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Sample Business ContractsHome: Sample Business Contracts:
CREDIT AGREEMENT
Dated as of March 11, 2003
among
PEI HOLDINGS, INC.,
as Borrower,
BANK OF AMERICA, N.A.,
as Administrative Agent
and
The Other Lenders Party Hereto
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TABLE OF CONTENTS
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SECTION PAGE
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.....................................................................1
1.01 Defined Terms........................................................................................1
1.02 Other Interpretive Provisions.......................................................................16
1.03 Accounting Terms....................................................................................16
1.04 Rounding............................................................................................16
1.05 References to Agreements and Laws...................................................................16
1.06 Letter of Credit Amounts............................................................................17
ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS..............................................................17
2.01 Committed Loans.....................................................................................17
2.02 Committed Borrowings, Conversions and Continuations of Committed Loans..............................17
2.03 Letters of Credit...................................................................................18
2.04 Intentionally Omitted...............................................................................23
2.05 Prepayments/Mandatory Commitment Reductions.........................................................23
2.06 Optional Reduction or Termination of Commitments....................................................23
2.07 Repayment of Loans..................................................................................24
2.08 Interest............................................................................................24
2.09 Fees................................................................................................24
2.10 Computation of Interest and Fees....................................................................25
2.11 Evidence of Debt....................................................................................25
2.12 Payments Generally..................................................................................25
2.13 Sharing of Payments.................................................................................26
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY............................................................27
3.01 Taxes...............................................................................................27
3.02 Illegality..........................................................................................28
3.03 Inability to Determine Rates........................................................................28
3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on IBOR Committed Loans...............29
3.05 Funding Losses......................................................................................29
3.06 Matters Applicable to all Requests for Compensation.................................................30
3.07 Replacement of Affected Lenders.....................................................................30
3.08 Survival............................................................................................30
ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS..........................................................30
4.01 Conditions of Initial Credit Extension..............................................................30
4.02 Conditions to all Credit Extensions.................................................................32
ARTICLE V REPRESENTATIONS AND WARRANTIES......................................................................32
5.01 Existence, Qualification and Power; Compliance with Laws............................................32
5.02 Authorization; No Contravention.....................................................................32
5.03 Governmental Authorization..........................................................................33
5.04 Binding Effect......................................................................................33
5.05 Financial Statements; No Material Adverse Effect....................................................33
5.06 Litigation..........................................................................................33
5.07 No Default..........................................................................................33
5.08 Environmental Compliance............................................................................34
5.09 Insurance...........................................................................................34
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5.10 Taxes...............................................................................................34
5.11 ERISA Compliance....................................................................................34
5.12 Subsidiaries........................................................................................34
5.13 Disclosure..........................................................................................35
5.14 Compliance with Laws................................................................................35
5.15 Margin Regulations; Investment Company Act; Public Utility Holding Company Act......................35
5.16 Senior Secured Note Debt............................................................................35
ARTICLE VI AFFIRMATIVE COVENANTS..............................................................................35
6.01 Financial Statements................................................................................35
6.02 Certificates; Other Information.....................................................................36
6.03 Notices.............................................................................................36
6.04 Preservation of Existence, Etc......................................................................37
6.05 Compliance with Laws................................................................................37
6.06 Books and Records...................................................................................37
6.07 Inspection Rights...................................................................................37
6.08 Use of Proceeds.....................................................................................37
6.09 Financial Covenants.................................................................................37
6.10 Additional Guarantors...............................................................................38
6.11 Designation of Restricted and Unrestricted Subsidiaries.............................................38
6.12 Appraisal of Playboy Mansion........................................................................38
ARTICLE VII NEGATIVE COVENANTS................................................................................39
7.01 Liens...............................................................................................39
7.02 Investments.........................................................................................39
7.03 Indebtedness........................................................................................39
7.04 Fundamental Changes.................................................................................39
7.05 Dispositions........................................................................................39
7.06 Restricted Payments.................................................................................40
7.07 Limitations in respect of Subordinated Liabilities..................................................40
7.08 Limitations in respect of Senior Secured Note Debt..................................................40
7.09 Limitations in respect of Califa Obligation.........................................................40
7.10 Change in Nature of Business........................................................................41
7.11 Transactions with Affiliates........................................................................41
7.12 Margin Regulations..................................................................................41
7.13 Disqualified Stock..................................................................................41
7.14 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries...........................41
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES...................................................................41
8.01 Events of Default...................................................................................41
8.02 Remedies Upon Event of Default......................................................................43
8.03 Application of Funds................................................................................43
ARTICLE IX AGENT..............................................................................................44
9.01 Appointment and Authorization of Agent..............................................................44
9.02 Delegation of Duties................................................................................44
9.03 Liability of Agent..................................................................................45
9.04 Reliance by Agent...................................................................................45
9.05 Notice of Default...................................................................................45
9.06 Credit Decision; Disclosure of Information by Agent.................................................45
9.07 Indemnification of Agent............................................................................46
9.08 Agent in its Individual Capacity....................................................................46
9.09 Successor Agent.....................................................................................46
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9.10 Agent May File Proofs of Claim......................................................................47
9.11 Loan Guaranty Matters...............................................................................47
9.12 Collateral Matters..................................................................................47
9.13 Remedial Action.....................................................................................49
9.14 Co-Agent............................................................................................49
ARTICLE X MISCELLANEOUS.......................................................................................49
10.01 Amendments, Etc.....................................................................................49
10.02 Notices and Other Communications; Facsimile Copies..................................................50
10.03 No Waiver; Cumulative Remedies......................................................................51
10.04 Attorney Costs, Expenses and Taxes..................................................................51
10.05 Indemnification by Borrower.........................................................................51
10.06 Payments Set Aside..................................................................................52
10.07 Successors and Assigns..............................................................................52
10.08 Confidentiality.....................................................................................54
10.09 Set-off.............................................................................................54
10.10 Interest Rate Limitation............................................................................55
10.11 Counterparts........................................................................................55
10.12 Integration.........................................................................................55
10.13 Survival of Representations and Warranties..........................................................55
10.14 Severability........................................................................................55
10.15 Governing Law; Submission to Jurisdiction...........................................................56
10.16 Waiver of Right to Trial by Jury....................................................................56
10.17 Restrictions on Foreign Collateral..................................................................56
10.18 Right of First Refusal..............................................................................56
10.19 Agent's Liens.......................................................................................57
SIGNATURES...................................................................................................S-1
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SCHEDULES
2.01 Commitments and Pro Rata Shares
5.06 Litigation
5.08 Environmental Matters
5.12 Subsidiaries, Restricted Subsidiaries and Equity Investments
10.02 Addresses for Notices
EXHIBITS
Form of
A Committed Loan Notice
B Note
C Compliance Certificate
D Assignment and Assumption Agreement
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CREDIT AGREEMENT
This CREDIT AGREEMENT ("Agreement") is entered into as of March 11, 2003,
among PEI HOLDINGS, INC., a Delaware corporation ("Borrower"), each lender from
time to time party hereto (collectively, the "Lenders" and individually, a
"Lender"), and BANK OF AMERICA, N.A., as Agent.
Borrower has requested that Lenders provide a revolving credit facility,
and Lenders are willing to do so on the terms and conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms.
As used in this Agreement, the following terms shall have the meanings set
forth below:
"Adjusted EBITDA" means net income, less income or plus loss from
discontinued operations and extraordinary items, plus income taxes, plus
interest expense, plus depreciation, depletion, and amortization (including
programming amortization), plus restructuring charges, plus non-cash expenses or
losses or any other non-cash charges, and minus cash investments in programming,
all determined for Playboy and its Restricted Subsidiaries on a consolidated
basis and in accordance with GAAP.
"Administrative Agent" or "Agent" means Bank of America in its capacity as
(a) Administrative Agent under any of the Loan Documents and/or (b) issuer of
Letters of Credit hereunder, as the context requires, or any successor Agent.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise (it being understood that PTVLA is not an Affiliate of
Playboy on the Closing Date as a result of its ownership and governance
structure as in effect on the Closing Date). For purposes of this definition,
the terms "controlling," "controlled by" and "under common control with" shall
have correlative meanings.
"Agent Fee Letter" has the meaning specified in Section 2.09(b).
"Agent's Office" means Agent's address and, as appropriate, account as set
forth on Schedule 10.02, or such other address or account as Agent may from time
to time notify Borrower and Lenders.
"Agent-Related Persons" means Agent, together with its Affiliates, and the
officers, directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Aggregate Commitments" means the Commitments of all Lenders.
"Agreement" means this Credit Agreement.
