CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT
HAVE BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
EXHIBIT 10.48.1
FIRST AMENDMENT TO
RETAIL MAGAZINE SUPPLY AGREEMENT
This FIRST AMENDMENT TO RETAIL MAGAZINE SUPPLY AGREEMENT BETWEEN XXXXXX & XXXXX,
INC. AND INTERNATIONAL PERIODICAL DISTRIBUTORS INC., dated August 6, 2004, as
revised, is made and entered into as of April 1, 2006 by and between Xxxxxx &
Noble, Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("B&N") and
International Periodical Distributors, Inc., a wholly-owned subsidiary of Source
Interlink Companies, Inc., 00000 Xxxxxxxxx Xxxxxx Xxxx., Xxxxx 000, Xxxxxx
Xxxxxxx, Xxxxxxx 00000 ("IPD").
NOW THEREFORE, for good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
1. REFERENCE TO AND EFFECT ON AGREEMENT. Subject to the terms hereof and except
as specifically modified hereby, the Retail Magazine Supply Agreement dated as
of August 6, 2004 between B&N and IPD (the "Agreement") shall remain in full
force and effect. The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of either party
hereto, or constitute a waiver or amendment of any provision of the Agreement,
except as set forth herein. Solely with respect to the Imported Publications (as
defined herein), the Term of this Agreement shall be extended to March 31, 2010.
For all publications other than the Imported Publications, the Term of the
Agreement shall terminate or expire according to the terms of the Agreement as
set forth in Section 2 of the Agreement.
2. IMPORTED PUBLICATIONS. From and after April 1, 2006 and subject to the terms
and conditions of the Agreement (as herein amended), B&N agrees to purchase, and
IPD agrees to sell, during the four-year period ending March 31, 2010, each
Store's requirements for magazines published by any person or entity whose
primary place of business is located anywhere in the world other than the United
States of America (the "Imported Publications"). B&N hereby agrees to refrain
from purchasing Imported Publications, except from IPD under the terms and
conditions set forth in this Agreement and except as with respect to certain
publications mutually agreed from time to time by the parties hereto (to be
referred to by the parties as "Excluded Imported Publications"), such agreement
not to be unreasonably withheld. However, B&N may continue to purchase Imported
Publications from those companies that do not currently use IPD from B&N
magazine distributors other than IPD until July 1, 2006.
3. EXHIBIT A AMENDED. Exhibit A to the Agreement is hereby deleted in its
entirety and Exhibit A attached hereto substituted in lieu thereof.
4. ADDITIONAL REQUIREMENTS. In order to maintain its exclusive status with
respect to the distribution of Imported Publications to B&N, IPD must, (a) by
the end of the first year following the execution of this First Amendment,
achieve, and thereafter throughout the term of this First Amendment maintain, at
least 90% of the retail sales value of Imported Publications on an annualized
basis of what B&N currently achieves through its current non-IPD magazine
distributors, (b) maintain the ability, throughout the term of this First
Amendment, to supply substantially all Imported Publications supplied by IPD to
B&N as of April 1, 2006, in substantially the same quantities, and, (c) supply
all Imported Publications ranked within Xxxxxx & Xxxxx'x top 1,000 best sellers
as of April 1, 2006, throughout the term of this First Amendment. Relating to
current non-IPD business, IPD may include in this calculation the sales of
Imported Publications within B&N that neither IPD nor any other B&N magazine
distributor currently provide to B&N.
5. ROLE OF SOURCE INTERLINK INTERNATIONAL (SII). Immediately following the
execution of this amendment IPD shall contract with its affiliate Source
Interlink International (SII) to provide display promotion marketing, product
procurement, and publisher support services on behalf of both B&N and IPD
towards the objective of furthering B&N's profile as a leading provider of
Imported Publications within the U.S. market.
6. RETURNS PROCESSING. As part of this amendment IPD, through its Acme division,
agrees that during the Term it will pick up and process full copy returns of all
unsold magazines of all B&N magazine distributors, on a timetable to be mutually
agreed upon by IPD and B&N. IPD also agrees to pickup unsold paperback books
from B&N stores within its truck footprint. Until March 31, 2010, but only for
so long as B&N uses a returns processor other than it's magazine distributor,
Acme shall have the exclusive right to process magazine returns on behalf of all
B&N magazine distributors in accordance with the pricing schedule listed in
Exhibit C to this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized representatives as of the day
and year first written above.
INTERNATIONAL PERIODICAL XXXXXX & NOBLE, INC.
DISTRIBUTORS, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxx
----------------------- -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx Xxxxx
Title: Executive VP Title: VP Newsstand
EXHIBIT A
TERMS AND CONDITIONS OF SALE
A. TITLE & OBLIGATION
Upon receipt of the periodicals, B&N shall take title and be obligated to
pay in accordance with the terms below.
