Document:

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                                                                   EXHIBIT 10.32

Dated                                                                 2000-09-26

                          DISTRIBUTIONS AGREEMENT - USA

                                     BETWEEN

                  ANTHONY PETERS MANUFACTURING COMPANY LIMITED

                                       AND

                               EARLYCHILDHOOD.COM
<PAGE>

DISTRIBUTION AGREEMENT - Anthony Peters and Earlychildhood.com

This Agreement is made on the              day of                       2000

"Earlychildhood" means Earlychildhood.com L.L.C., a limited liability company
organized in California, U.S.A. and having its principal address at 2 Lower
Ragsdale Drive, Monterey, California 93940, U.S.A. (hereinafter referred to as
EC.)

ANTHONY PETERS MANUFACTURING COMPANY LIMITED, a company registered in England
and having its Registered Office at Sterling House, 1 Loughborough Road, West
Bridgford, Nottingham NG2 7LJ and its principal place of business at Thorpe
Road, Melton Mowbray, Leicestershire LE13 1SL (hereinafter referred to as `AP')

WHEREAS the parties have agreed that EC will distribute certain toys produced by
ELC under the following terms and conditions:

THEREFORE it is agreed as follows:

1.     DEFINITIONS

       "Brand Guidelines" means the guidelines to be produced by ELC and AP and
       agreed by EC (such agreement not to be unreasonably withheld or delayed)
       setting out the criteria for the marketing of ELC branded product `ELC'
       means Early Learning Centre, a trading division of John Menzies (UK)
       Limited, a company incorporated in England and having its principal place
       of business at South Marston Park, Swindon, SN3 4TJ, UK.

       'ELC Toys' means ELC owned products, or any of them, manufactured in Hong
       Kong or China, as being marketed now or in the future or have been
       marketed in the UK under the ELC label and for which ELC has all
       requisite rights of distribution in the Territory.

       'Market' means the educational market for children, parents and schools,
       which is accessed through direct marketing, catalogue, and Internet
       sales.

       'Territory' means the United States of America.

       'Trademarks' means the United States common law and registered trademarks
       of ELC and design and Early Learning Centre and any similar designations,
       such as "Early Learning".
<PAGE>

2.     TERM

       Subject to the terms of clause 5 below, this Agreement shall endure from
       the date hereof until 31* December 2003 (the `First Term') and, provided
       that:

       (a)    the targeted purchase levels as specified in clause 3.5 below have
              been met by EC and

       (b)    EC has produced to AP by 30th June 2001 a business plan showing
              EC's intentions for the remainder of the First Term and for a
              second term of 3 years which shall continue from 1st January 2004
              to 31st December 2005 (the `Second Term') which plan shall
              include, but not be limited to, details of the Market and the
              direct, education, internet and any other channels within the
              Market, performance by EC, customer profiles and any other
              information which AP may consider relevant to setting targeted
              purchase levels for the Second Term and which plan is reasonably
              acceptable to AP; and

       (c)    The parties have reasonably agreed on targeted purchase levels for
              the Second Term.

              this Agreement shall, unless (a), (b), or (c) above have not been
              met, be automatically renewed for the Second Term on expiry of
              which this Agreement shall cease and terminate without notice by
              either party.

              If AP exercises its rights under clause 5.3 below within 60 days
              after 31 December 2003, the Second Term shall be deemed not to
              have started.

3.     APPOINTMENT AND AUTHORIZATION

3.1    AP hereby appoints EC to distribute the ELC Toys within the Market in the
       Territory during the term of this Agreement.

3.2    It is a precondition of this contract that ELC shall approve in writing
       the terms and conditions agreed herein. No variations to any of the terms
       and conditions herein shall be made without the consent in writing of ELC
       and EC.

