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Sample Business ContractsHome: Sample Business Contracts:
EXECUTION COPY
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CREDIT AGREEMENT
Dated as of February 26, 1999
among
NEW PLAYBOY, INC.,
PEI HOLDINGS, INC.,
THE LENDERS NAMED HEREIN,
ING (U.S.) CAPITAL LLC
("ING BARINGS"),
as Syndication Agent
and
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent,
as Collateral Agent and
as Issuing Bank
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[CS&M #2163-494]
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
Page
----
SECTION 1.01. Defined Terms ............................................... 2
SECTION 1.02. Terms Generally ............................................. 26
SECTION 1.03. Accounting and Financial Terms .............................. 26
ARTICLE II
The Credits
SECTION 2.01. Commitments ................................................. 27
SECTION 2.02. Loans ....................................................... 27
SECTION 2.03. Borrowing Procedure ......................................... 29
SECTION 2.04. Evidence of Debt; Repayment of Loans ........................ 30
SECTION 2.05. Fees ........................................................ 31
SECTION 2.06. Interest on Loans ........................................... 31
SECTION 2.07. Default Interest ............................................ 32
SECTION 2.08. Alternate Rate of Interest .................................. 32
SECTION 2.09. Termination and Reduction of Commitments .................... 32
SECTION 2.10. Conversion and Continuation of Borrowings ................... 33
SECTION 2.11. Repayment of Term Borrowings ................................ 35
SECTION 2.12. Optional Prepayments ........................................ 35
SECTION 2.13. Mandatory Prepayments ....................................... 36
SECTION 2.14. Reserve Requirements; Change in Circumstances ............... 39
SECTION 2.15. Change in Legality .......................................... 40
SECTION 2.16. Indemnity ................................................... 41
SECTION 2.17. Pro Rata Treatment .......................................... 41
SECTION 2.18. Sharing of Setoffs .......................................... 42
SECTION 2.19. Payments .................................................... 42
SECTION 2.20. Taxes ....................................................... 43
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate .......................................... 44
SECTION 2.22. Letters of Credit ........................................... 46
<PAGE>
Contents, p. 2
ARTICLE III
Representations and Warranties
Page
----
SECTION 3.01. Organization; Powers ........................................ 50
SECTION 3.02. Authorization ............................................... 50
SECTION 3.03. Enforceability .............................................. 50
SECTION 3.04. Governmental Approvals ...................................... 50
SECTION 3.05. Financial Statements ........................................ 51
SECTION 3.06. No Material Adverse Change .................................. 51
SECTION 3.07. Title to Properties; Possession Under Leases ................ 51
SECTION 3.08. Subsidiaries ................................................ 52
SECTION 3.09. Litigation; Compliance with Laws ............................ 52
SECTION 3.10. Agreements .................................................. 53
SECTION 3.11. Federal Reserve Regulations ................................. 53
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act ....................................................... 53
SECTION 3.13. Use of Proceeds ............................................. 53
SECTION 3.14. Tax Returns ................................................. 53
SECTION 3.15. No Material Misstatements ................................... 54
SECTION 3.16. Employee Benefit Plans ...................................... 54
SECTION 3.17. Environmental Matters ....................................... 54
SECTION 3.18. Insurance ................................................... 55
SECTION 3.19. Security Documents .......................................... 55
SECTION 3.20. Intellectual Property ....................................... 56
SECTION 3.21. Location of Real Property and Leased Premises ............... 56
SECTION 3.22. Labor Matters ............................................... 56
SECTION 3.23. Solvency .................................................... 56
SECTION 3.24. Merger Agreement ............................................ 57
SECTION 3.25 Year 2000 Compliance ........................................ 57
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events ........................................... 57
SECTION 4.02. Initial Credit Event ........................................ 58
<PAGE>
Contents, p. 3
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties, Insurance ............. 60
SECTION 5.02. Obligations and Taxes ....................................... 61
SECTION 5.03. Financial Statements, Reports, etc .......................... 61
SECTION 5.04. Litigation and Other Notices ................................ 63
SECTION 5.05. Employee Benefits ........................................... 63
SECTION 5.06. Maintaining Records; Access to Properties and Inspections ... 63
SECTION 5.07. Use of Proceeds ............................................. 64
SECTION 5.08. Compliance with Environmental Laws .......................... 64
SECTION 5.09. Further Assurances .......................................... 64
SECTION 5.10. Hedging Arrangements ........................................ 65
SECTION 5.11. Transfer of Equity Interests and Rights ..................... 65
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness ................................................ 65
SECTION 6.02. Liens ....................................................... 67
SECTION 6.03. Sale and Lease-Back Transactions ............................ 69
SECTION 6.04. Investments, Loans and Advances ............................. 69
SECTION 6.05. Mergers, Consolidations, Sales of Assets .................... 71
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Restricted Subsidiaries to Pay Dividends .................. 72
SECTION 6.07. Transactions with Affiliates ................................ 72
SECTION 6.08. Business of the Company and Restricted Subsidiaries ......... 72
SECTION 6.09. Amendment of Material Documents ............................. 73
SECTION 6.10. Prepayments, Redemptions and Repurchases of Debt ............ 73
SECTION 6.11. Collateral and Guarantee Requirements ....................... 73
SECTION 6.12. Fiscal Year ................................................. 73
SECTION 6.13. Annual EBITDA ............................................... 73
SECTION 6.14. Consolidated Leverage Ratio ................................. 74
SECTION 6.15. Consolidated Interest Expense Coverage Ratio ................ 75
SECTION 6.16. Consolidated Fixed Charge Coverage Ratio .................... 75
SECTION 6.17. Capital Expenditures ........................................ 75
<PAGE>
Contents, p. 4
ARTICLE VII
Events of Default .......................................... 76
Contents, p. 5
ARTICLE VIII
The Agents ................................................. 78
ARTICLE IX
Guarantee .................................................. 81
ARTICLE X
Miscellaneous .............................................. 82
SECTION 10.01. Notices .................................................... 82
SECTION 10.02. Survival of Agreement ...................................... 83
SECTION 10.03. Binding Effect ............................................. 83
SECTION 10.04. Successors and Assigns ..................................... 83
SECTION 10.05. Expenses; Indemnity ........................................ 87
SECTION 10.06. Right of Setoff ............................................ 88
SECTION 10.07. Applicable Law ............................................. 88
SECTION 10.08. Waivers; Amendment ......................................... 89
SECTION 10.09. Interest Rate Limitation ................................... 90
SECTION 10.10. Entire Agreement ........................................... 90
SECTION 10.11. WAIVER OF JURY TRIAL ....................................... 90
SECTION 10.12. Severability ............................................... 91
SECTION 10.13. Counterparts ............................................... 91
SECTION 10.14. Headings ................................................... 91
SECTION 10.15. Jurisdiction; Consent to Service of Process ................ 91
SECTION 10.16. Confidentiality ............................................ 92
SECTION 10.17. Assignment, Delegation and Assumption ...................... 93
Schedule 1.01 Subsidiary Guarantors
Schedule 1.01(c) Mortgaged Properties
Schedule 2.01 Commitments
<PAGE>
Contents, p. 6
Schedule 3.07(a) Leases
Schedule 3.07(c) Condemnation Proceedings
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.14 Tax Returns
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.19(d) Mortgage Filing Offices
Schedule 3.21(a) Owned Property
Schedule 3.21(b) Leased Property
Schedule 6.01 Existing Indebtedness
Schedule 6.02 Existing Liens
Schedule 6.04 Existing Investments
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Subsidiary Guarantee Agreement
Exhibit E Form of Indemnity, Subrogation and
Contribution Agreement
Exhibit F Form of Pledge Agreement
Exhibit G Form of Security Agreement
Exhibit H-1 Form of Opinion of Howard Shapiro, Esq.,
General Counsel of the Company
Exhibit H-2 Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison,
special counsel for the Company and the Subsidiaries
Exhibit H-3 Form of Opinion of Local Counsel for the
Company and the Subsidiaries
Exhibit H-4 Form of Opinion of Daniel J. Barsky, Esq.,
General Counsel of Spice
Exhibit I-1 Form of Mortgage
Exhibit I-2 Form of Deed of Trust
<PAGE>
CREDIT AGREEMENT dated as of February 26, 1999 (this
"Agreement"), among NEW PLAYBOY, INC., a Delaware corporation
to be renamed PLAYBOY ENTERPRISES, INC. immediately following
the Playboy Merger referred to below (the "Company"); PEI
HOLDINGS, INC., a Delaware corporation and wholly owned
subsidiary of the Company ("PHI"); the Lenders (as defined in
Article I); and CREDIT SUISSE FIRST BOSTON, a bank organized
under the laws of Switzerland, acting through its New York
Branch ("CSFB"), as administrative agent (in such capacity,
the "Administrative Agent"), as collateral agent (in such
capacity, the "Collateral Agent") and as issuing bank (in such
capacity, the "Issuing Bank").
The Company, a wholly owned subsidiary of Playboy Enterprises, Inc.
("Playboy"), intends to acquire (the "Spice Acquisition") all the issued and
outstanding shares of capital stock of Spice Entertainment Companies, Inc.
