Exhibit 10.18
PRINTING SERVICES AGREEMENT
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THIS PRINTING SERVICES AGREEMENT, made as of November 29, 1999 (this
"Agreement"), between: ARTECH CAPITAL CORPORATION, a Canadian corporation
("Printer"), and GOLDEN BOOKS PUBLISHING COMPANY, INC., a Delaware corporation
("Customer").
WHEREAS, Printer has signed an Asset Purchase Agreement with Customer (the
"Asset Purchase Agreement") regarding that certain manufacturing facility (the
"Sturtevant Facility") currently leased by Customer located at 00000 Xxxxxxx
Xxxxx, Xxxxxxxxxx, Xxxxxxxxx, pursuant to which Customer is seeking to transfer
and sell to Printer its right, title and interest in certain printing equipment
located at the Sturtevant Facility and the lease pertaining to such facility,
and Printer is seeking to assume such lease and purchase such equipment
(collectively, the "Transaction"); and
WHEREAS Customer is a preferred client of Printer and enjoys the privileges of
such status;
WHEREAS, the Customer intends to purchase from Printer, and Printer has the
capacity and intends to manufacture assorted printed books in the formats set
forth on Schedule A ("Product") hereto for Customer, subject to the terms hereof
and subject to the closing of the Transaction;
WHEREAS, the Customer intends to purchase from Printer, and Printer intends on a
right of first refusal basis to seek to manufacture the currently outsourced
products set forth in Schedules D-1 and D-2 hereto which it, its affiliates,
associated companies (in which it holds a material interest) or the Xxxxxx Group
(in which it holds indebtedness) (all of which, in reference to Outsourced
Product or Additional Product (as hereinafter defined) may simply be referred to
as "Printer") have the internal capability of manufacturing (as hereinafter
defined) for Customer, pursuant to the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the covenants and mutual agreement
hereinafter set forth, the parties hereto agree as follows:
1. ARTICLE I: GENERAL TERMS AND PROVISIONS
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1.1 GENERAL.
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1.1.1 PRODUCT REQUIREMENTS. Upon the terms and subject to the
conditions of this Agreement, Printer shall produce and supply
Customer with, and Customer shall purchase from Printer, (i) no
less than * of Customer's total requirements for Product for the
first year of the term of this Agreement,
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(ii) no less than * of Customer's requirements for Product for
the second year of the term of this Agreement, and (iii) no less
than * of Customer's requirements for Product for each of the
third, fourth and fifth years of this Agreement, in all cases
based on aggregate ordered annual unit volume across all formats
of Product for the current year of the Agreement. Notwithstanding
the previous sentence, Printer agrees that it will produce and
supply Customer with all of Customer's requirements for Products,
regardless of whether such requirements exceed percentage
requirements specified in 1.1.1(ii) and 1.1.1(iii) above,
provided however, that Customer, in requesting work to be done,
schedules work on a basis reasonably consistent with past
practice or its forecast(s) as provided pursuant to this
Agreement, bearing in mind the needs of the Customer's business
and its customers, on the one hand, and the capacity of the
Printer to supply product and the availability and capacity of
required subcontractors, on the other hand. Product shall be
manufactured in accordance with the Production Guidelines and
Production Schedule (as defined in Section 1.4(A) hereof), and
Customer shall pay Printer a price calculated in accordance with
Section 1.5 hereof for all Product and Outsourced Product
delivered in accordance with Section 1.3 hereof. Nothing
contained in this Agreement shall obligate Customer to purchase
any quantity of Product or Outsourced Product until Customer
issues specific purchase orders for such Product or Outsourced
Product in accordance with the terms of the Agreement.
Notwithstanding the foregoing sentence, Printer shall purchase
supplies only based on Customer's orders or instructions or based
on Customer's historical production volume levels for Schedules A
and D. Historical production volume levels shall mean, for the
calendar year 2000, Schedules A and D for calendar year 1999, and
for subsequent years, Schedules A and D during the previous
calendar year. In all cases, historical production levels shall
be adjusted for seasonality for the previous two calendar years.
Printer agrees to put in place stocking programs with its
suppliers generally equivalent to the stocking programs operated
by Customer prior to the Transaction for the basic types of paper
and other consumables required to produce the Products per the
specifications in Schedules B and D. It is understood that the
lead times listed in Schedules B and D are predicated upon such
programs and normal stocking levels of paper and consumables
based on Customer's historical production volume levels as
described above. Customer may from time to time instruct Printer
to purchase additional paper and other consumables to meet
unusual demand. Printer may invoice Customer for the cost of any
such additional supplies if such supplies are not used within 90
days of their purchase. Subsequent to any such invoice, Printer
shall, upon Customer's instructions on its purchase orders, use
such supplies for specific future orders, with the cost of the
supplies utilized applied against the cost of such future orders.
Upon payment of Printer's invoice for such supplies, title
thereto shall pass to Customer. Printer shall store such supplies
for Customer on terms consistent with terms for Customer supplied
materials in accordance with
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Paragraph 2.3. Notwithstanding anything to the contrary in this
paragraph, if Printer is not billed by its paper supplier for
paper ordered by Printer on Customer's instructions, Printer
shall not xxxx Customer for such paper.