3.3    Subject to the terms of this Agreement all rights to market, distribute
       and sell the ELC Toys in the Territory are reserved to ELC. AP and ELC
       acknowledge the importance of maintaining the integrity of the ELC brand
       and therefore will not undermine EC's efforts in the Market by charging
       EC higher prices than ELC and AP would offer to a third party
       distributor, except that any such prices would be based on volume of
       trade. EC shall not set up any web-site or other online trading or
       information facility under the name `ELC'; "Early Learning Centre';
       `Early Learning' or any other similar name. It is also agreed that ELC
       shall retain exclusive rights to set up or operate any web-site or other
<PAGE>

       online trading or information facility using the name `ELC'; `Early
       Learning Centre'; `Early Learning' or any other substantially similar
       name and to accept orders from, and supply direct to the Territory.
       In the event that ELC requires a distribution network anywhere within the
       Territory for transactions completed directly with ELC by way of
       electronic trading, ELC and AP agree to offer EC the right to supply such
       distribution network provided that reasonably satisfactory commercial
       terms can be agreed between the parties, before offering such rights to
       any third party. EC shall include on any Web-site offering ELC Toys, a
       disclaimer, which shall state that the ELC Toys may only be supplied or
       sold to parties within the Territory.

3.4    The ELC Toys shall be delivered to a place or places within the Territory
       as agreed between the parties.

3.5    EC agrees to purchase from AP at least the following targeted quantities
       of ELC Toys, during each of the periods undernoted, the value being
       calculated as the ELC FOB Hong Kong price prevailing at the time of any
       order by EC, hereinafter referred to as the `Value'.

3.5.1  During the period from the start of the Agreement until 30th June 2002
       US$ 3 Million.

3.5.2  By the end of the First Term (31st December 2003) the total Value from
       the start of the agreement to be US$ 10.5 Million or else AP has the
       right to terminate the agreement as set forth in 5.3 below.

3.6    For the purposes of 3.5 above, a purchase is made at the time a purchase
       order is received for the products. Payment for all goods to be made by
       Direct Bank Transfer at least seven days prior to shipment. All rights to
       goods to remain with ELC until payment has been received in full. Any
       additional charges incurred in transport or warehousing due to late
       payment to be the responsibility of EC.

4.     OBLIGATIONS BY EC AND LICENSE TO USE ELC RIGHTS

4.1    AP sub-licenses EC to use such ELC trade marks on the ELC toys and other
       intellectual property rights as ELC has (the `ELC Rights') for the
       purposes only of marketing and distributing the ELC Toys during the term
       of this Agreement within the Market in the Territory. This sub-license
       will immediately cease, on the expiry or termination for whatever reason
       of this Agreement or any Agreement between ELC and AP relating to the
       distribution of ELC Toys in the Market in the Territory. EC will be
       permitted, without liability, a reasonable time thereafter to discontinue
       its use of such ELC trademarks. (E.g., EC will not be in breach of this
       agreement if it continues to use such ELC trademarks until the next
       scheduled publication of any of its catalogs or brochures where such ELC
       trademarks are used.)
<PAGE>

4.2    EC will not use the sub-license of the ELC Rights granted in 4.1 except
       in accordance with the Brand Guidelines and with ELC's prior written
       approval, such approval not to be unreasonably withheld or delayed.

4.3    EC will use the normal packaging as supplied by ELC but EC is responsible
       for providing any further information on the packaging that may be
       legally required in any part of the Territory or for any particular
       channel in the Market. All such changes to packaging, or any other
       variations to ELC's packaging, together with any proposed catalogues or
       promotional material to be produced or used by EC must be submitted to
       ELC for its prior written approval which approval shall be based on the
       consistency of such packaging, catalogues or material with the Brand
       Guidelines, such approval not to be unreasonably withheld or delayed. ELC
       to respond to all requests within 7 working days.

4.4    For the avoidance of doubt the parties agree that ELC Rights are and will
       remain the property of ELC. EC shall not register or attempt to register
       any of the ELC Rights or assist any third party in registering such
       rights. In the event of any breach of this provision, and in addition to
       other rights and remedies of AP, Earlychildhood shall assign back or make
       reasonable efforts to procure the assignment back, to ELC of all such
       rights and shall indemnify AP against any legal expenses incurred in
       relation thereto.