("Spice") pursuant to a merger of Spice Acquisition Corp., a wholly owned
subsidiary of the Company, into Spice, as provided in the Merger Agreement dated
May 29, 1998, as amended as of November 16, 1998 (the "Merger Agreement"), among
the Company, Playboy, Playboy Acquisition Corp., Spice Acquisition Corp. and
Spice. The consideration payable in connection with the Spice Acquisition will
consist of (a) approximately $64,900,000 in cash (including severance costs, net
of option proceeds, payable in connection with the Spice Acquisition), (b)
shares of Class B Common Stock of the Company and (c) the assumption by the
Company of approximately $11,300,000 of Indebtedness of Spice (which will be
refinanced as provided herein), all as described in the Merger Agreement. In
addition, immediately prior to the Spice Acquisition, (a) holders of Spice
common stock will receive shares of common stock of Directrix, Inc., a wholly
owned subsidiary of Spice, and (b) assets related to the Spice Hot Network will
be transferred to Califa Entertainment Group, Inc. (collectively, the "Spin-Off
Transactions"). At or prior to the completion of the Spice Acquisition, Playboy
Acquisition Corp., a wholly owned subsidiary of the Company, will be merged into
Playboy, which will be renamed Playboy Enterprises International, Inc., in a
transaction in which the former shareholders of Playboy will receive common
stock of the Company and Playboy will become a wholly owned subsidiary of the
Company, all as provided in the Merger Agreement (the "Playboy Merger"). Upon
consummation of the Spice Acquisition and the Playboy Merger, the Company, which
will be renamed Playboy Enterprises, Inc., will own 100% of the equity interests
in both Playboy and Spice, and will, on the Transfer Date, transfer all such
equity interests to PHI, which will succeed to and assume the rights and
obligations of the Company as "Borrower" hereunder as provided in Section 10.17.
The Company and PHI have requested the Lenders to extend credit in the
form of (a) Tranche A Term Loans on the Closing Date in an aggregate principal
amount not in
<PAGE>
2
excess of $35,000,000, (b) Tranche B Term Loans on the Closing Date in an
aggregate principal amount not in excess of $75,000,000, (c) Revolving Loans at
any time and from time to time prior to the Revolving Credit Maturity Date in an
aggregate principal amount at any time outstanding not in excess of $40,000,000
minus the L/C Exposure at such time and (d) Letters of Credit in an aggregate
stated amount at any time outstanding that will not result in the L/C Exposure
exceeding $10,000,000. The proceeds of the Term Loans and of Revolving Loans
made on the Closing Date (the amount of which shall not exceed $10,000,000) are
to be used by the Borrower solely (i) to finance the Spice Acquisition, (ii) to
refinance the Scheduled Playboy Indebtedness and the Scheduled Spice
Indebtedness and (iii) to pay fees and expenses related to the Closing Date
Transactions, the Spin-Off Transactions and the transactions ancillary to the
Spice Acquisition. The proceeds of the remaining Revolving Loans are to be used
by the Borrower and the Subsidiaries to provide working capital and for other
general corporate purposes, including to finance investments in the amount of up
to $12,000,000 in Playboy Online. The Letters of Credit are to be used to
support obligations incurred by the Borrower and the Subsidiaries in the conduct
of their businesses.
The Lenders are willing to extend such credit to the Borrower and the
Issuing Bank is willing to issue Letters of Credit for the account of the
Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, including in the
preamble hereto, the following terms shall have the meanings specified below:
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Acquisition" shall mean the acquisition by the Borrower or any
Subsidiary, including through a merger or consolidation or a purchase of capital
stock, of any other person or any division or business unit of any other person
or any assets (other than
<PAGE>
3
inventory acquired in the ordinary course of business) that are substantial in
relation to the Company and the Subsidiaries taken as a whole.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum equal to the product of (a)
the LIBO Rate in effect for such Interest Period and (b) Statutory Reserves.
"Administrative Agent" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Administrative Questionnaire" shall mean an Administrative Questionnaire
in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount of
the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the sum of (i)
the Federal Funds Effective Rate in effect on such day and (ii) 1/2 of 1%. If
for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability of the Administrative Agent to obtain sufficient quotations in
accordance with the terms of the definition thereof, the Alternate Base Rate
shall be determined without regard to clause (b) of the preceding sentence until
the circumstances giving rise to such inability no longer exist. Any change in
the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Alternate Currency" shall mean at any time any currency (other than
dollars) approved by the Administrative Agent that is freely tradeable and
exchangeable into dollars in the London market and for which an Exchange Rate
can be determined by reference to the applicable Bloomberg Key Cross Currency
Rates Page.
"Applicable Percentage" shall mean, for any day, with respect to any
Eurodollar Loan or ABR Loan that is part of a Revolving Credit Borrowing or a
Tranche A Term Borrowing, as the case may be, the applicable percentage set
forth below under the caption "Eurodollar Spread" or "ABR Spread", as the case
may be, based upon the Consolidated Leverage Ratio as of the fiscal quarter end
immediately preceding the Determination Date
<PAGE>
4
occurring on or most recently prior to such day (provided, that if financial
statements with respect to the fourth fiscal quarter in any year satisfying the
requirements of paragraph (b) of Section 5.03 shall be delivered to the
Administrative Agent within 60 days after the end of such fiscal quarter, then
from the second Business Day following the date on which such financial
statements are so delivered until the Determination Date following such fiscal
quarter end the Applicable Percentage shall be based upon the Consolidated
Leverage Ratio as of such fiscal quarter end, as determined on the basis of such
financial statements):
Eurodollar ABR
Consolidated Leverage Ratio Spread Spread
--------------------------- ---------- --------
Category 1
Greater than or equal to 5.00 to 1.00 3.25% 2.25%
Category 2
Less than 5.00 to 1.00 but greater than or equal to 4.00 to 1.00 3.00% 2.00%
Category 3
Less than 4.00 to 1.00 but greater than or equal to 3.00 to 1.00 2.75% 1.75%
Category 4
Less than 3.00 to 1.00 2.50% 1.50%
provided that (a) until the Determination Date next following June 30, 1999,
the Applicable Percentage shall be determined by reference to (i) prior to the
date on which the Playboy International Transaction shall be completed, Category
1 and (ii) on and after the date on which the Playboy International Transaction
shall be completed, Category 3, and (b) if the Borrower shall fail to deliver
any financial statements and certificates required to have been delivered under
Section 5.03(a) or (b), then (i) until such financial statements and
certificates are delivered, the Applicable Percentage shall be determined by
reference to the Category indicated by the financial statements most recently
delivered, (ii) after such financial statements and certificates are delivered,
the Applicable Percentage shall be redetermined by reference to the Category
indicated by such financial statements and (iii) if, but only if, the
redetermination referred to in the preceding clause (ii) results in an increase
in the interest rates or fees in effect hereunder, such increase shall be
retroactive to and including the second Business Day following the date by which
such financial statements were required to have been delivered under Section
5.03(a) or (b) (and the Borrower shall promptly pay to the Administrative Agent,
for distribution to the Lenders, the amount of such increase allocable to
periods for which such interest or fees shall already have been paid).
<PAGE>
5
"Arranger and Agent Fees" shall have the meaning assigned to such term in
Section 2.05(b).
"Arranger" shall mean CSFB.
"Asset Sale" shall mean the sale, transfer, licensing or other disposition
(directly, by way of merger or formation of a joint venture or otherwise, and
including any casualty event or condemnation that results in the receipt of any
insurance or condemnation proceeds) by the Company or any of the Restricted
Subsidiaries (other than a sale, transfer, licensing or other disposition to the
Company or any Restricted Subsidiary) of (a) any capital stock of any of the
Subsidiaries or (b) any other assets, whether real or personal and whether
tangible or intangible, of the Company or any of the Restricted Subsidiaries;
provided that the following shall not be deemed to be "Asset Sales" for purposes
of this Agreement: (i) any disposition of obsolete or worn out assets or
Permitted Investments, (ii) sales of inventory in the ordinary course of
business, (iii) consummation of Playboy's previously announced sale of its
interest in its Greek casino, (iv) Ordinary Licensing Transactions, (v) any
asset sale or series of related asset sales described in clause (b) above
resulting in Net Cash Proceeds not in excess of $1,000,000 in the aggregate
during any fiscal year and (vi) any sale of assets permitted under clause (c) of
Section 6.05 if (w) the Borrower or the Company advises the Administrative Agent
in writing not later than the Business Day following the completion of such sale
that the Borrower intends to use (or cause a Restricted Subsidiary to use) the
Net Cash Proceeds of such sale received by the Company or any of the Restricted
Subsidiaries to purchase additional assets to be used in the business of the
Borrower or the Restricted Subsidiaries, (x) either (A) the Net Cash Proceeds of
such sale received by the Company or any of the Restricted Subsidiaries are
promptly deposited in an escrow account with the Administrative Agent, pursuant
to an escrow agreement reasonably satisfactory to the Borrower and the
Administrative Agent, and held in such account pending any such purchase or the
application of such Net Cash Proceeds pursuant to Section 2.13(b) or (B) the Net
Cash Proceeds of such sale received by the Company or any of the Restricted
Subsidiaries are promptly applied to prepay Revolving Credit Borrowings, in
which case an amount of the Revolving Credit Commitments equal to the amount so
prepaid will be held available and unused pending, and will be made available
(subject to the conditions to borrowing set forth herein) to provide funds for,
any such purchase or the application of such Net Cash Proceeds pursuant to
Section 2.13(b), and (y) such Net Cash Proceeds are in fact used to purchase
additional assets to be used in the business of the Borrower or the Restricted
Subsidiaries within nine months after the date of closing of such sale (or the
Borrower and the Restricted Subsidiaries shall within nine months after the date
of closing of such sale enter into a contract to purchase additional assets to
be used in the business of the Borrower or the Restricted Subsidiaries using
such proceeds and shall close such purchase within 12 months after the date of
closing of such sale), failing which any portion of such Net Cash Proceeds that
have not been used to purchase additional assets to be used in the business of
the Borrower or the Restricted Subsidiaries will immediately be deemed
<PAGE>
6
for purposes of Section 2.13(b) to constitute Net Cash Proceeds of an Asset Sale
and applied to prepay Term Loans as provided in such Section. Notwithstanding
clause (vi) of the preceding definition, the aggregate amount of Net Cash
Proceeds held in escrow or held available in the form of unused Revolving Credit
Commitments at any time shall not exceed $10,000,000, and any Net Cash Proceeds
in excess of such amount will immediately be deemed for purposes of Section
2.13(b) to constitute Net Cash Proceeds of an Asset Sale and applied to prepay
Term Loans as provided in such Section.
