EXPANDED DISTRIBUTION TERMS

This agreement is made between Hillcrest Media Group, Inc. (“Hillcrest”) and the copyright holder of said book, assignee thereof, or anyone authorized to execute this Agreement ("Customer").

These terms and conditions incorporate the General Terms and Conditions offered by Hillcrest Media Group.

1. SERVICES INCLUDED IN EXPANDED DISTRIBUTION

Expanded Distribution includes the services set forth below.

Customer’s Book will be included in the distributor’s data feeds to retailers and wholesalers.
Hillcrest will assist Customer in setting up a marketing plan in the proper format to be presented to book buyers.
A copy of Customer’s Book, the marketing plan, and title data will be sent to the appropriate buyer or department at Barnes & Noble, Ingram, Baker & Taylor and Follet.
Hillcrest will pay the set-up fees to list the Book with the distributor and other book trade vendors.
Hillcrest’s distributor will handle and process wholesale and retail orders by book trade vendors.
Hillcrest will cover the warehousing fees for the Book for one year (for up to four (4) cartons of books).
Hillcrest will format Customer’s Book cover into the sizes required by the various wholesalers and retailers.
Hillcrest will manage the payment for and reconciliation of Customer's sales through the Distributor.

2. TERM AND TERMINATION

a. Initial Term

The initial term of the program commences when Customer submits any distribution metadata to Hillcrest via the Hillcrest Author Center. “Distribution Metadata” is defined as retail listing information provided by the Customer—including but not limited to retail price, sales page descriptions, author biography information, etc.—that is required by Hillcrest to list Customer’s book for sale with the distributor.

b. Renewal Term

The renewal term shall commence as set forth in Section 3 below.

c. Termination by Customer During Initial or Renewal Term

No refunds for any part of this service are permitted after initial term has commenced. However, Customer may terminate at any time.

If Customer terminates during the initial term or any renewal term at such time as Customer’s books are in distribution channels, Customer must give sixty (60) days written notice and must indicate cancellation per Hillcrest’s website. Upon termination, Customer acknowledges that a fee equal to the number of books the distributor has sent to wholesalers x the wholesale cost of the book x 18% (the distributor’s fee) x estimated shipping fees back to distributor, will be owed by Customer. For example, if at the time of cancellation, the distributor has sent 50 books to wholesalers, and the wholesale cost of the book is $8.00, and shipping fees for returns average out to $1.00 per book Customer would owe a termination fee of 50 x $8 = $400 + (18% * x $400) = $472.00 + $50 (shipping fees for 50 books), for a total of $522.00.

By terminating this service, Customer acknowledges that he/she is terminating his/her distribution relationship with Hillcrest and its distributor. Customer acknowledges that upon termination, his/her Book will be listed as out-of-print and that Customer will need to publish, print and distribute elsewhere using an ISBN owned by Customer and not one provided by Hillcrest as part of any publishing service.

Customer acknowledges that Hillcrest’s distributor is the only distributor for Customer’s book during the term of this Agreement. If Customer finds another distributor, Customer must provide notice in writing to Hillcrest at least sixty (60) days in advance of any distributor switch. Customer acknowledges that upon execution of an agreement with a new distributor, this Agreement is immediately terminated.

d. Termination by Customer prior to Initial Term

If Customer terminates prior to submission of Customer’s title data and Book files to the distributor, he/she will receive a refund of $160 (one hundred sixty dollars).

e. Post Termination Payment of Customer

If the distributor receives payment for the books that have shipped, Customer will be paid in accordance with the payment process set forth in Sections 4 and 5 of this Agreement

f. Post Termination Return of Inventory to Customer / Recycling of Books

Upon termination and assuming that Customer has a zero balance with Hillcrest, Hillcrest shall either ship Customer’s remaining books to Customer or recycle said books as set forth herein.