However, in the event that either (1) unusual items are required
(e.g., customized paint boxes) or (2) the volume of Customer's
orders are in excess of Customer's historical production volume
levels for that time of year; and Customer has not with
sufficient notice instructed Printer to purchase such unusual
items or additional paper and supplies in advance, then the lead
times in Schedule B or D shall automatically be extended to allow
for the purchase of such unusual items or additional paper and
supplies. In such event, Printer will use commercially reasonable
best efforts to obtain the supplies required for such order and
will inform Customer within 48 hours of its ability to meet the
lead times in Schedule B or D. Should Printer inform Customer
that under such circumstances Printer can not meet the lead
times, then: (a) Customer shall have the right to place that
portion of the order which can not be met with another printer,
(b) Printer's failure to produce such product shall not be
included in the calculation of a possible default by Printer
pursuant to Section 8.1(c), and (c) Customer's failure to
purchase such product from Printer shall not be deemed a failure
to provide the minimum percentage requirements set forth in
Section 1.1.1.
1.1.2 OUTSOURCED PRODUCT. Schedule D lists all of Customer's currently
outsourced product (excluding novelty items) ("Outsourced
Product"). Schedule D-1 reflects those formats of Outsourced
Product which Printer currently has the internal capability to
manufacture. For purposes of this Agreement, the words "internal
capability to manufacture" mean that Printer or any of its
affiliated companies is able to perform in-house a sufficient
percentage of the entire manufacturing process for a particular
format such that it can reasonably guarantee meeting the
standards of quality and scheduling for such format. Schedule D-2
reflects those formats of Outsourced Product which Printer does
not currently have internal capability to manufacture, but as to
which Printer intends to install or otherwise obtain the internal
capability to manufacture within twenty four months of the
Effective Date. Schedule D-3 reflects those formats of Outsourced
Product which Printer or its affiliates do not have or currently
intend to have the internal capability to manufacture during the
first two years of this Agreement. Printer agrees to manufacture
all Outsourced Product formats set forth in Schedule D-1 hereto
at the pricing set forth in Schedule D-1 (subject to quantity
variation and variations in paper and other prices as set forth
in Section 1.5), provided however, that Customer, in requesting
work to be done, schedules work on a basis reasonably consistent
with past practice or its forecast(s) as provided pursuant to
this Agreement, bearing in mind the needs of the Customer's
business and its customers, on the one hand, and the capacity of
the Printer to supply product and the availability and capacity
of required subcontractors, on the other hand. *
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1.1.3 ADDITIONAL PRODUCT. *
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1.2 ANNUAL MINIMUM VOLUME REQUIREMENT. The parties acknowledge that the initial
aggregate annual minimum volume requirement for orders for items on
Schedule A (including prepress for such Schedule A items as described in
Schedule F, which Customer hereby commits to utilize Printer to perform) is
* during the first year, and adjusted for subsequent years as illustrated
in the next paragraph.
Customer's obligations pursuant to Sections 1.1 and 1.2 are subject to the
termination provisions of Section 8.1 as well as Customer's rights pursuant
to Section 1.5(b) to remove from the scope of this Agreement formats with
respect to which Printer is unable to provide competitive pricing.
Shortfalls resulting from Customer exercising its rights pursuant to
Section 1.5(b) will not constitute a breach of Sections 1.1 or 1.2 by
Customer, and such unit volume will not be carried over to the subsequent
year's requirements, as set forth in Section 1.5(b). The minimum volume
requirement for determining any potential shortfall in Customer's orders
for Product on Schedule A to Printer shall be * in year one of this
Agreement, * in year two, * in year three, * in year four, and * in year
five. The minimum volume requirement for determining any premium or excess
amount in Customer's orders for Product on Schedule A shall be * in year
one of the Agreement, * in year two, * in year three, * in year four, and *
in year five.
1.2.1 TERM. This Agreement shall begin on the date set forth above (the
"Effective Date") and expire on December 31, 2004, subject to
earlier termination pursuant to the terms hereof. In the event
Customer desires to renew the term of this Agreement, Printer and
Customer agree to commence good-faith negotiations to renew this
Agreement, and to conclude such an agreement by or before the end
of the third year of the initial term hereof. * It is understood
and agreed that any and all references to the first year of this
Agreement actually include the period of time from the Effective
Date through December 31, 2000, even though such period of time
comprises more than one year.
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1.3 DELIVERY. Finished product shall be delivered FOB the Printer's shipping
dock at the Sturtevant Facility. Shipment must be made to meet the required
lead times in accordance with Schedule B or Schedule D hereto (if
applicable) or as mutually agreed upon by Customer and Printer at time of
purchase order. Notwithstanding the foregoing, Printer shall be
automatically entitled to a 24-hour extension from any required delivery
date, except in the case of rush orders. Upon the expiration of the 24-hour
extension, where applicable, a penalty discount equal to 0.5% per day for
the first two days late, and 1% per day late after two days and up to 5
days late shall be applied to each late order. Subject to the foregoing,
Customer, without waiving any other legal rights, reserves the right to
cancel without charge or to postpone deliveries of any product produced
pursuant to the Agreement that is not received within seven (7) days of the
required delivery date for non rush orders and within five (5) days of the
required delivery date for rush orders, or, for either rush or non rush
orders, to take an additional discount of 1% for each additional week of
late delivery. In the event of such cancellation or postponement, such
product unit volume shall be deemed a credit against Customer's minimum
Product requirements as provided in Sections 1.1 and 1.2 (calculated in
U.S. dollars based on the applicable pricing schedule). Unless otherwise
specified by Customer, a partial delivery of not less than 50% of an order
will be considered delivered on time as long as 90% of the order shall be
delivered within the next 24 hour period from the scheduled and agreed to
delivery date and the remaining 10% is delivered within the subsequent 24
hour period. Except as expressly contemplated herein, time is of the
essence.
