Credit Agreement - PEI Holdings Inc. and Bank of America NA
CREDIT AGREEMENT
Dated as of March 11, 2003
among
PEI HOLDINGS, INC.,
as Borrower,
BANK OF AMERICA, N.A.,
as Administrative Agent
and
The Other Lenders Party Hereto
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.....................................................................1
1.01 Defined Terms........................................................................................1
1.02 Other Interpretive Provisions.......................................................................16
1.03 Accounting Terms....................................................................................16
1.04 Rounding............................................................................................16
1.05 References to Agreements and Laws...................................................................16
1.06 Letter of Credit Amounts............................................................................17
ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS..............................................................17
2.01 Committed Loans.....................................................................................17
2.02 Committed Borrowings, Conversions and Continuations of Committed Loans..............................17
2.03 Letters of Credit...................................................................................18
2.04 Intentionally Omitted...............................................................................23
2.05 Prepayments/Mandatory Commitment Reductions.........................................................23
2.06 Optional Reduction or Termination of Commitments....................................................23
2.07 Repayment of Loans..................................................................................24
2.08 Interest............................................................................................24
2.09 Fees................................................................................................24
2.10 Computation of Interest and Fees....................................................................25
2.11 Evidence of Debt....................................................................................25
2.12 Payments Generally..................................................................................25
2.13 Sharing of Payments.................................................................................26
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY............................................................27
3.01 Taxes...............................................................................................27
3.02 Illegality..........................................................................................28
3.03 Inability to Determine Rates........................................................................28
3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on IBOR Committed Loans...............29
3.05 Funding Losses......................................................................................29
3.06 Matters Applicable to all Requests for Compensation.................................................30
3.07 Replacement of Affected Lenders.....................................................................30
3.08 Survival............................................................................................30
ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS..........................................................30
4.01 Conditions of Initial Credit Extension..............................................................30
4.02 Conditions to all Credit Extensions.................................................................32
ARTICLE V REPRESENTATIONS AND WARRANTIES......................................................................32
5.01 Existence, Qualification and Power; Compliance with Laws............................................32
5.02 Authorization; No Contravention.....................................................................32
5.03 Governmental Authorization..........................................................................33
5.04 Binding Effect......................................................................................33
5.05 Financial Statements; No Material Adverse Effect....................................................33
5.06 Litigation..........................................................................................33
5.07 No Default..........................................................................................33
5.08 Environmental Compliance............................................................................34
5.09 Insurance...........................................................................................34
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5.10 Taxes...............................................................................................34
5.11 ERISA Compliance....................................................................................34
5.12 Subsidiaries........................................................................................34
5.13 Disclosure..........................................................................................35
5.14 Compliance with Laws................................................................................35
5.15 Margin Regulations; Investment Company Act; Public Utility Holding Company Act......................35
5.16 Senior Secured Note Debt............................................................................35
ARTICLE VI AFFIRMATIVE COVENANTS..............................................................................35
6.01 Financial Statements................................................................................35
6.02 Certificates; Other Information.....................................................................36
6.03 Notices.............................................................................................36
6.04 Preservation of Existence, Etc......................................................................37
6.05 Compliance with Laws................................................................................37
6.06 Books and Records...................................................................................37
6.07 Inspection Rights...................................................................................37
6.08 Use of Proceeds.....................................................................................37
6.09 Financial Covenants.................................................................................37
6.10 Additional Guarantors...............................................................................38
6.11 Designation of Restricted and Unrestricted Subsidiaries.............................................38
6.12 Appraisal of Playboy Mansion........................................................................38
ARTICLE VII NEGATIVE COVENANTS................................................................................39
7.01 Liens...............................................................................................39
7.02 Investments.........................................................................................39
7.03 Indebtedness........................................................................................39
7.04 Fundamental Changes.................................................................................39
7.05 Dispositions........................................................................................39
7.06 Restricted Payments.................................................................................40
7.07 Limitations in respect of Subordinated Liabilities..................................................40
7.08 Limitations in respect of Senior Secured Note Debt..................................................40
7.09 Limitations in respect of Califa Obligation.........................................................40
7.10 Change in Nature of Business........................................................................41
7.11 Transactions with Affiliates........................................................................41
7.12 Margin Regulations..................................................................................41
7.13 Disqualified Stock..................................................................................41