4.5    EC agrees that it will assist AP and ELC, at ELC's sole cost and expense,
       to the extent reasonably necessary to protect ELC's rights in the event
       of infringements by third parties of the Trademarks or ELC's intellectual
       property rights. ELC may commence or prosecute any claims or suits in its
       own name or, subject to EC's consent not be unreasonably withheld, in the
       name of AP and/or EC or may join AP and/or EC as a party or parties
       thereto. EC shall promptly notify AP in writing of any infringements or
       imitations by products similar to those covered by this Agreement which
       may come to EC's attention and ELC shall have the sole right to determine
       whether or not any action shall be taken on account of such infringements
       or imitations. EC shall not institute any suit or take any actions on
       account of any such infringements or imitations without the prior written
       consent of ELC, such consent not to be unreasonably withheld.

5.     TERMINATION

5.1    Either party, in addition to any other rights available to it, may
       terminate this Agreement forthwith by written notice to the other party
       in the event of an act of default by the other, as defined in clause 5.2
       below.

5.2    Any of the following events shall constitute an act of default:
<PAGE>

       5.2.1  EC fails to pay any sum of money owned under the Agreement when
              due, but only upon the expiration of 10 business days following
              written notice to EC by AP specifying to EC the amount owing under
              the Agreement.

       5.2.2  Any breach by Earlychildhood, of either clause 4.2, 4.3 or 4.4 of
              this Agreement.

       5.2.3  The other party fails to perform any material obligation under
              this Agreement, and, if remediable, such failure remains uncured
              for more than thirty (30) days after receipt of notice thereof.

       5.2.4  In the event of a change of control of EC, EC shall inform AP
              immediately of such change of control and, in the event that AP
              reasonably considers that such change of control will be
              prejudicial to the continuance of this Agreement, AP shall have
              the right to terminate this Agreement forthwith by written notice
              to EC. For the purposes of this clause, `control' shall mean (i)
              the ownership or control directly or indirectly of more than 50%
              of the voting share capital of EC; or (ii) the ability to direct
              the casting of more than 50% of the votes exercisable at general
              meetings of EC on all, or substantially all, matters; or (iii) the
              right to appoint or remove directors of EC holding a majority of
              the voting rights at meetings of the board on all, or
              substantially all, matters.

       5.2.5  The other party commits an act of bankruptcy, goes or is put into
              liquidation or receivership or has an administrator or
              administrative receiver appointed, passes a resolution for its
              winding up (otherwise than for the purpose of amalgamation or
              reconstruction) or makes any assignment for the benefit of its
              creditors.

5.3    In the event that EC fails to meet the targeted purchase levels as
       specified in clause 3.5 above as at either 30th June 2002, or 31st
       December 2003, then AP's sole recourse will be to decline to renew this
       Agreement for a Second Term, if this Agreement continues to a Second
       Term, this Agreement shall include any further necessary changes as
       agreed to by the parties.

5.4    AP agrees that EC shall be entitled to dispose of ELC Toys in its
       possession or for which binding purchase orders have been placed and paid
       for following the termination or expiration of this Agreement.

6.     CONFIDENTIALITY

       The parties agree that this Agreement and all information provided by
       either party to the other, or by ELC to EC, hereunder or in connection
       herewith shall be Confidential Information and neither party will
       disclose to any third party
<PAGE>

       (excluding ELC to whom such confidential information may be disclosed)
       any such Confidential Information.

       Confidential Information will not include:

          6.1    Information that at the time of disclosure is, or after
                 disclosure otherwise than as a result of breach of this
                 Agreement becomes publicly known; or

          6.2    Information required to be produced by any court or public or
                 regulatory authority.

       Any breach of this clause will entitle the non-breaching party to
       terminate the Agreement immediately and to obtain immediate preliminary
       and permanent injunctive relief, together with any damages to which the
       non-breaching party may be entitled. The provisions of this clause 6o
       survive the termination or expiration of this Agreement.

