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Exhibit: 10.11FT
DISTRIBUTION AGREEMENT
THIS AGREEMENT is entered into as of the 5th day of January, 1998, by
and between Little Tiger Press USA, L.L.C., a New York limited liability company
("Publisher") and Futech Educational Products, Inc., an Arizona corporation, to
be operating as "XYZ Distributors" ("Distributor").
R E C I T A L S:
A. Publisher publishes printed materials, and Distributor is in the
business of marketing and distributing published materials.
B. The parties desire to enter into an agreement for distribution by
Distributor of certain materials published by Publisher, all on the terms and
conditions herein set forth.
T E R M S:
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. RIGHT OF FIRST REFUSAL. Publisher hereby grants Distributor the
right of first refusal to purchase from Publisher and distribute in the United
States any and all published materials Publisher desires to have distributed in
the United States (hereinafter individually a "Book" and collectively "Books").
Publisher will supply Distributor with three (3) folded and gathered
sheets, and/or three (3) review copies, of each Book Publisher wants distributed
in the United States, at no cost to Distributor. At the same time, Publisher
will supply Distributor with the title, name of the author and illustrator, Unit
Price (defined below), and the proposed delivery date of the Book.
Distributor shall inform Publisher of Distributor's election whether to
distribute each Book within thirty (30) days after Distributor receives the Book
from Publisher for review, and the other information described in the preceding
paragraph. Publisher will supply Distributor with 130 folded and gathered
sheets, and/or 130 review copies, of each Book Distributor elects to distribute
in the United States, at no cost to Distributor.
Books selected by Co-Publisher for distribution under this Agreement
will be distributed under and with the name and imprint "Little Tiger Press USA,
L.L.C."
If Distributor elects not to distribute any Book offered by Publisher,
then Publisher shall have the right to pursue alternative distribution for such
Book; provided, however, that the terms offered to an alternative distributor
shall not be more favorable than the terms offered by Publisher to Distributor.
2. APPOINTMENT AND TERRITORY. Publisher hereby grants Distributor the
right to
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distribute and sell each Book acquired by Distributor under Section 1 above
exclusively throughout the United States of America. Distributor's right to
distribute any Book in other territories shall be subject to the prior written
consent of Publisher.
Unless otherwise agreed to in writing by Publisher, Distributor is
excluded from selling any Book to book clubs, or from selling any Book by direct
marketing methods including, but not limited to, mail order, door-to-door,
direct mail, television advertising, or incentive, premium or coupon advertising
methods.
Distributor shall not, without the prior written consent of Publisher,
which consent may be withheld for any reason or no reason, print or authorize
the printing of copies of any Book other than by Publisher.
Distributor shall promote the sale of each Book actively throughout the
territory granted to Distributor under this Agreement.
Except as otherwise called for herein, during the term of this
Agreement, Distributor shall be entitled to market Books acquired pursuant to
this Agreement using the Imprint (defined in Section 3 below).
Publisher agrees to sell to Distributor, and Distributor agrees to
distribute, the 1998 Spring and Fall Front Lists, copies of which are attached
hereto as Exhibit "A" and hereby made a part hereof, at the pricing shown on
said Exhibit.
3. MANNER OF PURCHASING.
(a) Distributor shall have the option to purchase copies of each Book,
on a title-by-title basis, from Publisher, on a returnable basis, on terms for
said purchases as described in Section 4 below. The details of Book orders shall
be set out from time to time on purchase orders (hereinafter "Purchase Orders")
issued by Distributor.
(b) As used in this Agreement, and on any Purchase Order, the following
terms shall have the following meanings:
(i) "Book": One of Publisher's book titles, copies of which
are to be purchased by Distributor, as further described in
Section 1 above.
(ii) "Unit Price": The price to Distributor, inclusive of
royalty and delivery (C.I.F. to Distributor's warehouse in the
State of New York) of each copy of a Book.
(iii) "Quantity": The initial quantity of copies of a Book
ordered by Distributor, as specified in a Purchase Order for
such Book.
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(iv) "Delivery Date": The date for bulk delivery of the
Quantity of a Book, as specified in a Purchase Order for such
Book.
(v) "Imprint": The "Little Tiger Press" imprint.
(c) Distributor shall notify Publisher of the proposed release dates of
each Book. Distributor shall release each Book within three (3) months of
delivery of the Quantity ordered of such Book, unless Distributor is prevented
from doing so by circumstances beyond Distributor's control, in which event
Publisher shall be notified in writing and the period permitted for release
shall be extended by the duration of such circumstances.