"Assigned Rights and Obligations" shall mean all rights and obligations of the
Company as the initial Borrower under this Agreement (including the right to
borrow and obtain Letters of Credit hereunder and the obligation to repay
Borrowings and reimburse L/C Disbursements). The Assigned Rights and Obligations
will include only those rights and obligations that under the terms of this
Agreement are rights and obligations, respectively, of the "Borrower", and shall
exclude rights and obligations of the "Company", all of which shall continue to
be rights and obligations of the Company following the Assignment and
Assumption.
"Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent, in
the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Assignment and Assumption" shall have the meaning assigned to such term
in Section 10.17 of this Agreement.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" shall mean (a) initially, the Company, and (b) from and at all
times after the effectiveness of the Assignment and Assumption, PHI.
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C.
"Business Day" shall mean any day other than a Saturday, Sunday or day on
which banks in New York, New York are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan or any
Letter of Credit denominated in an Alternate Currency, the term "Business Day"
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.
<PAGE>
7
"Capital Expenditures" shall mean, for any period, additions to property,
plant and equipment and other capital expenditures of the Company and the
Restricted Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of the Company for such period prepared in accordance
with GAAP.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
A "Change in Control" shall be deemed to have occurred if (a) Hugh M. Hefner
and Christie Hefner, their heirs or estates or trusts for the benefit of
themselves or their heirs shall fail, taken together, to own, beneficially and
of record, shares of capital stock of the Company representing a majority of the
ordinary voting power of all the issued and outstanding capital stock of the
Company; (b) a majority of the Board of Directors of the Company shall consist
at any time of persons who were not either (i) Directors on the date hereof or
(ii) nominated by a majority of the Board of Directors; (c) any change of
control or similar event, however denominated, shall have occurred under any
indenture or other agreement or instrument of the Company or any Restricted
Subsidiary evidencing or governing Material Indebtedness; (d) at any time the
Company shall not directly own, beneficially and of record, 100% of the issued
and outstanding capital stock of PHI; or (e) at any time the Company or, after
the Assignment and Assumption, PHI shall not directly own, beneficially and of
record, 100% of the issued and outstanding capital stock of each of Playboy and
Spice.
"Closing Date" shall mean the date of the initial Credit Event.
"Closing Date Transactions" shall mean the Spin-Off Transactions, the
Spice Acquisition, the Playboy Merger, the refinancing of the Scheduled Playboy
Indebtedness and the Scheduled Spice Indebtedness, the Borrowings hereunder on
the Closing Date and the creation of the Liens provided for in the Security
Documents.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall mean all the "Collateral" as defined in any Security
Document.
"Collateral Agent" shall have the meaning assigned to such term in the
preamble to this Agreement.
<PAGE>
8
"Collateral Requirement" shall mean, at any time, that (a) the Pledge
Agreement (or a supplement referred to in Section 23 thereof) shall have been
duly executed by the Company, PHI and each other Domestic Restricted Subsidiary
existing at such time and owning any Equity Interests, Rights or Indebtedness of
the Company, PHI or any other Subsidiary or other person (including Playboy
International), shall have been delivered to the Collateral Agent and shall be
in full force and effect, and all the outstanding Equity Interests and Rights of
the Subsidiaries (after giving effect to the Spice Acquisition and the Playboy
Merger and including PHI, Playboy and Spice) and such other persons (including
Playboy International) owned by the Company and the Restricted Subsidiaries and
all such Indebtedness shall have been duly and validly pledged thereunder (or,
to the extent not evidenced by any instrument, under the Security Agreement) to
the Collateral Agent for the ratable benefit of the Secured Parties and
certificates or other instruments representing such Equity Interests and Rights
or Indebtedness (to the extent such Indebtedness is evidenced by instruments),
accompanied by stock powers or other instruments of transfer endorsed in blank,
shall be in the actual possession of the Collateral Agent; provided that none of
the Company, PHI or the Domestic Restricted Subsidiaries shall be required to
pledge more than 65% of the voting Equity Interests (but shall be required to
pledge 100% of the non-voting Equity Interests) of any Foreign Subsidiary; (b)
the Security Agreement (or a supplement referred to in Section 7.15 thereof)
shall have been duly executed by the Company, PHI, each other Domestic
Restricted Subsidiary existing at such time, and shall have been delivered to
the Collateral Agent and shall be in full force and effect, and each document
(including each Uniform Commercial Code financing statement and each filing with
respect to Intellectual Property owned by the Company, PHI or any other Domestic
Restricted Subsidiary party to the Security Agreement) required by law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded in order to create in favor of the Collateral Agent for the benefit of
the Secured Parties a valid, legal and perfected first-priority security
interest in and lien on the Collateral subject to the Security Agreement
(subject to any Lien expressly permitted by Section 6.02) shall have been
delivered to the Collateral Agent in form suitable for filing; (c) each person
required under the terms of the Playboy International Agreements to consent to
the assignment pursuant to the Security Agreement of the rights of the Company,
PHI or any other Restricted Subsidiary thereunder in order for such assignment
to be effective shall have executed and delivered a consent to such assignment
reasonably satisfactory to the Collateral Agent; (d) the Indemnity, Subrogation
and Contribution Agreement (or a supplement referred to in Section 12 thereof)
shall have been executed by the Company and each other Loan Party, shall have
been delivered to the Collateral Agent and shall be in full force and effect and
(e)(i) each of the Mortgages, substantially in the form of Exhibit I-1 or I-2,
as applicable, relating to each of the Mortgaged Properties shall have been duly
executed by the parties thereto and delivered to the Collateral Agent and shall
be in full force and effect, (ii) each of such Mortgaged Properties shall not be
subject to any Lien other than those expressly permitted under Section 6.02,
(iii) each of such Mortgages shall have been delivered to the Collateral Agent
in form suitable for filing and recordation in the recording office as specified
on
<PAGE>
9
Schedule 3.19(d) and (iv) the Collateral Agent shall have received such other
documents, including a policy or policies of title insurance issued by a
nationally recognized title insurance company, together with such endorsements,
coinsurance and reinsurance as may be requested by the Collateral Agent,
insuring the Mortgages as valid first liens on the Mortgaged Properties, free of
Liens other than those expressly permitted under Section 6.02, together with
such surveys, abstracts, appraisals and legal opinions required to be furnished
pursuant to the terms of the Mortgages or as reasonably requested by the
Collateral Agent.
"Commitments" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitments.
"Commitment Fee" shall have the meaning assigned to such term in Section
2.05(a).
"Company" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Company dated January, 1999.
"Consolidated Adjusted EBITDA" shall mean, for any period, Consolidated
EBITDA for such period minus cash investments in programming during such period.
"Consolidated EBITDA" shall mean, for any period, Consolidated Net Income
for such period, plus, without duplication and to the extent deducted from
revenues in determining Consolidated Net Income for such period, the sum of (a)
the aggregate amount of Consolidated Interest Expense for such period, (b) the
aggregate amount of income tax expense for such period, (c) all amounts
attributable to depreciation and amortization (including programming
amortization) for such period, (d) all extraordinary charges during such period,
and (e) all other non-cash charges during such period, and minus, without
duplication, the sum, to the extent included in Consolidated Net Income for such
period, of (x) the Playboy International Rights Acquisition Fee for such period,
(y) all extraordinary gains during such period and (z) all other non-cash gains
during such period, all as determined on a consolidated basis with respect to
the Company and its Restricted Subsidiaries in accordance with GAAP. Anything
contained in this definition or elsewhere in this Agreement to the contrary
notwithstanding, in calculating Consolidated EBITDA (i) for any
four-fiscal-quarter period that includes the fiscal quarter ending June 30,
1999, Consolidated EBITDA for such quarter shall be increased by an amount up to
$3,000,000 of restructuring costs incurred in connection with the Spice
Acquisition to the extent such costs have actually been paid by the Company and
the Restricted Subsidiaries, and (ii) for the four-fiscal-quarter period ending
on June 30, 1999, September 30, 1999 and December 31, 1999, Consolidated EBITDA
shall be deemed to equal Consolidated EBITDA for the period commencing on April
1, 1999, and ending on (x) June 30, 1999, multiplied by 4, (y)
<PAGE>
10
September 30, 1999, multiplied by 2, and (z) December 31, 1999, multiplied by
4/3, respectively.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any period, the
ratio of (a) the sum of (i) Consolidated Adjusted EBITDA for such period and
(ii) any amounts received in cash during such period on account of the Playboy
International Rights Acquisition Fee (other than amounts required to be applied
to prepay Term Loans pursuant to Section 2.13(f)) to (b) the sum of (i)
Consolidated Interest Expense for such period, (ii) the aggregate amount of
taxes paid by the Company and the Restricted Subsidiaries in cash during such
period, (iii) scheduled principal payments during such period in respect of any
Indebtedness of the Company and the Restricted Subsidiaries, (iv) cash dividends
on capital stock declared by the Company or any Loan Party during such period
(excluding dividends paid to the Company, the Borrower or any of its Wholly
Owned Restricted Subsidiaries), (v) the scheduled principal component of Capital
Lease Obligations paid during such period by the Company and the Restricted
Subsidiaries, (vi) the aggregate amount of investments in foreign networks
(including the Playboy International Capital Contributions) made by the Company
and the Restricted Subsidiaries during such period and (vii) Capital
Expenditures (other than (A) expenditures of insurance or condemnation proceeds
for the repair or replacement of assets that have been damaged, destroyed or
taken by condemnation, (B) expenditures of the proceeds of sales of property,
plant and equipment to acquire additional property, plant and equipment to be
used for the same or similar purposes and (C) permitted Acquisitions) during
such period (the items referred to in the foregoing clauses (i) through (vii)
being collectively called "Consolidated Fixed Charges").