7.     ASSIGNMENT AND SUB DISTRIBUTION

       FC may not assign this Agreement or transfer any of its rights hereunder
       to a third party without the prior written consent of AP and ELC, such
       consent not to be unreasonably withheld or delayed. AP hereby agrees that
       EC may assign this Agreement to a wholly owned subsidiary company of EC.
       EC may not appoint any sub-distributors or agents. This agreement shall
       be binding on any successors or assigns of the parties or of ELC.

8.     FORCE MAJEURE

       In the event that AP is unable to supply any goods ordered during the
       term of this Agreement because of circumstances outwith the control of AP
       including, but without prejudice to the generality of the foregoing, any
       strikes, lock outs, labour disputes of any kind, industrial action of any
       nature whatsoever (whether any of the foregoing relate to AP's employees
       or others) fire, floods, storms, acts of God, shortage of materials, EC
       will have no claim against AP and AP will not be liable to EC for any
       loss or damage howsoever arising or sustained as a result therefrom.
       However, all purchase orders received by EC pursuant to this Agreement
       shall be credited toward the target quantities in Section 3.5 above, even
       if ELC or AP is unable to meet those orders due to the circumstances that
       occur in this section titled "Force Majeure."

9.     NOTICES

       All notices required under this Agreement shall be in writing addressed
       to the parties at any of the addresses above, unless notification of a
       change of address is given in writing.
<PAGE>

10.    WHOLE AGREEMENT, GOVERNING LAW

       This Agreement forms the whole agreement between the parties and shall
       not form part of any other agreement or arrangement between the parties.
       Any alterations or amendments to this Agreement shall be made in writing
       and signed by an authorized signatory of each party. This Agreement shall
       be construed in accordance with the laws of England and the parties
       submit to the jurisdiction of the English courts.

11.    SEVERABILITY

       If any of the provisions of this Agreement is found by any Court or other
       competent authority to be void, illegal or unenforceable, such provision
       shall be deemed to be deleted from this Agreement and the remaining
       provisions of this Agreement shall continue in full force and effect.
       Notwithstanding the foregoing the parties shall thereupon negotiate in
       good faith in order to agree the terms of a mutually satisfactory
       provision to be substituted for the provision so found to be void illegal
       or unenforceable.

       IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
       their authorized representatives:

       ANTHONY PETERS MANUFACTURING COMPANY LTD.

         By                /s/ M.A. Austin
         Print Name        M.A. Austin
         Date              26th September 2000
         Place             Melton Mowbray, England

       EARLY CHILDHOOD.COM LLC

         By                /s/ R.C. Elliott
         Print Name        R.C. Elliott
         Date              9th October 2000
         Place             Monterey, CA 93940<PAGE>

                                                                   Exhibit 10.40
                             AMENDED AND RESTATED
                        DEFERRED COMPENSATION AGREEMENT
                        -------------------------------

          THIS AGREEMENT is made this 1/st/ day of January 1, 2000, by and
between SELECT MEDICAL CORPORATION, a Delaware corporation ("Employer"), having
an address at P.O. Box 2034, 4716 Old Gettysburg Road, Mechanicsburg, PA 17055,
and ROCCO A. ORTENZIO, an individual ("Executive"), having an address at 7
Westwind Drive, Lemoyne, PA 17043.

          The parties hereto, intending to be legally bound hereby, agree as
follows:

          1.   Deferrals. For the period beginning on March 1, 1997 (the "Start
               ---------
Date") and ending on December 31, 2000 (the "End Date"), Executive agrees to
defer payment of his compensation (including base salary and bonus payments, if
any) to him in accordance with the terms and conditions of this Agreement. In
consideration of Executive's agreement to defer payment of such compensation,
Employer will establish on its books a deferred compensation account for
Executive (the "Account"), and will credit to the Account one hundred percent
(100%) of the compensation (including base salary and bonus payments, if any)
that would otherwise be payable to Executive under the Senior Management
Agreement between Employer and Executive, dated February 7, 1997, or any
successor agreement governing Executive's employment by the Employer as its
chief Executive Officer. Such amounts shall be credited to the Account as of the
date they would otherwise have been payment to Executive.