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"Applicable Rate" means, from time to time, the following percentages per
annum, based upon Playboy's Adjusted EBITDA (the "Financial Covenant") as set
forth in the most recent quarterly Compliance Certificate received by Agent
pursuant to Section 6.02(b):
Applicable Rate
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IBOR Committed Base Rate
Pricing Commitment Loans and Letter Committed
Level Financial Covenant Fee of Credit Fees Loans
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1 Greater than $35,000,000 0.40% 2.50% 1.00%
2 Greater than $30,000,000, but less than or 0.40% 3.00% 1.50%
equal to $35,000,000
3 Greater than $25,000,000, but less than or 0.50% 3.25% 1.75%
equal to $30,000,000
4 Greater than $20,000,000, but less than or 0.50% 3.50% 2.00%
equal to $25,000,000
5 Less than or equal to $20,000,000 0.50% 4.00% 2.50%
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The Applicable Margin will be an effect from the first day of the month
following the delivery date of each quarterly Compliance Certificate (an
"Adjustment Date") until the first day of the month following the delivery date
of the next quarterly Compliance Certificate. The Applicable Rate in effect from
the Closing Date through November 1, 2003 shall be determined based upon Pricing
Level 4. If no Compliance Certificate is delivered when due in accordance with
Section 6.02(b), the then-applicable Pricing Level will remain in effect until
actual delivery of such Compliance Certificate, at which time the Pricing Level
will be adjusted retroactive to the applicable Adjustment Date.
"Assignment and Assumption Agreement" means an Assignment and Assumption
Agreement substantially in the form of Exhibit D.
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel.
"Attributable Debt" means, in respect of a sale and leaseback transaction,
at the time of determination, (i) in the case of a capital lease, the Capital
Lease Obligation in respect thereof, or (ii) in all other cases, the present
value of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction,
including any period for which such lease has been extended or may, at the
option of the lessor, be extended. Such present value shall be calculated using
a discount rate equal to the rate of interest implicit in such transaction,
determined in accordance with GAAP.
"Audited Financial Statements" means the audited consolidated balance
sheet of Playboy and its Subsidiaries for the fiscal year ended December 31,
2001, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such fiscal year of Playboy and its
Subsidiaries, including the notes thereto, all prepared by Ernst & Young, LLP.
"Available Revolver" means, at any time, the amount by which the Aggregate
Commitments at such time exceeds the sum of (a) the L/C Obligations and (b) the
aggregate principal balance of the Loans at such time.
"Availability Period" means the period from and including the Closing Date
to the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.06, and (c) the date of termination
of the commitment of each Lender to make Loans and of the obligation of Agent to
make L/C Credit Extensions pursuant to Section 8.02.
"Bank of America" means Bank of America, N.A. and its successors.
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"Base Amount" means 70% of Net Worth as of December 31, 2002, as reflected
in Borrower's 10-K filing as of such date.
"Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest
in effect for such day as publicly announced from time to time by Bank of
America as its "prime rate." The "prime rate" is a rate set by Bank of America
based upon various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change. The "prime rate" is not necessarily the lowest rate charged by Bank of
America on its loans and is set by Bank of America in its sole discretion. If
the "prime rate" becomes unavailable during the term of this Agreement, Agent
may designate a substitute index after notifying Borrower thereof.
"Base Rate Committed Loan" means a Committed Loan that is a Base Rate
Loan.
"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"Board of Directors" means:
(a) with respect to a corporation, the board of directors of the
corporation;
(b) with respect to a partnership, the board of directors of the general
partner of the partnership; and
(c) with respect to any other Person, the board or committee of such
Person serving a similar function.
Unless the context otherwise provides, "Board of Directors" refers to the
Board of Directors of Playboy.
"Borrower" has the meaning specified in the introductory paragraph hereto.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in fact
closed in, New York, New York, Chicago, Illinois or the state where Agent's
Office is located and, if such day relates to any IBOR Committed Loan, means any
such day on which dealings in Dollar deposits are conducted by and between banks
in the Grand Cayman, British West Indies offshore dollar interbank market.
"Califa Debt Documents" means the Asset Purchase Agreement, dated as of
June 29, 2001, among Playboy, Califa Entertainment Group, Inc., V.O.D., Inc.
Steven Hirsch, Dewi James and William Asher.
"Califa Obligation" means any obligation of Playboy, Borrower or any
Restricted Subsidiary pursuant to or arising in connection with the Califa Debt
Documents or any related agreement, in each case as amended from time to time.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock;
(c) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
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(d) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of assets of,
the issuing Person; provided, that the foregoing expressly excludes any deferred
compensation, phantom equity or similar benefit plan.
"Cash Collateralize" has the meaning specified in Section 2.03(g)
"Cash Equivalents" means:
(a) United States dollars;
(b) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof (provided,
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than one year from the date of
acquisition;
(c) certificates of deposit and eurodollar time deposits with maturities
of one year or less from the date of acquisition, bankers' acceptances with
maturities not exceeding one year and overnight bank deposits, in each case,
with any domestic commercial bank having capital and surplus in excess of
$500,000,000 and a Thomson Bank Watch Rating of "B" or better;
(d) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (b) and (c) above
entered into with any financial institution meeting the qualifications specified
in clause (c) above;
(e) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in each case
maturing within one year after the date of acquisition;
(f) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (e) of this
definition; and
(g) other investment instruments approved in writing by Agent.
"Change of Control" means the occurrence of any "Change of Control" as
defined in the Senior Secured Note Indenture.
"Closing Date" means the first date all the conditions precedent in
Section 4.01 are satisfied or waived in accordance with Section 10.01 (or, in
the case of Section 4.01(b), waived by the Person entitled to receive the
applicable payment).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Collateral" shall mean any and all assets and rights and interests in or
to property of Playboy and each of the other Loan Parties, whether real or
personal, tangible or intangible, in which a Lien is granted or purported to be
granted pursuant to the Collateral Documents.
"Collateral Documents" means the Security Agreements, the Pledge
Agreements, the Deed of Trust and all other agreements, instruments and
documents now or hereafter executed and delivered in connection with this
Agreement pursuant to which Liens are granted or purported to be granted to
Agent in Collateral securing all or part of the Obligations each in form and
substance reasonably satisfactory to Agent.
"Commitment" means, as to each Lender, its obligation to (a) make
Committed Loans to Borrower pursuant to Section 2.01 and (b) purchase
participations in L/C Obligations, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender's name
on Schedule 2.01, or in the Assignment and Assumption Agreement pursuant to
which such Lender becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement.
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"Committed Borrowing" means a borrowing consisting of simultaneous
Committed Loans of the same Type and, in the case of IBOR Committed Loans,
having the same Interest Period made by each of Lenders pursuant to Section
2.01.
"Committed Loan" has the meaning specified in Section 2.01.
"Committed Loan Notice" means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other, or (c) a continuation
of IBOR Committed Loans, pursuant to Section 2.02(a), which, if in writing,
shall be substantially in the form of Exhibit A.
"Companies" means, collectively, the Loan Parties and each other
Restricted Subsidiary of Playboy.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Extension" means a Committed Borrowing or an L/C Credit Extension.
"Debtor Relief Laws" means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.
"Deed of Trust" means the Deed of Trust with Assignment of Rents, Security
Agreement and Fixture Filing executed by Playboy Enterprises International, Inc.
in favor of Agent with respect to the Playboy Mansion.
"Default" means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.
"Default Rate" means an interest rate equal to (a) the Base Rate plus (b)
the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per
annum; provided, however, that with respect to an IBOR Committed Loan, the
Default Rate shall be an interest rate equal to the interest rate (including any
Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in each
case to the fullest extent permitted by applicable Laws.
"Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Committed Loans or participations in L/C Obligations required to
be funded by it hereunder within one Business Day of the date required to be
funded by it hereunder, (b) has otherwise failed to pay over to Agent or any
other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute,
or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.
"Disposition" or "Dispose" means (a) the sale, lease, conveyance or other
disposition of any assets or rights including by way of merger or consolidation
other than in the ordinary course of business consistent with past practices;
provided that the sale, conveyance or other disposition of all or substantially
all of the assets of Playboy or Borrower will be governed by Section 7.04; and
(b) the issuance of Equity Interests by any of Playboy's Restricted Subsidiaries
or the sale by Playboy or any of its Restricted Subsidiaries of Equity Interests
in any of its Restricted Subsidiaries. Notwithstanding the foregoing, a
"Disposition" shall not include any transaction specifically excluded from the
definition of the term "Asset Sale" contained in the Senior Secured Note
Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures (excluding any maturity as the result of the
redemption thereof at the option of the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Senior Secured Notes mature, except
to the extent that such Capital Stock is (either mandatorily or at the option of
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the issuer thereof) redeemable solely with, or exchangeable solely for, any
Equity Interests of Playboy that are not Disqualified Stock; provided, however,
that only the portion of Capital Stock or other security which so matures, is
mandatorily redeemable or is so redeemable at the option of the holder prior to
such date will be deemed to be Disqualified Stock; provided further that, if
such Capital Stock or other security is issued to any employee or to any plan
for the benefit of employees of Playboy or its Subsidiaries or by any plan to
such employees, such Capital Stock or other security will not constitute
Disqualified Stock solely because it may be required to be repurchased by
Playboy or any of its Subsidiaries in order to satisfy applicable statutory or
regulatory obligations as a result of such employee's termination, death or
disability. Notwithstanding the preceding sentence, any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require Borrower to repurchase such Capital Stock upon the occurrence of a
change of control or an asset sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that Borrower may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 7.06.
"Dollar" and "$" mean lawful money of the United States.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary of
Borrower that was formed under the laws of the United States or any state
thereof or the District of Columbia or that Guarantees or otherwise provides
direct credit support for any Indebtedness of Playboy or Borrower.