(d) Except as may otherwise be specified in this Agreement, all details
of sale and advertisement of each Book, and the number and destination of free
copies, shall be at the sole discretion and expense of Distributor.
4. RETURNABLE SALES.
(a) Unless otherwise agreed upon by the Publisher and Distributor,
all sales under this Agreement will be returnable sales. The details of each
purchase shall be identified on a Purchase Order.
The Unit Price of each Book, as offered by Publisher, is based upon
the cost of paper and printing as of the date of the offer relating to such
Book. If such costs have increased by more than 5% at the time the Book goes to
print, one-half of the increase in cost per copy in excess of 5% shall be added
to the Unit Price per copy for such Book. If the increase in cost would not have
been incurred but for a delay in printing caused by Distributor's failure to
perform its obligations under this Agreement, Distributor shall bear the entire
increase in cost.
(b) Distributor shall furnish Publisher with monthly sales reports
on a per Book basis, commencing within one (1) month after first distribution of
each Book by Distributor.
(c) Within sixty (60) days after delivery of each Book purchased by
Distributor, Distributor shall pay Publisher the Unit Price of the Book. The
parties intend that the Unit Price for each Book shall be 65% of the suggested
retail price of such Book. Distributor shall be responsible for all credit
checks, and all uncollected credit, for all purchasers of Publisher's books from
Distributor, and Publisher shall accept no responsibility for bad debts incurred
by Distributor.
(d) Publisher shall supply to Distributor, as ordered by
Distributor, 10% additional jackets/covers for each hard cover Book ordered by
Distributor, at no charge to Distributor. The purchase price for jackets/covers
ordered in excess of said 10% shall be 100% of Publisher's direct out-of-pocket
costs for the jackets/covers, payable in full within sixty (60) days after
receipt by Distributor of the jackets/covers. Extra jackets/covers shall be firm
sales -
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not returnable.
(e) Distributor shall, after taking possession of Books purchased on
a returnable basis, offer the Books for sale at prices not less than
Distributor's Unit Price from Publisher for the Books. Distributor shall use its
best efforts to sell the Books.
(f) Distributor shall pay all expenses incident to the receipt,
handling, storage, marketing, advertising, selling, and delivery to customers of
the Books purchased by Distributor, and shall pay all taxes and other charges
assessed and/or levied on said Books while in Distributor's possession,
including sales taxes and Distributor's income taxes, but not including
Publisher's income taxes.
(g) Initial and reorder quantities will not be less than 5000 copies
per Book, unless otherwise agreed to by the parties.
(h) Distributor may return to Publisher any Books purchased by
Distributor on a returnable basis, for full credit. All freight charges for
returned Books shall be paid by Publisher, unless the Books are being returned
as a result of an uncured breach by Distributor under the terms of this
Agreement, or unless Books are being returned as a result of Distributor
terminating this Agreement, in which event Distributor shall pay all said
freight charges.
5. PRODUCTION, PRINTING AND DELIVERY.
(a) Publisher will send Distributor for approval (such approval not
to be unreasonably withheld or delayed), ozalids of each Book.
(b) Subject to timely performance by Distributor of Distributor's
obligations under this Agreement, Publisher shall arrange for the printing of
the Quantity of Books ordered for delivery to Distributor by the Delivery Date,
unless Publisher is prevented from doing so by circumstances beyond Publisher's
control, or unless otherwise mutually agreed.
(c) Delivery to distributor of up to 10% under or over the Quantity
of any Book shall constitute good delivery, and Distributor shall pay for the
actual number of copies received.
(d) Distributor shall notify Publisher in writing of Distributor's
requirements, if any, with respect to advance copies, extra covers or jackets,
and folded and gathered sheets.
(e) Distributor shall not insert within or on the cover or jacket of
any edition of any Book, any advertisement, other than information about other
Books published by Publisher, without the prior written consent of Publisher.
6. ACCOUNTING MATTERS.
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(a) Distributor shall prepare statements of the sale of each Book
yearly through December 31 of that year, and shall deliver such statements to
Publisher by March 31 of the next year. Such statements shall show clearly the
number of unsold copies of each Book in the possession or under the control of
Distributor at the end of such accounting.
(b) All monies due to Publisher shall be paid by mail or telegraphic
transfer to Publisher's bank account. Distributor shall ensure that all
remittances or notifications of remittance shall detail the names of Distributor
and Publisher, the title of the Book(s), and, if applicable, Publisher's invoice
number.