"Consolidated Interest Expense" shall mean, for any period, the interest
expense, both expensed and capitalized (including the interest component in
respect of Capital Lease Obligations but excluding the amortization of deferred
financing fees), accrued or paid in cash by the Company and the Restricted
Subsidiaries during such period net of interest income earned on cash balances
during such period, determined on a consolidated basis in accordance with GAAP.
For purposes of the foregoing, interest expense shall give effect to any net
payments made or received by the Company and the Restricted Subsidiaries with
respect to interest rate Hedging Agreements.
"Consolidated Interest Expense Coverage Ratio" shall mean, for any period,
the ratio of (a) Consolidated Adjusted EBITDA for such period to (b)
Consolidated Interest Expense for such period.
"Consolidated Leverage Ratio" shall mean, at any time, the ratio of (a)
Consolidated Total Debt at such time to (b) Consolidated Adjusted EBITDA for the
most recently ended period of four fiscal quarters, all as determined on a
consolidated basis in accordance with GAAP. Solely for purposes of this
definition, if, at any time the Consolidated Leverage Ratio is being determined,
the Borrower or any Restricted Subsidiary shall have completed
<PAGE>
11
an Acquisition or Disposition since the beginning of the relevant four fiscal
quarter period, the Consolidated Leverage Ratio shall be determined on a pro
forma basis as if such Acquisition or Disposition, any related incurrence or
repayment of Indebtedness, had occurred at the beginning of such period.
"Consolidated Net Income" shall mean, for any period, net income or loss
of the Company and the Restricted Subsidiaries for such period, as determined on
a consolidated basis in accordance with GAAP, provided that there shall in any
event be excluded (a) the income of any person (other than a Loan Party) in
which any other person (other than the Company or any of the Restricted
Subsidiaries or any director holding qualifying shares in compliance with
applicable law) owns any equity interest, except to the extent of the amount of
dividends or other distributions actually paid to the Company or any of the
Subsidiaries by such person during such period and (b) the income (or loss) of
any person accrued prior to the date it becomes a Subsidiary or is merged into
or consolidated with the Company or any Subsidiary or the date that person's
assets are acquired by the Company or any Subsidiary.
"Consolidated Total Debt" shall mean, as of any date of determination,
without duplication, the aggregate principal amount of Indebtedness of the
Company and the Restricted Subsidiaries outstanding as of such date, determined
on a consolidated basis in accordance with GAAP (other than Indebtedness of the
type referred to in clauses (i) and (j) of the definition of the term
"Indebtedness", except, in the case of clause (j), to the extent of any
unreimbursed drawings thereunder).
"Control" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"CSFB" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Deferment" shall mean a fixed sum obligation (other than a Participation
or a Residual) payable by the Company or any of the Restricted Subsidiaries in
accordance with customary industry practice to a person who is not an Affiliate
of the Company or any of the Restricted Subsidiaries in connection with such
person's furnishing rights or personal services in connection with the
development, acquisition, production, distribution or
<PAGE>
12
exploitation of any item of Product or rights in Product, the payment of which
is contingent upon (a) the receipt of revenues from the exploitation of such
item of Product, and/or (b) the occurrence of certain conditions and/or (c) the
passage of time; provided, however, that the term "Deferments" does not include
supplemental market payments or sums included in the budgeted cost of production
for the applicable item of Product.
"Determination Date" shall mean each day that is the second Business Day
after a delivery of financial statements pursuant to Section 5.03(a) or (b).
"Disposition" shall mean the sale or transfer by the Company or any
Restricted Subsidiary, including through a merger or consolidation or a sale of
capital stock, of any subsidiary, division or business unit of the Company or
such Restricted Subsidiary or any assets (other than inventory sold in the
ordinary course of business) that are substantial in relation to the Company and
its Restricted Subsidiaries taken as a whole.
"Dollar Equivalent" shall mean (a) as to any amount denominated in
dollars, the amount thereof, and (b) as to any amount denominated in an
Alternate Currency, the equivalent thereof in dollars determined by the
Administrative Agent pursuant to Section 1.03 using the Exchange Rate with
respect to such currency at the time in effect.
"dollars" or "$" shall mean lawful money of the United States of America.
"Domestic Restricted Subsidiary" shall mean a Domestic Subsidiary that is
a Restricted Subsidiary.
"Domestic Subsidiary" shall mean a Subsidiary incorporated or organized
under the laws of the United States of America, any State thereof or the
District of Columbia.
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon (a) the existence, or
the continuation of the existence, of a Release (including sudden or non-sudden,
accidental or non-accidental Releases), (b) exposure to any Hazardous Material,
(c) the presence, use, handling,
<PAGE>
13
transportation, storage, treatment or disposal of any Hazardous Material or (d)
the violation or alleged violation of any Environmental Law or Environmental
Permit.
"Environmental Law" shall mean any and all applicable present and future
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including, but not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.ss. 9601 et seq.
(collectively "CERCLA"), the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. ss.ss. 6901 et seq., the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. ss.ss. 1251 et
seq., the Clean Air Act of 1970, as amended 42 U.S.C. ss.ss. 7401 et seq., the
Toxic Substances Control Act of 1976, 15 U.S.C. ss.ss. 2601 et seq., the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. ss.ss. 651 et
seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
ss.ss. 11001 et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C.
ss.ss. 300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
ss.ss. 5101 et seq., and any similar or implementing state or local law, and all
amendments or regulations promulgated under any of the foregoing.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Equity Interests" shall mean (a) with respect to a corporation, shares of
the capital stock of such corporation and (b) with respect to a partnership,
limited liability company or other person, partnership, limited liability or
other equity interests in such person.
"Equity Issuance" shall mean any issuance and sale by the Company or by
any Subsidiary to a person other than the Company or any Subsidiary, of any
Equity Interests of the Company or any Subsidiary or any Rights in respect
thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
<PAGE>
14
"ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan; (b)
the adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the incurrence of any liability under Title IV of ERISA
with respect to the termination of any Plan or the withdrawal or partial
withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or
Multiemployer Plan; (f) the receipt by the Borrower or any ERISA Affiliate from
the PBGC or a plan administrator of any notice relating to the intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (g)
the receipt by the Borrower or any ERISA Affiliate of any notice concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; (h) the occurrence of a "prohibited transaction" with respect
to which the Borrower or any of the Subsidiaries is a "disqualified person"
(within the meaning of Section 4975 of the Code) or with respect to which the
Borrower or any such Subsidiary could otherwise be liable; and (i) any other
event or condition with respect to a Plan or Multiemployer Plan that could
reasonably be expected to result in material liability of the Borrower.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or Eurodollar
Term Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Adjusted LIBO Rate in accordance with
the provisions of Article II.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in Article
VII.
