First Amendment to Content License, Marketing and Sales Agreement between Playboy.com, Inc. and eFashion Solutions, LLC
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This amendment updates the agreement between Playboy.com, Inc. and eFashion Solutions, LLC regarding the operation, marketing, and sales of Playboy-branded merchandise. Key changes include EFS no longer being required to employ certain staff, new terms for creative services and merchandise discounts, revised marketing and royalty payment obligations, and updated conditions for termination if sales targets are not met. The amendment also clarifies procedures for inventory repurchase upon termination. These changes are effective as of March 1, 2008.
EX-10.13(B) 3 d76389_ex1013-b.txt FIRST AMENDMENT TO THE CONTENT LICENSE, MARKETING AND SALES AGREEMENT Exhibit 10.13(b) Portions of this Exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. The omissions have been indicated by asterisks ("*****"), and the omitted text has been filed separately with the Securities and Exchange Commission. FIRST AMENDMENT TO THE CONTENT LICENSE, MARKETING AND SALES AGREEMENT This First Amendment (this "First Amendment") effective as of March 1, 2008 ("First Amendment Effective Date"), by and between Playboy.com, Inc. ("Client") and eFashion Solutions, LLC ("EFS"), hereby amends that certain Content License, Marketing and Sales Agreement entered into by the parties and effective as of January 15, 2008 (the "Agreement"). All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement. This First Amendment is hereby incorporated into the Agreement by reference. WHEREAS, pursuant to Section 14.5 of the Agreement, the parties wish to amend the Agreement as set forth herein. NOW, THEREFORE, in consideration of the mutual promises and covenants herein and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, Client and EFS agree as follows: 1. Operation of the Playboy Commerce Business. 1.1. Notwithstanding anything to the contrary in Section 1.1(j) of the Agreement, the parties agree and acknowledge that EFS shall no longer be required to employ those individuals previously hired from Client and may terminate the employment of such individuals at the discretion of EFS. 1.2. The following shall be added as Section 1.1(n) of the Agreement: 1.1(n) Client-Requested Merchandise & Creative Services. In the event Client requests that EFS assist in the production of certain Merchandise (e.g., customized calendars), EFS will invoice Client, and Client will reimburse EFS, for such creative services at an hourly rate of *****. The parties agree that this hourly rate is calculated based upon the applicable EFS staff member's salary plus *****, and is therefore subject to change. 2. Merchandise Supplied to Client and Employees. Section 2.12 of the Agreement is hereby revised such that employees of Client and EFS shall be permitted to purchase Merchandise through the Playboy Commerce Business and shall receive a ***** discount on posted prices. In addition, EFS hereby grants Client, at no cost, an annual Merchandise allowance ("Allowance") of ***** for wholesale Merchandise acquisitions from EFS by Client for its own use, *****. In the event that Client does not use its entire Allowance for any Year of the Term, any remaining amount shall roll over for use in the next Year. EFS shall also provide and honor coupons granting a ***** discount off of Merchandise purchased through the Playboy Commerce Business to models participating in Client casting calls. 3. Advertising Commitments. 3.1. Section 4.1 of the Agreement is hereby deleted in its entirety and replaced with the following: 4.1. Marketing Commitment. EFS agrees it will spend on a monthly basis not less than ***** of the actual Net Merchandise Sales (as defined in Section 6.1) during the immediately preceding month on marketing the Playboy Commerce Business in order to maximize both Website and Catalog sales (the "Marketing Budget"). The Marketing Budget will be used by the EFS marketing team to promote the PLAYBOY and BUNNY SHOP brands, increase Catalog circulation, drive traffic to and sales on the Websites, purchase search engine placement, drive affiliate sales and to participate in other online marketing initiatives. In addition, EFS commits to continuous SEO efforts during the Term to maximize discovery of, and algorithmic search results for, the Websites. EFS will submit to Client a written marketing plan not less than sixty (60) days prior to the end of each calendar year for Client's review and approval and shall revise such plan as reasonably requested by Client. 3.2. Section 4.2 of the Agreement is hereby deleted in its entirety and replaced with the following: 4.2 This Section is intentionally left blank. 4. Payments and Fees. 4.1. Sections 6.1 and 6.2 of the Agreement are hereby replaced in their entirety with the following: 6.1 Royalties. EFS shall pay a royalty ("Royalty") to Client equal to ***** of the Net Merchandise Sales (as defined below) for the applicable Calendar Quarter (each as defined below). The Royalty calculation period shall begin upon the first order received by EFS via any order channel (e.g., on a Website, via mail, fax or telephone) and shall be paid to Client as set forth in Section 6.2(a). For purposes of this Agreement, "Net Merchandise Sales" shall be defined as total Merchandise sales derived through the Playboy Commerce Business via any order channel, including but not limited to international sales, less applicable, actual Merchandise returns, if any, during the applicable calendar quarter ("Calendar Quarter"). 