"Eligible Assignee" has the meaning specified in Section 10.07(h).
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Playboy, any other Company or any of their
respective Restricted Subsidiaries directly or indirectly resulting from or
based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, not
amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Playboy within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by Playboy or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by Playboy or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Playboy
or any ERISA Affiliate, in each case under circumstances that would reasonably
be expected to have a Material Adverse Effect.
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"Event of Default" has the meaning specified in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by Agent.
"Foreign Subsidiary" means any Restricted Subsidiary of Playboy other than
a Domestic Restricted Subsidiary.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of government.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantors" means, collectively, (a) Playboy and (b) each direct or
indirect Domestic Restricted Subsidiary of Playboy (initially excluding the
Playboy.com Entities) that executes a Loan Guaranty in accordance with the
provisions hereof; and their respective successors and assigns, unless and until
such time as such Guarantor is released from its Loan Guaranty pursuant to the
provisions hereof.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hefner" means Hugh M. Hefner, his decedent's estate, or any entity or
trust controlled by Hugh M. Hefner or his executor.
"Hefner Debt" means the Indebtedness of Playboy.com to Hugh M. Hefner in
the principal amount immediately prior to the Closing Date of $27,235,490.69.
"Hefner Debt Exchange" means the exchange of the Hefner Debt for (a)
$10,000,000 of Series A Preferred Stock of Borrower, (b) $500,000 cash and (c)
approximately $16,700,000 of Series B Preferred Stock of Borrower.
"Hefner Option" means a non-assignable option granted to Hefner, which
option shall be subordinate to the Deed of Trust, pursuant to which Hefner will
have the right to purchase the Playboy Mansion and all or a portion of the
Mansion Personal Property for a price payable in cash at closing determined
pursuant to a third party appraisal process approved by a majority of the
independent directors of Playboy.
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"Hefner Securities" means (i) preferred stock of the Borrower with an
aggregate liquidation preference of $26,735,490.69 issued in exchange for
promissory notes of Playboy.com outstanding on the Closing Date and (ii) Equity
Securities of Playboy (other than Disqualified Stock) issued in exchange
therefor.
"IBOR Base Rate" has the meaning set forth in the definition of IBOR Rate.
"IBOR Rate" means for any Interest Period with respect to any IBOR
Committed Loan, a rate per annum determined by Agent pursuant to the following
formula, rounded upward to the nearest 1/100 of one percent:
IBOR Base Rate
IBOR Rate = ----------------------------------------
1.00 -Reserve Percentage
Where,
(1) "IBOR Base Rate" means, for such Interest Period, the interest rate
per annum (rounded upward to the nearest 1/100 of one percent) at
which Bank of America's Grand Cayman Banking Center, Grand Cayman,
British West Indies, would offer U.S. dollar deposits for the
applicable Interest Period to other major banks in the offshore
dollar inter bank market, as adjusted from time to time in Bank of
America's sole discretion for then-applicable deposit insurance
assessment rates and other regulatory costs; and
(2) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency Liabilities, as
defined in Federal Reserve Board Regulation D, rounded upward to the
nearest 1/100 of one percent. The percentage will be expressed as a
decimal, and will include, but not be limited to, marginal,
emergency, supplemental, special, and other reserve percentages.
If at any time Bank of America is no longer acting as Agent hereunder, the
IBOR Base Rate may be revised to substitute another index as agreed to by the
replacement Agent and Borrower.
"IBOR Committed Loan" means a Committed Loan that bears interest at a rate
based on the IBOR Rate.
"Increase Amount" means 70% of Net Income for the period from the Closing
Date through the last day of the applicable quarter, excluding the negative
results from any quarter, if any.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof), excluding
letters of credit securing obligations other than obligations described in
clauses (a), (b), (d) and (f) of this paragraph and entered into in the ordinary
course of business of such Person, to the extent such letters of credit are not
drawn upon, or if drawn upon, to the extent such drawing is reimbursed no later
than the third business day following receipt by such Person of a demand for
reimbursement;
(c) in respect of banker's acceptances;
(d) representing Capital Lease Obligations or Attributable Debt;
(e) representing the balance deferred and unpaid of the purchase price of
any property or services, except any such balance that constitutes an accrued
expense or trade payable, which purchase price is due more than six months after
the date of placing such property in service or taking delivery and title or the
completing of such services excluding any obligation to the extent that it is
either required to be or the option of each Person may be satisfied solely
through the issuance of Equity Interests of Playboy that are not Disqualified
Stock; or
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(f) representing any Swap Contract,
if and to the extent any of the preceding items (other than letters of credit
and Swap Contracts) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes (i) all Indebtedness of others secured by a Lien on any
asset of the specified Person whether or not such Indebtedness is assumed by the
specified Person, provided that the amount of such Indebtedness shall be the
lesser of (A) the fair market value of such asset as of the date of
determination and (B) the amount of such Indebtedness and, to the extent not
otherwise included, the Guarantee by the specified Person of any Indebtedness of
any other Person; (ii) obligations of such Person and its Restricted
Subsidiaries to repay Disqualified Stock; and (iii) the liquidation preference
of all preferred stock of any such Person's Restricted Subsidiaries other than
the Playboy.com Series A Preferred Stock and the Hefner Securities.
The amount of any Indebtedness outstanding as of any date shall be:
(1) with respect to any contingent obligation included as Indebtedness,
the maximum liability upon the occurrence of the contingency giving rise to the
obligation;
(2) with respect to any Swap Contract, the net amount payable if such Swap
Contract terminated at that time due to default by such Person;
(3) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(4) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness.
"Indemnified Liabilities" has the meaning specified in Section 10.05.
"Indemnitees" has the meaning specified in Section 10.05.
"Information" has the meaning specified in Section 10.08.
"Intercreditor Agreement" means the Intercreditor Agreement of even date
herewith among Agent, Trustee, Playboy, Borrower and Playboy's Domestic
Restricted Subsidiaries in existence as of the date hereof.
"Interest Coverage Ratio" means the ratio of Adjusted EBITDA to cash
interest expense, all determined for Playboy and its Restricted Subsidiaries on
a consolidated basis and in accordance with GAAP.
"Interest Payment Date" means, (a) as to any IBOR Committed Loan, the last
day of each Interest Period applicable to such Loan and the Maturity Date;
provided, however, that if any Interest Period for a IBOR Committed Loan exceeds
three months, the respective dates that fall every three months after the
beginning of such Interest Period shall also be Interest Payment Dates; and (b)
as to any Base Rate Loan, the last Business Day of each March, June, September
and December and the Maturity Date.
"Interest Period" means as to each IBOR Committed Loan, the period
commencing on the date such IBOR Committed Loan is disbursed or converted to or
continued as a IBOR Committed Loan and ending on the date one, two, three or, if
available to Lenders, six or twelve months thereafter, as selected by Borrower
in its Committed Loan Notice; provided that:
(a) any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless, such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and
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(c) no Interest Period shall extend beyond the Maturity Date.
"Investment" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons, including Affiliates, in the forms
of loans, including Guarantees or other obligations, advances or capital
contributions (excluding commission, travel and similar advances to officers,
employees, customers and suppliers made consistent with past practices),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If Borrower or any Restricted Subsidiary of Borrower sells or otherwise disposes
of any Equity Interests of any direct or indirect Restricted Subsidiary of
Borrower such that, after giving effect to any such sale or disposition, such
Person is no longer a Restricted Subsidiary of Borrower, Borrower shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Restricted
Subsidiary not sold or disposed of in an amount determined as provided in
Section 4.07(c) of the Senior Secured Note Indenture. The acquisition by
Borrower or any Restricted Subsidiary of Borrower of a Person that holds an
Investment in a third Person shall be deemed to be an Investment by Borrower or
such Restricted Subsidiary in such third Person in an amount equal to the fair
market value of the Investment held by the acquired Person or such third Person
or an amount determined as provided in the final paragraph of Section 4.07(c) of
the Senior Secured Note Indenture.
"IRS" means the United States Internal Revenue Service and any Person
succeeding to the functions thereof.
"Laws" means, any law, treaty, rule or regulation of determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"L/C Advance" means, with respect to each Lender, such Lender's funding of
its participation in any L/C Borrowing in accordance with its Pro Rata Share.
"L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when made
or refinanced as a Committed Borrowing.
"L/C Credit Extension" means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the renewal or
increase of the amount thereof.
"L/C Obligations" means, as at any date of determination, the aggregate
undrawn face amount of all outstanding Letters of Credit plus the aggregate of
all Unreimbursed Amounts, including all L/C Borrowings.
"Lender" has the meaning specified in the introductory paragraph hereto
and, as the context requires, includes Agent in its capacity as issuer of
Letters of Credit hereunder.
"Lending Office" means, as to any Lender, the office or offices of such
Lender described as such on Schedule 10.02, or such other office or offices as a
Lender may from time to time notify Borrower and Agent.
"Letter of Credit" means any letter of credit issued hereunder. A Letter
of Credit may be a commercial letter of credit or a standby letter of credit.
"Letter of Credit Application" means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by Agent.
