<PAGE> 1
As filed with the Securities and Exchange Commission on May 11, 2000
Registration No. 333-35178
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
LearningExpress.com Holdings LLC
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
Delaware 5945c 04-3511125
---------------------------- -------------------------- --------------
(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
29 Buena Vista Street
Ayer, Massachusetts 01432
(978) 889-1000
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(Address, Including Zip Code, and Telephone Number, Including Area Code of
Registrant's Principal Executive Offices)
Steven P. Manfredi
Chief Executive Officer
LearningExpress.com Holdings LLC
29 Buena Vista Street
Ayer, Massachusetts 01432
(978) 889-1000
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(Name, Address, Including Zip Code, and Telephone Number, Including Area Code
of Agent For Service)
Copies to:
Timothy B. Bancroft, Esq.
Goulston & Storrs, P.C.
400 Atlantic Ave.
Boston, MA 02110-3333
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Approximate date of commencement of proposed sale to the public: AS
SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the Securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box.[ ] _____________
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ] ______________________________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the securities
Act registration statement number of the earlier effective registration
statement for the same offering.[ ] ________________________________
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.[ ] ____________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box.[ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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EXPLANATORY NOTE
This Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1 is
a Part II filing solely to file Exhibits 99.8, 99.9, 99.10 and 99.11.
Accordingly, a preliminary prospectus has been omitted.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses to be incurred in connection
with the sale and distribution of the securities being registered.
SEC Registration Fee.....................$______
Brokers' Fees............................$______
Blue Sky Fees and Expenses...............$______
Fees and Expenses........................$______
Printing and Engraving Costs.............$______
Legal....................................$______
Accounting Fees..........................$______
Total $
======
All amounts listed above are estimates.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to the operating agreement of LearningExpress.com Holdings LLC,
managers and officers of LearningExpress.com Holdings are entitled to indemnity
from the LLC for any liability incurred and/or for any act performed within the
scope of the authority conferred, and/or for any act omitted to be performed,
which indemnification shall include all reasonable expenses incurred, including
reasonable legal and other professional fees and expenses; provided, however,
that such manager or officer acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of LearningExpress.com
Holdings LLC.
ITEM 15. RECENT SALE OF UNREGISTERED SECURITIES.
1. At the time of its initial organization, LearningExpress.com Holdings
LLC issued 14,250 Common Shares to Sharon DiMinico for a nominal price.
2. Prior to this offering, the following individuals purchased Series A
Convertible Preferred Shares for a purchase price of $1.75 per share,
or an aggregate price of $1,049,999.00:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
---- ----------------
<S> <C>
Sharon DiMinico 85,714
Louis DiMinico 85,714
Steven P. Manfredi 114,286
Hal Cook 142,857
Chip Will 114,286
Jerry Pope 57,143
</TABLE>
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The Common Shares and the Series A Convertible Preferred Shares were
sold to accredited investors only, pursuant to the exemption from the
registration requirements of the Securities Act of 1933 provided by Section 4(2)
of the Securities Act and Rule 506 under the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) See the Exhibit Index included immediately preceding the exhibits to
this Registration Statement.
(b) There are no schedules required under the instructions relating to the
applicable accounting regulations of the Securities and Exchange Commission or
are inapplicable, and therefore have been omitted.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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EXHIBIT INDEX
EXHIBIT
NO.
- -------
*3.1 Amended Certificate of Formation of LearningExpress.com Holdings LLC
*3.2 Amended Certificate of Formation of LearningExpress.com LLC
*3.3 Certificate of Formation of LearningExpress.com Incentive Plan LLC
*3.4 Limited Liability Company Operating Agreement of LearningExpress.com
Holdings LLC
*3.5 Form of First Amended and Restated Limited Liability Company Operating
Agreement of LearningExpress.com Holdings LLC
*3.6 First Amended and Restated Limited Liability Company Operating
Agreement of LearningExpress.com LLC
*3.7 Liability Company Operating Agreement of LearningExpress.com Incentive
Plan LLC
*4.1 Form of Subscription Agreement for Series A Convertible Preferred
Shares (to be filed by amendment to the registration statement)
*4.2 Letter Agreement between LearningExpress.com Holdings LLC and Sharon
DiMinico, Louis DiMinico, The Learning Express, Inc. and Toy Building,
LLC dated as of December 29, 1999
*5 Opinion of Goulston & Storrs, P.C. with respect to the legality of the
securities being offered
*10.1 License Agreement between The Learning Express, Inc. and
LearningExpress.com LLC dated as of November 5, 1999
*10.2 Management Services Agreement between The Learning Express, Inc.,
LearningExpress.com LLC and LearningExpress.com Holdings LLC dated as
of November 5, 1999
*10.3 Loan Agreement between LearningExpress.com and USTrust dated as of
December 29, 1999
*10.4 Web Site Development Agreement between LearningExpress.com LLC and
Miller Systems, Inc. dated December 17, 1999.
*21 Subsidiaries of the Registrant
*23.1 Consent of Charles L. Burke, C.P.A.
*23.2 Consent of Goulston & Storrs, P.C. (included in Exhibit 5)
*24 Power of Attorney
*27 Financial Data Schedule
*99.1 Guaranty (Unlimited) executed by Sharon DiMinico in favor of USTrust
dated December 29, 1999
*99.2 Guaranty (Unlimited) executed by Louis DiMinico in favor of USTrust
dated December 29, 1999
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*99.3 Guaranty (Unlimited) executed by The Learning Express, Inc. in favor of
USTrust dated December 29, 1999
*99.4 Guaranty (Unlimited) executed by Toy Building, LLC in favor of USTrust
dated December 29, 1999
*99.5 Form of Amendment to Franchise Agreement
*99.6 Form of Amendment to Regional Franchise License Agreement
*99.7 The Learning Express, Inc. Operations Manual Supplement
**99.8 Material Modification to Franchise Offering Circular For Existing
Franchisees As Required By The California Franchise Investment Law
(franchisee version)
**99.9 Cover letter from Learning Express, Inc. to California franchisees
relating to the Material Modification to Franchise Offering Circular
For Existing Franchisees As Required By The California Franchise
Investment Law
**99.10 Material Modification to Franchise Offering Circular For Existing
Franchisees As Required By The California Franchise Investment Law
(regional owner version)
**99.11 Cover letter from Learning Express, Inc. to California regional owners
relating to the Material Modification to Franchise Offering Circular
For Existing Franchisees As Required By The California Franchise
Investment Law
* Previously filed with the Commission on April 19, 2000.
** Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Ayer, Commonwealth of
Massachusetts, on May 11, 2000.