Any remaining books in inventory upon termination will be sent to the address that Hillcrest has on file in the Author Center (it is up to Customer to log in and update that address when need be and or contact Hillcrest directly if the shipment address for these books is different than that on file). The books will be sent at Customer’s expense, assuming that Customer has a valid credit card on file and/or has arranged an alternate form of payment with Hillcrest. If Hillcrest is unable to charge the card on file, or has not been provided payment for shipment, Hillcrest reserves the right to recycle the remaining inventory without notice. At such time, Customer will be charged a $100 recycling fee per pallet or any portion thereof.

Alternatively, Customer can choose to have remaining inventory recycled for the same $100 per pallet or any portion thereof.

Any copies of Customer’s book that are returned to the distributor after termination through the normal sales cycle (e.g. Barnes & Noble has 10 copies that don’t sell and returns them), shall be recycled and not returned to Customer.

3. RENEWAL FEES

After the first year in Expanded Distribution, there will be an additional charge of $349 per year. The $349 renewal fee will include storage of up to four cartons of Customer’s books for one year, continued inclusion in the distributor’s database and/or online catalog, and the distributor’s management fees, but not processing fees for each individual shipment of Customer’s Book. The date of renewal corresponds with the month that Hillcrest submitted the title data for Customer’s Book to the distributor. The renewal date will be one year from the date that Hillcrest sent the title data to the distributor. Hillcrest will notify Customer approximately sixty (60) days prior to the renewal date. Customer acknowledges that within ten (10) business days, he/she must either pay the $349 renewal fee or terminate the service.

4. DISTRIBUTION CHANNELS, TRADE DISCOUNTS, AND DISTRIBUTOR FEES

a. Vendors

Distribution is through the following wholesalers, distributors and online retailers ("Vendors"):

Ingram
Baker&Taylor
Brodart (library distributor)
Follett Library Services
Barnes & Noble
BN.com
Amazon.com

b. Distribution Fees

Vendors will take a trade discount of between 40 and 55% off the retail price of the book (as determined by the distributor). The distributor takes an additional 18% of the wholesale price.

The distributor's 18% fee, and any applicable freight fees, are assessed at the time that a trade order is fulfilled by the distributor.

The distributor may accept orders for Customer’s Book through its toll-free telephone number. If a toll-free order is accepted, Customer acknowledges that the fees for said order are determined by the distributor. The distributor may also accept orders for Customer’s Book through its website. For direct-to-customer orders handled by the distributor through its website, the distributor shall take 30 percent of the net.

Customer is paid the full wholesale price of the book within the timeframe set forth herein when payment for that book is remitted by the buyer.

The following fees are owed monthly by Customer, and may be due before the distributor receives payment for sales of the Book:

any returns (unsold copies returned by a vendor, subject to a restocking fee assessed by the distributor (15% of the wholesale price);
all shipping costs associated with getting the Book from the distributor to any Vendor;
the distributor’s 18% fee (outlined above); and
additional storage fees (if Customer stores more than four cartons of the Book with the distributor).

Customer agrees to keep a valid credit card on file with Hillcrest and further agrees that Hillcrest can charge Customer’s card each month for these fees in conjunction with issuing the monthly distribution statement.

If Customer is participating in the Direct-to-Reader Sales Page Service, the earnings for direct orders and Expanded Distribution will be combined and issued in one check.

Customer must have a signed W-9 on file (W-8BEN if Customer is not a U.S. citizen), and must net a minimum of $25.00 (twenty-five) U.S. Dollars in order for Hillcrest to issue payment. If Customer’s net earnings are below $25.00 in a given month, earnings will accrue until they meet or exceed $25.00. Payment will be issued with the next month’s statement.

Example 1: Bookstore Sales

If the retail price of Customer’s Book is set at $15.95, and is sold to a bookstore that gets a trade discount of 40%, what remains is the wholesale price of $9.57. The distributor takes a fee of 18% of the wholesale price, or $1.72, leaving a profit of $7.85 (less the freight fees to ship to the bookstore, if applicable).