"Letter of Credit Expiration Date" means the day that is seven days prior
to the Maturity Date then in effect (or, if such day is not a Business Day, the
next preceding Business Day).
"Letter of Credit Sublimit" means an amount equal to $20,000,000. The
Letter of Credit Sublimit is part of, and not in addition to, the Aggregate
Commitments.
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"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidity Test" means that, after giving effect to the payment subject to
the Liquidity Test, cash and Cash Equivalents of Playboy and its Domestic
Restricted Subsidiaries at such time, exceed the Outstanding Amount of the
Committed Loans at such time.
"Loan" means an extension of credit by a Lender to Borrower under Article
II in the form of a Committed Loan.
"Loan Documents" means this Agreement, each Note, the Agent Fee Letter,
each Collateral Document, each Loan Guaranty and the Intercreditor Agreement,
each as amended, supplemented or modified from time to time.
"Loan Guaranties" means, collectively, the Guaranty made by the Guarantors
in existence on the Closing Date in favor of Agent on behalf of Lenders and each
other Guaranty delivered to Agent after the Closing Date by a Guarantor, each in
form and substance reasonably satisfactory to Agent.
"Loan Parties" means, collectively, (a) Borrower, (b) Playboy and (c) each
Person (other than Agent, any Lender or the Trustee) executing a Loan Document
including, without limitation, each Guarantor and each Person executing a
Collateral Document.
"Mansion Personal Property" means the personal property, if any, located
at the Playboy Mansion which Hefner elects to purchase in connection with the
exercise of the Hefner Option.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, or financial
condition of Playboy and its Restricted Subsidiaries taken as a whole; (b) a
material impairment of the ability of any Loan Party to perform its obligations
under any Loan Document to which it is a party; or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against any Loan
Party of any Loan Document to which it is a party.
"Maturity Date" means March 11, 2006.
"Multiemployer Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which Playboy or any ERISA Affiliate makes or
is obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.
"Net Cash Proceeds" means the aggregate proceeds in cash or Cash
Equivalents received by Playboy or any of its Restricted Subsidiaries in respect
of any Disposition, including, without limitation, any cash or Cash Equivalents
received upon the sale or other disposition of any non-cash consideration
received in any Disposition, net of the direct costs relating to such
Disposition, including, without limitation, legal, accounting and investment
banking fees, and sales commissions, and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof, in each case, after
taking into account any available tax credits or deductions and any tax sharing
arrangements, and amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Disposition and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"Net Income" means net income, after income taxes, of Playboy and its
Restricted Subsidiaries determined on a consolidated basis and in accordance
with GAAP.
"Net Worth" means the total assets of Playboy and its Restricted
Subsidiaries less Total Liabilities of Playboy and its Subsidiaries, all
determined on a consolidated basis and in accordance with GAAP.
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"Non-U.S. Person" means any Person that is not a U.S. Person.
"Note" means a promissory note made by Borrower in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit B.
"Obligations" means (a) all advances to, and debts, liabilities,
obligations, covenants and duties of, any Loan Party arising under any Loan
Document or otherwise with respect to any Loan or Letter of Credit, or (b) all
amounts owing to Agent, any Lender or any Affiliate of Agent or any Lender,
under or in connection with any Swap Contract, in any case whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Party or any
Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding.
"Offering Memorandum" means the Offering Memorandum, dated March 6, 2003,
of Borrower for the issuance of the Senior Secured Notes.
"Organization Documents" means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation and operating agreement; and (c) with respect to any partnership,
joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation and any agreement,
instrument, filing or notice with respect thereto filed in connection with its
formation or organization with the applicable Governmental Authority in the
jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.
"Outstanding Amount" means (i) with respect to Committed Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to
any borrowings and prepayments or repayments of Committed Loans occurring on
such date; and (ii) with respect to any L/C Obligations on any date, the amount
of such L/C Obligations on such date after giving effect to any L/C Credit
Extension occurring on such date and any other changes in the aggregate amount
of the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of Credit or any
reductions in the maximum amount available for drawing under Letters of Credit
taking effect on such date.
"Participant" has the meaning specified in Section 10.07(d).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PEGI" shall mean Playboy Entertainment Group, Inc., a Delaware
corporation.
"Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by Playboy or any
ERISA Affiliate or to which Playboy or any ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.
"Person" means any individual, trustee, corporation, general partnership,
limited partnership, limited liability company, joint stock company, trust,
unincorporated organization, bank, business association, firm, joint venture,
Governmental Authority or other entity.
"Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by Playboy or, with respect to any such plan
that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.
"Playboy" means Playboy Enterprises, Inc., a Delaware corporation.
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"Playboy.com" means Playboy.com, Inc., a Delaware corporation.
"Playboy.com Entities" means, collectively, Playboy.com and its
Subsidiaries.
"Playboy International Agreements" shall mean (i) the Second Amended and
Restated Operating Agreement for Playboy TV - Latin America, LLC, a California
limited liability company, dated as of December 23, 2002 and effective as of
April 1, 2002, between PEGI and Lifford International Co. Ltd. and (ii) the
Playboy TV - Latin America Program Supply and Trademark License Agreement, dated
as of December 23, 2002 and effective as of April 1, 2002, between PEGI an
PTVLA.
"Playboy Mansion" means the property owned by Playboy Enterprises
International, Inc. and located at 10236 Charing Cross Road, Holmby Hills,
California.
"Pledge Agreements" means, collectively, each Pledge Agreement now or
hereafter delivered by Playboy or any of its Restricted Subsidiaries, whereby
such Person pledges to Agent, as security for the Obligations and for such
Person's liabilities under any applicable Loan Guaranty, 100% of such Person's
interests in the Equity Interests of each Domestic Restricted Subsidiary or 65%
of such Person's interests in the Equity Interests of each first-tier Subsidiary
that is not a Domestic Restricted Subsidiary.
"Primary Collateral" has the meaning set forth in the Senior Secured Note
Indenture.
"Pro Rata Share" means, with respect to each Lender, at any time, a
fraction (expressed as a percentage), carried out to the ninth decimal place),
the numerator of which is the amount of the Commitment of such Lender at such
time and the denominator of which is the amount of the Aggregate Commitments at
such time; provided that if the commitment of each Lender to make Loans and the
obligation of Agent to make L/C Credit Extensions have been terminated pursuant
to Section 8.02, then the Pro Rata Share of each Lender shall be determined
based on the Pro Rata Share of such Lender immediately prior to such termination
and after giving effect to any subsequent assignments made pursuant to Section
10.07. The initial Pro Rata Share of each Lender is set forth opposite the name
of such Lender on Schedule 2.01 or in the Assignment and Assumption Agreement
pursuant to which such Lender becomes a party hereto, as applicable.
"Protected Collateral" means the following Collateral: the Playboy
Mansion; all current and future accounts receivable of the Loan Parties; and all
current and future raw materials and finished goods inventory of Loan Parties.
By way of clarification, raw materials and finished goods inventory shall not
include artwork or film or video libraries and goods produced therefrom (other
than finished pieces existing as of the date of the release of Agent's Lien on
such film or video libraries pursuant to Section 9.12(b)(ii)).
"PTVLA" shall mean Playboy TV - Latin America, LLC, a California limited
liability company formed pursuant to the Playboy International Agreements.
"Register" has the meaning set forth in Section 10.07(c).
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.
"Request for Credit Extension" means (a) with respect to a Committed
Borrowing, conversion or continuation of Committed Loans, a Committed Loan
Notice and (b) with respect to an L/C Credit Extension, a Letter of Credit
Application.
"Required Lenders" means, as of any date of determination, Lenders having
more than 50% of the Aggregate Commitments or, if the commitment of each Lender
to make Loans and the obligation of Agent to make L/C Credit Extensions have
been terminated pursuant to Section 8.02, Lenders holding in the aggregate more
than 50% of the Total Outstandings (with the aggregate amount of each Lender's
risk participation and funded participation in L/C Obligations being deemed
"held" by such Lender for purposes of this definition); provided, that at any
time that there are only two Lenders with Commitments, Required Lenders shall
mean both of such Lenders;
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and provided further, that the Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.
"Responsible Officer" means the chief executive officer, president, chief
financial officer, principal accounting officer, controller, treasurer or
assistant treasurer of a Loan Party. Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.
"Restricted Payment" means (a) the declaration or payment of any dividend
or the making of any other payment or distribution on account of Playboy's or
any of its Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation involving
Playboy or any of its Restricted Subsidiaries) or to the direct or indirect
holders of Playboy's or any of its Restricted Subsidiaries' Equity Interests in
their capacity as such (other than (i) dividends, payments or distributions
payable in Equity Interests of Playboy (other than Disqualified Stock) and (ii)
dividends or distributions payable to Playboy or any of its Restricted
Subsidiaries); and (b) the purchase, redemption or other acquisition or
retirement for value (including, without limitation, in connection with any
merger or consolidation involving Playboy or any of its Subsidiaries) of any
Equity Interests of Playboy, any direct or indirect parent of Playboy or any
Subsidiary of Playboy (other than a Restricted Subsidiary of Playboy).
"Restricted Subsidiary" of a Person means any Subsidiary of the referenced
Person that is not an Unrestricted Subsidiary, it being understood that Borrower
shall be a Restricted Subsidiary of Playboy at all times that it is a Subsidiary
of Playboy.