7.14 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries...........................41
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES...................................................................41
8.01 Events of Default...................................................................................41
8.02 Remedies Upon Event of Default......................................................................43
8.03 Application of Funds................................................................................43
ARTICLE IX AGENT..............................................................................................44
9.01 Appointment and Authorization of Agent..............................................................44
9.02 Delegation of Duties................................................................................44
9.03 Liability of Agent..................................................................................45
9.04 Reliance by Agent...................................................................................45
9.05 Notice of Default...................................................................................45
9.06 Credit Decision; Disclosure of Information by Agent.................................................45
9.07 Indemnification of Agent............................................................................46
9.08 Agent in its Individual Capacity....................................................................46
9.09 Successor Agent.....................................................................................46
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9.10 Agent May File Proofs of Claim......................................................................47
9.11 Loan Guaranty Matters...............................................................................47
9.12 Collateral Matters..................................................................................47
9.13 Remedial Action.....................................................................................49
9.14 Co-Agent............................................................................................49
ARTICLE X MISCELLANEOUS.......................................................................................49
10.01 Amendments, Etc.....................................................................................49
10.02 Notices and Other Communications; Facsimile Copies..................................................50
10.03 No Waiver; Cumulative Remedies......................................................................51
10.04 Attorney Costs, Expenses and Taxes..................................................................51
10.05 Indemnification by Borrower.........................................................................51
10.06 Payments Set Aside..................................................................................52
10.07 Successors and Assigns..............................................................................52
10.08 Confidentiality.....................................................................................54
10.09 Set-off.............................................................................................54
10.10 Interest Rate Limitation............................................................................55
10.11 Counterparts........................................................................................55
10.12 Integration.........................................................................................55
10.13 Survival of Representations and Warranties..........................................................55
10.14 Severability........................................................................................55
10.15 Governing Law; Submission to Jurisdiction...........................................................56
10.16 Waiver of Right to Trial by Jury....................................................................56
10.17 Restrictions on Foreign Collateral..................................................................56
10.18 Right of First Refusal..............................................................................56
10.19 Agent's Liens.......................................................................................57
SIGNATURES...................................................................................................S-1
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SCHEDULES
2.01 Commitments and Pro Rata Shares
5.06 Litigation
5.08 Environmental Matters
5.12 Subsidiaries, Restricted Subsidiaries and Equity Investments
10.02 Addresses for Notices
EXHIBITS
Form of
A Committed Loan Notice
B Note
C Compliance Certificate
D Assignment and Assumption Agreement
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CREDIT AGREEMENT
This CREDIT AGREEMENT ("Agreement") is entered into as of March 11, 2003,
among PEI HOLDINGS, INC., a Delaware corporation ("Borrower"), each lender from
time to time party hereto (collectively, the "Lenders" and individually, a
"Lender"), and BANK OF AMERICA, N.A., as Agent.
Borrower has requested that Lenders provide a revolving credit facility,
and Lenders are willing to do so on the terms and conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms.
As used in this Agreement, the following terms shall have the meanings set
forth below:
"Adjusted EBITDA" means net income, less income or plus loss from
discontinued operations and extraordinary items, plus income taxes, plus
interest expense, plus depreciation, depletion, and amortization (including
programming amortization), plus restructuring charges, plus non-cash expenses or
losses or any other non-cash charges, and minus cash investments in programming,
all determined for Playboy and its Restricted Subsidiaries on a consolidated
basis and in accordance with GAAP.
"Administrative Agent" or "Agent" means Bank of America in its capacity as
(a) Administrative Agent under any of the Loan Documents and/or (b) issuer of
Letters of Credit hereunder, as the context requires, or any successor Agent.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise (it being understood that PTVLA is not an Affiliate of
Playboy on the Closing Date as a result of its ownership and governance
structure as in effect on the Closing Date). For purposes of this definition,
the terms "controlling," "controlled by" and "under common control with" shall
have correlative meanings.
"Agent Fee Letter" has the meaning specified in Section 2.09(b).
"Agent's Office" means Agent's address and, as appropriate, account as set
forth on Schedule 10.02, or such other address or account as Agent may from time
to time notify Borrower and Lenders.
"Agent-Related Persons" means Agent, together with its Affiliates, and the
officers, directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Aggregate Commitments" means the Commitments of all Lenders.
"Agreement" means this Credit Agreement.
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"Applicable Rate" means, from time to time, the following percentages per
annum, based upon Playboy's Adjusted EBITDA (the "Financial Covenant") as set
forth in the most recent quarterly Compliance Certificate received by Agent
pursuant to Section 6.02(b):
Applicable Rate
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IBOR Committed Base Rate
Pricing Commitment Loans and Letter Committed
Level Financial Covenant Fee of Credit Fees Loans
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1 Greater than $35,000,000 0.40% 2.50% 1.00%
2 Greater than $30,000,000, but less than or 0.40% 3.00% 1.50%
equal to $35,000,000
3 Greater than $25,000,000, but less than or 0.50% 3.25% 1.75%
equal to $30,000,000
4 Greater than $20,000,000, but less than or 0.50% 3.50% 2.00%
equal to $25,000,000
5 Less than or equal to $20,000,000 0.50% 4.00% 2.50%
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The Applicable Margin will be an effect from the first day of the month
following the delivery date of each quarterly Compliance Certificate (an
"Adjustment Date") until the first day of the month following the delivery date
of the next quarterly Compliance Certificate. The Applicable Rate in effect from
the Closing Date through November 1, 2003 shall be determined based upon Pricing
Level 4. If no Compliance Certificate is delivered when due in accordance with
Section 6.02(b), the then-applicable Pricing Level will remain in effect until
actual delivery of such Compliance Certificate, at which time the Pricing Level
will be adjusted retroactive to the applicable Adjustment Date.