Example 2: Online Retailer Sales

If the Book sells through Amazon.com, and Customer’s retail price is set at $15.95, it will be sold at a trade discount of 55%. What remains is the wholesale price of $7.17. The distributor takes a fee of 18% of the wholesale price, or $1.29, and Customer is responsible for freight fees (which vary per shipment, but generally do not exceed $1.50), leaving a profit of $5.48 (e.g., if the freight fee were $0.40). The freight fee can vary based on number of books being shipped to a particular vendor.

c. Audits

At Customer’s expense, Customer may audit sales and distribution records at any time in person at Hillcrest's offices. Customer may also send a designated representative for such an audit.

5. INITIAL INVENTORY ORDER FOR DISTRIBUTION AND STORAGE FEES

Customer must place an initial book order of 75 (seventy-five) copies to be sent to the distributor. Customer acknowledges that he/she is responsible for the cost of printing and shipping all book orders.

Customer acknowledges that Hillcrest will pay for storage with the distributor of up to four (4) cartons for one version of Customer’s Book (defined by ISBN) for one year.

Note: If Customer has one (1) ISBN, but provides autographed copies and non-autographed copies of the same version, these are counted as two separate inventories for purposes of this Agreement.

Customer is responsible for paying any additional storage fees incurred by storing more than four (4) cartons of books at the distributor’s warehouse. The cost for storage is $4.50 per month per quarter pallet after the four carton maximum (pallets are 4’ x 4’ x 4’ in size).

Customer acknowledges that the distributor makes the Book available through its website and by sending copies of the Book to various wholesalers and retailers. The distributor sends up to five (5) copies of the Book as samples to various vendors when the Book is initially listed with the trade. Customer acknowledges that this is a one-time occurrence, and that Customer will not receive payment for said sample copies, and is responsible for freight fees incurred by shipping these samples to vendors.

Customer may request to ship inventory from the warehouse to a third party at any time. There is a $7.00 (seven dollar) per carton pick and pack fee for this service, plus the cost of shipping.

All fees paid by Hillcrest to distributor on Customer's behalf are subject to a 4.5 percent credit card processing fee.

6. DISTRIBUTOR APPROVAL OF COVER AND INTERIOR DESIGN

Customer acknowledges that the distributor must approve all cover designs and interior formatting for Customer’s Book. Customer acknowledges that he/she may be required to alter the cover design and/or interior to meet the Distributor’s requirements. Should Customer elect not to alter the cover and/or interior design as required by the distributor, Customer’s book may be published via print-on-demand distribution, and a portion of the cost of Expanded Distribution, not to exceed $400.00, may be applied toward any applicable Hillcrest marketing services. The credit offered is at the discretion of Hillcrest staff.

7. PAYMENTS TO CUSTOMER FOR DISTRIBUTION SALES

Customer shall receive a monthly sales statement from Hillcrest listing shipments, returns, receipts, credits, storage fees, and distribution fees. Customer acknowledges that said report will be available in electronic format only and will be uploaded to the Author Center, and that it is Customer’s responsibility to log in and review the statements. At its discretion, Hillcrest may or may not notify Customer when a new statement is available for Customer’s review.

Customer acknowledges that Net Revenue must meet or exceed $25.00 (twenty-five dollars) in order for Hillcrest to remit payment. If Customer’s Net Revenue is below $25.00 in a given month, earnings will accrue until Customer’s earnings meet or exceed $25.00; payment will be issued at the close of the following month’s sales/reporting period. If, in a twelve-month period, Customer’s Net Revenues are less than $25.00, Customer will be paid the accumulated Net Revenue at the end of the calendar year in which the Net Revenues are earned.

While Hillcrest currently pays via check, Hillcrest may elect to pay via electronic bank transfer (“EBT”). Customer acknowledges that he/she will need to provide certain banking information for that to happen. If Hillcrest changes to an EBT format and Customer elects not to provide the necessary information for Hillcrest to electronically transfer funds into his/her bank account, or wishes to be paid through any other method (i.e., PayPal), he/she will be subject to a $15.00 (fifteen dollar) service fee per royalty check or other non-EBT payment.