LEARNINGEXPRESS.COM HOLDINGS LLC
/s/ Steven P. Manfredi
-------------------------------
By: Steven P. Manfredi
Chief Executive Officer and
Manager
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Steven P. Manfredi Chief Executive Officer and May 11, 2000
- ------------------------ Manager (principal executive
Steven P. Manfredi officer)
/s/ Glenn E. Davis Chief Financial Officer and May 11, 2000
- ------------------------ Vice President, Finance
Glenn E. Davis (principal financial and
accounting officer)
/s/ Michael J. Sanders Chief Operating Officer May 11, 2000
- ------------------------
Michael J. Sanders
/s/ Sharon DiMinico Manager May 11, 2000
- ------------------------
Sharon DiMinico
</TABLE>
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<PAGE> 1
Exhibit 99.8
[LEARNING EXPRESS LOGO] LEARNING EXPRESS, INC.
a Massachusetts Corporation
29 Buena Vista Corporation
Ayer, Massachusetts 01432
978/889-1000
[LEARNING EXPRESS TRAIN LOGO]
MATERIAL MODIFICATION TO FRANCHISE
OFFERING CIRCULAR FOR EXISTING FRANCHISEES
AS REQUIRED BY THE
CALIFORNIA FRANCHISE INVESTMENT LAW
THE CHANGES SET FORTH HEREIN ARE VOLUNTARY. IF FRANCHISEE DOES NOT RECEIVE THE
ATTACHED DISCLOSURE AT LEAST FIVE BUSINESS DAYS BEFORE THE EXECUTION OF THE
BINDING AGREEMENT, THE FRANCHISEE MAY, BY WRITTEN NOTICE, MAILED OR DELIVERED TO
LEARNING EXPRESS, INC., OR KENNETH F. DARROW, ESQ. (AGENT FOR LEARNING EXPRESS,
INC.), 9350 SOUTH DIXIE HIGHWAY, SUITE 1550, MIAMI, FLORIDA 33156, WITHIN FIVE
BUSINESS DAYS FOLLOWING THE EXECUTION OF THE AGREEMENT, RESCIND THE AGREEMENT TO
THE MODIFICATION.
THE COMPANY'S REGISTERED AGENT AUTHORIZED TO RECEIVE SERVICE OF PROCESS IN THE
STATE OF CALIFORNIA IS:
CALIFORNIA COMMISSIONER OF CORPORATIONS
980 NINTH STREET, SUITE 500,
SACRAMENTO, CALIFORNIA 95814
The effective date of this Offering Circular is: May 8, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
INTRODUCTION 1
ITEM 1 The Franchisor, Its Predecessors and Affiliates 2
ITEM 7 Initial Investment 3
ITEM 8 Restrictions on Sources of Products and Services 3
ITEM 11 Franchisor's Obligations 3
ITEM 12 Territory 4
ITEM 16 Restrictions on What Franchisee May Sell 4
ITEM 17 Renewal, Termination, Transfer, Dispute Resolution 4
ITEM 20 List of Outlets 5
ITEM 22 Contracts 5
ITEM 23 Receipt 5
</TABLE>
ACKNOWLEDGMENT OF RECEIPT (YOUR COPY)
ACKNOWLEDGMENT OF RECEIPT (OUR COPY)
EXHIBITS TO THIS OFFERING CIRCULAR
EXHIBIT 1 - Proposed Amendment to Franchise Agreement, including
Exhibit "A" - Supplement to Learning Express Operations Manual
EXHIBIT 2 - Order of the California Department of Corporations
Approving and Registering this Offering Circular
<PAGE> 3
INTRODUCTION
Learning Express, Inc. (referred to as the "Company," "we" or "us") offers its
franchisees the opportunity to amend their existing Local Store Franchise
Agreement (the "Franchise Agreement") on the terms stated in the Amendment to
Franchise Agreement/Local Franchise License Agreement ("Amendment") (see Exhibit
1 to this Offering Circular). Capitalized terms, not defined here, have the same
meaning as in the Franchise Agreement or Offering Circular currently on file
with the California Department of Corporations.
LearningExpress.com Holdings LLC, a Delaware limited liability company ("LECH")
is offering an aggregate of 2,607,750 of its Common Shares to our franchisees
and regional owners. LECH is the parent of Learning Express.com LLC, a Delaware
limited liability company ("LEC"). LEC serves as the e-commerce distribution
channel of Learning Express. LEC will provide similar products and services as
the Learning Express franchised stores, but operate through the
LearningExpress.com World Wide Web site (the "On-Line Store"). LEC's business
operations will be integrated with participating Learning Express Local Store
Franchisees in an effort to minimize the sales channel conflict between the
Local Store Franchisees and the Web site and to maximize the options for
customers seeking to buy Learning Express products. Each franchisee under a
current Franchise Agreement with us as of April 10, 2000 and which remains a
franchisee as of the date when the registration statement of LECH is declared
effective by the Securities and Exchange Commission and executes and delivers an
amendment to its Franchise Agreement in the form of Exhibit 1 to this Offering
Circular, will receive 14,250 Common Shares of LECH for each Local Store
franchise that it owns.
The key terms of the Amendment are, in addition to the issuance of 14,250 Common
Shares of LECH:
(1) a provision stating that the franchisee will not have any
rights under the Franchise Agreement against us or any other
party with respect to LEC's operation of its Online Store,
other than as set forth in the Amendment;
(2) Our agreement to pay the franchisee, for the 2 year period
after LEC's launch of the Online Store, a commission of 5% of
net sales resulting from the Online Store's sales to addresses
within the franchisee's "protected territory" under the
Franchise Agreement, and after those first 2 years, a
commission of not less than 2.5% of net sales, as determined
by the Board of Managers of LECH, taking into account sales
and cash flow information; and
(3) the franchisee's agreement that the Manual will be amended to
provide for the franchisee's cooperation and assistance in
various aspects of the Online Store.
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Each franchisee which wishes to receive the Common Shares will need to execute a
"LearningExpress.com Holdings LLC First Amended and Restated Operating
Agreement" and an Amendment. LECH is not permitted by the Securities Act of 1933
and the rules of the Securities and Exchange Commission, to issue the Common
Shares to franchisees until the registration statement has been declared
effective by the Securities and Exchange Commission. Accordingly, until the
registration statement has been declared effective and a final prospectus,
together with the operating agreement and the franchise agreement amendment
bearing the franchisee's signature and also executed by us, in the case of the
amendment and LECH, in the case of the operating agreement, have been delivered
back to the franchisee, the amendment and the operating agreement will not be
binding upon you. Prior to the effective date, execution and delivery, you may
withdraw your executed amendment and operating agreement at any time by
indicating in a written notice received by us at our address or sent to us by
fax at (978) 889-1010, that you do not wish to continue with the amendment and
receive the Common Shares. If you do not withdraw, the amendment and operating
agreement, if executed and delivered by you to LECH, will become binding
agreements after the registration statement has been declared effective and the
final prospectus and executed amendment and operating agreement are sent or
delivered to you. The operating agreement executed by LECH, will evidence your
ownership of Common Shares.
Execution of the amendment and operating agreement is strictly optional
on your part. All franchisees are being offered the same form of amendment and
operating agreement. If you do not execute the amendment and operating
agreement, you will not receive the Common Shares and not participate in the On
Line Store. Your status as a Learning Express franchisee will in no way be
altered or modified.
The modifications to the Franchise Agreement, as a result of execution
of the Amendment are described under the applicable Uniform Franchise Offering
Circular item headings which follow.