7. FREIGHT. Except as provided for in subparagraph 4(h) above, all
Books will be shipped C.I.F. to Distributor's warehouse in the State of New
York.
8. SHIPPING SERVICES. From time to time Publisher may request
Distributor to ship stock of Distributor's books held by Distributor to fill
orders placed by Publisher's other customers. All such orders shall be for
full-case quantities to a single shipping location. Distributor will charge
Publisher, in fulfillment of any such order, the actual cost of shipping plus a
handling charge of 1% of the value of such order. Publisher shall also reimburse
Distributor for any portion of the purchase price paid by Distributor to
Publisher for the Books so sold, and for all of Distributor's out-of-pocket
costs for such Books. Such charges shall be deducted from monthly payments due
to Publisher from Distributor under this Agreement.
9. PACKAGING SPECIFICATIONS. Publisher agrees to package all Books
shipped to Distributor under this Agreement in case packs of 30 copies unless
otherwise mutually agreed to by the parties. Each carton will have the following
information clearly marked on the outside of the carton: Publisher Imprint:
Little Tiger Press; ISBN: ; Title: ; Number of Copies: ;
Distributor's Product No.: .
10. IMPRINT; COPYRIGHT.
(a) All Books purchased by Distributor from Publisher for
distribution by Distributor shall bear the Imprint.
(b) Distributor shall inform Publisher promptly of any infringement
of the copyright in any Book of which Distributor becomes aware. Any actions to
protect the copyright will be at the Publisher's expense and Distributor shall
take no such action without Publisher's prior written authorization.
11. RESERVED RIGHTS. All rights in each Book, other than those
specifically granted to Distributor under this Agreement, are reserved by
Publisher.
12. TERM; TERMINATION. This Agreement shall be effective immediately
and automatically on the "Contingency Expiration Date," as that term is defined
in that certain Operating Agreement for Little Tiger Press USA, L.L.C., dated of
even date herewith, executed
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by Futech Educational Products, Inc. and Magi Publications. This Agreement shall
continue thereafter until terminated in any one of the following ways:
(a) If Distributor is at any time in breach of any of the terms and
conditions of this Agreement, and Distributor fails to cure such breach within
thirty (30) days after receipt by Distributor of written notice from Publisher
specifying the breach and requiring that it be cured.
(b) If Distributor is declared bankrupt or goes into liquidation
(other than solvent voluntary liquidation for the purpose of reconstruction
only), or if a receiver or administrator or administrative receiver is appointed
to the whole or substantially the whole of Distributor's business, or if
Distributor shall make an assignment for the benefit of creditors, then
Publisher may terminate this Agreement if Distributor fails to cure such breach
within thirty (30) days after receipt by Distributor of written notice from
Publisher specifying the breach and requiring that it be cured.
(c) If Distributor ceases to trade as a distributor or is for any
reason unable to perform and comply with the terms and conditions of this
Agreement.
(d) If Distributor allows any Book to go out of stock (to the extent
that Distributor has less than 50 copies of such Book in stock), and to remain
out of stock for 6 months, then Publisher may terminate this Agreement with
respect to such Book only.
(e) If Distributor shall dispose of all remaining stock of a Book by
remaindering or destruction, then Publisher may terminate this Agreement with
respect to such Book only.
Notwithstanding the foregoing, or any other provision of this
Agreement, Distributor shall be entitled to use the Imprint in connection with
sales of Books purchased from Publisher until such time as Distributor shall
have exhausted Distributor's stock of said Books, including Books received by
Distributor after a termination of this Agreement from orders placed by
Distributor prior to said termination. Except as so provided, upon termination
of this Agreement Distributor shall immediately cease using the Imprint.
Any termination of this Agreement by either party shall not affect
the obligations of either party under this Agreement to pay the other party
amounts owing in connection with performance under this Agreement prior to the
termination. The termination of this Agreement by either party shall not
prejudice any claim which either party has against the other.
13. ASSIGNMENT. Distributor shall not, without the prior written
consent of Publisher, assign or in any way transfer Distributor's rights granted
hereunder, in whole or in part, nor issue or permit issue of any Book over any
imprint other than the Imprint.
14. NATURE OF RELATIONSHIP. The relationship the parties intend to
create is that of
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principal and independent contractor, and nothing herein is intended, nor shall
it be construed, to create a relationship of partnership, joint venture, or
employer/employee between the parties. Publisher shall not have the right to
direct the specific daily activities or practices of Distributor nor the manner
in which Distributor conducts Distributor's affairs.