Customer acknowledges that some wholesalers and other commercial book buyers will not pay the distributor for ninety to one hundred eighty (90-180) days. Customer acknowledges that Hillcrest, at its discretion, can pay Customer monthly or pay when the distributor has paid Hillcrest for the book sales.

Customer acknowledges that he/she is paid for sales of the Book within fifteen to thirty (15-30) days of payment being remitted to Hillcrest by the distributor, which is usually about one hundred twenty (120) days from the end of the month that the sale occurred in, so long as Customer has a positive balance that meets or exceeds $25.00. For example, if a book is sold on January 15, Hillcrest is paid by the Distributor by July 1, and Hillcrest will pay the Customer by July 30.

The payment shall be in the amount equal to that owed to the Customer on the sales report (so long as at least $25.00 is owed), which will be less any amounts owed to the distributor, and less a 90 day reserve in cases where wholesalers and/or retailers have ordered over $1,000.00 worth of books.

Customer acknowledges that he/she must complete and return IRS Form W-9 (or Form W-8BEN if Customer is not a United States citizen), provided by Hillcrest, in order for Hillcrest to remit payment to Customer. Further, Customer acknowledges that Hillcrest can only issue payments to one party (i.e., if there are two authors, Hillcrest will only issue payment to one party, and it is the responsibility of the Customer to distribute payment accordingly).

a. Audits

At Customer’s expense, Customer may audit sales and distribution records at any time in person at Hillcrest's offices. Customer may also send a designated representative for such an audit.

8. INVENTORY COUNT

Inventory count will be available for review through Hillcrest’s Author Center. Customer acknowledges that the Author Center inventory count relies on the distributor’s warehousing system, and their inventory count can be inaccurate by up to five (5) copies.

9. NO GUARANTEE OF SALES

Customer acknowledges that participation in Expanded Distribution is no guarantee that any wholesaler, distributor, or retailer will purchase copies of Customer’s Book. The service makes the Book available to those in the book trade.

10. MULTIPLE VERSIONS

This Agreement covers one version of Customer's Book as identified by the ISBN assigned. If Customer wishes to have another version of the book distributed (e.g., a hardcover version), Customer must pay $399.00 for distribution and $199.00 for returns in addition to the $599.00 for set up of the second format. The second version of Customer's book will also be subject to storage fees as set forth above, and annual renewal fees of $349.00 for distribution and $99.00 for returns.

11. RETURNS PROGRAM

Customer acknowledges that he/she must have an active Returns Program service in order to participate in Expanded Distribution as required by the distributor. Two years of the Returns Program service are included in the initial fee for Expanded Distribution. Upon expiration of the service, Customer must renew the Returns Program service in order to continue listing his/her book for sale with the distributor. Renewal fees for the Returns Program are set forth in the terms for that service.

12. REVISIONS AFTER SUBMISSION TO DISTRIBUTOR

If Customer decides, after book has been listed with the distributor, that he/she would like to make changes to Distribution Metadata, the fee is $100.00 (one hundred dollars) per change request. Customer acknowledges that some changes may not be possible or may require additional fees (e.g. a change to retail price would require placing new barcode stickers on existing inventory). Hillcrest shall determine additional fees for metadata changes at its discretion.

13. TIMELINE

Once Book Information has been submitted to the distributor, it takes approximately ten to fifteen (10-15) business days for Book Information to appear in most vendors’ databases. Barnes and Noble may take approximately 60 days. Customer acknowledges that books will not be available for order until physical inventory arrives at the distributor’s warehouse, and that physical inventory shipment timeframe may affect Book availability.

Customer acknowledges that Hillcrest has no control over how long it takes the initial listing of Customer’s Book to appear on any third-party retailer or wholesaler’s website or database, or what portion of the Book information submitted appears on any third-party website. Retailers and wholesalers are not required to hold inventory of Customer’s book at their warehouses.