ITEM 1
THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES
Our affiliate, LearningExpress.com LLC, is a Delaware limited liability
company formed in November 1999 ("LEC"). LEC maintains its principal business
address at 29 Buena Vista Street, Ayer, Massachusetts 01432. LEC serves as the
e-commerce distribution channel of Learning Express. LEC will provide similar
products and services as the Learning Express franchised stores, but operate
through the LearningExpress.com World Wide Web site (the "On-Line Store"). LEC's
business operations will be integrated with participating Local Store
Franchisees in an effort to minimize the sales channel conflict between the
Local Store Franchisees and the Web site and to maximize the options for
customers seeking to buy Learning
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Express products. LEC is itself a subsidiary of Learning Express.com Holdings,
LLC, a Delaware limited liability company ("LECH") whose business address is
also 29 Buena Vista Street, Ayer, Massachusetts 01432. LECH is partially owned
by Local Store Franchisees in existence as of April 10, 2000 and our Regional
Owners.
Under the Amendment, you will participate in the On-Line Store by
providing certain services in connection with its operation, such as dedicating
space for a kiosk area, engaging in marketing and promotion activities and
facilitating product fulfillment and returns. You will be entitled to receive
certain payments in consideration for your participation. (See Item 12.) The
specifics of the On-Line Store are contained in Exhibit A to the Amendment,
attached to this Offering Circular as Exhibit 1.
ITEM 7
INITIAL INVESTMENT
Under the Amendment you will provide appropriate space inside your
location for placement of the On-Line Store Kiosk. You will provide the
appropriate utility connections as well as subscription service to an Internet
Service Provider ("ISP") for access to the World Wide Web. Customers will have
access only to the Learning Express.com URL.
You will have no cost associated with Kiosk hardware and related
equipment and fixtures, excluding ongoing communications and ISP subscription
costs.
ITEM 8
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
The On-Line Store will be the only Internet based e-commerce
distribution channel authorized for Learning Express franchisees. You will be
required to display the LEC URL on catalogs, print ads, marketing and
advertising materials, bags and in-store displays.
You will also be required to accept gift certificates and coupons from
the On-Line Store, using the same process as is currently in place for
franchised stores.
You will be required to accept product returns from On-Line Store
customers following the exiting inter-store procedure set out in the Manual.
ITEM 11
FRANCHISOR'S OBLIGATIONS
Under our agreement with LEC, LEI will promote LEC and the On-Line
3
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Store in all marketing, advertising and promotion campaigns relating to Local
Store franchisees. This will include a prominent listing of the name, URL and a
brief description, such as "Shop for Learning Express toys and games on-line at
www.LearningExpress.com," for the On-Line Store in all catalogs, periodic
product newsletters and any other marketing, advertising or promotional
materials prepared by or on our behalf for use by Local Store Franchisees.
Promptly following full execution of the Amendment, LEC will (i) assist
Local Store Franchisees with the procurement, installation and operation of the
Kiosk equipment and the Kiosk as provided in the Manual; (ii) provide all
reasonable cooperation, assistance and payments to Local Store Franchisees to
effectuate the provisions of the Amendment and the Manual and (iii) effectuate
and otherwise make all payments required to be made to the Local Store
Franchisee in connection with the product order, fulfillment and return
functions described in the Manual.
ITEM 12
TERRITORY
Under the Amendment, we will pay you a commission (the "On-Line
Commission") equal to a percentage (the "Percentage"), of the On-line Store's
"Net Sales in Territory", accrued during each calendar month (or part) during
the Term. "Percentage" means 5% through the second anniversary of the date on
which the On-Line Store first commences operations and (b) after that, the
percentage established from time to time by the Board of Managers of LEC, based
on experience of sales and cash flow of the On-Line Store. The percentage
determined by the Board of Managers will never be less than 2.5%. "Net Sales in
Territory" means: (A) LEC's gross revenues accrued from the sale through the
On-Line Store of products ordered by customers whose "bill to" address for the
applicable order is within your Protected Territory minus (B) all costs and
charges incurred in connection with returned products and related shipping and
handling charges.
ITEM 16
RESTRICTIONS ON WHAT FRANCHISE MAY SELL
See Item 8 for information regarding requirements in connection with
the On-Line Store.
ITEM 17
RENEWAL, TERMINATION, TRANSFER, DISPUTE RESOLUTION
Under the Amendment, the Amendment will be in effect until the earlier
of: (a) termination of the Franchise Agreement; (b) your breach of the
provisions of the Amendment, and failure to cure after written notice; or (c)
our election to terminate the Agreement due to LEC's breach of the other
agreements with us.
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ITEM 20
LIST OF OUTLETS
As of April 1, 2000, there were 160 Local Store Franchises in
operation, with 16 operating in California. We propose to modify all Franchise
Agreements, including all of those in California.
ITEM 22
CONTRACTS
Exhibit 1 is a copy of the proposed Amendment.
ITEM 23
RECEIPT
The last page of this Offering Circular is a detachable receipt in
duplicate for this Offering Circular to be signed by you.
5
<PAGE> 8
AMENDMENT TO
FRANCHISE AGREEMENT/LOCAL FRANCHISE LICENSE AGREEMENT
AMENDMENT (this "Amendment"), dated as of ____ _____, _____, by and between
THE LEARNING EXPRESS, INC. a Massachusetts corporation ("Franchisor"), and
________________, a _______________ _____________ (the "Franchisee").
BACKGROUND
A. Franchisor and Franchisee are parties to that certain Franchise
Agreement/Local Franchise License Agreement dated as of ____ _____,
_____ by and between Franchisor and Franchisee (the "Franchise
Agreement") pursuant to the terms and conditions of which Franchisor
has granted a franchise to Franchisee to operate a retail specialty toy
store (the "Retail Store") using Franchisor's "System" and "Marks" in
the "Protected Territory," all as defined in the Franchise Agreement.
B. Franchisor has entered into a License Agreement, dated as of November
5, 1999 (the "LEC Agreement") with LearningExpress.com, LLC, a Delaware
limited liability company ("LEC"), pursuant to the terms and conditions
of which Franchisor has licensed certain components of the System and
the Marks to enable LEC to develop, operate and promote an
Internet-based on-line specialty toy store under the name
LearningExpress.com (the "On-Line Store").
C. Franchisor has entered into Management Services Agreement, dated as of
November 5, 1999 (the "Management Agreement") by and among Franchisor,
LEC and LearningExpress.com Holdings LLC ("LECH"), the principal owner
of LEC, pursuant to the terms and conditions of which, among other
matters, Franchisor has agreed to (1) support LEC's use of the System
in the On-Line Store through assistance with marketing, promotion and
exchange of information regarding sales, customers, vendors, and (2)
contract with each of Franchisor's franchisees on the terms and
conditions set forth in this Amendment.
D. Franchisor and Franchisee believe that the On-Line Store will enhance
Franchisor's and Franchisee's respective businesses by, among other
things, promoting the "Learning Express" image and good will to
consumers who use the Internet and enhancing customer traffic to the
Retail Store and other retail stores operated by other franchisees of
Franchisor.
E. Accordingly, Franchisor and Franchisee are entering into this Amendment
to facilitate the development, operation and promotion of the On-Line
Store by LEC
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<PAGE> 9
and to set forth: (i) certain services that Franchisee has agreed to
provide to Franchisee's and LEC's customers with respect to the On-Line
Store and (ii) certain specified payments and other benefits that
Franchisee will receive in consideration thereof.
Now therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. AMENDMENT OF FRANCHISE AGREEMENT; CAPITALIZED TERMS. The terms and
provisions of this Amendment amend the Franchise Agreement. In the event of any
conflict between the terms of the Franchise Agreement and the terms of this
Amendment, the terms of this Amendment shall govern. Capitalized terms not
otherwise defined herein shall have the same meaning(s) as set forth in the
Franchise Agreement.