1.4 SPECIFICATIONS; PRODUCTION GUIDELINES AND PRODUCTION SCHEDULE. SCHEDULING.
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(a) The current standard specifications ("Production Guidelines") and
lead times ("Production Schedule") for the manufacture of (i)
Product are set forth in Schedule B and (ii) Outsourced Product
are set forth in Schedule D. Customer reserves the right to alter
product specifications at any time during the term of this
Agreement. "Lead time" is defined as the time from the later of:
(a) the date of the Customer order (in the cases of re-prints),
(b) and/or the date of acceptance of the digital file or final
film proofs (on new or revised titles orders), (c) the date that
any customer-supplied materials have been delivered to Printer,
or (d) the date that final author's alterations have been
delivered to Printer, to the date that the product is at
dockside.
(b) Additional packaging and shipping instructions will be indicated
on individual purchase orders.
(c) Orders of product hereunder shall be by purchase order only.
Printer shall apply its best efforts to provide Customer, at the
same price as for standard lead time deliveries, up to 20% of its
product print runs during each year of the term of this Agreement
on an expedited basis of no more than 50% of the standard lead
time days for that format as defined in Schedules B and D. The
Customer understands that the request for "Rush" orders may
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require the extension of delivery time on non-rush orders.
Extensions may only be requested by the Printer in writing, and
such requests for extensions shall be deemed to be accepted only
upon receipt of Customer's permission in writing.
(d) In the event Customer cancels an order within 36 hours of press
time, Printer may invoice Customer for all out of pocket costs
incurred by Printer associated with this order (which shall be
credited against a re-order if applicable) and the cost of
unutilized Press and Bindery time. Printer shall take all
reasonable efforts to obtain alternative uses for such Press and
Bindery time.
(e) An order which is partially completed and cancelled or put on
hold at the request of the Customer may be invoiced within 30
days for work actually performed by Printer with respect to such
order.
1.5 PRICE; PRICE ADJUSTMENTS.
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(a) MANUFACTURING PRICES.
Manufacturing prices for Product are listed in Schedule A hereto.
Manufacturing prices for Outsourced Product are listed in
Schedule D hereto. Unit prices for different quantities will be
subject to change using the make ready and run on costs listed in
Schedules A and D hereto. Manufacturing prices for any format
similar to those described in Schedules A or D hereto (including
without limitation formats listed in Schedules A or D to which
minor alterations and adjustments have been made) ("Similar
Products") and changes to the gang quantity for formats listed in
Schedules A and D shall be negotiated by the parties in good
faith, based upon the pricing contained in such Schedules for the
format most similar to the new format. Such Similar Products
shall then be included in Schedule A or D, as the case may be.
Manufacturing pricing includes paper and all materials, plates
(conventional or CTP), make-readies and run cost for printing and
binding, and, with regard to Product, packaging as described in
Schedule A. Customer shall have the right to require Printer to
package any purchase order quantity in any combination of
minipack, brick pile and cartoned at no additional charge
(providing that all materials used by the printer are of standard
xxxxx xxxxx paper and xxxxx corrugated single wall boxes with
printed logo) Double walled boxes and/or specialty paper wrap
shall be charged at the cost of material plus set-up or die
charges. If Customer requests Printer to provide packaging
services materially different from those provided for in
Schedules A and D, and such services need to be performed
manually, a charge of US$18.50 per man hour will be applied to
each such order. The following pricing will apply, subject to the
provisions of subsection 1.5(b).
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1.5.1 PREPARATION:
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o Prepress will be charged as set forth on Schedule F.
o Final plate-ready film output will be charged at * per
color per page based on customer supplied application files.
o Film mounting will be charged at * per color per page.
o Computer to Plate file processing (preflight, ripping and
trapping) will be charged at * per color per page.
1.5.2 FULFILLMENT PRICES:
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STICKERING:
Product stickering will be provided on a job by job basis as requested on
the individual purchase order. Customer will be charged * per unit
inclusive of materials for in-line stickering and * per unit for any other
stickering.
1.5.3 ASSORTMENT PACKING & SHRINK-WRAPPING:
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Pricing for any assortment packaging or shrink-wrapping requirements will
be agreed upon at time of purchase order issuance.
1.5.4 CUSTOMER PICKUP:
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Product and Outsourced Product will be packed and staged for pickup by
Customer's client per Customer's shipping instructions at no additional
charge.