6.2 Minimum Royalty. Notwithstanding revenue actually generated by EFS in connection with the Playboy Commerce Business hereunder, during each calendar year ("Year") of the Term, EFS shall pay to Client an annual minimum 2 guaranteed royalty in the amounts set forth in Exhibit 10 (the "Minimum Royalty"), payable in equal quarterly installments and due within fifteen (15) days of the end of each Calendar Quarter for the proceeding Calendar Quarter. (a) Within fifteen (15) days following the end of each Year of the Term, the parties will perform a true-up based upon the Minimum Royalty paid for the applicable Year and the Royalties payable to Client, whereby: (i) In the event that Royalties payable to Client are in excess of the Minimum Royalty paid in any applicable Year, (A) EFS shall pay Client the amount above the applicable Minimum Royalty for such Year within thirty (30) days of the end of the applicable Year; (B) EFS shall not be permitted to carry over any overages into the next Year and (C) EFS will not be eligible for any refund from any Minimum Royalty or Royalty previously owed or paid to Client. (ii) In the event Royalties payable to Client are less than the Minimum Royalty paid for an applicable Year, no additional payment will be required; provided however that EFS will not be permitted to offset the shortfall with any overages from any previous or subsequent Year, and a new Minimum Royalty will be due as set forth in this Section 6.2. For the avoidance of doubt, the Minimum Royalty is a minimum net sum from which no taxes or charges of any sort may be deducted. 4.2. Exhibit 10 of the Agreement is hereby replaced in its entirety as set forth in Attachment 1, attached hereto and hereby incorporated by reference. 4.3. ***** 5. Term and Termination. 5.1. Termination for Revenue Shortfall. In addition to Client's rights of termination pursuant to Section 10 of the Agreement, within forty-five (45) days following the end of each Year of the Term, Client will have the option to terminate the Agreement upon not less than ***** written notice in the event that EFS has not achieved a minimum of ***** of projected Net Merchandise Sales for such Year as set forth in Attachment 2, attached hereto and hereby incorporated by reference. 5.2. Effects of Termination. In addition to those effects of termination set forth in Section 10.4 of the Agreement, upon expiration or any termination of the Agreement by Client, including termination under Section 5.1 (except in the event of termination by Client for any breach by EFS): (a) Client will repurchase the remaining amount of the identified reimbursable Client Inventory as set forth in Attachment 3, attached hereto and hereby incorporated by 3 reference, at the full price paid for such Client Inventory by EFS (inventory transfer costs to be paid by EFS); and (b) In order to allow EFS to recoup its wholesale cost for any remaining Merchandise not repurchased by Client as set forth above, unless otherwise agreed by the parties in writing, for a maximum period of eighteen (18) months after termination, the remaining inventory may be sold by EFS via a Client website, as chosen by Client, and/or other third party online mechanism(s) that is approved in advance in writing by Client (e.g., sale/clearance webpages); provided however that any such third party online mechanism must include a direct link to the PlayboyStore.com Website home page. Any amounts received in connection with the sale of such Merchandise shall be included in Net Merchandise Sales and subject to the Royalty. (c) Provided however, that Subsections 5.2(a) and (b) above shall be conditioned upon demonstration by EFS, to Client's reasonable satisfaction, of commercially reasonable efforts by EFS to sell all applicable Client Inventory and other Merchandise via the Playboy Commerce Business immediately prior to expiration or termination of the Agreement and during the Term of the Agreement. 6. Miscellaneous. 6.1. No Replacement. Except as expressly set forth herein, no provision of this First Amendment shall be interpreted to replace or delete any provision of the Agreement. All provisions of the Agreement which are not expressly replaced or deleted by this First Amendment shall remain in full force and effect and shall, where appropriate, apply to the terms of this First Amendment. In the event of any conflict between the Agreement and this First Amendment, the terms of this First Amendment shall control. 6.2. Counterparts. This First Amendment may be executed in any number of counterparts. Any counterpart may be executed by facsimile, unless notarization is required under applicable law. All counterparts shall collectively constitute one and the same agreement. 6.3. Entire Agreement. The terms and conditions contained in this First Amendment and the Agreement (including the exhibits and/or schedules attached thereto) constitute the entire agreement between the parties relating to the subject matter and shall supersede all previous communications between the parties with respect to the subject matter of this First Amendment or of the Agreement. The remainder of this page is intentionally left blank. 4 IN WITNESS WHEREOF, the parties hereto, intending this First Amendment to be effective as of the First Amendment Effective Date, have caused this First Amendment to be executed by their respective duly authorized officers. EFASHION SOLUTIONS, LLC PLAYBOY.COM, INC. By: By: ------------------------- ---------------------------- Name: Name: ------------------------- ---------------------------- Title: Title: ------------------------- ---------------------------- Date: Date: ------------------------- ---------------------------- 5 ATTACHMENT 1 Exhibit 10 Minimum Royalty ----------------------------------- Minimum Year Royalty ----------------------------------- 2008 ***** ----------------------------------- 2009 ***** ----------------------------------- 2010 ***** ----------------------------------- 2011 ***** ----------------------------------- 2012 ***** ----------------------------------- 2013 ***** ----------------------------------- 6 ATTACHMENT 2 Projected Net Merchandise Sales by Year ---------------------------------------- Year Projected Net Merchandise Sales ---------------------------------------- 2008 ***** ---------------------------------------- 2009 ***** ---------------------------------------- 2010 ***** ---------------------------------------- 2011 ***** ---------------------------------------- 2012 ***** ---------------------------------------- 2013 ***** ---------------------------------------- 7 ATTACHMENT 3 Reimbursable Client Inventory Style Selling Report
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