"Excess Cash Flow" shall mean, for any fiscal year, the sum (without
duplication) of:
(a) Consolidated Net Income, adjusted to exclude (i) any income,
gains or losses attributable to any Asset Sale the proceeds of which are
required to be applied
<PAGE>
15
to prepay Loans under Section 2.13(b) and (ii) that portion of
Consolidated Net Income attributable to the Playboy International Rights
Acquisition Fee; plus
(b) amounts received in cash during such period on account of the
Playboy International Rights Acquisition Fee (other than amounts required
to be applied to prepay Term Loans pursuant to Section 2.13(f)); plus
(c) depreciation, amortization and other non-cash charges or losses
deducted in determining Consolidated Net Income for such period; minus
(d) payments during such period on account of charges added to
Excess Cash Flow for an earlier period pursuant to clause (c) above as
"non-cash charges or losses" in such earlier period; plus
(e) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such period, plus (ii) the aggregate principal amount of
Indebtedness (other than Capital Lease Obligations and Revolving Credit
Borrowings) incurred by the Company and the Restricted Subsidiaries during
such period to finance Capital Expenditures taken into account in
computing the Consolidated Fixed Charge Coverage Ratio; minus
(f) the sum of (i) any non-cash gains included in determining such
Consolidated Net Income (or loss) for such period, plus (ii) the amount,
if any, by which Net Working Capital increased during such period; plus
(g) amounts received during such period on account of gains
subtracted from Excess Cash Flow for an earlier period pursuant to clause
(f)(i) above as "non-cash gains" in such earlier period; minus
(h) Capital Expenditures for such period, to the extent taken into
account in computing the Consolidated Fixed Charge Coverage Ratio; minus
(i) the sum of (i) scheduled amortization payments and voluntary
principal payments made in respect of the Term Loans during such period,
(ii) amortization or other required payments of principal made during such
period in respect of other Indebtedness of the Company and the Restricted
Subsidiaries and (iii) mandatory prepayments of principal made during such
period in respect of other Indebtedness of the Company and the
Subsidiaries (other than prepayments that would not be required if the
Company and the Subsidiaries made, or were required to make, prepayments
in respect of Loans outstanding hereunder); minus
<PAGE>
16
(j) cash investments by the Company and the Restricted Subsidiaries
in foreign networks (including the Playboy International Capital
Contributions); minus
(k) cash investments in programming during such period; plus
(l) the net proceeds of Indebtedness incurred by the Company and the
Subsidiaries during such period to the extent such proceeds were applied
to make payments or prepayments of Indebtedness referred to in clause (i)
above.
"Exchange Rate" shall mean, on any day, with respect to any Alternate
Currency, the rate at which such Alternate Currency may be exchanged into
dollars as set forth at approximately 11:00 a.m., New York City time, on such
date on the applicable Bloomberg Key Cross Currency Rates Page. In the event
that such rate does not appear on any Bloomberg Key Cross Currency Rates Page,
the Exchange Rate shall be determined by reference to such other publicly
available service for displaying exchange rates selected by the Administrative
Agent for such purpose, or, at the discretion of the Administrative Agent, such
Exchange Rate shall instead be the arithmetic average of the spot rates of
exchange of the Administrative Agent in the market where its foreign currency
exchange operations in respect of such Alternate Currency are then being
conducted, at or about 10:00 a.m., local time, on such date for the purchase of
dollars with such Alternate Currency for delivery two Business Days later;
provided that, if at the time of any such determination, for any reason, no such
spot rate is being quoted, the Administrative Agent may use any other reasonable
method it deems appropriate to determine such rate, and such determination shall
be presumed correct absent demonstrable error.
"Excluded Taxes" shall mean, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income and any backup withholding
taxes, in each case imposed by the United States of America or by any
Governmental Authority as a result of a present or former connection between the
recipient and the jurisdiction of the Governmental Authority imposing such tax
or any political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from the recipient having received any
payment under or taking any other action related to any Loan under this
Agreement or any Loan Document), (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction
described in clause (a) above and (c) in the case of a Non-U.S. Lender (other
than an assignee pursuant to a request by the Borrower under Section 2.21(a)),
any withholding tax that (i) is in effect and would apply to amounts payable to
such Non-U.S. Lender at the time such Non-U.S. Lender becomes a party to this
Agreement (or designates a new lending office), except to the extent that the
prior lending office or the assignor, as applicable, of such Non-U.S. Lender was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the
<PAGE>
17
Borrower with respect to any withholding tax pursuant to Section 2.20(a), or
(ii) is attributable to such Non-U.S. Lender's failure to comply with Section
2.20(e).
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
the day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Fee Payment Date" shall have the meaning assigned to such term in Section
2.05(a).
"Fees" shall mean the Commitment Fees, the Arranger and Agent Fees, the
L/C Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any entity shall mean the chief financial officer,
principal accounting officer, treasurer or controller of such entity.
"Foreign Lender" shall mean any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean United States generally accepted accounting principles
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee" of or by any person shall mean any obligation, contingent or
otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness;
<PAGE>
18
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.
"Guarantee Requirement" shall mean, at any time, that the Subsidiary
Guarantee Agreement (or a supplement referred to in Section 20 thereof) shall
have been executed by each Restricted Subsidiary (other than any Foreign
Subsidiary) existing from time to time, shall have been delivered to the
Collateral Agent and shall be in full force and effect.
"Guarantors" shall mean the Company, PHI (at such times as they are
guarantors of the Obligations under the terms of Article IX hereof) and the
Subsidiary Guarantors.
"Hazardous Materials" shall mean all explosive or radioactive substances
or wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" shall mean any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind (other than prepaid subscriptions and similar deposits),
(b) all obligations of such person evidenced by bonds, debentures, notes or
similar instruments, (c) all obligations of such person upon which interest
charges are customarily paid (other than solely on past due amounts), (d) all
obligations of such person under conditional sale or other title retention
agreements relating to property or assets purchased by such person, (e) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable and accrued obligations
incurred in the ordinary course of business), (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (g) all Guarantees by such person of Indebtedness of others, (h)
all Capital Lease Obligations of such person, (i) all obligations of such person
in respect of Hedging Agreements and (j) all obligations of such person as an
account party in respect of letters of credit. The Indebtedness of any person
shall include the Indebtedness of any partnership in which such person is a
general partner.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
<PAGE>
19
"Indemnitee" shall have the meaning assigned to such term in Section
10.05(b).
"Indemnity, Subrogation and Contribution Agreement" shall mean an
Indemnity, Subrogation and Contribution Agreement substantially in the form of
Exhibit E among the Company, PHI, the Subsidiary Guarantors and the Collateral
Agent.
"Intellectual Property" shall have the meaning assigned to such term in
Section 3.20.
"Interest Payment Date" shall mean, with respect to any Loan, (i) each day
that is the last day of an Interest Period applicable to the Borrowing of which
such Loan is a part, (ii) in the case of a Loan with an Interest Period of
longer than three months, each day that would have been the last day of an
Interest Period had a series of three month Interest Periods been applicable to
such Loan and (iii) the date of any prepayment of such Loan or conversion of
such Loan to a Loan of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
preceding Interest Period applicable thereto and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3, or 6 (or, if available from all
applicable Lenders, 9 or 12) months thereafter, as the Borrower may elect and
(b) as to any ABR Borrowing, the period commencing on the date of such Borrowing
or on the last day of the preceding Interest Period applicable thereto and
ending on the earliest of (i) the next succeeding March 31, June 30, September
30 or December 31, (ii) the Revolving Credit Maturity Date, Tranche A Maturity
Date or Tranche B Maturity Date, as applicable, and (iii) the date such
Borrowing is converted to a Borrowing of a different Type in accordance with
Section 2.10 or repaid or prepaid in accordance with Section 2.11, 2.12 or 2.13;
provided, however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Eurodollar Borrowing only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Issuing Bank" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"L/C Commitment" shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.22.
<PAGE>
20
"L/C Disbursement" shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the Dollar Equivalent
of the aggregate undrawn amount of all outstanding Letters of Credit at such
time plus (b) the Dollar Equivalent of the aggregate amount of all L/C
Disbursements that have not yet been reimbursed at such time. The L/C Exposure
of any Lender at any time shall mean its Pro Rata Percentage of the aggregate
L/C Exposure at such time.
"L/C Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c).
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01 and (b) any financial institution that has become a party hereto pursuant
to an Assignment and Acceptance (in either case other than any such financial
institution that has ceased to be a party hereto pursuant to an Assignment and
Acceptance).
"Letter of Credit" shall mean any letter of credit issued pursuant to
Section 2.22.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m., London time, on the date which is two Business Days
prior to the beginning of such Interest Period by reference to the British
Bankers' Association Interest Settlement Rates for deposits in dollars (as set
forth by any service selected by the Administrative Agent which has been
nominated by the British Bankers' Association as an authorized information
vendor for the purpose of displaying rates) for a period equal to such Interest
Period, provided that, to the extent that an interest rate is not ascertainable
pursuant to the foregoing provisions of this definition, the "LIBO Rate" shall
be the interest rate per annum determined by the Administrative Agent equal to
the rate per annum at which deposits in dollars are offered for such Interest
Period by the Administrative Agent in the London interbank market in London,
England at approximately 11:00 a.m., London time, on the date which is two
Business Days prior to the beginning of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Loan Documents" shall mean this Agreement, the Subsidiary Guarantee
Agreement, the Security Documents and the Indemnity, Subrogation and
Contribution Agreement.
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21
"Loan Parties" shall mean the Company, PHI and each other Restricted
Subsidiary that is, or is required by this Agreement to be, a party to the
Subsidiary Guarantee Agreement or any Security Document.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Margin Stock" shall have the meaning assigned to such term in Regulation
U.
"Material Adverse Effect" shall mean one or more events, changes or
effects which, individually or in the aggregate, could reasonably be expected to
have a materially adverse effect on (a) the business, assets, results of
operations or condition (financial or otherwise) of the Company and the
Restricted Subsidiaries (including, on and after the Closing Date, Spice), taken
as a whole, or on their ability to perform their obligations under the Loan
Documents, or (b) the validity or enforceability of any Loan Document or any
other document entered into in connection with the Transactions or the other
transactions contemplated hereby or the rights, remedies or benefits available
to the Lenders, the Administrative Agent or the Collateral Agent.
"Material Indebtedness" shall mean Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Company and its Restricted Subsidiaries in an
aggregate principal amount for all such Indebtedness and obligations of
$5,000,000 or more. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of the Company or any Restricted
Subsidiary in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Company or
such Restricted Subsidiary would be required to pay if such Hedging Agreement
were terminated at such time.