(b) *
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(c) *
(d) *
(e) IMPROVEMENTS. If, during the term of this Agreement, improvements
are made in the method of producing any of the work herein
included by the invention or acquisition of improved or
supplemental equipment, by the discovery or development of new or
improved process, or of new materials, and Printer and Customer
mutually agree that the use of such improved or supplemental
equipment, processes, or materials would be advantageous, then
the parties shall mutually agree on the nature and extent of the
incorporation of said developments into this Agreement. Printer
shall not unreasonably withhold such technological changes as
long as such changes are economically advantageous to both
parties and Product prices outlined in Schedule A and Outsourced
Product prices outlined in Schedule D hereto are appropriately
adjusted.
(f) LEVEL LOADING DISCOUNTS. Schedule C shall set forth the schedule
of discounts which Printer shall grant Customer for the
manufacture of incremental volume of Product during non-peak
periods. During the term of the Agreement, Printer shall provide
Customer on or before November 1st of each year a schedule of
non-peak periods throughout the coming calendar year during which
the non-peak pricing discounts set forth at that time shall
apply. Customer shall have right of first refusal for up to 25%
of Printer's
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maximum printing and production capacity during this period and
shall receive such discounts with respect to any order for
Product placed with Printer by Customer for delivery during a
non-peak period.
(g) *
(h) *
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1.6 PAYMENT. For the first two (2) years of the term of this Agreement, payment
shall be on a net 30 days basis from the 15th and 30th of the previous
month. For the balance of the term the payment terms shall be 2%/10 days,
net 30 days calculated from the date of the consolidated statement of
account. Printer shall invoice on a regular basis and Customer shall pay
all invoices issued from the 1st to the 15th of each month no later than
the 15th of the subsequent month and shall pay all invoices issued from the
15th to the 31st of each month no later than the last day of the subsequent
month. Printer shall send Customer consolidated statements of account
identifying invoices outstanding on the 15th and 30th of each month.
Printer shall submit all invoices and consolidated statements of account
to:
Golden Books Publishing Company, Inc.
00000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
1.7 QUANTITY VARIATIONS. Billing for all quantities must agree with the total
quantity ordered for such title, provided, however, that billing for
overruns and underruns is permitted but will be limited to +/- 5% for total
quantity orders up to 50,000 and +/- 2% for total quantity orders in excess
of 50,000. If a production difficulty causes an underun of up to a maximum
of 5% in the case of orders for quantities up to 50,000, and 2% in the case
of orders for quantities over 50,000, the Customer will permit the Printer
to add the missing volume to a future re-print, and will not require the
Printer to reprint the missing volume until that time.
1.8 PROPRIETARY DESIGN. Printer agrees that it will not (at the Sturtevant
Facility or elsewhere) produce for anyone besides Customer books similar
to, or incorporating any of the distinguishing characteristics of,
Customer's Little Golden Book(TM), First Little Golden Book(TM), or Little
Little Golden Book(TM). Such distinguishing characteristics shall include,
but not be limited to, the side stitched binding style and the foil spine
employed in the production of such books, as well as all elements of
Customer's trade dress incorporated into such books. Printer may request
that Customer approve Printer's utilization of such formats for work to be
done for Books for Adults and may utilize such formats only upon receiving
Customer's written permission to do so, which permission shall be granted
in Customer's sole discretion.
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1.9 ACQUISITION OF CUSTOMER OR ACQUISITION BY CUSTOMER In the event Customer is
acquired during the term of this Agreement, the percentage volume
requirements set forth in Section 1.1.1 hereof shall not apply to any
pre-existing printing requirements of the acquirer. In the event that
during the term of this Agreement, the Customer acquires a company with
similar formats to those outlined in this Agreement then the percentage
volume requirement provisions of this Agreement shall not apply to the
incremental volume brought about by the acquisition but shall be subject to
separate negotiations.
1.10 INVOICES. Invoices submitted to Customer by Printer shall contain the
information contained in Schedule G.
1.11 FORECASTS. Customer shall use commercially reasonable efforts to provide
quarterly forecasts to Printer approximately 30 days before the start of
each quarter, and monthly forecasts to Printer approximately 30 days before
the start of the months of May, June, July, August, September, October and
November. Such proceeds shall not be deemed "orders" under Section 1.1.1
and Customer shall have no liability whatsoever to Printer with respect to
such forecasts.
2. ARTICLE II: MATERIALS
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2.1 PRINTER SUPPLIED MATERIALS. Printer shall, at Customer's discretion, supply
all materials and supplies necessary to perform this Agreement, at or
exceeding quality standards at inception. Paper to be supplied by Printer
shall meet the minimum specifications outlined in Schedule E hereto.
Printer shall supply all text stock and cover stock in accordance with the
requirements as outlined in Schedules A, B, D and E hereto.
2.2 CUSTOMER SUPPLIED MATERIALS.
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(a) PAPER, SEMI-FINISHED MATERIALS AND COMPONENTS. Customer shall have
the right to supply its own text stock, cover stock, semi-finished
materials and/or components. As Printer receives stock on Customer's
behalf, Printer shall forward the receiving slips to Customer. If Printer
discovers damage to paper, the damaged paper will be noted and identified
and stored separately. Printer shall contact the merchant/mill
representative and Customer so that the merchant/mill representative can
initiate any claims for mill related or paper transportation problems.