15. NOTICES. Any notice or communication given under the terms of this
Agreement ("Notice") shall be in writing and shall be given by any of the
following means and shall be deemed to have been received as follows:
(i) If by hand delivery, upon delivery;
(ii) If by pre-paid mail, 48 hours after posting, or if the
intended recipient party is in a country other than that of
the sender, on the seventh day after dispatch (Saturdays,
Sundays and public holidays excluded); or
(iii) If by telex, facsimile or other system which prints the
notice at the receiving end, if the sender has an
acknowledgment from the recipient of its receipt in readable
form, upon receipt of such acknowledgment;
provided, however, that no Notice shall be deemed to have been received unless
addressed to the addresses appearing below, or such other address provided to
the other party by Notice:
If to Distributor:
XYZ Distributors
2999 North 44th Street, Suite 225
Phoenix, Arizona 85018-7247
Facsimile: (602) 808-9863
If to Publisher:
Little Tiger Press USA, L.L.C.
2999 North 44th Street, Suite 225
Phoenix, Arizona 85018-7247
Facsimile: (602) 808-9863
Notice given on a Saturday, Sunday or public holiday, or outside normal business
hours, shall not be deemed given until commencement of the next normal business
hours.
16. ENTIRE AGREEMENT. This Agreement is intended by the parties to be
the final expression of their agreement and a complete and exclusive statement
of its terms. No prior course of dealings between the parties and no usage of
trade shall be relevant or admissible to supplement, explain, or vary any of the
terms of this Agreement. Acceptance of, or acquiescence in, a course of
performance rendered under this or any prior agreement shall not
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be relevant or admissible to determine the meaning of this Agreement even though
the accepting or acquiescing party has knowledge of the nature of the
performance and an opportunity to make objection. No representations,
understandings, or agreements have been made or relied upon in the making of
this Agreement other than those specifically set forth herein. This Agreement
can be modified only by writing signed by all of the parties hereto.
17. MISCELLANEOUS. This Agreement contains the entire Agreement between
the parties with respect to the subject matter discussed in this Agreement, and
any prior arrangements or negotiations relating thereto are superseded by this
Agreement. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Arizona, without giving effect to the
conflict laws thereof. The courts of the State of Arizona shall have the sole
and exclusive jurisdiction and venue in any case or controversy arising under
this Agreement or by reason of this Agreement. The parties agree that any
litigation or arbitration arising from the interpretation or enforcement of this
Agreement shall be only in either Maricopa County Superior Court or in the
United States Federal District Court for the District of Arizona, and for this
purpose each party to this Agreement (and each person who shall become a party)
hereby expressly and irrevocably consents to the jurisdiction and venue of such
courts. This Agreement shall be construed according to its fair meaning and
neither for nor against the drafting party. If arbitration or other legal action
is instituted in connection with this Agreement, the prevailing party in such
action shall be entitled to recover from the other party reasonable attorneys'
fees and costs. The parties agree to accept facsimile signatures in counterparts
to this Agreement, and that said facsimile signatures shall for all purposes be
binding upon the parties as if the same were originals. The failure of a party
to require the performance of any term of this Agreement, or the waiver by a
party of any breach of this Agreement, shall not prevent a subsequent
enforcement of such term nor be deemed a waiver of any subsequent breach. The
remedies and payments provided for in this Agreement are not exclusive of other
remedies available to the parties. Every provision of this Agreement is intended
to be severable. If any term of provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
of the remainder of this Agreement. Time is of the essence of each and every
provision of this Agreement. Titles and headings of sections of this Agreement
are for convenience of reference only, are not intended to define, limit or
describe the scope or intent of any provision of this Agreement, and shall not
affect the construction of any provision of this Agreement.
DATED the date first hereinabove written.