"Assignment and Assumption Agreement" means an Assignment and Assumption
Agreement substantially in the form of Exhibit D.
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel.
"Attributable Debt" means, in respect of a sale and leaseback transaction,
at the time of determination, (i) in the case of a capital lease, the Capital
Lease Obligation in respect thereof, or (ii) in all other cases, the present
value of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction,
including any period for which such lease has been extended or may, at the
option of the lessor, be extended. Such present value shall be calculated using
a discount rate equal to the rate of interest implicit in such transaction,
determined in accordance with GAAP.
"Audited Financial Statements" means the audited consolidated balance
sheet of Playboy and its Subsidiaries for the fiscal year ended December 31,
2001, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such fiscal year of Playboy and its
Subsidiaries, including the notes thereto, all prepared by Ernst & Young, LLP.
"Available Revolver" means, at any time, the amount by which the Aggregate
Commitments at such time exceeds the sum of (a) the L/C Obligations and (b) the
aggregate principal balance of the Loans at such time.
"Availability Period" means the period from and including the Closing Date
to the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.06, and (c) the date of termination
of the commitment of each Lender to make Loans and of the obligation of Agent to
make L/C Credit Extensions pursuant to Section 8.02.
"Bank of America" means Bank of America, N.A. and its successors.
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"Base Amount" means 70% of Net Worth as of December 31, 2002, as reflected
in Borrower's 10-K filing as of such date.
"Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest
in effect for such day as publicly announced from time to time by Bank of
America as its "prime rate." The "prime rate" is a rate set by Bank of America
based upon various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change. The "prime rate" is not necessarily the lowest rate charged by Bank of
America on its loans and is set by Bank of America in its sole discretion. If
the "prime rate" becomes unavailable during the term of this Agreement, Agent
may designate a substitute index after notifying Borrower thereof.
"Base Rate Committed Loan" means a Committed Loan that is a Base Rate
Loan.
"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"Board of Directors" means:
(a) with respect to a corporation, the board of directors of the
corporation;
(b) with respect to a partnership, the board of directors of the general
partner of the partnership; and
(c) with respect to any other Person, the board or committee of such
Person serving a similar function.
Unless the context otherwise provides, "Board of Directors" refers to the
Board of Directors of Playboy.
"Borrower" has the meaning specified in the introductory paragraph hereto.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in fact
closed in, New York, New York, Chicago, Illinois or the state where Agent's
Office is located and, if such day relates to any IBOR Committed Loan, means any
such day on which dealings in Dollar deposits are conducted by and between banks
in the Grand Cayman, British West Indies offshore dollar interbank market.
"Califa Debt Documents" means the Asset Purchase Agreement, dated as of
June 29, 2001, among Playboy, Califa Entertainment Group, Inc., V.O.D., Inc.
Steven Hirsch, Dewi James and William Asher.
"Califa Obligation" means any obligation of Playboy, Borrower or any
Restricted Subsidiary pursuant to or arising in connection with the Califa Debt
Documents or any related agreement, in each case as amended from time to time.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock;
(c) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
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(d) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of assets of,
the issuing Person; provided, that the foregoing expressly excludes any deferred
compensation, phantom equity or similar benefit plan.
"Cash Collateralize" has the meaning specified in Section 2.03(g)
"Cash Equivalents" means:
(a) United States dollars;
(b) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof (provided,
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than one year from the date of
acquisition;
(c) certificates of deposit and eurodollar time deposits with maturities
of one year or less from the date of acquisition, bankers' acceptances with
maturities not exceeding one year and overnight bank deposits, in each case,
with any domestic commercial bank having capital and surplus in excess of
$500,000,000 and a Thomson Bank Watch Rating of "B" or better;
(d) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (b) and (c) above
entered into with any financial institution meeting the qualifications specified
in clause (c) above;
(e) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in each case
maturing within one year after the date of acquisition;
(f) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (e) of this
definition; and
(g) other investment instruments approved in writing by Agent.
"Change of Control" means the occurrence of any "Change of Control" as
defined in the Senior Secured Note Indenture.
"Closing Date" means the first date all the conditions precedent in
Section 4.01 are satisfied or waived in accordance with Section 10.01 (or, in
the case of Section 4.01(b), waived by the Person entitled to receive the
applicable payment).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Collateral" shall mean any and all assets and rights and interests in or
to property of Playboy and each of the other Loan Parties, whether real or
personal, tangible or intangible, in which a Lien is granted or purported to be
granted pursuant to the Collateral Documents.
"Collateral Documents" means the Security Agreements, the Pledge
Agreements, the Deed of Trust and all other agreements, instruments and
documents now or hereafter executed and delivered in connection with this
Agreement pursuant to which Liens are granted or purported to be granted to
Agent in Collateral securing all or part of the Obligations each in form and
substance reasonably satisfactory to Agent.