2. AMENDMENT TO LEARNING EXPRESS CONFIDENTIAL OPERATIONS MANUAL.
(a) Franchisee consents and agrees to all of the amendments to the
LEARNING EXPRESS CONFIDENTIAL OPERATIONS Manual (the "Manual") set forth on
Exhibit A hereto (the "Manual Amendment").
3. TERM. Franchisee's and Franchisor's obligations under this Amendment,
shall commence on , 2000 and continue until the earlier to occur of: (i)
termination of the Franchise Agreement in accordance with its terms (without
giving effect to this Amendment), (ii) the occurrence of a material breach by
Franchisee of the terms and conditions of this Amendment following written
notice to Franchisee by Franchisor detailing such alleged breach and
Franchisee's failure to remedy any such actual breach within ten (10) days, or
such other period as may be required by applicable state law, following such
notice, or (iii) upon Franchisor's election, exercised in its sole discretion by
written notice to Franchisee, to terminate this Amendment incident to a breach
by LEC of the LEC Agreement or the Management Agreement. The foregoing period is
referred to herein as the "Term".
Upon any termination in accordance with subsection (iii) of the
foregoing paragraph, all obligations of the Franchisor and the Franchisee under
this Amendment shall terminate but the Franchise Agreement and all obligations
of the parties thereunder shall continue in full force and effect in accordance
with their terms unaffected hereby.
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4. EQUITY AND COMMISSION
(a) Equity of LECH.
(i) In consideration of Franchisee's agreement to execute
and consummate the terms and conditions of this
Amendment, Franchisor shall cause LECH to issue to
Franchisee 14,250 Common Shares of LECH for each
Retail Store operated by Franchisee (such shares, the
"Shares").
(ii) Prior to issuance of the Shares, LECH may require
Franchisee to execute an investment letter or letters
to the effect that the Shares are being acquired by
Franchisee for Franchisee's own account for
investment purposes, that Franchisee has no present
intention of offering, distributing or otherwise
disposing of the Shares, and that Franchisee shall
agree not to dispose of the Shares unless a
registration statement or appropriate qualification
is then in effect under applicable state "Blue Sky"
laws with respect to the Shares or in the opinion of
counsel for LECH the Shares are exempt from the
registration or qualification requirements of such
laws.
(iii) Prior to issuance of the Shares, Franchisee shall
execute and enter into the then current Operating
Agreement for LECH and be bound thereby as a member
of LECH. Such Operating Agreement shall provide,
among other matters, that, until such time as LECH,
or a successor entity, has completed an "Initial
Public Offering" (defined below), all of the Shares
shall be forfeited to LECH immediately upon the
termination of either or both of the Franchise
Agreement or this Amendment, provided, however, that
the Shares shall not be subject to forfeiture in the
case where either or both of the Franchise Agreement
and this Amendment are terminated in connection with
the sale or transfer of Franchisee's Retail Store to
a New Franchisee.
(iv) Franchisee agrees that Franchisee will not, for a
period of at least 180 days following the effective
date of any "Initial Public Offering" (defined below)
by LECH (or its successor-in-interest) or by LEC (or
its successor-in-interest), directly or indirectly,
sell, offer to sell or otherwise dispose of the
Shares other than any securities which are included
in such Initial Public Offering, provided, however,
that LECH shall be under no obligation to include the
Shares or any portion thereof in any Initial Public
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<PAGE> 11
Offering. If the managing underwriter of any such
Initial Public Offering determines that a shorter
time period is appropriate, the aforementioned 180
day period may be shortened consistent with the
requirements of such managing underwriter. An
"Initial Public Offering" shall mean LECH's, or a
successor entity's, initial distribution of
securities in a firm commitment underwritten public
offering to the general public pursuant to a
registration statement filed with the Securities and
Exchange Commission.
(b) On-Line Commission.
(i) In consideration of Franchisee's performance of
Franchisee's obligations hereunder, Franchisor shall
pay to Franchisee a commission (the "On-Line
Commission") equal to a percentage (the
"Percentage"), of the On-Line Store's "Net Sales in
Territory" accrued during each calendar month (or
portion thereof) during the Term. "Percentage" shall
mean (a) five percent (5%) through the second
anniversary of the "On-Line Store Date," defined
below, and (b) for the period thereafter, the
percentage established from time to time by the Board
of Managers of LEC based on experience of sales and
cash flow of the On-Line Store, provided, however,
that, (1) without limitation of the foregoing, LEC
presently intends to maintain the Percentage during
such period at the 5% level and (2) notwithstanding
anything herein to the contrary such percentage
determined by the Board of Managers shall never be
less than 2.5%. "Net Sales in Territory" shall mean:
(A) LEC's gross revenues accrued from the sale
through the On-Line Store of On-Line Store products
("Products") ordered by customers ("Customers") whose
"bill-to" address for the applicable order is within
the "Protected Territory" as defined in the Franchise
Agreement minus (B) all costs and charges incurred in
connection with returned products and shipping and
handling charges in connection therewith. "On-Line
Store Date" shall mean the date on which the On-Line
Store first commences operation on the Internet for
the sale of Products to the general public.
(ii) The On-Line Commission will be payable to the
Franchisee within 35 days after the end of the
calendar month in which LEC accrues the applicable
sale(s).
(iii) In addition, Franchisor need not pay the On-Line
Commission to Franchisee to the extent that LEC,
under and pursuant to that
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<PAGE> 12
certain Management Services Agreement by and among
Franchisor, LEC and LearningExpress.com Holdings LLC
(the "MSA"), has not paid to Franchisor the component
of the "On-Line Commission," as defined in the MSA,
corresponding to the On-Line Commission otherwise
payable by Franchisor to Franchisee hereunder.
(iv) Franchisor may suspend payment of the On-Line
Commission to Franchisee if Franchisor determines
that Franchisee continues to be materially
noncompliant with the Manual, as amended from time to
time, following written notice by Franchisor to
Franchisee of such noncompliance and a subsequent
thirty (30) day opportunity to cure such
non-compliance.
(c) Except for payment of the On-Line Commission and the other
consideration provided for in this Agreement, Franchisee shall have no rights
under the Franchise Agreement or otherwise against Franchisor or any other party
with respect to the operations and sales of LEC and the On-Line Store regardless
of the billing address, shipping address or other location of the Customer or
other person to whom any Product is delivered or otherwise on account of any
sale of any Product.
5. FURTHER COOPERATION. Each of the parties hereto covenants and agrees
that it shall furnish to the other party hereto such reasonably necessary
information and reasonable assistance, including without limitation execution of
documents, certificates and instruments, as such other party may reasonably
require to effectuate the provisions of this Amendment.
6. CONFIRMATION OF FRANCHISE AGREEMENT. The parties hereto acknowledge,
agree and confirm that subject to Sections 2(a) and 4(c) hereof, all terms and
conditions of the Franchise Agreement not inconsistent with the terms of this
Amendment shall continue and remain in full force and effect unaffected by this
Amendment.
7. EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall not be effective
until a copy executed by Franchisee and delivered to Franchisor has been
countersigned by Franchisor and delivered to Franchisee.