DISTRIBUTOR: Futech Educational Products, Inc., an
Arizona corporation, dba XYZ Distributors
By_______________________________________
Vincent W. Goett, CEO
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PUBLISHER: Little Tiger Press USA, L.L.C.,
a New York limited liability company
By: Magi Publications,
a partnership, Member
By: /s/ Manmohan Singh Bhatia
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Manmohan Singh Bhatia, Partner
By: Futech Educational Products, Inc.,
an Arizona corporation, Member
By: /s/ Vincent W. Goett
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Vincent W. Goett, CEO
List of Exhibits
1998 Spring and Fall Front List "A"
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Exhibit "A", Page 1 of 2
LITTLE TIGER PRESS, USA
FRONT LIST AND REPRINT PUBLISHING SCHEDULE SPRING '98
ORDER RETAIL FUTECH/
TITLE FORMAT QUANTITY PRICE LTP COST EXT COST XYZ PRICE W/S TURNOVER EX-WORKS
----- ------ -------- ------ -------- -------- --------- ------------ --------
It Could Have Been Worse Hardback 15,000 $14.95 $3.75 56,250 $5.23 78,450 Dec '97
A Duck So Small Hardback 10,000 $14.95 $3.75 37,500 $5.23 52,300 Dec '97
You Won't Think of Me at All Hardback 10,000 $14.95 $3.75 37,500 $5.23 52,300 Dec '97
Beware of the Bears Hardback 15,000 $14.95 $3.75 56,250 $5.23 78,450 Dec '97
The Lion Who Wanted to Love Hardback 12,000 $14.95 $4.10 49,200 $5.23 62,760 Nov '97
Look Out for the Big Bad Fish Hardback 15,000 $14.95 $3.75 56,250 $5.23 78,450 Dec '97
Tommy Hardback 15,000 $16.95 $4.40 66,000 $5.93 88,950 Dec '97
I Don't Want to Take a Bath! Board Book 25,000 $ 6.95 $1.75* 43,750 $2.43 60,750 Jan '98
I Don't Want to Go to Bed! Board Book 25,000 $ 6.95 $1.75* 43,750 $2.43 60,750 Jan '98
Tim's Animal Stories 96-page H/B 15,000 $16.95 $4.25 63,750 $6.93 88,950 Jan '98
Animals All Around
Laura's Star Reprint** Hardback 50,000 $16.95 $4.40 220,000 $5.93 296,500 June '98
Rumble in the Jungle Reprint** Hardback 15,000 $14.95 $4.10 61,500 $6.23 78,450 June '98
Magi Various Reprints** Hardback 60,000 $14.95 $3.75 225,000 $6.23 313,800 June '98
PAPERBACK
I Don't Want to Take a Bath! Paperback 25,000 $ 5.95 $1.20 $2.08
Dora's Eggs Paperback 15,000 $ 5.95 $1.20 $2.08
TOTAL 307,000 960,450 1,390,860
* Price to be finalized
** Quantities, dates and titles to be finalized
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Exhibit "A", Page 2 of 2
LITTLE TIGER PRESS, USA
FRONT LIST PUBLISHING SCHEDULE FALL '96
Order Retail Futech/
Title Format Quantity Price LIP Cost Ext Cost XYZ Price W/P Turnover Ex-Works
Hurry Santa Hardback 40,000 $14.95 $3.60 144,000 $5.23 209,200 June '98
Mouse, Look Out Hardback 10,000 $14.95 $3.75 37,500 $5.23 52,300 June '98
One Two Three Oops** Hardback 15,000 $14.95 $3.75 56,250 $5.23 78,450 June '98
Little Bunny Bobkin Hardback 15,000 $14.95 $4.10 61,500 $5.23 78,450 March '98
Bedtime for Little Hare Hardback 20,000 $14.95 $3.75 75,000 $5.23 104,600 June '98
Smudge** Hardback 15,000 $14.95 $3.75 56,250 $5.23 78,450 July '98
Commotion in the Ocean Hardback 20,000 $14.95 $4.10 82,000 $5.23 104,600 July '98
A New Hardback*** Hardback 15,000 $14.95 $4.10 61,500 $5.23 78,450 July '98
Santa's Large Board Book Board Book 25,000 $12.95 $3.20* 80,000 $4.53 113,250 Aug '98
Tiger's Large Board Book Board Book 25,000 $12.95 $3.20* 80,000 $4.53 113,250 Aug '98
Tim's Bear Stories 96 page H/B 15,000 $16.95 $4.25 63,750 $5.93 88,950 June '98
Little Tiger Cloth Book 1 Cloth Book 25,000 $19.95 $6.00* 150,000 $8.00* 200,000 July '98
Little Tiger Cloth Book 2 Cloth Book 25,000 $19.95 $6.00* 150,000 $8.00* 200,000 July '98
PAPERBACK
Beware of the Bears Paperback 25,000 $ 5.95 $1.20 $2.08
It Could Have Been Worse Paperback 15,000 $ 5.95 $1.20 $2.08
TOTAL 305,000 1,097,750 1,499,950
* Price to be finalized
** Pub date to be confirmed
*** Titles to be confirmed