"Commitment" means, as to each Lender, its obligation to (a) make
Committed Loans to Borrower pursuant to Section 2.01 and (b) purchase
participations in L/C Obligations, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender's name
on Schedule 2.01, or in the Assignment and Assumption Agreement pursuant to
which such Lender becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement.
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"Committed Borrowing" means a borrowing consisting of simultaneous
Committed Loans of the same Type and, in the case of IBOR Committed Loans,
having the same Interest Period made by each of Lenders pursuant to Section
2.01.
"Committed Loan" has the meaning specified in Section 2.01.
"Committed Loan Notice" means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other, or (c) a continuation
of IBOR Committed Loans, pursuant to Section 2.02(a), which, if in writing,
shall be substantially in the form of Exhibit A.
"Companies" means, collectively, the Loan Parties and each other
Restricted Subsidiary of Playboy.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Extension" means a Committed Borrowing or an L/C Credit Extension.
"Debtor Relief Laws" means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.
"Deed of Trust" means the Deed of Trust with Assignment of Rents, Security
Agreement and Fixture Filing executed by Playboy Enterprises International, Inc.
in favor of Agent with respect to the Playboy Mansion.
"Default" means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.
"Default Rate" means an interest rate equal to (a) the Base Rate plus (b)
the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per
annum; provided, however, that with respect to an IBOR Committed Loan, the
Default Rate shall be an interest rate equal to the interest rate (including any
Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in each
case to the fullest extent permitted by applicable Laws.
"Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Committed Loans or participations in L/C Obligations required to
be funded by it hereunder within one Business Day of the date required to be
funded by it hereunder, (b) has otherwise failed to pay over to Agent or any
other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute,
or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.
"Disposition" or "Dispose" means (a) the sale, lease, conveyance or other
disposition of any assets or rights including by way of merger or consolidation
other than in the ordinary course of business consistent with past practices;
provided that the sale, conveyance or other disposition of all or substantially
all of the assets of Playboy or Borrower will be governed by Section 7.04; and
(b) the issuance of Equity Interests by any of Playboy's Restricted Subsidiaries
or the sale by Playboy or any of its Restricted Subsidiaries of Equity Interests
in any of its Restricted Subsidiaries. Notwithstanding the foregoing, a
"Disposition" shall not include any transaction specifically excluded from the
definition of the term "Asset Sale" contained in the Senior Secured Note
Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures (excluding any maturity as the result of the
redemption thereof at the option of the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Senior Secured Notes mature, except
to the extent that such Capital Stock is (either mandatorily or at the option of
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the issuer thereof) redeemable solely with, or exchangeable solely for, any
Equity Interests of Playboy that are not Disqualified Stock; provided, however,
that only the portion of Capital Stock or other security which so matures, is
mandatorily redeemable or is so redeemable at the option of the holder prior to
such date will be deemed to be Disqualified Stock; provided further that, if
such Capital Stock or other security is issued to any employee or to any plan
for the benefit of employees of Playboy or its Subsidiaries or by any plan to
such employees, such Capital Stock or other security will not constitute
Disqualified Stock solely because it may be required to be repurchased by
Playboy or any of its Subsidiaries in order to satisfy applicable statutory or
regulatory obligations as a result of such employee's termination, death or
disability. Notwithstanding the preceding sentence, any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require Borrower to repurchase such Capital Stock upon the occurrence of a
change of control or an asset sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that Borrower may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 7.06.
"Dollar" and "$" mean lawful money of the United States.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary of
Borrower that was formed under the laws of the United States or any state
thereof or the District of Columbia or that Guarantees or otherwise provides
direct credit support for any Indebtedness of Playboy or Borrower.
"Eligible Assignee" has the meaning specified in Section 10.07(h).
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Playboy, any other Company or any of their
respective Restricted Subsidiaries directly or indirectly resulting from or
based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, not
amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Playboy within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by Playboy or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by Playboy or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Playboy
or any ERISA Affiliate, in each case under circumstances that would reasonably
be expected to have a Material Adverse Effect.
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"Event of Default" has the meaning specified in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by Agent.
"Foreign Subsidiary" means any Restricted Subsidiary of Playboy other than
a Domestic Restricted Subsidiary.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of government.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantors" means, collectively, (a) Playboy and (b) each direct or
indirect Domestic Restricted Subsidiary of Playboy (initially excluding the
Playboy.com Entities) that executes a Loan Guaranty in accordance with the
provisions hereof; and their respective successors and assigns, unless and until
such time as such Guarantor is released from its Loan Guaranty pursuant to the
provisions hereof.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hefner" means Hugh M. Hefner, his decedent's estate, or any entity or
trust controlled by Hugh M. Hefner or his executor.
"Hefner Debt" means the Indebtedness of Playboy.com to Hugh M. Hefner in
the principal amount immediately prior to the Closing Date of $27,235,490.69.