-5-
<PAGE> 13
8. MISCELLANEOUS.
8.1 Notices.
Any notice required or permitted to be given to Franchisor hereunder shall be
addressed as follows:
The Learning Express, Inc.
Devens Business Community
29 Buena Vista Street
Ayer, MA 01432
Attn: Chief Executive Officer
Any notice required or permitted to be given to Franchisee hereunder shall be
addressed as follows:
or such other address as any party may give the others notice of pursuant to
this Section.
8.2 Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.3 Headings. Headings in this Amendment are included for
reference only and shall have no effect upon the construction or interpretation
of any part of this Agreement.
8.4 Sealed Instrument. This Amendment shall have the effect of an
instrument executed under seal.
[continues on next page]
-6-
<PAGE> 14
IN WITNESS WHEREOF, this Amendment has been executed as of the date
first above written.
THE LEARNING EXPRESS, INC. FRANCHISEE
PRINT NAME OF LEGAL ENTITY (IF ANY):
By: _______________________ _____________________________________
Name:
Title:
BY: _______________________
PRINT NAME OF SIGNER: ____________________
PRINT TITLE OF SIGNER: ___________________
(if more than one signer, continue
signatures below)
BY: _______________________
PRINT NAME OF SIGNER: ____________________
PRINT TITLE OF SIGNER: ___________________
BY: _______________________
PRINT NAME OF SIGNER: ____________________
PRINT TITLE OF SIGNER: ___________________
BY: _______________________
PRINT NAME OF SIGNER: ____________________
PRINT TITLE OF SIGNER: ___________________
-7-
<PAGE> 15
EXHIBIT A
SUPPLEMENT TO LEARNING EXPRESS, INC. OPERATIONS MANUAL
This supplement is intended to outline the key operational requirements of each
Learning Express franchisee that will facilitate cooperation thereby enhancing
the development of the On-Line Store as well as the franchised stores. It does
not address in detail all operational procedures that will facilitate a seamless
environment for the Learning Express customer when shopping either through a
franchised location, the On-Line Store or both. Those detailed procedures are
under development and will be incorporated, along with the following, as part of
the Learning Express, Inc. Policies and Procedures section of the Operations
Manual.
1. IN-STORE KIOSK
A cooperative program between Learning Express franchisee and
LearningExpress.com E-commerce Company ("On-Line Store") that will
enhance customer service and broaden product offerings by enabling
access to the On-Line Store via a Kiosk unit.
OPERATIONAL REQUIREMENTS: Learning Express franchisee will provide the
appropriate retail space inside franchised location for placement of
the Kiosk. Franchisee will provide the appropriate utility connections
as well as subscription service to an Internet Service Provider ("ISP")
for access to the World Wide Web. Customer will have access only to the
LearningExpress.com URL.
COST TO FRANCHISEE: Ongoing communications (i.e., telephone line and
ISP subscription costs). On-line store will provide equipment and
fixture to franchisee at no cost.
2. MARKETING AND BRAND DEVELOPMENT
Learning Express, Inc. believes that the development of the On-Line
Store will enhance the business of its Franchisees by creating additional
awareness of the Learning Express name through various cooperative marketing and
advertising programs.
OPERATIONAL REQUIREMENTS: Learning Express franchisee will allow the
marketing and promotion of the On-Line Store as well as display the
LearningExpress.com URL on marketing materials including; catalogs, print ads,
marketing and advertising materials, bags and in-store display materials.
COST TO FRANCHISEE: Minimal, if any.
-8-
<PAGE> 16
OPERATIONAL REQUIREMENTS: Learning Express franchisee will allow up to
four direct mailings to customer mailing list that will promote in a joint
fashion, the On-Line Store and that particular local store.
COST TO FRANCHISEE: None
OPERATIONAL REQUIREMENTS: Learning Express franchisee will accept
On-Line Store gift certificates and coupons utilizing the same process as now
used for the franchised store system. On-Line Store gift certificates and
coupons will be validated via telephonic or electronic means.
COST TO FRANCHISEE: None
3. PRODUCT RETURNS
In order to provide seamless customer service and distinguish the
Learning Express On-Line Store from other like e-commerce companies, a
cooperative return process between the On-Line Store and the franchised store is
necessary.
OPERATIONAL REQUIREMENTS: Learning Express franchised store will
accept product returns from Learning Express On-Line Store customers following
the same inter-store procedure as outlined in the current Operations Manual.
- Returned products that are on the Learning Express
"Buying Program" will be retained into inventory by
store for sale at retail. Store will receive
reimbursement from On-Line Store for cost of item.
- Returned products that are not on "Buying Program" may
be returned to the On-Line Store fulfillment center.
Store will receive full reimbursement of credit given
to customer.
- Customer will receive instructions for those items
carried by the On-Line Store (i.e., direct ship by
mfg., affiliate sales, etc.) that are not returnable to
a franchised store location.
COST TO FRANCHISEE: Minimal to none
-9-
<PAGE> 17
RECEIPT
THIS OFFERING CIRCULAR SUMMARIZES CERTAIN PROVISIONS OF THE AMENDMENT
TO FRANCHISE AGREEMENT AND OTHER INFORMATION IN PLAIN LANGUAGE. READ THIS
OFFERING CIRCULAR AND ALL AGREEMENTS CAREFULLY. IF LEARNING EXPRESS OFFERS YOU
AN AMENDMENT TO FRANCHISE AGREEMENT, IT MUST PROVIDE THIS OFFERING CIRCULAR TO
YOU AT LEAST:
FIVE BUSINESS DAYS BEFORE YOU SIGN THAT AMENDMENT TO THE LOCAL STORE
FRANCHISE AGREEMENT.
IF LEARNING EXPRESS DOES NOT DELIVER THIS OFFERING CIRCULAR ON TIME OR
IF IT CONTAINS A FALSE OR MISLEADING STATEMENT OR A MATERIAL OMISSION, A
VIOLATION OF FEDERAL AND STATE LAW MAY HAVE OCCURRED AND SHOULD BE REPORTED TO
THE FEDERAL TRADE COMMISSION, WASHINGTON, D.C. 20580 AND THE CALIFORNIA
COMMISSIONER OF CORPORATIONS, 980 NINTH STREET, SUITE 500, SACRAMENTO,
CALIFORNIA 95814.
THIS OFFERING CIRCULAR INCLUDES A COPY OF THE AMENDMENT TO THE LOCAL
STORE FRANCHISE AGREEMENT, AS EXHIBIT 1, TOGETHER WITH THE SUPPLEMENT TO
LEARNING EXPRESS, INC. OPERATIONS MANUAL.
The effective date of this Offering Circular is: May 8, 2000
Print Name:_______________________________
___________________________
Witness
Signed:___________________________________
Address:__________________________________
__________________________________
Dated:____________________________________
Franchisor Copy
<PAGE> 18
RECEIPT
THIS OFFERING CIRCULAR SUMMARIZES CERTAIN PROVISIONS OF THE AMENDMENT
TO FRANCHISE AGREEMENT AND OTHER INFORMATION IN PLAIN LANGUAGE. READ THIS
OFFERING CIRCULAR AND ALL AGREEMENTS CAREFULLY. IF LEARNING EXPRESS OFFERS YOU
AN AMENDMENT TO FRANCHISE AGREEMENT, IT MUST PROVIDE THIS OFFERING CIRCULAR TO
YOU AT LEAST:
FIVE BUSINESS DAYS BEFORE YOU SIGN THAT AMENDMENT TO THE LOCAL STORE
FRANCHISE AGREEMENT.