Printer shall account for the paper received from the merchant/mill, and
shall submit to Customer a monthly report of paper received, paper received
damaged, paper consumed, paper on hand and paper requirements, with such
paper requirements being inclusive of the manufacturing waste allowance for
press work and binding. Any semi-finished materials or components supplied
by Customer will be supplied in such quantities so as to include waste
allowances. Waste allowances for paper, semi-finished materials or
components will be based on the waste allowances which would have been
provided by Printer had Printer been supplying such materials,
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provided further, that such waste allowances will be consistent with
industry standards. Printer will report actual and allowed component
consumption for Customer supplied components on each invoice. Printer shall
report all paper or stock received in damaged condition to Customer within
two (2) business days from discovery of the damage. Printer will report
actual and allowed paper consumption for Customer supplied paper on each
invoice. All over consumption of Customer supplied paper will be credited
to Customer directly on invoice at the price determined in Section 1.5. The
value (measured at the cost determined in Section 1.5 if possible,
otherwise at standard cost) of any Customer-supplied materials will be
included for purposes of measuring Customer's compliance with the minimum
volume requirement, as calculated in Section 1.2, even though Printer may
not actually xxxx Customer for the value of the Customer supplied items.
(b) OTHER MATERIALS. Customer shall supply all film or digital files
pursuant to Printer's prior specifications, and if Customer so decides,
Customer shall have the right to request Printer to produce film at an
additional cost as outlined in Subsection 1.4(a).
2.3 DELIVERY OF MATERIALS. Customer will notify Printer of the scheduled
delivery dates and specifications for any materials it is supplying in
accordance with Printer's published manufacturing schedule. In the event of
any delay of the scheduled delivery date in excess of 5 days, Printer may
invoice Customer for all work done to date, and such work shall be subject
to a storage fee of * per skid per week.
3. ARTICLE III: REPRESENTATIONS AND WARRANTIES OF PRINTER
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Printer represents and warrants to Customer as follows:
3.1 ORGANIZATION; AUTHORITY. Printer is a corporation duly organized and
validly existing under the laws of Canada and has the full power and
authority to own and operate its properties and assets and to carry on its
business as currently conducted. This Agreement has been duly authorized,
executed and delivered by Printer and constitutes a valid and legally
binding obligation of Printer enforceable in accordance with its terms
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability affecting creditors'
rights and general equity principles.
3.2 NON-CONTRAVENTION. The execution, delivery and performance of this
Agreement will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under any statute, rule, regulation,
or order of any governmental agency or body having jurisdiction over
Printer or its properties, or any agreement or instrument to which Printer
is a party or by which it is bound, or the articles of incorporation or
by-laws of Printer.
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4. ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF CUSTOMER
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Customer represents and warrants to Printer as follows:
4.1 ORGANIZATION; AUTHORITY. Customer is a corporation duly organized and
validly existing under the laws of the State of Delaware and has full power
and authority to own and operate its properties and assets and to carry on
its business as currently conducted. This Agreement has been duly
authorized, executed and delivered by Customer and constitutes a valid and
legally binding obligation of Customer enforceable in accordance with its
terms subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
affecting creditors' rights and general equity principles.
4.2 NON-CONTRAVENTION. The execution, delivery and performance of this
Agreement will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under any statute, rule, regulation,
or order of any governmental agency or body having jurisdiction over
Customer or its properties, or any agreement or instrument to which
Customer is a party or by which it is bound, or the article of
incorporation or by-laws of Customer.
5. ARTICLE V: RISK OF LOSS/TITLE/INSURANCE
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5.1 TITLE. All property furnished to Printer by Customer, including all
intellectual property rights in all electronic files, shall remain the sole
property of Customer. Printer shall use reasonable diligence to protect all
Customer property in its possession. Printer shall not cause any Customer
property in its possession to become subject to any liens or encumbrances.
During the term of this Agreement and following the expiration of this
Agreement, and upon Customer's instructions, Printer shall return or
transfer Customer property to Customer in accordance with such
instructions.
Title to film negatives, positives, electronic images and any other
material paid for by Customer and furnished by Printer shall pass to
Customer upon completion of manufacture of such item. Title to product
shall pass from Printer to Customer at the time risk of loss for such
product passes from Printer to Customer.
5.2 RISK OF LOSS. Risk of loss of Customer property in Printer's possession
shall be borne by Printer and valued at actual current cost to reproduce
such Customer property. Work in the library or other space subleased by
Customer from Printer shall not be deemed to be in Printer's possession.
Risk of loss of product shall pass from Printer to Customer upon delivery
of such product to Customer in accordance with Section 1.3 hereof.