"Hefner Debt Exchange" means the exchange of the Hefner Debt for (a)
$10,000,000 of Series A Preferred Stock of Borrower, (b) $500,000 cash and (c)
approximately $16,700,000 of Series B Preferred Stock of Borrower.
"Hefner Option" means a non-assignable option granted to Hefner, which
option shall be subordinate to the Deed of Trust, pursuant to which Hefner will
have the right to purchase the Playboy Mansion and all or a portion of the
Mansion Personal Property for a price payable in cash at closing determined
pursuant to a third party appraisal process approved by a majority of the
independent directors of Playboy.
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"Hefner Securities" means (i) preferred stock of the Borrower with an
aggregate liquidation preference of $26,735,490.69 issued in exchange for
promissory notes of Playboy.com outstanding on the Closing Date and (ii) Equity
Securities of Playboy (other than Disqualified Stock) issued in exchange
therefor.
"IBOR Base Rate" has the meaning set forth in the definition of IBOR Rate.
"IBOR Rate" means for any Interest Period with respect to any IBOR
Committed Loan, a rate per annum determined by Agent pursuant to the following
formula, rounded upward to the nearest 1/100 of one percent:
IBOR Base Rate
IBOR Rate = ----------------------------------------
1.00 -Reserve Percentage
Where,
(1) "IBOR Base Rate" means, for such Interest Period, the interest rate
per annum (rounded upward to the nearest 1/100 of one percent) at
which Bank of America's Grand Cayman Banking Center, Grand Cayman,
British West Indies, would offer U.S. dollar deposits for the
applicable Interest Period to other major banks in the offshore
dollar inter bank market, as adjusted from time to time in Bank of
America's sole discretion for then-applicable deposit insurance
assessment rates and other regulatory costs; and
(2) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency Liabilities, as
defined in Federal Reserve Board Regulation D, rounded upward to the
nearest 1/100 of one percent. The percentage will be expressed as a
decimal, and will include, but not be limited to, marginal,
emergency, supplemental, special, and other reserve percentages.
If at any time Bank of America is no longer acting as Agent hereunder, the
IBOR Base Rate may be revised to substitute another index as agreed to by the
replacement Agent and Borrower.
"IBOR Committed Loan" means a Committed Loan that bears interest at a rate
based on the IBOR Rate.
"Increase Amount" means 70% of Net Income for the period from the Closing
Date through the last day of the applicable quarter, excluding the negative
results from any quarter, if any.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof), excluding
letters of credit securing obligations other than obligations described in
clauses (a), (b), (d) and (f) of this paragraph and entered into in the ordinary
course of business of such Person, to the extent such letters of credit are not
drawn upon, or if drawn upon, to the extent such drawing is reimbursed no later
than the third business day following receipt by such Person of a demand for
reimbursement;
(c) in respect of banker's acceptances;
(d) representing Capital Lease Obligations or Attributable Debt;
(e) representing the balance deferred and unpaid of the purchase price of
any property or services, except any such balance that constitutes an accrued
expense or trade payable, which purchase price is due more than six months after
the date of placing such property in service or taking delivery and title or the
completing of such services excluding any obligation to the extent that it is
either required to be or the option of each Person may be satisfied solely
through the issuance of Equity Interests of Playboy that are not Disqualified
Stock; or
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(f) representing any Swap Contract,
if and to the extent any of the preceding items (other than letters of credit
and Swap Contracts) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes (i) all Indebtedness of others secured by a Lien on any
asset of the specified Person whether or not such Indebtedness is assumed by the
specified Person, provided that the amount of such Indebtedness shall be the
lesser of (A) the fair market value of such asset as of the date of
determination and (B) the amount of such Indebtedness and, to the extent not
otherwise included, the Guarantee by the specified Person of any Indebtedness of
any other Person; (ii) obligations of such Person and its Restricted
Subsidiaries to repay Disqualified Stock; and (iii) the liquidation preference
of all preferred stock of any such Person's Restricted Subsidiaries other than
the Playboy.com Series A Preferred Stock and the Hefner Securities.
The amount of any Indebtedness outstanding as of any date shall be:
(1) with respect to any contingent obligation included as Indebtedness,
the maximum liability upon the occurrence of the contingency giving rise to the
obligation;
(2) with respect to any Swap Contract, the net amount payable if such Swap
Contract terminated at that time due to default by such Person;
(3) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(4) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness.
"Indemnified Liabilities" has the meaning specified in Section 10.05.
"Indemnitees" has the meaning specified in Section 10.05.
"Information" has the meaning specified in Section 10.08.
"Intercreditor Agreement" means the Intercreditor Agreement of even date
herewith among Agent, Trustee, Playboy, Borrower and Playboy's Domestic
Restricted Subsidiaries in existence as of the date hereof.
"Interest Coverage Ratio" means the ratio of Adjusted EBITDA to cash
interest expense, all determined for Playboy and its Restricted Subsidiaries on
a consolidated basis and in accordance with GAAP.
