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[* SIGNIFIES THAT CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND
FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR
CONFIDENTIAL TREATMENT.]
EXHIBIT 10.7
October 1, 2002
The Peoples Publishing Group, Inc.
299 Market Street
Saddle Brook, NJ 07663
Attn: James Peoples
This letter when counterexecuted and delivered to us, shall
constitute an
agreement effective as of the above date between John Wiley
& Sons, Inc.
("Publisher") and The Peoples Publishing Group, Inc.
("Distributor").
1. APPOINTMENT.
a) Publisher hereby 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 (the "Works") provided, however, that Distributor's
rights
with respect to works which are not college textbooks shall
be
non-exclusive. Publisher shall have the right, in its sole
discretion
to withdraw selective Work(s) from this Agreement so long as
such Works
constituted [*]% or less of the Distributor's prior fiscal year
total
purchases and commissions from all the Work(s), and thereby
to
terminate Distributor's distribution rights with respect to
such
Work(s). In the event of such partial withdrawal of the
Works,
Publisher will provide a minimum of nine months written
notice.
However, if Publisher gives notice of withdrawal during the
period from
October 1 through December 31, Distributor may continue to sell
such
Works through September 30 of the following year. Publisher
shall give
Distributor timely advance notice and information concerning all
new
Works it plans to publish that Publisher determines would be
appropriate for distribution in the Market, 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.
2. DISTRIBUTOR. Distributor shall perform, at Distributor's
expense, the
following duties as well as any other services reasonably
necessary to fulfill
its obligations as Distributor hereunder:
a) Use its reasonable efforts to sell the Works to the
Market;
b) Execute at Distributor's sole expense a sales and marketing
effort as
described in Schedule 2 and provide sales and marketing
management for
its staff, inclusive of ongoing training programs;
c) Provide all normal and customary pre-sale and post-sale
presentations
and product training requested by schools; that are reasonable
and
consistent with the industry practices of school publishers
selling
college textbooks to secondary schools.
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d) Submit to Publisher quarterly written reports to advise
Publisher on
its selling program for the Works, pending sales and
complementary
copies distributed, and attend quarterly meetings with Publisher
to
discuss all aspects of the parties' relationship, including
inventory,
participation in state adoptions, bids, adoption contracts,
sales and
complementary copies. Distributor also shall submit, broken down
by
title, formal inventory forecasts, in May and November of each
year
during the term of this Agreement, an adoption forecast broken
down by
state and an open State forecast including significant
adoption
opportunities for the two year period commencing on the date of
this
Agreement and for each two year period thereafter during the
term, and
a fiscal year sales forecast to aid Publisher and Distributor
in
mutually setting reasonable inventory and sales targets.
Distributor
shall provide Publisher with updates to these forecasts on a
quarterly
basis;
e) Attend, at Publisher's request, sales meetings and
conventions at which
Publisher has sponsored exhibits. Publisher agrees to discuss
with the
Distributor the merits of attending such meetings and
conventions
before requesting the Distributor's attendance. Distributor
shall pay
the expenses associated with attending such meetings and
conventions;
f) Permit Publisher, upon reasonable notice, to inspect
Distributor's
premises;
g) [*];
h) [*]; and
i) Bill customers for the Works and collect on invoices.
3. PUBLISHER'S DUTIES. Publisher shall perform, at Publisher's
expense, the
following duties as well as any other services reasonably
necessary to fulfill
its obligations as Publisher hereunder:
a) Provide Distributor with leads and information on front and
back lists,
such material to remain the Publisher's property;
b) Provide access to all Publisher's appropriate editorial and
marketing
personnel for information on the Works. The primary contact for
such
information shall be the Marketing Systems Support Manager for
the
Publisher's educational division;
c) For every year of the term of this Agreement, supply
Distributor with
free copies of the Works solely for demonstration, examination
and
selling purposes, the cost of such copies not to exceed a value
of [*]
percent ([*]%) of the annual net sales of Works by the
Distributor, to
be estimated by Distributor and Publisher. The cost of such free
copies
shall be determined by multiplying the average cost of Works
in
Publisher's inventory by the number of free copies to be
supplied to
Distributor. Such free copies shall remain Publisher's property.
Under
no circumstances shall Distributor sell such free copies to any
third
party;
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d) Supply Distributor with reasonable amounts of sales
literature,
brochures, and other materials on a regular basis, as available
and
requested by Distributor;
e) Fulfill orders submitted by Distributor and bear costs
related to
shipping orders and free copies;
f) 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; and
g) Provide prior and current fiscal year monthly, quarterly and
annual
purchase reports and commission statements, broken down by title
and
presented in a format providing the Distributor with the
information
needed to provide Publisher with the reports and other
requirements for
formal inventory forecasts, adoption forecasts, open state
forecasts,
quarterly sales forecasts and sales targets. Publisher reporting
will
be inclusive to the Work(s) and will exclude other works sold by
the
Publisher to schools.
4. TERMS OF SALE.
a) Distributor may purchase Works to complete orders, from open
territory
states, private and parochial schools and from adoption states,
other
than State Adoption Contracts, from Publisher's available
inventory on
the following terms, in each case payable in U.S. dollars within
[*]
days of invoice: [*].
b) Sales shall be f.o.b. Publisher's bindery or warehouse, as
applicable.
Publisher shall bill Distributor for the discounted sales price
plus
postage or other transportation charges.
c) Sales under State Adoption Contracts shall be made directly
between the
Publisher and the States. On State Adoption Contracts, the
Publisher
shall pay the Distributor a standard sales commission of [*].
Based on
the adoption requirements and the commission potential related
to a
particular State Adoption, the parties shall agree on the
exact
commission rate prior to the decision to enter a State
Adoption.
[*].
5. RETURNS. Distributor shall 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.
Distributor shall enact a returns policy for its customers with
respect to
Publisher's products that is substantially similar to the policy
attached hereto
as Schedule 3.
Publisher shall be responsible for returns resulting from State
Adoption
Contracts.
Independent of returns or manufacturing defects, on termination
for any reason
including the end of the Term, the Publisher shall use
reasonable efforts to
resolve concerns raised by Customers, who purchased Work(s) from
the
Distributor, related to the durability of college textbooks
compared to high
school textbooks, which are manufactured to NASTA
specifications.
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6. SALES REPORTS AND GOALS. Distributor shall semi-annually
report to
Publisher its estimated needs by title for Works in the
forthcoming 6-month
period. These reports shall be given to Publisher on October 1
and April 1 of
each year during the term. By November 1 of each year during the
term,
Distributor shall submit its proposed sales targets for the
upcoming fiscal year
to Publisher (the "Original Forecast"). By May 15 of each year
during the term,
Distributor and Publisher shall do a re-forecast to determine
the overall sales
target for Distributor for the upcoming fiscal year as well as
the sales target
for Distributor for specific titles, includ
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