IF LEARNING EXPRESS DOES NOT DELIVER THIS OFFERING CIRCULAR ON TIME OR
IF IT CONTAINS A FALSE OR MISLEADING STATEMENT OR A MATERIAL OMISSION, A
VIOLATION OF FEDERAL AND STATE LAW MAY HAVE OCCURRED AND SHOULD BE REPORTED TO
THE FEDERAL TRADE COMMISSION, WASHINGTON, D.C. 20580 AND THE CALIFORNIA
COMMISSIONER OF CORPORATIONS, 980 NINTH STREET, SUITE 500, SACRAMENTO,
CALIFORNIA 95814.
THIS OFFERING CIRCULAR INCLUDES A COPY OF THE AMENDMENT TO THE LOCAL
STORE FRANCHISE AGREEMENT, AS EXHIBIT 1, TOGETHER WITH SUPPLEMENT TO LEARNING
EXPRESS, INC. OPERATIONS MANUAL.
The effective date of this Offering Circular is: May 8, 2000
Print Name:________________________________
___________________________
Witness
Signed:____________________________________
Address:___________________________________
___________________________________
Dated:_____________________________________
Franchisee Copy
<PAGE> 1
EXHIBIT 99.9
[SCHOOL HOUSE GRAPHIC]
[LEARNING EXPRESS LOGO]
MEMO
TO: All California Local Store Franchisees
FROM: Jamie Levy
SUBJECT: Amendment to Franchise Agreement
DATE: May 9, 2000
As required by the State of California, enclosed is an Offering Circular
regarding the amendment to your Learning Express Local Store Franchise
Agreement, which is a part of our e-commerce venture. The last page is a
detachable receipt. Please sign and date the receipt and return it in the
enclosed, self-addressed, stamped envelope, at this time.
Thank you
LEARNING EXPRESS CORPORATE OFFICE
29 BUENA VISTA STREET
AYER, MA 01432
<PAGE> 1
[LEARNING EXPRESS LOGO]
Exhibit 99.10
[LEARNING EXPRESS TRAIN LOGO] LEARNING EXPRESS, INC.
a Massachusetts Corporation
29 Buena Vista Corporation
Ayer, Massachusetts 01432
978/889-1000
MATERIAL MODIFICATION TO FRANCHISE
OFFERING CIRCULAR FOR EXISTING FRANCHISEES
AS REQUIRED BY THE
CALIFORNIA FRANCHISE INVESTMENT LAW
THE CHANGES SET FORTH HEREIN ARE VOLUNTARY. IF FRANCHISEE DOES NOT RECEIVE THE
ATTACHED DISCLOSURE AT LEAST FIVE BUSINESS DAYS BEFORE THE EXECUTION OF THE
BINDING AGREEMENT, THE FRANCHISEE MAY, BY WRITTEN NOTICE, MAILED OR DELIVERED TO
LEARNING EXPRESS, INC., OR KENNETH F. DARROW, ESQ. (AGENT FOR LEARNING EXPRESS,
INC.), 9350 SOUTH DIXIE HIGHWAY, SUITE 1550, MIAMI, FLORIDA 33156, WITHIN FIVE
BUSINESS DAYS FOLLOWING THE EXECUTION OF THE AGREEMENT, RESCIND THE AGREEMENT TO
THE MODIFICATION.
THE COMPANY'S REGISTERED AGENT AUTHORIZED TO RECEIVE SERVICE OF PROCESS IN THE
STATE OF CALIFORNIA IS:
CALIFORNIA COMMISSIONER OF CORPORATIONS
980 NINTH STREET, SUITE 500,
SACRAMENTO, CALIFORNIA 95814
The effective date of this Offering Circular is: May 8, 2000
---------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
INTRODUCTION 1
ITEM 1 The Franchisor, Its Predecessors and Affiliates 2
ITEM 7 Initial Investment 3
ITEM 12 Territory 3
ITEM 22 Contracts 3
ITEM 23 Receipt 3
ACKNOWLEDGMENT OF RECEIPT (YOUR COPY)
ACKNOWLEDGMENT OF RECEIPT (OUR COPY)
</TABLE>
EXHIBITS TO THIS OFFERING CIRCULAR
EXHIBIT 1 - Proposed Amendment to Regional Franchise License Agreement
EXHIBIT 2 - Order of the California Department of Corporations Approving and
Registering this Offering Circular
<PAGE> 3
INTRODUCTION
Learning Express, Inc. (referred to as the "Company," "we" or "us") offers its
regional owners the opportunity to amend their existing Regional Franchise
License Agreement (the "License Agreement") on the terms stated in the
Amendment to Regional Franchise License Agreement ("Amendment") (see Exhibit 1
to this Offering Circular). Capitalized terms, not defined here, have the same
meaning as in the License Agreement or Offering Circular last on file with the
California Department of Corporations, describing the Regional Owner Program.
LearningExpress.com Holdings LLC, a Delaware limited liability company ("LECH")
is offering an aggregate of 2,607,750 of its Common Shares to our franchisees
and regional owners. LECH is the parent of LearningExpress.com LLC, a Delaware
limited liability company ("LEC"). LEC serves as the e-commerce distribution
channel of Learning Express. LEC will provide similar products and services as
the Learning Express franchised stores, but operate through the
LearningExpress.com World Wide Web site (the "On-Line Store"). LEC's business
operations will be integrated with participating Learning Express Local Store
Franchisees in an effort to minimize the sales channel conflict between the
Local Store Franchisees and the Web site and to maximize the options for
customers seeking to buy Learning Express products. Each regional owner under a
current License Agreement with us as of April 10, 2000 and which remains a
regional owner as of the date when the registration statement of LECH is
declared effective by the Securities and Exchange Commission and executes and
delivers an amendment to its License Agreement in the form of Exhibit 1 to this
Offering Circular, will receive 14,250 Common Shares of LECH for each regional
territory for which it is responsible
The key terms of the Amendment are, in addition to the issuance of 14,250
Common Shares of LECH:
(1) a provision stating that the operation of LEC's Online Store will not
violate the License Agreement; and
(2) Our agreement to pay the regional owner, commencing January 1, 2002, the
greater of 1/2 of the royalty due us from LEC with respect to net sales by
the Online Store to billing addresses within the regional owner's "regional
territory" under the License Agreement or 1 1/2% of the net sales to
billing addresses in the regional owner's regional territory.
Each regional owner which wishes to receive the Common Shares will need to
execute a "LearningExpress.com Holdings LLC First Amended and Restated
Operating Agreement" and an Amendment. LECH is not permitted by the Securities
Act of 1993 and the rules of the Securities and Exchange Commission, to issue
the
1
<PAGE> 4
Common Shares to regional owner until the registration statement has been
declared effective by the Securities and Exchange Commission. Accordingly, until
the registration statement has been declared effective and a final prospectus,
together with the operating agreement and the license agreement amendment
bearing the regional owner's signature and also executed by us, in the case of
the amendment and LECH, in the case of the operating agreement, have been
delivered back to the regional owner, the amendment and the operating agreement
will not be binding upon you. Prior to the effective date, execution and
delivery, you may withdraw your executed amendment and operating agreement at
any time by indicating in a written notice received by us at our address or sent
to us by a fax at (978) 889-1010, that you do not wish to continue with the
amendment and receive the Common Shares. If you do not withdraw, the amendment
and operating agreement, if executed and delivered by you to LECH, will become
binding agreements after the registration statement has been declared effective
and the final prospectus and executed amendment and operating agreement are sent
or delivered to you. The operating agreement executed by LECH, will evidence
your ownership of Common Shares.