"Interest Payment Date" means, (a) as to any IBOR Committed Loan, the last
day of each Interest Period applicable to such Loan and the Maturity Date;
provided, however, that if any Interest Period for a IBOR Committed Loan exceeds
three months, the respective dates that fall every three months after the
beginning of such Interest Period shall also be Interest Payment Dates; and (b)
as to any Base Rate Loan, the last Business Day of each March, June, September
and December and the Maturity Date.
"Interest Period" means as to each IBOR Committed Loan, the period
commencing on the date such IBOR Committed Loan is disbursed or converted to or
continued as a IBOR Committed Loan and ending on the date one, two, three or, if
available to Lenders, six or twelve months thereafter, as selected by Borrower
in its Committed Loan Notice; provided that:
(a) any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless, such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and
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(c) no Interest Period shall extend beyond the Maturity Date.
"Investment" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons, including Affiliates, in the forms
of loans, including Guarantees or other obligations, advances or capital
contributions (excluding commission, travel and similar advances to officers,
employees, customers and suppliers made consistent with past practices),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If Borrower or any Restricted Subsidiary of Borrower sells or otherwise disposes
of any Equity Interests of any direct or indirect Restricted Subsidiary of
Borrower such that, after giving effect to any such sale or disposition, such
Person is no longer a Restricted Subsidiary of Borrower, Borrower shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Restricted
Subsidiary not sold or disposed of in an amount determined as provided in
Section 4.07(c) of the Senior Secured Note Indenture. The acquisition by
Borrower or any Restricted Subsidiary of Borrower of a Person that holds an
Investment in a third Person shall be deemed to be an Investment by Borrower or
such Restricted Subsidiary in such third Person in an amount equal to the fair
market value of the Investment held by the acquired Person or such third Person
or an amount determined as provided in the final paragraph of Section 4.07(c) of
the Senior Secured Note Indenture.
"IRS" means the United States Internal Revenue Service and any Person
succeeding to the functions thereof.
"Laws" means, any law, treaty, rule or regulation of determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"L/C Advance" means, with respect to each Lender, such Lender's funding of
its participation in any L/C Borrowing in accordance with its Pro Rata Share.
"L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when made
or refinanced as a Committed Borrowing.
"L/C Credit Extension" means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the renewal or
increase of the amount thereof.
"L/C Obligations" means, as at any date of determination, the aggregate
undrawn face amount of all outstanding Letters of Credit plus the aggregate of
all Unreimbursed Amounts, including all L/C Borrowings.
"Lender" has the meaning specified in the introductory paragraph hereto
and, as the context requires, includes Agent in its capacity as issuer of
Letters of Credit hereunder.
"Lending Office" means, as to any Lender, the office or offices of such
Lender described as such on Schedule 10.02, or such other office or offices as a
Lender may from time to time notify Borrower and Agent.
"Letter of Credit" means any letter of credit issued hereunder. A Letter
of Credit may be a commercial letter of credit or a standby letter of credit.
"Letter of Credit Application" means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by Agent.
"Letter of Credit Expiration Date" means the day that is seven days prior
to the Maturity Date then in effect (or, if such day is not a Business Day, the
next preceding Business Day).
"Letter of Credit Sublimit" means an amount equal to $20,000,000. The
Letter of Credit Sublimit is part of, and not in addition to, the Aggregate
Commitments.
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"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidity Test" means that, after giving effect to the payment subject to
the Liquidity Test, cash and Cash Equivalents of Playboy and its Domestic
Restricted Subsidiaries at such time, exceed the Outstanding Amount of the
Committed Loans at such time.
"Loan" means an extension of credit by a Lender to Borrower under Article
II in the form of a Committed Loan.
"Loan Documents" means this Agreement, each Note, the Agent Fee Letter,
each Collateral Document, each Loan Guaranty and the Intercreditor Agreement,
each as amended, supplemented or modified from time to time.
"Loan Guaranties" means, collectively, the Guaranty made by the Guarantors
in existence on the Closing Date in favor of Agent on behalf of Lenders and each
other Guaranty delivered to Agent after the Closing Date by a Guarantor, each in
form and substance reasonably satisfactory to Agent.
"Loan Parties" means, collectively, (a) Borrower, (b) Playboy and (c) each
Person (other than Agent, any Lender or the Trustee) executing a Loan Document
including, without limitation, each Guarantor and each Person executing a
Collateral Document.
"Mansion Personal Property" means the personal property, if any, located
at the Playboy Mansion which Hefner elects to purchase in connection with the
exercise of the Hefner Option.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, or financial
condition of Playboy and its Restricted Subsidiaries taken as a whole; (b) a
material impairment of the ability of any Loan Party to perform its obligations
under any Loan Document to which it is a party; or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against any Loan
Party of any Loan Document to which it is a party.
"Maturity Date" means March 11, 2006.
"Multiemployer Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which Playboy or any ERISA Affiliate makes or
is obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.
