Exhibit 10.27(d)
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.
February 9, 2009
Christie Hefner
CAH LLC
628 North State Street
Chicago, IL 60610
Dear Christie:
This letter, when the enclosed copy has been
signed, dated and returned by you, and the revocation period as set
forth in paragraph 19. has passed, will evidence the agreement (the
“Agreement”) between Playboy Enterprises, Inc.
(“Playboy”) and you, regarding your separation as an
employee and officer of Playboy and shall be binding on Playboy and
you. You and Playboy agree as follows:
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Your employment with Playboy ended effective
January 31, 2009 (the “Employment End Date”). You will
receive severance and termination benefits only as described in
this Agreement. In particular, and except as provided in paragraph
2., you will receive severance pay in the amount of $2 million. The
total severance pay identified in this paragraph includes all
severance pay you might otherwise be entitled to under any policy,
plan or practice of Playboy and exceeds any severance pay that you
might otherwise be entitled to in consideration of the terms and
covenants in this Agreement.
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The severance pay set out in paragraph 1.a.
will be made in a lump sum within 10 days after the revocation
period set forth in paragraph 19. has expired.
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In the event Playboy enters into an agreement
***** on or before March 31, 2009 (an “Investment
Agreement”) which results in a Modified Change of Control, as
hereinafter defined, Playboy will pay you the additional sum of
$1,712,500 in a lump sum within 10 days after the date on which
such Modified Change of Control occurs; provided, however, that if
the circumstances of the transaction which forms the basis for such
Modified Change in Control are not circumstances which would also
be treated as a “Change in the ownership or effective control
of a corporation, or a change in the ownership of a substantial
portion of the assets of a corporation” for purposes of
Treasury Regulation Section 1.409A-3(i)(5), then such additional
sum shall instead be paid on October 31, 2010, provided a Modified
Change in Control has occurred prior to such date. The term
“Modified Change of Control” shall have the meaning set
forth in Section 1(b) of your Amended and Restated Severance
Agreement with Playboy dated as of September 1, 2008.
(“Severance Agreement”), without regard to Section
1(b)(vi) thereof and, in the
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event any payment is due under this paragraph,
you shall also be provided with the protections set forth in
Sections 6 and 7 of the Severance Agreement. Any payments made to
you in accordance with such Section 6 shall be made when called for
under such Section and in no event later than December 31 of the
year following the year in which the applicable taxes were paid.
Any payments made to you in accordance with such Section 7 shall
(i) be made when called for under such Section and in no event
later than December 31 of the year following the year in which the
applicable expenses were incurred, and (ii) not affect the amount
of any other expenses eligible for reimbursement or in kind
benefits to be provided in any other taxable year.
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You will receive a one-time grant of 30,000
Class B shares of Playboy’s common stock within 10 days after
the revocation period set forth in paragraph 19. has expired.
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3.
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You will receive, at the same time you receive
the payment under paragraph 1.b. above, a lump sum payment in the
amount of $22,211.55, representing 7 vacation carryover days as
indicated on Playboy’s payroll system. You certify that the
vacation reports submitted by you to payroll are complete and
accurate insofar as the number of vacation days taken by you during
the period January 1, 2008 through the Employment End Date.
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4.
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As of the Employment End Date, you will no
longer remain covered by any of Playboy’s health insurance
plans, and you will have the right to convert your life insurance
and long term disability insurance, applications for which must be
made within 31 days following the Employment End Date. All other
benefits, including participation in Playboy’s 401(k) plan,
will cease as of the Employment End Date.
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5.
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After the Employment End Date, you may elect
to continue your health insurance coverage under the Consolidated
Omnibus Budget Reconciliation Act (COBRA), paying premiums as they
become due. Coverage may be continued for you under COBRA for up to
18 months. You may contact Katy O’Mahony, at 312 373 2045 to
discuss your coverage.
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6.