Execution of the amendment and operating agreement is strictly optional on
your part. All regional owners are being offered the same form of amendment and
operating agreement. If you do not execute the amendment and operating
agreement, you will not receive the Common Shares and not receive a fee from the
operation of the On Line Store. Your status as a Learning Express regional owner
will in no way be altered or modified.
The modifications to the License Agreement, as a result of execution of the
Amendment are described under the applicable Uniform Franchise Offering Circular
item headings which follow. We are not presently offering License Agreements.
Therefore, we do not have a currently effective offering circular registered in
California.
ITEM 1
THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES
Our affiliate, LearningExpress.com LLC, is a Delaware limited liability
company formed in November 1999 ("LEC"). LEC maintains its principal business
address at 29 Buena Vista Street, Ayer, Massachusetts 01432. LEC serves as the
e-commerce distribution channel of Learning Express. LEC will provide similar
products and services as the Learning Express franchised stores, but operate
through the LearningExpress.com World Wide Web site (the "On-Line Store"). LEC's
business operations will be integrated with participating Local Store
Franchisees in an effort to minimize the sales channel conflict between the
Local Store Franchisees and the Web site and to maximize the options for
customers seeking to buy Learning Express products. LEC is itself a subsidiary
of LearningExpress.com Holdings, LLC,
2
<PAGE> 5
a Delaware limited liability company ("LECH") whose business address is also 29
Buena Vista Street, Ayer, Massachusetts 01432. LECH is partially owned by Local
Store Franchises in existence as of April 10, 2000 and our Regional Owners.
Under the Amendment, you will be entitled to receive certain payments as a
result of the operation of the Online Store (see Item 12).
ITEM 7
INITIAL INVESTMENT
There is no cost to you to receive benefits from the operation of the
Online Store.
ITEM 12
TERRITORY
Under the Amendment, we will pay you a commission for each calendar month
(or portion) during the term of the License Agreement, commencing with the month
ended January 31, 2002, unless LEC is in breach of a certain agreement between
us and LEC (the "LEI/LEC Agreement"), based on sales through the OnLine Store of
products ordered by customers whose "bill to" address is within the "Regional
Territory", as defined in the License Agreement. (See Item 1.)
ITEM 20
LIST OF OUTLETS
As of April 1, 2000, there were 13 Regional Owners in operation, with 2
operating in California. We propose to modify all License Agreements, including
all of those in California.
ITEM 22
CONTRACTS
Exhibit 1 is a copy of the proposed Amendment.
ITEM 23
RECEIPT
The last of this Offering Circular is a detachable receipt in duplicate
for this Offering Circular to be signed by you.
<PAGE> 6
AMENDMENT TO
REGIONAL FRANCHISE LICENSE AGREEMENT
THIS AMENDMENT, made and entered into this _____ day of
_______________, 2000, by and between The Learning Express, Inc., a Delaware
corporation ("LEI") and ___________________________________, a
("Regional Owner").
__________________________________
RECITALS
A. LEI and Regional Owner entered into a Learning Express
Regional Franchise License Agreement dated __________,
_______________ (as amended from time to time, the "License
Agreement");
B. LEI has entered into a License Agreement dated as of
November 5, 1999 (the "LEI/LEC Agreement"), with
LearningExpress.com, LLC, a Delaware limited liability company
("LEC"), pursuant to the terms and conditions of which LEI has
granted LEC a license (the "License") to use the System, as
defined in the LEI/LEC Agreement, in the development,
operation and promotion of an Internet based, on-line store
(the "On-Line Store");
C. As consideration for the License, LEC will pay LEI a
royalty (the "Royalty"), as defined in the LEI/LEC Agreement
with respect to "Net Sales," as defined in the LEI/LEC
Agreement, accrued by LEC via the On-Line Store;
D. LEI has entered into a Management Services Agreement,
dated as of November 5, 1999 (the "Management Agreement"),
by and among LEI, LEC and LearningExpress.com Holdings LLC,
a Delaware limited liability company ("LECH"), the principal
owner of LEC, pursuant to the terms and conditions of which,
among other matters, LEI has agreed, among other matters, to
(1) support LEC's use of the System in the On-Line Store
through assistance with marketing, promotion and exchange of
information regarding sales, customers, vendors, and (2)
contract with each of LEI's regional owners on the terms and
conditions set forth in an Amendment to each regional
owner's respective Regional Franchise License Agreement; and
E. LEI and Regional Owner wish to amend the License
Agreement and reflect the amendment in writing.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. The foregoing recitals are true and correct and are incorporated herein
by this reference.
2. (a) In consideration of Regional Owner's agreement to execute
and consummate the terms and conditions of this Amendment, LEI
shall cause LECH to issue to
-1-
<PAGE> 7
Regional Owner, 14,250 Common Shares of LECH (the "Shares"),
for each Regional Territory granted by LEI to Regional
Owner.
(b) Prior to issuance of the Shares, LECH may require Regional
Owner to execute an investment letter or letters to the
effect that the Shares are being acquired by Regional Owner
for Regional Owner's own account for investment purposes,
that Regional Owner has no present intention of offering,
distributing or otherwise disposing of the Shares, and that
Regional Owner shall agree not to dispose of the Shares
unless a registration statement or appropriate qualification
is then in effect under applicable state "Blue Sky" laws
with respect to the Shares or in the opinion of counsel for
LECH the Shares are exempt from the registration or
qualification requirements of such laws.
(c) Prior to issuance of the Shares, Regional Owner shall execute
and enter into the then current Operating Agreement for LECH
and be bound thereby, as a member of LECH. Such Operating
Agreement shall provide, among other matters, that, until
such time as LECH, or a successor entity, has completed an
"Initial Public Offering" (defined below), that all of the
Shares shall be forfeited to LECH immediately upon the
termination of either or both of the License Agreement or
this Amendment, provided, however, that the Shares shall not
be subject to forfeiture in the case where either or both of
the License Agreement and this Amendment are terminated in
connection with the sale or transfer of Regional Owner's
rights and obligations under the License Agreement to a new
regional owner.
(d) Regional Owner agrees that Regional Owner will not, for a
period of at least 180 days following the effective date of
any "Initial Public Offering" (defined below) by LECH (or
its successor-in-interest) or by LEC (or its
successor-in-interest), directly or indirectly, sell, offer
to sell or otherwise dispose of the Shares other than any
securities which are included in such Initial Public
Offering, provided, however, that LECH shall be under no
obligation to include the Shares or any portion thereof in
any Initial Public Offering. If the managing underwriter of
any such Initial Public Offering determines that a shorter
time period is appropriate, the aforementioned 180 day
period may be shortened consistent with the requirements of
such managing underwriter. An "Initial Public Offering"
shall mean LECH's, or a successor entity's, initial
distribution of securities in a firm commitment underwritten
public offering to the general public pursuant to a
registration statement filed with the Securities and
Exchange Commission.
