\"I I hl'ull' I DPI SALES CONTRACT PROPOSAL Prepared by Lorraine De Vogue The following is an excerpt of the draft sales contract, provided by DPI: Term . The initial contract will be for two years, commencing July 1, 2022, and expiring June 30, 2024. This contract may be extended for another two years, if agreed to by both parties. - DPI may terminate the contract with 30 days notice without penalty. CTI may terminate the contract with 90 days notice with payment of a penalty. The contract can be terminated immediately if CTI is found to be in non-compliance with any of the agreed upon terms and conditions, except as otherwise stated in the agreement. Purchase commitments o DPI agrees to purchase a minimum volume per year of 875,000 units of games and puzzles, at an average selling price of $10.00 per unit. The maximum annual volume will not exceed 1,500,000 units during the term of this contract, unless othenNise agreed to by both parties. a DPI agrees to purchase a minimum of 375,000 units of Sookie dolls for $6.00 per unit. The maximum annual volume will not exceed 500,000 units during the term of this contract, unless othenNise agreed to by both parties. . CTI must be able to ship within 48 hours of receiving an order from DPI. If the items cannot be shipped within the specified time frame, the order will be cancelled, and it will reduce the minimum volumes that DPI commits to. o DPI will be able to set the selling price of all products purchased from CTI. o DPI has the right to return product for a full refund if not sold within four months. . CTI will be responsible for shipping the product to DPl's stores and for shipping any returns back to its own warehouses. 0 Note: This cost is estimated to be $0.25 per unit for games/puzzles and $0.18 per unit for dolls. Supplier requirements a CTI must list its annual financial information with Lutz and Booth Inc., a credit rating agency. . CTI must ensure that each product has a Universal Product Code (UPC) printed on the packaging. - CTI must comply with all product health and safety requirements and any additional DPI regulations related to the product. APPENDIX V (continued) DPI SALES CONTRACT PROPOSAL Prepared by Lorraine De Vogue DPI may require CTI to change its packaging periodically to comply with DPI specifications. Any costs for packing machine modifications will be CTI's responsibility. CTI will assign two people to be responsible for the DPI account. These two representatives will be able to deal with any issues that might arise between DPI and CTI. CTI will meet all DPI's commitments before servicing any other customers. Facility manufacturing standards CTI must comply with DPI's facility manufacturing standards, which include proper training, responsible sourcing, fair treatment of all employees including fair wages, and adherence to all other regulatory requirements for health and safety. o CTI must agree to a factory audit, allowing DPI qualified personnel access to the manufacturing plant upon request. This includes any facilities where items are manufactured by preferred vendors (such as Greenhaven). O CTI will be responsible for disclosing and scheduling audits for all facilities in which CTI products are manufactured. O CTI must manufacture product only in facilities that have been authorized by DPI; failure to do so could result in immediate termination of the agreement. o If CTI is found to be in non-compliance with any of DPI's standards, depending on the nature, CPI will have up to 15 days to rectify the issue to DPI's satisfaction, otherwise the contract will be terminated. Other items DPI guarantees it will include CTI products in its advertising at least twice during each year of the contract. DPI agrees to list CTI products on the company's online sales site with in-depth descriptions to promote consumer awareness. DPI will pay invoices within 90 days from the date the goods are received