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5.3 INSURANCE. Printer shall obtain and maintain at its costs, throughout the
term of this Agreement and for a period of not less than twelve (12) months
after the termination of this Agreement, a commercial general and
professional liability insurance policy, including product liability and
contractual liability, providing protection for Customer and the other
entities indemnified by Printer under the terms of Article VII hereof
against damages, liabilities, costs and expenses, including reasonable fees
of attorneys, arising out of any claims, demands or actions made by or on
behalf of any person or persons, firm or corporation and arising out of,
related to, or connected with product and (i) the performance of Printer
under the terms of this Agreement, (ii) the failure of Printer to perform
properly under the terms of this Agreement, or (iii) personal injury to or
death of any person or persons or damage to property. Such insurance shall
be written on an "occurrence" and not on a "claims made" basis, and such
policy shall have a combined single limit amount of not less than
US$5,000,000. As proof of such insurance, Printer shall submit to Customer,
as soon as possible after this Agreement is executed by the last party to
sign, a certificate of insurance naming Customer and the other entities
indemnified under the terms of Article VII hereof as additional insureds
thereunder and providing for not less than thirty (30) days' written notice
to Customer in the event of termination, cancellation, or material
modification of such insurance.
6. ARTICLE VI: GUARANTEE OF QUALITY/COMPLIANCE WITH STANDARDS
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6.1 GUARANTEE OF QUALITY. Printer warrants the printing, binding and
manufacturing of product hereunder to be done in the best and most
workmanlike manner and to conform to the highest standards applicable in
the industry. The Customer warrants that all computer files generated and
provided to Printer shall be free of known viruses and that computer files
provided to the Printer shall be prepared in a professional manner so as
not to impede production flow and quality. The Printer warrants that all
files shall be checked in advance for known viruses and checked to
determine that all components are available to the Printer on the supplied
disk. If components are required by the Printer from the Customer, the
Printer shall always offer the Customer the choice of repairing or adding
missing components, before any added charges are required. In addition,
Printer warrants that all product shall be (a) merchantable and fit for the
intended purpose of Customer, and (b) free from defects in workmanship and
material. The warranties of these sections shall be in addition to any
other warranties provided by law or given by Printer to Customer. If
Printer's performance does not conform to industry standards, then Customer
shall at its option pursue only one of the following rights:
(a) As promptly as practicable, but no later than ten (10) business
days from the date Customer reports such defect to Printer,
Printer shall repair or replace defective product at Printer's
cost, unless the defective product has arisen from a problem at
the Printer's subcontractor and the subcontractor cannot
alleviate the problem within the 10 business day time period (in
which case Customer shall choose option (b) or (c)), or
15
(b) Printer shall have another party manufacture or repair such
product for Customer, and either:
(i) Printer shall credit Customer for the cost of such
third-party manufacture or repair of product if Customer has
already paid Printer for the defective product, or,
(ii) Pay to Customer the difference for the cost Printer would
have charged to Customer to manufacture the product and the
cost to Customer to have the third-party manufacturer
produce the product, if Customer has not already paid
Printer for the defective product; or
(c) Printer shall credit Customer for some or all of the cost of the
product, in relation to the damage suffered to the product, with
such credit to be applied against the costs of the manufacture of
this or future product.
The foregoing rights shall be in addition to such other rights and
remedies Customer may have at law or in equity.
6.2 COMPLIANCE WITH LAWS, CUSTOMER STANDARDS. Printer covenants that it will
comply with all applicable laws and regulations in performing this
Agreement, including but not limited to, those pertaining to the
manufacture, pricing, sale and distribution of product. Printer also
covenants that it will comply with all of Customer's licensor and Customer
quality standards as indicated to Printer beforehand, including those
relating to the use of child or prison labor and upon the request of
Customer, Printer will supply the necessary documentation to substantiate
such compliance.
7. ARTICLE VII: INDEMNIFICATION
----------------------------
Printer agrees to defend or settle, indemnify and hold Customer, its directors,
officers, employees and agents harmless from and against any and all third party
demands, liabilities, obligations, costs and expenses (including reasonable fees
of attorneys) incurred by Customer, directly or indirectly, as a result of (i)
any breach by Printer of any of its agreements, representations, or warranties
made under the terms of this Agreement or under the terms of any purchase order
of Customer, (ii) any personal injury or property damage caused by or the
responsibility of Printer, or (iii) any material unauthorized deletion or change
made by Printer to materials supplied by Customer. Customer hereby agrees to
notify Printer promptly of any such demand or claim.
16
8. ARTICLE VIII: TERMINATION
-------------------------
8.1 TERMINATION. This Agreement may be terminated:
(a) At any time by the mutual written agreement of both Printer and
Customer;
(b) *
(c) *
* Confidential treatment requested
17
(d) By Customer, upon a continuing default by Printer for failure to
furnish proof of insurance within thirty (30) days of demand.
In the event that this Agreement is terminated by Customer pursuant to
Section 8.1 (a), (c) or (d) (any such termination being herein referred to
as a termination for "Cause"), then all amounts of Preferred Stock (as
defined in the Agreement) and/or subordinated debt into which such
Preferred Stock is or was convertible will remain due and unaffected by
such termination.