"Net Cash Proceeds" means the aggregate proceeds in cash or Cash
Equivalents received by Playboy or any of its Restricted Subsidiaries in respect
of any Disposition, including, without limitation, any cash or Cash Equivalents
received upon the sale or other disposition of any non-cash consideration
received in any Disposition, net of the direct costs relating to such
Disposition, including, without limitation, legal, accounting and investment
banking fees, and sales commissions, and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof, in each case, after
taking into account any available tax credits or deductions and any tax sharing
arrangements, and amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Disposition and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"Net Income" means net income, after income taxes, of Playboy and its
Restricted Subsidiaries determined on a consolidated basis and in accordance
with GAAP.
"Net Worth" means the total assets of Playboy and its Restricted
Subsidiaries less Total Liabilities of Playboy and its Subsidiaries, all
determined on a consolidated basis and in accordance with GAAP.
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"Non-U.S. Person" means any Person that is not a U.S. Person.
"Note" means a promissory note made by Borrower in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit B.
"Obligations" means (a) all advances to, and debts, liabilities,
obligations, covenants and duties of, any Loan Party arising under any Loan
Document or otherwise with respect to any Loan or Letter of Credit, or (b) all
amounts owing to Agent, any Lender or any Affiliate of Agent or any Lender,
under or in connection with any Swap Contract, in any case whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Party or any
Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding.
"Offering Memorandum" means the Offering Memorandum, dated March 6, 2003,
of Borrower for the issuance of the Senior Secured Notes.
"Organization Documents" means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation and operating agreement; and (c) with respect to any partnership,
joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation and any agreement,
instrument, filing or notice with respect thereto filed in connection with its
formation or organization with the applicable Governmental Authority in the
jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.
"Outstanding Amount" means (i) with respect to Committed Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to
any borrowings and prepayments or repayments of Committed Loans occurring on
such date; and (ii) with respect to any L/C Obligations on any date, the amount
of such L/C Obligations on such date after giving effect to any L/C Credit
Extension occurring on such date and any other changes in the aggregate amount
of the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of Credit or any
reductions in the maximum amount available for drawing under Letters of Credit
taking effect on such date.
"Participant" has the meaning specified in Section 10.07(d).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PEGI" shall mean Playboy Entertainment Group, Inc., a Delaware
corporation.
"Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by Playboy or any
ERISA Affiliate or to which Playboy or any ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.
"Person" means any individual, trustee, corporation, general partnership,
limited partnership, limited liability company, joint stock company, trust,
unincorporated organization, bank, business association, firm, joint venture,
Governmental Authority or other entity.
"Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by Playboy or, with respect to any such plan
that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.
"Playboy" means Playboy Enterprises, Inc., a Delaware corporation.
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"Playboy.com" means Playboy.com, Inc., a Delaware corporation.
"Playboy.com Entities" means, collectively, Playboy.com and its
Subsidiaries.
"Playboy International Agreements" shall mean (i) the Second Amended and
Restated Operating Agreement for Playboy TV - Latin America, LLC, a California
limited liability company, dated as of December 23, 2002 and effective as of
April 1, 2002, between PEGI and Lifford International Co. Ltd. and (ii) the
Playboy TV - Latin America Program Supply and Trademark License Agreement, dated
as of December 23, 2002 and effective as of April 1, 2002, between PEGI an
PTVLA.
"Playboy Mansion" means the property owned by Playboy Enterprises
International, Inc. and located at 10236 Charing Cross Road, Holmby Hills,
California.
"Pledge Agreements" means, collectively, each Pledge Agreement now or
hereafter delivered by Playboy or any of its Restricted Subsidiaries, whereby
such Person pledges to Agent, as security for the Obligations and for such
Person's liabilities under any applicable Loan Guaranty, 100% of such Person's
interests in the Equity Interests of each Domestic Restricted Subsidiary or 65%
of such Person's interests in the Equity Interests of each first-tier Subsidiary
that is not a Domestic Restricted Subsidiary.
"Primary Collateral" has the meaning set forth in the Senior Secured Note
Indenture.
"Pro Rata Share" means, with respect to each Lender, at any time, a
fraction (expressed as a percentage), carried out to the ninth decimal place),
the numerator of which is the amount of the Commitment of such Lender at such
time and the denominator of which is the amount of the Aggregate Commitments at
such time; provided that if the commitment of each Lender to make Loans and the
obligation of Agent to make L/C Credit Extensions have been terminated pursuant
to Section 8.02, then the Pro Rata Share of each Lender shall be determined
based on the Pro Rata Share of such Lender immediately prior to such termination
and after giving effect to any subsequent assignments made pursuant to Section
10.07. The initial Pro Rata Share of each Lender is set forth opposite the name
of such Lender on Schedule 2.01 or in the Assignment and Assumption Agreement
pursuant to which such Lender becomes a party hereto, as applicable.
"Protected Collateral" means the following Collateral: the Playboy
Mansion; all current and future accounts receivable of the Loan Parties; and all
current and future raw materials and finished goods inventory of Loan Parties.