3. (a) In consideration of Regional Owner's performance of Regional
Owner's obligations hereunder, LEI shall pay Regional Owner
with respect to each calendar month (or portion thereof)
during the Term, commencing with the month ended January 31,
2002, unless LEC is in breach of the LEI/LEC Agreement, a
fee (the "Fee") equal to the greater of (i) 50% of the
Royalty and (ii) 1.5% of "Net Sales," as defined in the
LEI/LEC Agreement, in either case as accrued during such
month from the sale through the On-Line Store of products
ordered by
-2-
<PAGE> 8
customers whose "bill to" address is within the "Regional
Territory", as defined in the License Agreement.
(b) Each installment of the Fee shall be payable to the Regional
Owner within 60 days after the end of the applicable calendar
month. Each payment shall be accompanied by a statement from
LEI, providing the basis for the calculation of the Fee. For
any amount not paid by LEI when due in accordance with the
foregoing, LEI shall pay Regional Owner a late payment penalty
equal to one percent (1%) per month of such unpaid amount, or
if less, the maximum amount permissible under applicable law.
(c) LEI shall have no obligation to pay the Fee in the event LEC
ceases operating the On-Line Store, if LEC becomes insolvent
or makes a general assignment for the benefit of creditors, or
unless otherwise prohibited by law, if a petition in
bankruptcy is filed by LEC, or such a petition is filed
against and consented to by LEC or not dismissed within 30
days, or if a bill in equity or other proceeding for the
appointment of a receiver of LEC or other custodian for LEC's
business or assets is filed and consented to by LEC or if a
receiver or other custodian (permanent or temporary) of LEC's
assets or property, or any part thereof, is appointed.
(d) Within 120 days following the end of each fiscal year, LEI
shall make available for review by Regional Owner, a
statement prepared by LEI's chief financial officer, for all
Net Sales for such fiscal year in the Regional Territory.
LEI shall cause LEC to maintain accurate books and records
pertaining to Net Sales for a period of two (2) years
following the close of the fiscal year for which such
determinations have been made and permit Regional Owner and
its representatives, upon at least 10 days prior written
notice to LEI, to make examinations of such books and
records during the usual business hours (without
interrupting LEC's normal conduct of its business) and at
the place LEC usually keeps its books and records.
4. Except for issuance of the Shares and payment of the Fee, Regional
Owner shall have no rights under the License Agreement or otherwise
against LEI or any other party with respect to the operations and sales
of LEC and the On-Line Store regardless of the billing address,
shipping address or other location of the applicable customer or other
person to whom any product purchased through the On-Line Store is
delivered or otherwise on account of any sale of any such product.
5. Except as modified by this Amendment, the License Agreement remains in
full force and effect.
In Witness Whereof, the parties hereto have executed this Amendment the
day and date first above written.
-3-
<PAGE> 9
LEI:
THE LEARNING EXPRESS, INC.
By: ______________________________
REGIONAL OWNER:
__________________________________
__________________________________
__________________________________
__________________________________
amendment to regional franchise license agreement
-4-
<PAGE> 10
RECEIPT
THIS OFFERING CIRCULAR SUMMARIZES CERTAIN PROVISIONS OF THE AMENDMENT TO
REGIONAL FRANCHISE LICENSE AGREEMENT AND OTHER INFORMATION IN PLAIN LANGUAGE.
READ THIS OFFERING CIRCULAR AND ALL AGREEMENTS CAREFULLY. IF LEARNING EXPRESS
OFFERS YOU AN AMENDMENT, IT MUST PROVIDE THIS OFFERING CIRCULAR TO YOU AT LEAST:
FIVE BUSINESS DAYS BEFORE YOU SIGN THAT AMENDMENT.
IF LEARNING EXPRESS DOES NOT DELIVER THIS OFFERING CIRCULAR ON TIME OR IF
IT CONTAINS A FALSE OR MISLEADING STATEMENT OR A MATERIAL OMISSION, A VIOLATION
OF FEDERAL AND STATE LAW MAY HAVE OCCURRED AND SHOULD BE REPORTED TO THE
FEDERAL TRADE COMMISSION, WASHINGTON, D.C. 20580 AND THE CALIFORNIA
COMMISSIONER OF CORPORATIONS, 980 NINTH STREET, SUITE 500, SACRAMENTO,
CALIFORNIA 95814.
THIS OFFERING CIRCULAR INCLUDES A COPY OF THE AMENDMENT TO THE REGIONAL
FRANCHISE LICENSE AGREEMENT, AS EXHIBIT 1.
The effective date of this Offering Circular is: May 8, 2000
Print Name:___________________
______________________
Witness
Signed:_______________________
Address:______________________
______________________________
Dated:________________________
Franchisor Copy
<PAGE> 11
RECEIPT
THIS OFFERING CIRCULAR SUMMARIZES CERTAIN PROVISIONS OF THE AMENDMENT
TO REGIONAL FRANCHISE LICENSE AGREEMENT AND OTHER INFORMATION IN PLAIN
LANGUAGE. READ THIS OFFERING CIRCULAR AND ALL AGREEMENTS CAREFULLY. IF LEARNING
EXPRESS OFFERS YOU AN AMENDMENT, IT MUST PROVIDE THIS OFFERING CIRCULAR TO YOU
AT LEAST:
FIVE BUSINESS DAYS BEFORE YOU SIGN THAT AMENDMENT.
IF LEARNING EXPRESS DOES NOT DELIVER THIS OFFERING CIRCULAR ON TIME
OR IF IT CONTAINS A FALSE OR MISLEADING STATEMENT OR A MATERIAL OMISSION, A
VIOLATION OF FEDERAL AND STATE LAW MAY HAVE OCCURRED AND SHOULD BE REPORTED TO
THE FEDERAL TRADE COMMISSION, WASHINGTON, D.C. 20580 AND THE CALIFORNIA
COMMISSIONER OF CORPORATIONS, 980 NINTH STREET, SUITE 500, SACRAMENTO,
CALIFORNIA 95814.
THIS OFFERING CIRCULAR INCLUDES A COPY OF THE AMENDMENT TO THE
REGIONAL FRANCHISE LICENSE AGREEMENT, AS EXHIBIT 1.
The effective date of this Offering Circular is: May 8, 2000
Print Name:_____________________
______________________
Witness
Signed:_________________________
Address:________________________
________________________________
Dated:__________________________
Franchisee Copy
<PAGE> 1
EXHIBIT 99.11
[LEARNING EXPRESS LOGO] [SCHOOL HOUSE GRAPHIC]
MEMO
TO: All California Regional Owners
FROM: Jamie Levy
SUBJECT: Amendment to License Agreement
DATE: May 9, 2000
As required by the State of California, enclosed is an Offering Circular
regarding the amendment to your Learning Express Regional Franchise License
Agreement, which is a part of our e-commerce venture. The last page is a
detachable receipt. Please sign and date the receipt and return it in the
enclosed, self-addressed, stamped envelope, at this time.
Thank you.
LEARNING EXPRESS CORPORATE OFFICE
29 BUENA VISTA STREET
AYER, MA 01432