"Security Agreements" means, collectively, each Security Agreement now or
hereafter executed by Playboy and any of its Domestic Restricted Subsidiaries
pursuant to which such Person grants to Agent, as security for the Obligations
and for such Person's liabilities under any Loan Guaranty, a Lien on
substantially all of its personal property.
"Senior Secured Note Debt" means up to $115,000,000 in aggregate principal
amount of Indebtedness of Borrower issued pursuant to the Senior Secured Note
Documents.
"Senior Secured Note Documents" means, collectively, the Senior Secured
Note Indenture, the Senior Secured Notes and each other agreement, instrument or
document now or hereafter evidencing or securing the Senior Secured Note Debt,
each as amended, supplemented or modified from time to time.
"Senior Secured Note Indenture" means the certain Indenture of even date
herewith among Borrower, Playboy, the Guarantors and Trustee, as it exists on
the date herewith, and not as it may be amended, modified or supplemented from
time to time, except as provided in Section 7.08.
"Senior Secured Notes" means, collectively, the Senior Secured Notes
issued pursuant to the Senior Secured Note Indenture.
"Subordinated Liabilities" means liabilities subordinated to the
Obligations.
"Subsidiary" means, with respect to any specified Person:
(a) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); and
(b) any partnership (i) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (ii) the only
general partners of which are such Person or one or more Subsidiaries of such
Person (or any combination thereof).
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"Swap Contract" means, with respect to any specific Person, the
obligations of such Person under:
(a) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(b) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates, currency exchange rates or commodity
prices.
"Taxes" has the meaning specified in Section 3.01(a).
"Threshold Amount" means $5,000,000.
"Total Liabilities" means the sum of current liabilities plus long term
liabilities.
"Total Outstandings" means the aggregate Outstanding Amount of all Loans
and all L/C Obligations.
"Trustee" means Bank One, N.A., as trustee under the Senior Secured Note
Indenture, and each successor trustee under the Senior Secured Note Indenture.
"Type" means with respect to a Committed Loan, its character as a Base
Rate Committed Loan or an IBOR Committed Loan.
"Unfunded Pension Liability" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
"United States," and "U.S." mean the United States of America.
"Unreimbursed Amount" has the meaning set forth in Section 2.03(c)(i).
"Unrestricted Subsidiary" means any Subsidiary of Playboy that is
designated by the Board of Directors of Playboy as an Unrestricted Subsidiary
pursuant to a board resolution, but only to the extent that such Subsidiary:
(a) has no Indebtedness other than debt that is non-recourse to such
Subsidiary;
(b) is not party to any agreement, contract, arrangement or understanding
with Playboy or any of its Restricted Subsidiaries unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to
Playboy or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of Playboy or such Restricted
Subsidiary;
(c) is a Person with respect to which neither Playboy nor any of its
Restricted Subsidiaries has any direct or indirect obligation (i) to subscribe
for additional Equity Interests or (ii) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results;
(d) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of Playboy or any of its Restricted Subsidiaries;
and
(e) has at least one director on its Board of Directors that is not a
director or executive officer of Playboy or any of its Restricted Subsidiaries
and has at least one executive officer that is not a director or executive
officer of Playboy or any of its Restricted Subsidiaries.
Any designation of a Restricted Subsidiary of Playboy as an Unrestricted
Subsidiary shall be evidenced to Agent by filing with Agent a certified copy of
the board resolution giving effect to such designation and an officers'
certificate certifying that such designation complied with the preceding
conditions and was otherwise permitted under this Agreement. If, at any time,
any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Agreement
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and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary of Playboy as of such date and, if such Indebtedness is
not permitted to be incurred as of such date under this Agreement, Borrower
shall be in default of such covenant.
"U.S. Person" means a U.S. person as defined in Section 7701(a)(30) of the
Code.
"Wholly Owned Restricted Subsidiary" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
1.02 Other Interpretive Provisions.
With reference to this Agreement and each other Loan Document, unless
otherwise specified herein or in such other Loan Document:
(a) The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.
(b) (i) The words "herein", "hereto", "hereof" and "hereunder" and words
of similar import when used in any Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof; (ii) Article,
Section, Exhibit and Schedule references are to the Loan Document in which such
reference appears; (iii) the term "including" is by way of example and not
limitation; and (iv) the term "documents" includes any and all instruments,
documents, agreements, certificates, notices, reports, financial statements and
other writings, whether in physical or facsimile form.
(c) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including;" the words "to" and
"until" each mean "to but excluding;" and the word "through" means "to and
including."
(d) Section headings herein and in the other Loan Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Loan Document.
1.03 Accounting Terms.
All accounting terms not specifically or completely defined herein shall
be construed in conformity with, and all financial data (including financial
ratios and other financial calculations) required to be submitted pursuant to
this Agreement shall be prepared in conformity with, GAAP applied on a
consistent basis, as in effect from time to time, provided that to the extent
any change in GAAP after the Closing Date affects the computation of any
financial ratio hereunder, GAAP shall mean GAAP as in effect on the Closing
Date.
1.04 Rounding.
Any financial ratios required to be maintained by any Loan Party pursuant
to this Agreement shall be calculated by dividing the appropriate component by
the other component, carrying the result to one place more than the number of
places by which such ratio is expressed herein and rounding the result up or
down to the nearest number (with a rounding-up if there is no nearest number).
1.05 References to Agreements and Laws.
Unless otherwise expressly provided herein, (a) references to Organization
Documents, agreements (including the Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, but only to the extent
that such amendments, restatements, extensions, supplements and other
modifications are not prohibited by any Loan Document; and (b) references to any
Law shall include all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such Law.
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1.06 Letter of Credit Amounts.
Unless otherwise specified, all references herein to the amount of a
Letter of Credit at any time shall be deemed to mean the maximum face amount of
such Letter of Credit after giving effect to (a) all increases thereof
contemplated by such Letter of Credit or the Letter of Credit Application
therefor, whether or not such maximum face amount is in effect at such time and
(b) the operation of any provision which has automatically reduced such maximum
face amount and any amendments thereto which reduced the maximum face amount
thereof.
ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS.
2.01 Committed Loans.
Subject to the terms and conditions set forth herein, each Lender
severally agrees to make loans (each such loan, a "Committed Loan") to Borrower
from time to time, on any Business Day during the Availability Period in an
aggregate amount not to exceed at any time outstanding the amount of such
Lender's Commitment; provided, however, that after giving effect to any
Committed Borrowing, (i) the Total Outstandings shall not exceed the Aggregate
Commitments, and (ii) the aggregate Outstanding Amount of the Committed Loans of
any Lender, plus such Lender's Pro Rata Share of the Outstanding Amount of all
L/C Obligations shall not exceed such Lender's Commitment. Within the limits of
each Lender's Commitment, and subject to the other terms and conditions hereof,
Borrower may borrow under this Section 2.01, prepay under Section 2.05, and
reborrow under this Section 2.01. Committed Loans may be Base Rate Committed
Loans or IBOR Committed Loans, as further provided herein.
2.02 Committed Borrowings, Conversions and Continuations of Committed
Loans.
(a) Each Committed Borrowing, each conversion of Committed Loans from one
Type to the other, and each continuation of IBOR Committed Loans shall be made
upon Borrower's irrevocable notice to Agent, which may be given by telephone.
Each such notice must be received by Agent not later than 11:00 a.m., Chicago
time, (i) two Business Days prior to the requested date of any Committed
Borrowing of, conversion to or continuation of IBOR Committed Loans or of any
conversion of IBOR Committed Loans to Base Rate Committed Loans, and (ii) on the
requested date of any Committed Borrowing of Base Rate Committed Loans. Each
telephonic notice by Borrower pursuant to this Section 2.02(a) must be confirmed
promptly by delivery to Agent of a written Committed Loan Notice, appropriately
completed and signed by a Responsible Officer of Borrower. Except as provided in
Section 2.03(c), each Committed Borrowing of, conversion to or continuation of
IBOR Committed Loans shall be in a principal amount of $1,000,000 or a whole
multiple of $100,000 in excess thereof. Each Committed Borrowing of or
conversion to Base Rate Committed Loans shall be in a principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan
Notice (whether telephonic or written) shall specify (i) whether Borrower is
requesting a Committed Borrowing, a conversion of Committed Loans from one Type
to the other, or a continuation of IBOR Committed Loans, (ii) the requested date
of the Committed Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iii) the principal amount of Committed Loans
to be borrowed, converted or continued, (iv) the Type of Committed Loans to be
borrowed or to which existing Committed Loans are to be converted, and (v) if
applicable, the duration of the Interest Period with respect thereto. If
Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice or
if Borrower fails to give a timely notice requesting a conversion or
continuation, then the applicable Committed Loans shall be made, or converted
to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be
effective as of the last day of the Interest Period then in effect with respect
to the applicable IBOR Committed Loans. If Borrower requests a Committed
Borrowing of, conversion to, or continuation of IBOR Committed Loans in any such
Committed Loan Notice, but fails to specify an Interest Period, it will be
deemed to have specified an Interest Period of one month.