In the event that this Agreement is terminated by Printer pursuant to
Section 8.1(b), or if this Agreement is terminated by Customer other than
for Cause, in either case, within the first three years of the term hereof,
the ownership of the funds held in escrow under the terms of the Asset
Purchase Agreement in favor of the Customer, shall transfer to the Printer,
and the subordinated note or the preferred shares held by Customer, as the
case may be, shall be deemed to be redeemed (or in the case of the
subordinated note, canceled) to the extent of the amount of gross profit
the Printer anticipated earning under this Agreement for the balance of the
Term, which for purposes hereof shall be deemed to be 20% of Printer's
gross revenues, based upon minimum volumes under Section 1.2 (the "Agreed
Upon Damages"). In the event that this Agreement is terminated by Printer
pursuant to Section 8.1(b), or if this Agreement is terminated by Customer
other than for Cause, in either case, after the first three years of the
term hereof, the subordinated notes or the preferred shares held by
Customer, as the case may be, shall be deemed to be redeemed to the extent
of the Agreed Upon Damages. In such case, the Preferred Stock shall no
longer be puttable, all redemption of Preferred Stock shall be suspended,
all payments of subordinated debt into which such Preferred Stock is or was
convertible shall be suspended and the Printer shall be relieved of
completing its obligations under the Techno Program and under the
Digitalization Program. In the event the amount of Agreed Upon Damages is
greater than the aggregate Liquidation Value of the Preferred Stock (as
defined in the Asset Purchase Agreement) and/or the subordinated debt into
which such Preferred Stock is or was convertible, such excess amount shall
be due and payable in cash at such time. Printer acknowledges and agrees
that the remedies provided for in this Section 8.1 are the exclusive
remedies to which Printer would be entitled in the event of a termination
of this Agreement by Printer pursuant to Section 8.1(b) or by Customer
other than for Cause. Without limiting the generality of the preceding
sentence, Printer shall not be entitled hereunder or otherwise to any
consequential, incidental, punitive or other similar damages; provided,
however, that nothing in this Printing Services Agreement shall affect in
any manner whatsoever, Buyer's right to obtain
18
any such damages in respect of any cause of action Buyer may have against
Customer in respect of Customer's actions or duties outside the scope of
this Printing Services Agreement, the Agreement or any other agreement or
transaction referred to therein.
Any termination of this Agreement pursuant to this Section 8.1 shall be in
writing and a copy thereof shall be furnished to GECC or any other senior
lender of Printer designated by it; provided, however, that the failure to
furnish such copy shall not affect in any respect the validity or
effectiveness of such termination.
8.2 RIGHT TO PRINT ELSEWHERE. If, two (2) times in any six-month period,
Printer is unable to deliver orders of the same product to Customer on a
timely basis in accordance with this Agreement and the production
guidelines set forth in Schedule B or D hereto, and in each instance
Customer has met its obligation for delivery of materials required for
manufacturing in accordance with such production guidelines, Customer shall
have the right to have all product of such format printed elsewhere if
Customer so chooses. In such event, the value of any such Product shall be
deducted from the minimum volume amount as calculated in Section 1.2.
9. ARTICLE IX: MISCELLANEOUS
-------------------------
9.1 CONSEQUENCES OF TERMINATION. In the event of termination, all Customer
property, materials and supplies on hand or in process of manufacture shall
be immediately returned or delivered to Customer (or to another party that
Customer designates to receive such). All account balances between the
parties shall be settled. Subject to Section 9.8 hereof, either party shall
have the right to pursue its remedies under law and equity.
9.2 PARTIES IN INTEREST; ASSIGNMENT. Subject to the terms of this Agreement,
this Agreement shall be binding upon and inure to the benefit of the
respective parties and their successors and assigns; provided, that this
Agreement may not be assigned by either party without the written consent
of the other, which consent shall not be unreasonably withheld or delayed.
Either party shall have the right to assign the Agreement, without the
consent of the other, to a parent company, subsidiary, division or
affiliate or to an entity which purchases substantially all of the assets
of such party, or its assignee, or in connection with an acquisition by or
merger with another company, provided, however, that regardless of any such
assignment, Printer agrees that the work performed under this contract with
regard to Product will continue to be substantially performed at the
Xxxxxxxxxx Facility unless moved to another plant with the prior written
approval of the Customer, which approval shall not be unreasonably withheld
or delayed. Notwithstanding that work will be substantially performed at
the Surtevant Facility, Printer shall immediately notify Customer in
writing when any work with regard to product is performed under this
Agreement at a facility other than the Xxxxxxxxxx Facility.
19
9.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement represents the entire
understanding between Printer and Customer with respect to the subject
matter hereof and supersedes all prior agreements and understandings oral
or written with respect thereto. This Agreement may be modified or amended
only by a written agreement signed by both parties.
9.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
9.5 HEADINGS. The paragraph headings in this Agreement are for convenience only
and shall not affect the construction of this Agreement.
9.6 NO JOINT VENTURE. Nothing in this Agreement shall be construed as creating
an agency, partnership, joint venture or any other form of legal
association between Printer and Customer.