"Merger Agreement" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Moody's" shall mean Moody's Investors Service, Inc., and any successor
thereto.
"Mortgaged Properties" shall mean the real properties of the Loan Parties
specified on Schedule 1.01(c) and all other real properties hereafter acquired
by any of the Loan Parties in which the Collateral Agent shall acquire a
security interest.
"Mortgages" shall mean mortgages, deeds of trust, assignments of rents,
modifications and other security documents reasonably satisfactory to the
Collateral Agent, delivered pursuant to Section 4.02(f) or Section 5.09. Each
mortgage shall be substantially in the form of Exhibit I-1 and each deed of
trust shall be substantially in the form of Exhibit I-2.
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22
"Multiemployer Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the cash
proceeds thereof, including any cash received in respect of any non-cash
proceeds, but only as and when received, and any insurance or condemnation
proceeds, net of (i) costs of sale (including payment of the outstanding
principal amount of, premium or penalty, if any, interest and other amounts on
any Indebtedness (other than Loans) required to be repaid under the terms
thereof as a result of such Asset Sale), (ii) taxes attributable to such Asset
Sale as a direct result thereof and (iii) amounts provided as a reserve, in
accordance with GAAP, against any liabilities under any indemnification
obligations, purchase price adjustment provisions or similar provisions
associated with such Asset Sale (provided that, to the extent and at the time
any such amounts are released from such reserve, such amounts shall constitute
Net Cash Proceeds), and (b) with respect to any Equity Issuance or any issuance
or other incurrence of Indebtedness for borrowed money, the cash proceeds
thereof net of underwriting commissions or placement fees and expenses directly
incurred in connection therewith.
"Net Working Capital" shall mean, at any date, (a) the consolidated
current assets of the Company and the Restricted Subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of the Company and the Restricted Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive number or negative number. Net Working Capital
increases when it becomes more positive or less negative and decreases when it
becomes less positive or more negative.
"Obligations" shall mean (a) the due and punctual payment by the Borrower
or the applicable Loan Parties of (i) the principal of and premium, if any, and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral, and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Administrative Agent,
the Collateral Agent, the Lenders, the Issuing Bank or any other person under
the Credit Agreement and the other Loan Documents, whether such Loans shall have
been made or such interest, fees or other amounts shall have accrued prior to,
on or after the Transfer Date,
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(b) the due and punctual payment and performance of all covenants, agreements,
obligations and liabilities of the Loan Parties, monetary or otherwise, under or
pursuant to the Loan Documents and (c) the due and punctual payment and
performance of all obligations of the Company or any Restricted Subsidiary,
monetary or otherwise, under each Hedging Agreement entered into to limit
interest rate risk with a counterparty that was a Lender or an Affiliate of a
Lender at the time such Hedging Agreement was entered into.
"Ordinary Licensing Transaction" shall mean any licensing arrangement (a)
entered into by the Company or any Restricted Subsidiary in the ordinary course
of its business or (b) that is terminable by the Company or the applicable
Restricted Subsidiary without the payment of any material penalty or other
consideration within one year.
"Other Taxes" shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Participation" shall mean any obligation (other than a Deferment or a
Residual) payable by the Company or any of its Restricted Subsidiaries in
accordance with customary industry practice to a person who is not an Affiliate
of the Company or any of the Subsidiaries in connection with the development,
acquisition, production, distribution or exploitation of an item of Product or
rights in Product, the payment of which is contingent upon and payable only to
the extent of the receipt by the obligor of revenues from the exploitation of
such item of Product or rights in Product.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 1 to the Security Agreement.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 180 days from
the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or Moody's;
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24
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days of the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any Lender or any commercial
bank organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of
not less than $500,000,000;
(d) other investment instruments approved in writing by the
Administrative Agent.
"person" shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"PHI" shall have the meaning assigned to such term in the preamble to this
Agreement.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Playboy" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Playboy International" shall mean Playboy TV International, LLC, a
California limited liability company formed pursuant to the Playboy
International Agreements.
"Playboy International Agreements" shall mean the Playboy TV
International, LLC Agreement Outline dated as of December 16, 1998, in the form
heretofore delivered to the Administrative Agent, and the "Superceeding
Agreements" referred to therein.
"Playboy International Capital Contributions" shall mean the capital
contributions that Playboy Entertainment Group, Inc. is contractually obligated
to make to Playboy International pursuant to the Playboy TV International, LLC
Agreement Outline referred to in the definition of "Playboy International
Agreements", to the extent such capital contributions are actually made.
"Playboy International Initial Fee" shall mean the fee payable under
Section 8.1.1 of the Playboy TV International, LLC Agreement Outline referred to
in the definition of "Playboy International Agreements" on the Funding Date (as
defined therein).
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25
"Playboy International Rights Acquisition Fee" shall mean the fees payable
under Section 8.1 of the Playboy TV International, LLC Agreement Outline
referred to in the definition of "Playboy International Agreements".
"Playboy International Transaction" shall mean the transactions provided
for in the Playboy International Agreements.
"Playboy Merger" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Playboy Online" shall mean Playboy Online, Inc., a Delaware corporation
which is initially an Unrestricted Subsidiary.
"Pledge Agreement" shall mean a Pledge Agreement substantially in the form
of Exhibit F between the Company, PHI and each other Restricted Subsidiary
owning Equity Interests, Rights or Indebtedness of the Company, PHI or any other
Subsidiary and the Collateral Agent for the benefit of the Secured Parties.
"Prime Rate" shall mean the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate for dollar loans
in effect at its principal office in New York City, New York; each change in the
Prime Rate shall be effective on the date such change is publicly announced as
being effective.
"Product" shall mean any still or motion pictures, films, videos, movies,
sound recordings, script or similar audio, print or visual media of
communication in use now, in the past, or in the future or any elements thereof
in which the Company or any Subsidiary has any proprietary or financial interest
including merchandising rights related to such Product.
"Pro Rata Percentage" of any Revolving Credit Lender at any time shall
mean the percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit Commitment. In the event the Revolving Credit
Commitments shall have been terminated, the Pro Rata Percentages of the
Revolving Credit Lenders shall be determined by reference to the Revolving
Credit Commitments most recently in effect (giving effect to any assignments
pursuant to Section 10.04).
"Register" shall have the meaning assigned to such term in Section
10.04(d).
"Regulation D" shall mean Regulation D of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
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"Regulation U" shall mean Regulation U of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
"Related Fund" shall mean, with respect to any Lender that is a fund that
invests in loans, any other fund that invests in loans and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is defined
in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any
Governmental Authority or voluntarily undertaken to: (i) clean up, remove,
treat, abate or in any other way address any Hazardous Material in the
environment; (ii) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not migrate or endanger or
threaten to endanger public health, welfare or the environment; or (iii) perform
studies and investigations in connection with, or as a precondition to, clause
(i) or (ii) above.
"Required Lenders" shall mean, at any time, Lenders having Loans, L/C
Exposures and unused Revolving Credit Commitments and Term Loan Commitments
representing a majority of the sum of all Loans outstanding, L/C Exposures and
unused Revolving Credit Commitments and Term Loan Commitments at such time.
"Residual" shall mean any obligation (other than a Participation or a
Deferment) payable by the Company or any of the Restricted Subsidiaries in
accordance with customary industry practice pursuant to guild agreements or
collective bargaining agreements in connection with the development,
acquisition, production, distribution or exploitation of any item of Product or
rights in Product.
"Responsible Officer" of any entity shall mean any executive officer or
Financial Officer of such entity and any other officer or similar official
thereof responsible for the administration of the obligations of such entity in
respect of this Agreement.
"Restricted Subsidiary" shall mean any Subsidiary other than an
Unrestricted Subsidiary.
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"Revolving Credit Borrowing" shall mean a Borrowing comprised of Revolving
Loans.
"Revolving Credit Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Revolving Loans and to participate in Letters
of Credit hereunder as set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender assumed its Revolving Credit
Commitment, as applicable, as the same may be (a) reduced from time to time
pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04.
"Revolving Credit Exposure" shall mean, with respect to any Lender at any
time, the aggregate principal amount at such time of all outstanding Revolving
Loans of such Lender plus the aggregate amount at such time of such Lender's L/C
Exposure.
"Revolving Credit Lender" shall mean a Lender that has a Revolving Credit
Commitment (or that had such a Commitment at the time the Revolving Credit
Commitments were terminated).
"Revolving Credit Maturity Date" shall mean the fifth anniversary of the
Closing Date.
"Revolving Loans" shall mean the revolving loans made by the Lenders to
the Borrower pursuant to clause (c) of Section 2.01. Each Revolving Loan shall
be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"Rights" shall mean, with respect to any person, warrants, options or
other rights to acquire Equity Interests in such person.
"S&P" shall mean Standard & Poor's Ratings Service and any successor
thereto.
"Sale and Lease-Back Transaction" shall have the meaning assigned to such
term in Section 6.03 of this Agreement.
"Scheduled Playboy Indebtedness" shall mean all Indebtedness incurred
under the Credit Agreement dated as of February 10, 1995, among Playboy, the
lenders party thereto, Harris Trust and Savings Bank, individually and as
administrative agent, and LaSalle National Bank, individually and as Co-Agent,
as amended to the date hereof.