(b) Following receipt of a Committed Loan Notice, Agent shall promptly
notify each Lender of the amount of its Pro Rata Share of the applicable
Committed Loans, and if no timely notice of a conversion or continuation is
provided by Borrower, Agent shall notify each Lender of the details of any
automatic conversion to Base Rate Loans described in the preceding subsection.
In the case of a Committed Borrowing, each Lender shall make the amount of its
Committed Loan available to Agent in immediately available funds at Agent's
Office not later than 1:00 p.m., Chicago time, on the Business Day specified in
the applicable Committed Loan Notice. Upon satisfaction of the applicable
conditions set forth in Section 4.02 (and, if such Committed Borrowing is the
initial Credit Extension, Section 4.01), Agent shall make all funds so received
available to Borrower in like funds as
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received by Agent either by (i) crediting the account of Borrower on the books
of Bank of America with the amount of such funds or (ii) wire transfer of such
funds, in each case in accordance with instructions provided to (and reasonably
acceptable to) Agent by Borrower; provided, however, that if, on the date of the
Committed Loan Notice with respect to such Committed Borrowing is given by
Borrower there are L/C Borrowings outstanding, then the proceeds of such
Committed Borrowing shall be applied, first, to the payment in full of any such
L/C Borrowings, and second, to Borrower as provided above.
(c) Except as otherwise provided herein, an IBOR Committed Loan may be
continued or converted only on the last day of an Interest Period for such an
IBOR Committed Loan. During the existence of an Event of Default, no Loans may
be requested as, converted to or continued as an IBOR Committed Loans without
the consent of the Required Lenders.
(d) Agent shall promptly notify Borrower and Lenders of the interest rate
applicable to any Interest Period for IBOR Committed Loans upon determination of
such interest rate. The determination of the IBOR Rate by Agent shall be
conclusive in the absence of manifest error.
(e) After giving effect to all Committed Borrowings, all conversions of
Committed Loans from one Type to the other, and all continuations of Committed
Loans as the same Type, there shall not be more than 5 Interest Periods in
effect with respect to Committed Loans.
2.03 Letters of Credit.
(a) The Letter of Credit Commitment.
(i) Subject to the terms and conditions set forth herein, (A) Agent
agrees, in reliance upon the agreements of the other Lenders set forth in
this Section 2.03: (1) from time to time on any Business Day during the
period from the Closing Date until the Letter of Credit Expiration Date,
to issue Letters of Credit for the account of Borrower, Playboy or any of
Playboy's Restricted Subsidiaries, and to amend or renew Letters of Credit
previously issued by it, in accordance with subsection (b) below, and (2)
to honor drafts under the Letters of Credit; and (B) Lenders severally
agree to participate in Letters of Credit issued for the account of
Borrower; provided that Agent shall not be obligated to make any L/C
Credit Extension with respect to any Letter of Credit, and no Lender shall
be obligated to participate in, any Letter of Credit if as of the date of
such L/C Credit Extension, (x) the Total Outstandings would exceed the
Aggregate Commitments, (y) the aggregate Outstanding Amount of the
Committed Loans of any Lender, plus such Lender's Pro Rata Share of the
Outstanding Amount of all L/C Obligations, would exceed such Lender's
Commitment, or (z) the Outstanding Amount of the L/C Obligations would
exceed the Letter of Credit Sublimit. Within the foregoing limits, and
subject to the terms and conditions hereof, Borrower's ability to obtain
Letters of Credit shall be fully revolving, and accordingly Borrower may,
during the foregoing period, obtain Letters of Credit to replace Letters
of Credit that have expired or that have been drawn upon and reimbursed.
(ii) Agent shall be under no obligation to issue any Letter of
Credit if:
(A) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain Agent from issuing such Letter of Credit, or any Law
applicable to Agent or any request or directive (whether or not
having the force of law) from any Governmental Authority with
jurisdiction over Agent shall prohibit, or request that Agent
refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon Agent with
respect to such Letter of Credit any restriction, reserve or capital
requirement (for which Agent is not otherwise compensated hereunder
or by Borrower after Agent has proposed to Borrower a reasonable
basis for compensation which Borrower does not accept) not in effect
on the Closing Date, or shall impose upon Agent any unreimbursed
loss, cost or expense which was not applicable on the Closing Date
and which Agent in good faith deems material to it;
(B) subject to Section 2.03(b)(iv), the expiry date of such
requested Letter of Credit would occur more than twelve months after
the date of issuance or last renewal, unless the Required Lenders
have approved such expiry date;
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(C) the expiry date of such requested Letter of Credit would
occur after the Letter of Credit Expiration Date, unless all Lenders
have approved such expiry date;
(D) the issuance of such Letter of Credit would violate one or
more policies of Agent applicable to the issuance of all letters of
credit by Agent; or
(E) such Letter of Credit is in an initial amount less than
$100,000, in the case of a commercial Letter of Credit, or $500,000,
in the case of a standby Letter of Credit, or is to be denominated
in a currency other than Dollars.
(iii) Agent shall be under no obligation to amend any Letter of
Credit if (A) Agent would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed
amendment to such Letter of Credit.
(b) Procedures for Issuance and Amendment of Letters of Credit;
Auto-Renewal Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case
may be, upon the request of Borrower delivered to Agent in the form of a
Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of Borrower. Such Letter of Credit Application must be
received by Agent not later than 11:00 a.m., Chicago time, at least two
Business Days (or such later date and time as Agent may agree in a
particular instance in its sole discretion) prior to the proposed issuance
date or date of amendment, as the case may be.
(ii) Promptly after receipt of any Letter of Credit Application by
Agent at the address set forth in Schedule 10.02 for receiving Letter of
Credit Applications and related correspondence, if the requested issuance
or amendment is permitted in accordance with the terms hereof, then,
subject to the terms and conditions hereof, Agent shall, on the requested
date, issue a Letter of Credit for the account of Borrower, Playboy or the
applicable Restricted Subsidiary of Playboy or enter into the applicable
amendment, as the case may be, in each case in accordance with Agent's
usual and customary business practices. Immediately upon the issuance of
each Letter of Credit, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from Agent a
participation in such Letter of Credit in an amount equal to the product
of such Lender's Pro Rata Share times the amount of such Letter of Credit.
(iii) Promptly after its delivery of any Letter of Credit or any
amendment to a Letter of Credit to an advising bank with respect thereto
or to the beneficiary thereof, Agent will also deliver to Borrower a true
and complete copy of such Letter of Credit or amendment.
(iv) If Borrower so requests in any applicable Letter of Credit
Application, Agent may, in it sole and absolute discretion, agree to issue
a Letter of Credit that has automatic renewal provisions (each, an
"Auto-Renewal Letter of Credit"); provided that any such Auto-Renewal
Letter of Credit must permit Agent to prevent any such renewal at least
once in each twelve-month period (commencing with the date of issuance of
such Letter of Credit) by giving prior notice to the beneficiary thereof
not later than a day (the "Nonrenewal Notice Date") in each such
twelve-month period to be agreed upon at the time such Letter of Credit is
issued. Unless otherwise directed by Agent, Borrower shall not be required
to make a specific request to Agent for any such renewal. Once an
Auto-Renewal Letter of Credit has been issued, Lenders shall be deemed to
have authorized (but may not require) Agent to permit the renewal of such
Letter of Credit at any time to an expiry date not later than the Letter
of Credit Expiration Date; provided, however, that Agent shall not permit
any such renewal if (A) Agent has determined that it would have no
obligation at such time to issue such Letter of Credit in its renewed form
under the terms hereof (by reason of Section 2.03(a)(ii) or otherwise), or
(B) it has received notice (which may be by telephone or in writing) at
least two (2) Business Days before the Nonrenewal Notice Date (1) from the
Required Lenders that they have elected not to permit such renewal or (2)
from any Lender or Borrower that one or more of the applicable conditions
specified in Section 4.02 is not then satisfied. Notwithstanding anything
to the contrary contained herein, Agent shall have no obligation to permit
the renewal of any Auto-Renewal Letter of Credit at any time.
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(c) Drawings and Reimbursements; Funding of Participations.
(i) Upon receipt from the beneficiary of any Letter of Credit of any
notice of drawing under such Letter of Credit, Agent shall notify Borrower
thereof. Not later than 11:00 a.m., Chicago time, on the date of any
payment by Agent under a Letter of Credit (each such date, an "Honor
Date"), Borrower shall reimburse Agent in an amount equal to the amount of
such drawing. If Borrower fails to so reimburse Agent by such time, Agent
shall promptly notify each Lender of the Honor Date, the amount of the
unreimbursed drawing (the "Unreimbursed Amount"), and the amount of such
Lender's Pro Rata Share thereof. In such event, Borrower shall be deemed
to have requested a Committed Borrowing of Base Rate Loans to be disbursed
on the Honor Date in an amount equal to the Unreimbursed Amount, without
regard to the minimum and multiples specified in Section 2.02 for the
principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Commitments and the conditions set
forth in Section 4.02 (other than the delivery of a Committed Loan
Notice). Any notice given by Agent pursuant to this Section 2.03(c)(i) may
be given by telephone if immediately confirmed in writing; provided that
the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
(ii) Each Lender (including Agent in its capacity as a Lender) shall
upon any notice pursuant to Section 2.03(c)(i) make funds available to
Agent at Agent's Office in an amount equal to its Pro Rata Share of the
Unreimbursed Amount not later than 1:00 p.m., Chicago time, on the
Business Day specified in such notice by Agent, whereupon, subject to the
provisions of Section 2.03(c)(iii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Committed Loan to
Borrower in such amount.
