Agreement

 

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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, including th