B. PAYMENT TERMS
All payments for Publications by B&N shall be made at the earlier of the
date of sale based on its scanned sales data or 120 days after receipt subject
to subsequent returns and shrink reconciliation. B&N shall cause its sales
systems to record the sale of the periodicals upon the product being scanned at
the point of sale. Sales information by store, day, unit, title and issue shall
be sent on a daily basis to IPD. IPD shall prepare remittance reports based on
the information pertaining to this scanned sales information. IPD will pay the
freight for shipments to B&N.
C. PURCHASE PRICE
B&N shall pay a purchase price for Non-Imported Publications recorded as sold by
its Stores equal to (a) [***] off of the retail price printed on the cover of
each Publication or printed on a label affixed to such cover (the "Cover Price")
in the case of Publications other than weeklies and (b) [***] off of the Cover
Price for weekly Publications. B&N shall pay a purchase price for Imported
Publications recorded as sold by its Stores equal to the Total Applicable
Discount off the Cover Price, as so stated and set forth below:
NON-WEEKLY PUBLICATIONS
APPLICABLE DISCOUNT
CALENDAR YEAR ----------------------------------------------
------------------------ APPLICABLE TOTAL
BEGINNING ENDING INCREMENTAL APPLICABLE
APRIL 1, MARCH 31, BASE DISCOUNT DISCOUNT DISCOUNT
--------- --------- ------------- ----------- ----------
2006 2007 [***] [***] [***]
2007 2008 [***] [***] [***]
2008 2009 [***] [***] [***]
2009 2010 [***] [***] [***]
WEEKLY PUBLICATIONS
APPLICABLE DISCOUNT
CALENDAR YEAR ----------------------------------------------
------------------------ APPLICABLE TOTAL
BEGINNING ENDING INCREMENTAL APPLICABLE
APRIL 1, MARCH 31, BASE DISCOUNT DISCOUNT DISCOUNT
--------- --------- ------------- ----------- ----------
2006 2007 [***] [***] [***]
2007 2008 [***] [***] [***]
2008 2009 [***] [***] [***]
2009 2010 [***] [***] [***]
-------------
[***] indicates confidential material redacted and filed separately with the
Commission
All payments shall be made in accordance with the provisions of EXHIBIT B. In
addition to the Total Applicable Discount relating to both non-Imported
Publications and Imported Publications, B&N shall be entitled to take a payment
deduction, as a cash discount, equivalent to [***] of the calculated net
payment.
D. RETURNS.
For a period of two years after the date of this Agreement, B&N shall cause the
front covers of such unsold copies to be torn from the Publication and delivered
to ACME Processing in accordance with current practices and rates, including
payment by B&N of the normal and customary expenses currently incurred with
respect to the shipment of the front covers to ACME Processing. B&N hereby
agrees to use its best efforts to cause all returned publications to be
destroyed or otherwise rendered unsaleable.
E. DEFERRED RETURNS CREDITS.
In the case of non-weekly publications only: Effective with week 3 as displayed
on EXHIBIT B, B&N agrees to suspend all cash deductions resulting from returns
credited by IPD to B&N for product invoiced on a non-pay on scan basis prior to
the effective date of this agreement from the prior IPD account. The total
amount has been projected to be [***]. Effective with week 1, B&N shall deduct
[***] from each weekly payment, to be concluded in week 104. Further, effective
with week 27, B&N and IPD agree to take the difference between the projected
amount of suspended returns credits and the actual value of the returns credits,
and amortize this difference over weeks 27 through 104. Such amortized amounts
shall either supplement or subtract from the ongoing scheduled weekly deductions
of [***]
F. TAX COLLECTION AND INDEMNITY
B&N shall collect and promptly pay to the appropriate taxing authorities all
sales, property or other taxes, assessments, or other public or private charges
levied against or payable with respect to the periodicals sold by IPD to B&N.
B&N hereby agrees to indemnify and hold IPD harmless from any and all claims,
demands, costs or liabilities (including reasonable attorney's fees) arising
from any taxes, assessments or charges related to the periodicals being sold to
B&N by IPD.
----------------
[***] indicates confidential material redacted and filed separately with the
Commission
EXHIBIT C FIRST AMENDMENT
ACME UNIT RETURNS PROCESSING PRICING SCHEDULE
AMENDMENT UNIT
YEAR COST
--------- ------
1 [***]
2 [***]
3 [***]
---------------
[***] indicates confidential material redacted and filed separately with the
Commission
EXHIBIT D FIRST AMENDMENT
EXCLUDED IMPORTED PUBLICATIONS
None.