9.7 NOTICE. All notices hereunder shall be deemed to have been given if in
writing and if personally delivered or if sent by registered or certified
mail (postage prepaid), or if sent by telecopier (provided that receipt of
telecopy is promptly confirmed by telephone) to the person at the address
set forth below, or to such other person or address as may be designated in
writing from time to time:
If to Printer:
Artech Capital Corporation
Xxxxxxxx, Xxxxxx
Xxxxxx ______________
Attn: Xxxxx Xxxxxx
Telecopier:
with a copy to:
Xxxxxxx Xxxxxxxxxx Xxxxxxx, senc
0000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
Xxxxxx X0X 0X0
Attn: Me. Xxxx X. Xxxxxxxxxx
Telecopier: (000) 000-0000
20
With a copy to:
General Electric Capital Corporation
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Artech Printing Inc. Account Manager
If to Customer:
Golden Books Publishing Company, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attn: Xxxxxx Xxxxxxx
Telecopier: 212.547.6771
With copies to:
Golden Books Family Entertainment, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attn: Xxxx Xxxxxxx
Attn: Xxxxxx Xxxxxxx
Telecopier: 212.547.6771
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telecopier: 212.969.2900
Notice shall be deemed to have been given as of the date personally
delivered or sent by telecopy (with telephonic confirmation) or as of the
fifth (5th) business day after being sent by registered or certified mail.
9.8 ARBITRATION. All disputes arising out of or in connection with this
Agreement or any transaction hereunder shall be finally settled under the
Commercial Arbitration Rules of the American Arbitration Association then
in effect by an arbitrator chosen from such association's blind pool of
arbitrators with significant knowledge and experience in the field of book
publishing who shall be appointed in accordance with such Rules. The
arbitrator's award shall be final and binding. Judgment upon the
21
award rendered may be entered in any court having jurisdiction over the
party against which the award is rendered. The parties expressly consent to
the jurisdiction of the federal and state courts situated in the State of
New York for the purpose of enforcing any arbitration award rendered
pursuant to this paragraph. The arbitration shall take place in New York
City or such other place as the parties may agree. The arbitration shall
include (i) a provision that the prevailing party in such arbitration shall
recover its costs of the arbitration and reasonable attorneys fees from the
other party or parties, and (ii) the amount of such fees and costs.
9.9 SEVERABILITY. The enforceability, invalidity or illegality of any provision
of this Agreement shall not affect or impair the enforceability, validity
or legality of any other provision; provided, that should any provision of
this Agreement be held to be invalid, illegal or unenforceable in any
respect, the parties will use all reasonable efforts to substitute a valid,
legal and enforceable provision which, insofar as practicable, implements
the purpose and intent of the invalid, illegal and unenforceable provision.
To the extent permitted by applicable law, each party waives any provision
of law, which renders any provision of this Agreement invalid, illegal or
unenforceable in any respect.
9.10 WAIVER. Any provision of or default under this Agreement may be waived if
it is in written form signed by the party against whom the waiver is
effective. No waiver by a party of any provision of or default under this
Agreement shall be deemed to be a waiver of any other provision of or
default under this Agreement, nor shall any delay or omission of a party to
exercise any right hereunder.
9.11 CONFIDENTIALITY. Each of the parties hereto covenants and agrees that the
terms, provisions and conditions of this Agreement are confidential,
including, but not limited to Customer product, materials, ideas,
information and concepts, and Printer's pricing formulations and
manufacturing process and techniques, which shall be kept in strictest
confidence by the parties hereto and their respective employees,
subcontractors, agents, sub-agents and distributors, and shall not be
disclosed to any person except in conformity with an order of a court of
competent jurisdiction or as may otherwise be required by law.
9.12 INTERVENTION. Golden Books Family Entertainment, Inc. intervenes hereto to
take knowledge of the terms and conditions set forth herein and to declare
itself bound to the Printer by all of the obligations and duties of the
Customer hereunder, such that all rights and recourses of the Printer
hereunder against the Customer may be exercised against Golden Books Family
Entertainment, Inc.
[END OF TEXT]
22
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first
stated above.
ARTECH CAPITAL CORPORATION GOLDEN BOOKS PUBLISHING COMPANY, INC.
By: By:
/s/ /s/
------------------------------- -------------------------------
XXXXX XXXXXX, Name:
President and Chief Executive Officer Title:
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
By: /s/
-------------------------------
Name:
Title:
[SIGNATURE PAGE TO PRINTING SERVICES AGREEMENT]
23
Golden Books: Schedule A
[Confidential Treatment Requested]
24
Golden Books: Schedule B
[Confidential Treatment Requested]
25
Golden Books: Schedule C
[Confidential Treatment Requested]
26
Golden Books: Schedule D
[Confidential Treatment Requested]
27
Golden Books: Schedule E
[Confidential Treatment Requested]
28
Golden Books: Schedule F
[Confidential Treatment Requested]
29
GOLDEN BOOKS - SCHEDULE G - INVOICING
All invoices shall be generated and forwarded to Golden Books within 48 hours
from completion of shipment.
All invoicing shall include the following:
o Golden Books Purchase Order Number/PO date
o Item number
o Title Name
o Quantity ordered
o Quantity shipped
o Prep charges
o Plate charges
o Cover Makeready charges
o Cover run charges (unit cost and total cost)
o Text press and binding makeready
o Text press and binding run costs (unit cost and total cost)
o Paper makeready charges
o Paper run charges
o Cartoning charges (unit and total cost) -if applicable
o Stickering charges (unit and total cost) -if applicable
o all other miscellaneous charges itemized
o Paper stock used -grade name and basis weight
o Paper consumption makeready (#'s)
o Paper consumption run (#'s)
o Paper CWT cost
o Dies