"Scheduled Spice Indebtedness" shall mean all Indebtedness under the Loan
and Security Agreement dated as of January 15, 1997, between Spice and Darla
L.L.C., as amended to the date hereof.
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"Secured Parties" shall mean the Administrative Agent, the Collateral
Agent, each Lender, the Issuing Bank and each other person to which any of the
Obligations is owed.
"Security Agreement" shall mean a Security Agreement substantially in the
form of Exhibit G between the Company, PHI and the other Restricted Subsidiaries
from time to time party thereto and the Collateral Agent for the benefit of the
Secured Parties, as the same may be amended, modified or supplemented from time
to time in accordance with the provisions hereof.
"Security Documents" shall mean the Security Agreement, the Pledge
Agreement, the Mortgages and each of the security agreements and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.09.
"Spice" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Spice Acquisition" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Spin-Off Transactions" shall have the meaning assigned to such term in
the preamble to this Agreement.
"Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board for Eurocurrency Liabilities (as defined in Regulation
D). Such reserve percentages shall include those imposed pursuant to Regulation
D. Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and
to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under Regulation D. Statutory Reserves shall be adjusted automatically on
and as of the effective date of any change in any reserve percentage.
"Stock Transfer" shall mean the Company's contribution to PHI of 100% of
the Equity Interests and Rights (if any) of each of Playboy and Spice.
"Subsidiary" shall mean, with respect to any person (herein referred to as
the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power are, at the
time any determination is being made, owned, controlled or held, or (b) that is,
at the time any determination is made, otherwise
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29
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Company.
"Subsidiary Guarantee Agreement" shall mean a Subsidiary Guarantee
Agreement substantially in the form of Exhibit D by the Subsidiary Guarantors in
favor of the Collateral Agent for the benefit of the Secured Parties.
"Subsidiary Guarantors" shall mean each person listed on Schedule 1.01 and
each other person that becomes party to the Subsidiary Guarantee Agreement as a
Subsidiary Guarantor, and the permitted successors and assigns of each such
person.
"Taxes" shall mean any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Borrowing" shall mean a Borrowing comprised of Tranche A Term Loans
or Tranche B Term Loans.
"Term Loan Commitments" shall mean the Tranche A Commitments and the
Tranche B Commitments.
"Term Loan Repayment Dates" shall mean the Tranche A Term Loan Repayment
Dates and the Tranche B Term Loan Repayment Dates as set forth in Section
2.11(a).
"Term Loans" shall mean the Tranche A Term Loans and the Tranche B Term
Loans.
"Total Revolving Credit Commitment" shall mean, at any time, the aggregate
amount of the Revolving Credit Commitments, as in effect at such time.
"Tranche A Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche A Term Loans as set forth on Schedule
2.01 or in the Assignment and Acceptance pursuant to which such Lender shall
have assumed its Tranche A Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 10.04.
"Tranche A Lender" shall mean a Lender with a Tranche A Commitment or with
outstanding Tranche A Term Loans.
"Tranche A Maturity Date" shall mean the fifth anniversary of the Closing
Date.
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"Tranche A Term Borrowing" shall mean a Borrowing comprised of Tranche A
Term Loans.
"Tranche A Term Loan Repayment Date" shall mean each of the 15 consecutive
calendar quarter end dates commencing with June 30, 2000 (or, if any such day
shall not be a Business Day, the next preceding Business Day).
"Tranche A Term Loans" shall mean the term loans made by the Lenders to
the Borrower pursuant to clause (a) of Section 2.01. Each Tranche A Term Loan
shall be either a Eurodollar Term Loan or an ABR Term Loan.
"Tranche B Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche B Term Loans as set forth on Schedule
2.01 or in the Assignment and Acceptance pursuant to which such Lender shall
have assumed its Tranche B Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09 and (b`) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 10.04.
"Tranche B Lender" shall mean a Lender with a Tranche B Commitment or with
outstanding Tranche B Term Loans.
"Tranche B Maturity Date" shall mean the seventh anniversary of the
Closing Date.
"Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche B
Term Loans.
"Tranche B Term Loan Repayment Date" shall mean each of the 24 consecutive
calendar quarter end dates commencing with March 31, 2000 (or, if any such day
shall not be a Business Day, the next preceding Business Day).
"Tranche B Term Loans" shall mean the term loans made by the Lenders to
the Borrower pursuant to clause (b) of Section 2.01. Each Tranche B Term Loan
shall be either a Eurodollar Term Loan or an ABR Term Loan.
"Transactions" shall mean the execution, delivery and performance by each
Loan Party of each of the Loan Documents, the Closing Date Transactions and the
Borrowings and issuances of Letters of Credit hereunder after the Closing Date.
"Transfer Date" shall mean the Business Day immediately following the
Closing Date.
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"Type" shall refer, when used in respect of any Loan or Borrowing, to the
Rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, the term "Rate" shall include the
Adjusted LIBO Rate and the Alternate Base Rate.
"Unrestricted Subsidiary" shall mean Playboy Online or any of its
subsidiaries.
"Wholly Owned Subsidiary" shall mean a Subsidiary of which securities
(except for directors' qualifying shares) or other ownership interests
representing 100% of the equity and 100% of the ordinary voting power are, at
the time any determination is being made, owned, controlled or held, directly or
indirectly, by the Borrower or one or more wholly owned subsidiaries of the
Borrower.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly
provided herein, any reference in this Agreement to any Loan Document shall mean
such document as amended, restated, supplemented or otherwise modified from time
to time.
SECTION 1.03. Accounting and Financial Terms. (a) Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided,
however, that, if the Borrower notifies the Administrative Agent that the
Borrower requests an amendment to any provision hereof to eliminate the effect
of any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
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(b) All computations required to be made hereunder with respect to the
Company and the Subsidiaries to demonstrate compliance with any of the financial
covenants contained in Article VI shall exclude the assets, liabilities, results
of operations and cash flows of the Unrestricted Subsidiaries; provided that if
the Company shall deliver to the Administrative Agent a written election to have
the assets, liabilities, results of operations and cash flows of the
Unrestricted Subsidiaries included for purposes of determining compliance with
such covenants, together with a certificate of a Financial Officer (i) stating
that no Default or Event of Default has occurred and is continuing or will have
occurred and be continuing after giving effect to such election and (ii)
demonstrating to the satisfaction of the Administrative Agent that the Borrower
shall be in compliance with the financial covenants set forth in Article VI
giving pro forma effect to the inclusion of such assets, liabilities, results of
operations and cash flows from the beginning of the most recent period of four
fiscal quarters for which financial statements shall have been delivered
pursuant to Section 5.03(a) or (b), as applicable, the assets, liabilities,
results of operations and cash flows of the Unrestricted Subsidiaries shall at
all times thereafter be included in such computations and the Unrestricted
Subsidiaries shall at all times thereafter be deemed Restricted Subsidiaries, it
being understood that any such election shall be permanent and irrevocable.
(c) All pro forma computations required to be made hereunder giving effect
to any acquisition, investment, sale, disposition or similar event shall reflect
on a pro forma basis such event and, to the extent applicable, the historical
earnings and cash flows associated with the assets acquired or disposed of and
any related incurrence or reduction of Indebtedness, but shall not take into
account any projected synergies or similar benefits expected to be realized as a
result of such event except to the extent such benefits would be permitted to be
taken into account in the preparation of pro forma financial statements
complying with Regulation S-X of the Securities and Exchange Commission and are
approved by the Company's independent certified public accountants.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, each Lender agrees,
severally and not jointly, (a) to make a Tranche A Term Loan to the Borrower on
the Closing Date in a principal amount equal to its Tranche A Commitment, (b) to
make a Tranche B Term Loan to the Borrower on the Closing Date in a principal
amount equal to its Tranche B Commitment and (c) to make Revolving Loans to the
Borrower, at any time and from time to time on or after the Closing Date and
until the earlier of the Revolving Credit Maturity Date and the termination of
the Revolving Credit Commitment of such Lender in accordance
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33
with the terms hereof, in an aggregate principal amount at any time outstanding
that will not result in such Lender's Revolving Credit Exposure exceeding such
Lender's Revolving Credit Commitment. Within the limits set forth in clause (c)
of the preceding sentence and subject to the terms, conditions and limitations
set forth herein, the Borrower may borrow, pay or prepay and reborrow Revolving
Loans. Amounts paid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
applicable Commitments; provided, that the failure of any Lender to make any
Loan shall not in itself relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be responsible for
the failure of any other Lender to make any Loan required to be made by such
other Lender). Except for Loans deemed made pursuant to paragraph (f) below, the
Loans comprising any Borrowing shall be in an aggregate principal amount that is
(i) an integral multiple of $250,000 and not less than $1,000,000 or (ii) equal
to the remaining available balance of the applicable Commitments.
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant
to Section 2.03. Each Lender may at its option make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accord ance with the terms of this
Agreement. Borrowings of more than one Type may be outstanding at the same time;
provided, however, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than ten Eurodollar Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Eurodollar
Borrowings having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Borrowings.