(iii) With respect to any Unreimbursed Amount that is not fully
refinanced by a Committed Borrowing of Base Rate Loans because the
conditions set forth in Section 4.02 cannot be satisfied or for any other
reason, Borrower shall be deemed to have incurred from Agent an L/C
Borrowing in the amount of the Unreimbursed Amount that is not so
refinanced, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the Default Rate. In
such event, each Lender's payment to Agent pursuant to Section 2.03(c)(ii)
shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this Section 2.03.
(iv) Until each Lender funds its Committed Loan or L/C Advance
pursuant to this Section 2.03(c) to reimburse Agent for any amount drawn
under any Letter of Credit, interest in respect of such Lender's Pro Rata
Share of such amount shall be solely for the account of Agent.
(v) Each Lender's obligation to make Committed Loans or L/C Advances
to reimburse Agent for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(c), shall be absolute and unconditional
and shall not be affected by any circumstance, including (A) any set-off,
counterclaim, recoupment, defense or other right which such Lender may
have against Agent, Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default or an Event of
Default; or (C) any other occurrence, event or condition, whether or not
similar to any of the foregoing. No such making of an L/C Advance shall
relieve or otherwise impair the obligation of Borrower to reimburse Agent
for the amount of any payment made by Agent under any Letter of Credit,
together with interest as provided herein.
(vi) If any Lender fails to make available to Agent any amount
required to be paid by such Lender pursuant to the foregoing provisions of
this Section 2.03(c) by the time specified in Section 2.03(c)(ii), Agent
shall be entitled to recover from such Lender, on demand, such amount with
interest thereon for the period from the date such payment is required to
the date on which such payment is immediately available to Agent at a rate
per annum equal to the Federal Funds Rate from time to time in effect. A
certificate of Agent submitted to any Lender with respect to any amounts
owing under this clause (vi) shall be conclusive absent manifest error.
(d) Repayment of Participations.
(i) At any time after Agent has made a payment under any Letter of
Credit and has received from any Lender such Lender's L/C Advance in
respect of such payment in accordance with Section
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2.03(c), if Agent receives any payment in respect of the related
Unreimbursed Amount or interest thereon (whether directly from Borrower or
otherwise, including proceeds of Cash Collateral applied thereto by
Agent), Agent will distribute to such Lender its Pro Rata Share thereof
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's L/C Advance was outstanding) in
the same funds as those received by Agent.
(ii) If any payment received by Agent pursuant to Section 2.03(c)(i)
is required to be returned under any of the circumstances described in
Section 10.06 (including pursuant to any settlement entered into by Agent
in its discretion, each Lender shall pay to Agent its Pro Rata Share
thereof on demand of Agent, plus interest thereon from the date of such
demand to the date such amount is returned by such Lender, at a rate per
annum equal to the Federal Funds Rate from time to time in effect.
(e) Obligations Absolute. The obligation of Borrower to reimburse Agent
for each drawing under each Letter of Credit, and to repay each L/C Borrowing,
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including
the following:
(i) any lack of validity or enforceability of such Letter of Credit,
this Agreement, or any other agreement or instrument relating thereto;
(ii) the existence of any claim, counterclaim, set-off, defense or
other right that Borrower may have at any time against any beneficiary or
any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), Agent or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or
instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented
under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under such
Letter of Credit;
(iv) any payment by Agent under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit; or any payment made by Agent under
such Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit, including any
arising in connection with any proceeding under any Debtor Relief Law; or
(v) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of,
Borrower (other than resulting from the gross negligence or willful
misconduct of Agent).
Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with Borrower's instructions or other irregularity, Borrower will
promptly notify Agent.
(f) Role of Agent. Each Lender and Borrower agree that, in paying any
drawing under a Letter of Credit, Agent shall not have any responsibility to
obtain any document (other than any sight draft, certificates and documents
expressly required by the Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the Person
executing or delivering any such document. None of Agent, any Agent-Related
Person nor any of the respective correspondents, participants or assignees of
Agent shall be liable to any Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of Lenders or the
Required Lenders, as applicable; (ii) any action taken or omitted in the absence
of gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Letter of Credit Application. Borrower hereby assumes
all risks of the acts or omissions of any beneficiary or transferee with respect
to its use of any Letter of Credit; provided, however, that this assumption is
not intended to, and shall not, preclude Borrower's pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
any other agreement. None of Agent, any Agent-
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Related Person, nor any of the respective correspondents, participants or
assignees of Agent, shall be liable or responsible for any of the matters
described in clauses (i) through (v) of Section 2.03(e); provided, however, that
anything in such clauses to the contrary notwithstanding, Borrower may have a
claim against Agent, and Agent may be liable to Borrower, to the extent, but
only to the extent, of any direct, as opposed to consequential or exemplary,
damages suffered by Borrower which Borrower proves were caused by Agent's
willful misconduct or gross negligence or Agent's willful failure to pay under
any Letter of Credit after the presentation to it by the beneficiary of a sight
draft and certificate(s) complying with the terms and conditions of such Letter
of Credit. In furtherance and not in limitation of the foregoing, Agent may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and Agent shall not be responsible for the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason.
(g) Cash Collateral. Upon the request of Agent, (i) if Agent has honored
any full or partial drawing request under any Letter of Credit and such drawing
has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit
Expiration Date, any Letter of Credit may for any reason remain outstanding and
partially or wholly undrawn, Borrower shall promptly Cash Collateralize the then
Outstanding Amount of all L/C Obligations (in an amount equal to such
Outstanding Amount determined as of the date of such L/C Borrowing or the Letter
of Credit Expiration Date, as the case may be). For purposes hereof, "Cash
Collateralize" means to deposit with or deliver to Agent, for the benefit of
Agent, as issuer of Letters of Credit and Lenders, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation in form
and substance reasonably satisfactory to Agent (which documents are hereby
consented to by Lenders). Derivatives of such term have corresponding meanings.
Cash collateral shall be maintained in blocked, interest bearing deposit
accounts at Bank of America.
(h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by
Agent and Borrower when a Letter of Credit is issued, (i) the rules of the
"International Standby Practices 1998" published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to each standby Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary Credits,
as most recently published by the International Chamber of Commerce (the "ICC")
at the time of issuance (including the ICC decision published by the Commission
on Banking Technique and Practice on April 6, 1998 regarding the European single
currency (euro)) shall apply to each commercial Letter of Credit.
(i) Letter of Credit Fees. Borrower shall pay to Agent for the account of
each Lender in accordance with its Pro Rata Share a letter of credit fee for
each Letter of Credit equal to the Applicable Rate times the daily maximum
amount available to be drawn under such Letter of Credit (whether or not such
maximum amount is then in effect under such Letter of Credit). Such letter of
credit fees shall be computed on a quarterly basis in arrears. Such letter of
credit fees shall be due and payable on the last Business Day of each March,
June, September and December, commencing with the first such date to occur after
the issuance of such Letter of Credit, on the Letter of Credit Expiration Date
and thereafter on demand. If there is any change in the Applicable Rate during
any quarter, the actual daily amount of each Letter of Credit shall be computed
and multiplied by the Applicable Rate for IBOR Committed Loans separately for
each period during such quarter that such Applicable Rate was in effect.
(j) Documentary and Processing Charges Payable to Agent. Borrower shall
pay directly to Agent for its own account the customary issuance, presentation,
amendment and other reasonable processing fees, and other standard costs and
charges, of Agent relating to letters of credit as from time to time in effect.
Such customary fees and standard costs and charges are due and payable on demand
from time to time and are nonrefundable.
(k) Conflict with Letter of Credit Application. In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.
(l) Termination of Existing L/C Agreements. The Lenders hereby agree that
any and all prior agreements relating to letters of credit previously issued by
such Lender shall terminate on the Closing Date and all letters of credit
previously issued by such Lender shall become L/C Obligations hereunder and
shall be subject to the terms of this Agreement.
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2.04 Intentionally Omitted.
2.05 Prepayments/Mandatory Commitment Reductions.
(a) Borrower may, upon notice to Agent, at any time or from time to time
voluntarily prepay Committed Loans in whole or in part without premium or
penalty; provided that (i) such notice must be received by Agent not later than
11:00 a.m., Chicago time, (A) three Business Days prior to any date of
prepayment of IBOR Committed Loans, and (B) on the date of prepayment of Base
Rate Committed Loans; (ii) any prepayment of IBOR Committed Loans shall be in a
principal amount of $2,000,000 or a whole multiple of $500,000 in excess
thereof; and (iii) any prepayment of Base Rate Committed Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof,
or, in each case, if less, the entire principal amount thereof then outstanding.