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Any stock options that were granted to you and
which were vested as of January 31, 2009 are exercisable through
the “Option Expiration Date,” which is the 90th day
following January 31, 2009. Any unexercised vested options will
automatically expire if not exercised by the Option Expiration
Date. Any unvested options and unvested restricted stock units will
be extended on the date hereof until March 31, 2010; provided,
however, that (i) none of such options may be exercised after the
date hereof, and all of such unvested options and restricted stock
units shall lapse and be forfeited on March 31, 2009, unless an
Investment Agreement has been entered into by March 31, 2009
pursuant to paragraph 2.a. hereof, and (ii) if such an Investment
Agreement has been entered into by March 31, 2009 pursuant to
paragraph 2.a. hereof, such options and restricted stock units
shall lapse and be forfeited on March 31, 2010, unless a Modified
Change in Control has occurred prior to March 31, 2010. If a
Modified Change in Control occurs prior to March 31, 2010, all such
unvested options shall become fully vested and may be exercised
until March 31, 2010, unless the Company’s outstanding stock
options are sooner terminated as part of such Modified Change in
Control, and all of such restricted stock units shall become fully
vested, regardless of whether any performance targets have been
satisfied. This paragraph 6 shall apply notwithstanding any
provision in any stock option plan or agreement to the contrary.
Your contact for any option questions is Bob Campbell at 312
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373 2180. Playboy has provided you with
information regarding your stock options and the exercise
thereof.
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7.
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In addition to the severance payments Playboy
has committed to paying her, Playboy will pay Deb Parry the sum of
$60,000, net of her applicable tax withholding, payable in equal
installments over 12 months, the first of which payments will be
made within 10 days after the revocation period set forth in
paragraph 19. has expired.
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8.
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Playboy will reimburse you for all reasonable
business expenses incurred by you through January 31, 2009, and
charged to your Diners Club Card or other credit cards prior to the
payment due date of such credit cards, subject to submission of (I)
the credit card bills and (ii) invoices or other supporting
documentation indicating the business purpose of each charge,
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9.
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Playboy will directly pay to the firm of
Willkie Farr & Gallagher LLP, your attorneys, upon submission
of a detailed invoice, up to $25,000 to cover your actual legal
fees (at your attorneys’ standard hourly rates) and expenses
incurred in the negotiation of this Agreement. Such amount will be
treated by Playboy as a “working condition fringe”
under Section 132 of the Internal Revenue Code of 1986, as amended,
and therefore shall not be treated as taxable income to you.
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10.
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You shall be under no duty to mitigate any of
the amounts received by you hereunder by securing employment with a
subsequent employer or otherwise, nor shall any amounts received by
you from any subsequent employment or otherwise, if applicable,
entitle Playboy to any right to off-set the amount of severance pay
or any other amount it owes you in accordance with the terms of
this Agreement.
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11.
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You acknowledge that, as a result of your
position with Playboy, you had access to confidential information
and trade secrets of Playboy, including customer and employee
identification and contacts, information about customers or
vendors, business relationships, contract provisions, pricing,
margins, business plans, marketing plans, financial data, business
and customer strategy, techniques, models, software, solutions,
discussion guides, personal or performance information about
employees, research and development, patent applications and plans
or proposals related to the foregoing, which in each instance is:
(a) generated or collected by or utilized in the operations of
Playboy and relating to the actual or anticipated business or
research or development of Playboy or Playboy’s actual or
prospective clients; (b) not generally known within the industry;
and (b) of commercial value to Playboy (“Confidential
Information”). You will not, without Playboy’s prior
written permission, disclose Confidential Information to anyone
outside of Playboy, either during or after your employment with
Playboy, as long as such matters remain trade secrets or
confidential. Confidential Information shall not include any
information that: (a) is, or becomes, generally known to the public
without breach of the terms of this Agreement; (b) was known to you
prior to your employment with Playboy or learned by you
independently of your employment with Playboy; (c) is lawfully
obtained from a third party with no duty of confidentiality to
Playboy; or is required to be disclosed by law, provided that, you
shall if permitted by law promptly inform Playboy of any such
situations and shall, if permitted by law, take reasonable steps,
at Playboy’s expense, to prevent disclosure of confidential
information or trade secrets until Playboy
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has been informed of such required disclosure
and has had a reasonable oppo
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