          2.   Agreement Unfunded. This Agreement shall be unfunded for tax
               ------------------
purposes and for the purposes of Title I of the Employee Retirement Income
Security Act of 1974, as amended. Executive shall have the status of a general
unsecured creditor of Employer and this Agreement shall constitute a mere
promise by Employer to make payments in the future. Employer may establish a
grantor trust to which general corporate assets may be contributed in order to
assist Employer in meeting its obligation under this Plan.

          3.   Interest on Deferred Amounts. For the period beginning on the
               ----------------------------
Start Date and ending on the December 31, 999, any amounts credited to the
Account pursuant to Paragraph 1 above shall accrue interest at the rate of six
percent (6%) per year compounded annually, from the date such amounts are
credited to the Account until December 31, 1999. Thereafter, no interest shall
accrue or be credited or paid with respect to any deferred compensation or the
Account.

          4.   Payment. The amount credited to the Account shall be paid to
               -------
Executive's spouse, or if Executive's spouse has predeceased Executive, to
Executive's estate, in a single sum payment. Such payment will made within sixty
(60) days after Executive's death.
<PAGE>

          5.   Amendment or Termination. This Agreement may be amended or
               ------------------------
terminated only upon the mutual agreement of Employer and Executive and only as
documented in a written amendment signed by both parties hereto.

          6.   Non-Alienation. No benefits under this Agreement shall be subject
               --------------
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of Executive or Executive's
spouse or estate, and any attempt to do so shall be void and unenforceable.
Such benefits shall not be subject to or liable for the debts, contracts,
liabilities, engagements, or torts of Executive or Executive's spouse or estate.

          7.   General Funds of Employer. Nothing contained in this Agreement
               -------------------------
and no action taken pursuant to the provisions of this Agreement shall create,
or be construed to create, a trust of any kind (except as provided in Paragraph
2), or a fiduciary relationship between Employer and Executive, Executive's
spouse or estate, or any other person. To the extent that any person acquires a
right to receive payments from Employer under this Agreement, such right shall
be greater than the right of an unsecured general creditor of Employer.

          8.   No Effect on Benefit Plans. No deferred compensation payable
               --------------------------
under this Agreement shall be deemed salary or other compensation to Executive
for the purpose of computing benefits to which he may be entitled under any
pension or profit-sharing plan or other arrangement of Employer for providing
benefits to its employees.

          9.   Interpretation of Agreement. Employer shall have full power and
               ---------------------------
authority to interpret, construe, and administer this Agreement.  Employer's
interpretation and construction thereof, and actions thereunder, including any
valuation of the Account, or its determination of the amount or recipient of
payments to be made therefrom, shall be binding and conclusive on all persons
for all purposes.  Employer shall not be liable to any person for any action
taken or omitted in connection with the interpretation and administration of
this Agreement unless attributable to its own willful misconduct.

          10.  Binding Nature. This Agreement shall be binding upon and inure
               --------------
to the benefit of Employer, its successors and assigns, and Executive and
Executive's heirs, executors, administrators, and legal representatives.

          11.  Applicable Law. This Agreement shall be construed in accordance
               --------------
with and governed by the law of the Commonwealth of Pennsylvania.
<PAGE>

          IN WITNESS WHEREOF, Employer has caused this Agreement to be executive
by its duly authorized officer and Executive has hereunto set his hand and seal
on the date first above written.

                                             Employer:

                                             SELECT MEDICAL CORPORATION, a
                                             Delaware corporation

                                             By: /s/ Michael E. Tarvin
                                                --------------------------------
                                                  Michael E. Tarvin,
                                                  Senior Vice President

                                             Executive:

                                             By: /s/ Rocco A. Ortenzio
                                                --------------------------------
                                                 Rocco A. Ortenzio

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