Each such notice shall specify the date and amount of such prepayment and the
Type(s) of Committed Loans to be prepaid. Agent will promptly notify each Lender
of its receipt of each such notice, and of the amount of such Lender's Pro Rata
Share of such prepayment. If such notice is given by Borrower, Borrower shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein. Any prepayment of a IBOR
Committed Loan shall be accompanied by all accrued interest thereon, together
with any additional amounts required pursuant to Section 3.05. Each such
prepayment shall be applied to the Committed Loans of Lenders in accordance with
their respective Pro Rata Shares.
(b) If for any reason the Total Outstandings at any time exceed the
Aggregate Commitments then in effect, Borrower shall immediately prepay Loans
and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to
such excess.
(c) The Aggregate Commitments shall be automatically reduced (i) to
$10,000,000 upon the Disposition of the Playboy Mansion at a time when no Event
of Default or Default is in existence or (ii) by an amount equal to the Net Cash
Proceeds of the Disposition of the Playboy Mansion (up to the amount necessary
to repay in full all Obligations, with any balance applied in accordance with
the Intercreditor Agreement) at a time when an Event of Default or Default is in
existence. If after such reduction of the Aggregate Commitments, the Total
Outstandings exceed the Aggregate Commitments as so reduced, Borrower shall
immediately prepay the Loans and/or Cash Collateralize the L/C Obligations in an
aggregate amount equal to such excess.
(d) If pursuant to the terms of the Senior Secured Note Indenture,
Borrower at any time makes an "Asset Sale Offer" (as defined in the Senior
Secured Note Indenture), and such Asset Sale Offer is accepted by Lenders, the
Aggregate Commitments shall be automatically reduced by the portion of such
Asset Sale Offer paid to Agent and Lenders and applied to the Obligations.
(e) If, after giving effect to any reduction of the Aggregate Commitments,
the Letter of Credit Sublimit exceeds the amount of the Aggregate Commitments,
the Letter of Credit Sublimit shall be automatically reduced by the amount of
such excess.
(f) Agent will promptly notify Lenders of any such reduction in the
Aggregate Commitments. Once reduced in accordance with this Section, the
Aggregate Commitments may not be increased. Any reduction of the Aggregate
Commitments shall be applied to the Commitment of each Lender according to its
Pro Rata Share. All commitment fees accrued until the effective date of any
termination of the Aggregate Commitments shall be paid on the effective date of
such termination.
2.06 Optional Reduction or Termination of Commitments.
Borrower may, upon notice to Agent, terminate the Aggregate Commitments,
or from time to time permanently reduce the Aggregate Commitments; provided that
(i) any such notice shall be received by Agent not later than 11:00 a.m., five
Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $1,000,000 or any whole
multiple of $500,000 in excess thereof, (iii) Borrower shall not terminate or
reduce the Aggregate Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Total Outstandings would exceed the
Aggregate Commitments and (iv) if, after giving effect to any reduction of the
Aggregate Commitments, the Letter of Credit Sublimit exceeds the amount of the
Aggregate Commitments, the Letter of Credit Sublimit shall be automatically
reduced by the amount of such excess. Agent will promptly notify Lenders of any
such notice of termination or reduction of the Aggregate
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Commitments. Once reduced in accordance with this Section, the Aggregate
Commitments may not be increased. Any reduction of the Aggregate Commitments
shall be applied to the Commitment of each Lender according to its Pro Rata
Share. All commitment fees accrued until the effective date of any termination
of the Aggregate Commitments shall be paid on the effective date of such
termination.
2.07 Repayment of Loans.
Borrower shall repay to Lenders on the Maturity Date the aggregate
principal amount of Committed Loans outstanding on such date.
2.08 Interest.
(a) Subject to the provisions of subsection (b) below, (i) each IBOR
Committed Loan shall bear interest on the outstanding principal amount thereof
for each Interest Period at a rate per annum equal to the IBOR Rate for such
Interest Period plus the Applicable Rate; and (ii) each Base Rate Committed Loan
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the
Applicable Rate.
(b) If any amount payable by Borrower under any Loan Document is not paid
when due (without regard to any applicable grace periods), whether at stated
maturity by acceleration or otherwise, then, if Borrower is so notified by Agent
or, Required Lenders, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws, provided that no such notice
shall apply to any interest which accrued more than 60 days prior to the date of
such notice. Furthermore, while any Event of Default exists (or after
acceleration), Borrower shall pay interest on the principal amount of all
outstanding Obligations at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.
Accrued and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.
2.09 Fees.
In addition to certain fees described in subsections (i) and (j) of
Section 2.03:
(a) Commitment Fee. Borrower shall pay to Agent for the account of each
Lender in accordance with its Pro Rata Share, a commitment fee equal to the
Applicable Rate times the actual daily amount by which the Aggregate Commitments
exceed the sum of (i) the Outstanding Amount of Committed Loans and (ii) the
Outstanding Amount of L/C Obligations. The commitment fee shall accrue at all
times during the Availability Period, including at any time during which one or
more conditions in Article IV is not met, and shall be due and payable quarterly
in arrears on the last Business Day of each March, June, September and December,
commencing with the first such date to occur after the Closing Date, and on the
Maturity Date. The commitment fee shall be calculated quarterly in arrears, and
if there is any change in the Applicable Rate during any quarter, the actual
daily amount shall be computed and multiplied by the Applicable Rate separately
for each period during such quarter that such Applicable Rate was in effect.
(b) Agency Fees. Borrower shall pay an agency fee to Agent for Agent's own
account, in the amounts and at the times specified in the letter agreement of
even date herewith (the "Agent Fee Letter"), between Borrower and Agent. Such
fees shall be fully earned when paid and shall be nonrefundable for any reason
whatsoever.
(c) Lenders' Upfront Fee. On the Closing Date, Borrower shall pay to
Agent, for the account of each Lender in accordance with their respective Pro
Rata Shares, an upfront fee in an aggregate amount of $150,000. Such upfront fee
is for the credit facilities committed by Lenders under this Agreement and is
fully earned on the date paid. The upfront fee paid to each Lender is solely for
its own account and is nonrefundable for any reason whatsoever.
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2.10 Computation of Interest and Fees.
All computations of interest for Base Rate Loans when the Base Rate is
determined by Bank of America's prime rate shall be made on the basis of a year
of 365 or 366 days, as the case may be. All other computations of interest and
all fees shall be made on the basis of a year of 360 days and the actual number
of days elapsed, (which results in more fees or interest, as applicable, being
paid than if computed on the basis of a 365 day year). Interest shall accrue on
each Loan for the day on which the Loan is made, and shall not accrue on a Loan,
or any portion thereof, for the day on which the Loan or such portion is paid,
provided that any Loan that is repaid on the same day on which it is made shall,
subject to Section 2.12(a), bear interest for one day.
2.11 Evidence of Debt.
(a) The Credit Extensions made by each Lender shall be evidenced by one or
more accounts or records maintained by such Lender and by Agent in the ordinary
course of business. The accounts or records maintained by Agent and each Lender
shall be conclusive absent manifest error of the amount of the Credit Extensions
made by Lenders to Borrower and the interest and payments thereon. Any failure
to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of Borrower hereunder to pay any amount owing with respect
to the Obligations. In the event of any conflict between the accounts and
records maintained by any Lender and the accounts and records of Agent in
respect of such matters, the accounts and records of Agent shall control in the
absence of manifest error. Upon the request of any Lender made through Agent,
Borrower shall execute and deliver to such Lender (through Agent) a Note, which
shall evidence, such Lender's Loans, in addition to such accounts or records.
Each Lender may attach schedules to its Note and endorse thereon the date, Type
(if applicable), amount and maturity of the applicable Loans and payments with
respect thereto.
(b) In addition to the accounts and records referred to in subsection (a),
each Lender and Agent shall maintain in accordance with its usual practice
accounts or records evidencing the purchases and sales by such Lender of
participations in Letters of Credit. In the event of any conflict between the
accounts and records maintained by Agent and the accounts and records of any
Lender in respect of such matters, the accounts and records of Agent shall
control in the absence of manifest error.
2.12 Payments Generally.
(a) All payments to be made by Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by Borrower hereunder shall be
made to Agent, for the account of the respective Lenders to which such payment
is owed, at Agent's Office in Dollars and in immediately available funds not
later than 12:00 noon, Chicago time, on the date specified herein. Agent will
promptly distribute to each Lender its Pro Rata Share (or other applicable share
as provided herein) of such payment in like funds as received by wire transfer
to such Lender's Lending Office. All payments received by Agent after 12:00
noon, Chicago time, shall be deemed received on the next succeeding Business Day
and any applicable interest or fee shall continue to accrue.
(b) If any payment to be made by Borrower shall come due on a day other
than a Business Day, payment shall be made on the next following Business Day,
and such extension of time shall be reflected in computing interest or fees, as
the case may be.
(c) Unless Borrower or any Lender has notified Agent, prior to the date
any payment is required to be made by it to Agent hereunder, that Borrower or
such Lender, as the case may be, will not make such payment, Agent may assume
that Borrower or such Lender, as the case may be, has timely made such payment
and may (but shall not be so required to), in reliance thereon, make available a
corresponding amount to the Person entitled thereto. If and to the extent that
such payment was not in fact made to Agent in immediately available funds, then:
(i) if Borrower failed to make such payment, each Lender shall
forthwith on demand r |