(c) Except with respect to Loans made pursuant to paragraph (f) below,
each Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account in New
York City as the Administrative Agent may designate not later than 12:00 (noon),
New York City time, and the Administrative Agent shall promptly transfer the
amounts so received to an account in the name of the Borrower designated by the
Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur
on such date because any condition precedent herein specified shall not have
been met, return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that
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such Lender has made such portion available to the Administrative Agent on the
date of such Borrowing in accordance with paragraph (c) above and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If the Administrative Agent
shall have so made funds available then, to the extent that such Lender shall
not have made such portion available to the Administrative Agent, such Lender
and the Borrower severally agree to repay to the Administrative Agent forthwith
on demand such corresponding amount together with interest thereon for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent at (i) in the case of the Borrower,
the interest rate applicable at the time to the Loans comprising such Borrowing
and (ii) in the case of such Lender, a rate determined by the Administrative
Agent to represent its cost of overnight or short-term funds (which
determination shall be conclusive absent manifest error). If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(e) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Borrowing if the Interest Period requested
with respect thereto would end after the Revolving Credit Maturity Date.
(f) If the Issuing Bank shall not have received from the Borrower the
payment required to be made by Section 2.22(e) in respect of any L/C
Disbursement within the time specified in such Section, the Issuing Bank will
promptly notify the Administrative Agent of the amount of such L/C Disbursement
and the dollar amount of the Revolving Credit Borrowing that will be required
(in the case of an L/C Disbursement denominated in an Alternate Currency, at
current exchange rates, as determined by the Issuing Bank, with such
determination to be conclusive absent demonstrable error) to refinance such L/C
Disbursement. The Administrative Agent will promptly notify each Revolving
Credit Lender of the amount of such Revolving Credit Borrowing and its Pro Rata
Percentage thereof. Each Revolving Credit Lender shall pay by wire transfer of
immediately available funds to the Administrative Agent not later than 2:00
p.m., New York City time, on such date (or, if such Revolving Credit Lender
shall have received such notice later than 12:00 (noon), New York City time, on
any day, not later than 11:00 a.m., New York City time, on the immediately
following Business Day), an amount equal to such Lender's Pro Rata Percentage of
such Revolving Credit Borrowing (it being understood that such amount shall be
deemed to constitute an ABR Revolving Loan of such Lender and that the Revolving
Credit Borrowing made pursuant to this paragraph will be deemed to have reduced
the L/C Exposure by the Dollar Equivalent of such L/C Disbursement), and the
Administrative Agent will promptly pay to the Issuing Bank amounts so received
by it from the Revolving Credit Lenders. The Administrative Agent will promptly
pay to the Issuing Bank any amounts received by it from the Borrower pursuant to
Section 2.22(e) prior to the time that any Revolving Credit Lender makes any
payment pursuant to this paragraph (f); any such amounts received by the
Administrative Agent thereafter will be promptly remitted by the
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35
Administrative Agent to the Revolving Credit Lenders that shall have made such
payments (after being converted into dollars, in the case of amounts received in
any Alternate Currency) and to the Issuing Bank, as their interests may appear.
If any Revolving Credit Lender shall not have made its Pro Rata Percentage of
such Revolving Credit Borrowing available to the Administrative Agent as
provided above, such Lender and the Borrower severally agree to pay interest on
such amount, for each day from and including the date such amount is required to
be paid in accordance with this paragraph to but excluding the date such amount
is paid, to the Administrative Agent for the account of the Issuing Bank at (i)
in the case of the Borrower, a rate per annum equal to the interest rate
applicable to ABR Revolving Loans pursuant to Section 2.06(a), and (ii) in the
case of such Lender, for the first such day, the Federal Funds Effective Rate,
and for each day thereafter, the Alternate Base Rate.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing (other
than a deemed Borrowing pursuant to Section 2.02(f), as to which this Section
2.03 shall not apply), the Borrower shall hand deliver or telecopy to the
Administrative Agent a duly completed Borrowing Request (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before a proposed Borrowing, and (b) in the case of an ABR
Borrowing, not later than 12:00 (noon), New York City time, on the Business Day
of a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall be
signed by or on behalf of the Borrower and shall specify the following
information: (i) whether the Borrowing then being requested is to be a Tranche A
Term Borrowing, a Tranche B Term Borrowing or a Revolving Credit Borrowing, and,
subject to the third sentence of Section 2.02(b), whether such Borrowing is to
be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing
(which shall be a Business Day), (iii) the number and location of the account to
which funds are to be disbursed; (iv) the amount of such Borrowing; and (v) if
such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect
thereto; provided, however, that, notwithstanding any contrary specification in
any Borrowing Request, each requested Borrowing shall comply with the
requirements set forth in Section 2.02. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing
is specified in any such notice, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration. The Administrative Agent
shall promptly advise the applicable Lenders of any notice given pursuant to
this Section 2.03 (and the contents thereof), and of each Lender's portion of
the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender (i) the then unpaid principal amount of each Revolving
Loan on the Revolving Credit Maturity Date and (ii) the principal amount of each
Term Loan of such Lender as provided in Section 2.11.
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(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs (b)
and (c) above shall be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans in
accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the event
any Lender shall request and receive a promissory note payable to such Lender
and its registered assigns, the interests represented by such note shall at all
times (including after any assignment of all or part of such interests pursuant
to Section 10.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender, through
the Administrative Agent, on the last day of each calendar quarter commencing
with the first such day after the date hereof (or, if any such day shall not be
a Business Day, the next preceding Business Day), and on the date on which the
last of the Commitments of such Lender shall expire or be terminated as provided
herein (each such day being called a "Fee Payment Date"), a commitment fee (a
"Commitment Fee") equal to .50% per annum on the average daily unused amount
(with Letters of Credit counting as usage) of the Commitments of such Lender
during the preceding quarter (or other period commencing with the date hereof or
ending with the date on which the last of the Commitments of such Lender shall
expire or be terminated). All Commitment Fees shall be computed on the basis of
the actual number of days elapsed in a year of 360 days. The Commitment Fee due
to each Lender shall commence to accrue on the date hereof and shall cease to
accrue on the date on which the last of the Commitments of such Lender shall
expire or be terminated as provided herein.
(b) The Borrower agrees to pay to the Arranger and to the Administrative
Agent, for their own accounts, the fees separately agreed upon by the Borrower,
the Arranger and the Administrative Agent (the "Arranger and Agent Fees").
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(c) The Borrower agrees to pay (i) to each Revolving Credit Lender,
through the Administrative Agent, on each Fee Payment Date, a fee (an "L/C
Participation Fee") calculated on such Lender's Pro Rata Percentage of the
average daily aggregate L/C Exposure (excluding the portion thereof attributable
to unreimbursed L/C Disbursements) during the preceding quarter (or shorter
period commencing with the date hereof or ending with the Revolving Credit
Maturity Date or the date on which all Letters of Credit have been canceled or
have expired and the Revolving Credit Commitments of all Lenders shall have been
terminated) at a rate equal to the Applicable Percentage from time to time used
to determine the interest rate on Revolving Credit Borrowings comprised of
Eurodollar Loans pursuant to Section 2.06, and (ii) to the Issuing Bank, (A) on
each Fee Payment Date and on the date on which the Letter of Credit Commitment
shall be terminated as provided herein and no Letters of Credit shall be
outstanding, a fronting fee of .25% per annum (or such other rate per annum, if
any, as the Borrower and the Issuing Bank may agree upon from time to time) on
the undrawn face amount of each outstanding Letter of Credit, and (B) issuance
and drawing fees specified from time to time by the Issuing Bank as its
applicable issuance and drawing fees for letters of credit similar to the
Letters of Credit (collectively, the "Issuing Bank Fees"). All L/C Participation
Fees and Issuing Bank Fees shall be computed on the basis of the actual number
of days elapsed in a year of 360 days.
All Fees shall be paid on the dates due, in immediately available funds,
to the Administrative Agent for distribution, if and as appropriate, among the
Lenders, except that the Issuing Bank Fees shall be paid directly to the Issuing
Bank. Once paid, none of the Fees shall be refundable.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of Section
2.07, the Loans comprising each ABR Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 365 or 366 days,
as the case may be, when the Alternate Base Rate is determined by reference to
the Prime Rate and over a year of 360 days at all other times) at a rate per
annum equal to the Alternate Base Rate plus (x) in the case of Revolving Loans
and Tranche A Term Loans, the Applicable Percentage in effect for such Loans
from time to time and (y) in the case of Tranche B Term Loans, (i) prior to the
date on which the Playboy International Transaction shall be completed, 2.75%
per annum and (ii) on and after the date on which the Playboy International
Transaction shall be completed, the greater of (A) the Applicable Percentage
that would be used to determine the interest rate applicable to a Tranche A Term
Loan plus .50% per annum and (B) 2.25% per annum.
(b) Subject to the provisions of Section 2.07, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus (x)
in the case of Revolving Loans and Tranche A Term Loans, the Applicable
Percentage in effect for such Loans from time to time and (y) in
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the case of Tranche B Term Loans, (i) prior to the date on which the Playboy
International Transaction shall be completed, 3.75% per annum and (ii) on and
after the date on which the Playboy International Transaction shall be
completed, the greater of (A) the Applicable Percentage that would be used to
determine the interest rate applicable to a Tranche A Term Loan plus .50% per
annum and (B) 3.25% per annum.
(c) Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent
demonstrable error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
the Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of overdue principal,
at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2%
per annum and (b) in all other cases, at the rate per annum applicable at such
time to ABR Loans comprising Revolving Credit Borrowings plus 2% per annum.
SECTION 2.08. Alternate Rate of Interest. In the event and on each
occasion that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately reflect the cost to the Required Lenders of making or maintaining its
Eurodollar Loan duri |
