision
shall be deemed to be deleted from this Agreement and the remaining
provisions of this Agreement shall continue in full force and effect.
Notwithstanding the foregoing the parties shall thereupon negotiate in
good faith in order to agree the terms of a mutually satisfactory
provision to be substituted for the provision so found to be void illegal
or unenforceable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their authorized representatives:
XXXXXXX XXXXXX MANUFACTURING COMPANY LTD.
By /s/ M.A. Austin
Print Name M.A. Austin
Date 26th September 2000
Place Xxxxxx Xxxxxxx, England
EARLY XXXXXXXXX.XXX LLC
By /s/ X.X. Xxxxxxx
Print Name X.X. Xxxxxxx
Date 9th October 0000
Xxxxx Xxxxxxxx, XX 00000