By way of clarification, raw materials and finished goods inventory shall not
include artwork or film or video libraries and goods produced therefrom (other
than finished pieces existing as of the date of the release of Agent's Lien on
such film or video libraries pursuant to Section 9.12(b)(ii)).
"PTVLA" shall mean Playboy TV - Latin America, LLC, a California limited
liability company formed pursuant to the Playboy International Agreements.
"Register" has the meaning set forth in Section 10.07(c).
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.
"Request for Credit Extension" means (a) with respect to a Committed
Borrowing, conversion or continuation of Committed Loans, a Committed Loan
Notice and (b) with respect to an L/C Credit Extension, a Letter of Credit
Application.
"Required Lenders" means, as of any date of determination, Lenders having
more than 50% of the Aggregate Commitments or, if the commitment of each Lender
to make Loans and the obligation of Agent to make L/C Credit Extensions have
been terminated pursuant to Section 8.02, Lenders holding in the aggregate more
than 50% of the Total Outstandings (with the aggregate amount of each Lender's
risk participation and funded participation in L/C Obligations being deemed
"held" by such Lender for purposes of this definition); provided, that at any
time that there are only two Lenders with Commitments, Required Lenders shall
mean both of such Lenders;
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and provided further, that the Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.
"Responsible Officer" means the chief executive officer, president, chief
financial officer, principal accounting officer, controller, treasurer or
assistant treasurer of a Loan Party. Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.
"Restricted Payment" means (a) the declaration or payment of any dividend
or the making of any other payment or distribution on account of Playboy's or
any of its Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation involving
Playboy or any of its Restricted Subsidiaries) or to the direct or indirect
holders of Playboy's or any of its Restricted Subsidiaries' Equity Interests in
their capacity as such (other than (i) dividends, payments or distributions
payable in Equity Interests of Playboy (other than Disqualified Stock) and (ii)
dividends or distributions payable to Playboy or any of its Restricted
Subsidiaries); and (b) the purchase, redemption or other acquisition or
retirement for value (including, without limitation, in connection with any
merger or consolidation involving Playboy or any of its Subsidiaries) of any
Equity Interests of Playboy, any direct or indirect parent of Playboy or any
Subsidiary of Playboy (other than a Restricted Subsidiary of Playboy).
"Restricted Subsidiary" of a Person means any Subsidiary of the referenced
Person that is not an Unrestricted Subsidiary, it being understood that Borrower
shall be a Restricted Subsidiary of Playboy at all times that it is a Subsidiary
of Playboy.
"Security Agreements" means, collectively, each Security Agreement now or
hereafter executed by Playboy and any of its Domestic Restricted Subsidiaries
pursuant to which such Person grants to Agent, as security for the Obligations
and for such Person's liabilities under any Loan Guaranty, a Lien on
substantially all of its personal property.
"Senior Secured Note Debt" means up to $115,000,000 in aggregate principal
amount of Indebtedness of Borrower issued pursuant to the Senior Secured Note
Documents.
"Senior Secured Note Documents" means, collectively, the Senior Secured
Note Indenture, the Senior Secured Notes and each other agreement, instrument or
document now or hereafter evidencing or securing the Senior Secured Note Debt,
each as amended, supplemented or modified from time to time.
"Senior Secured Note Indenture" means the certain Indenture of even date
herewith among Borrower, Playboy, the Guarantors and Trustee, as it exists on
the date herewith, and not as it may be amended, modified or supplemented from
time to time, except as provided in Section 7.08.
"Senior Secured Notes" means, collectively, the Senior Secured Notes
issued pursuant to the Senior Secured Note Indenture.
"Subordinated Liabilities" means liabilities subordinated to the
Obligations.
"Subsidiary" means, with respect to any specified Person:
(a) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); and
(b) any partnership (i) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (ii) the only
general partners of which are such Person or one or more Subsidiaries of such
Person (or any combination thereof).
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"Swap Contract" means, with respect to any specific Person, the
obligations of such Person under:
(a) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(b) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates, currency exchange rates or commodity
prices.
"Taxes" has the meaning specified in Section 3.01(a).
"Threshold Amount" means $5,000,000.
"Total Liabilities" means the sum of current liabilities plus long term
liabilities.
"Total Outstandings" means the aggregate Outstanding Amount of all Loans
and all L/C Obligations.
"Trustee" means Bank One, N.A., as trustee under the Senior Secured Note
Indenture, and each successor trustee under the Senior Secured Note Indenture.
"Type" means with respect to a Committed Loan, its character as a Base
Rate Committed Loan or an IBOR Committed Loan.
"Unfunded Pension Liability" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
"United States," and "U.S." mean the United States of America.
"Unreimbursed Amount" has the meaning set forth in Section 2.03(c)(i).
"Unrestricted Subsidiary" means any Subsidiary of Playboy that is
designated by the Board of Directors of Playboy as an Unrestricted Subsidiary
pursuant to a board resolution, but only to the extent that such Subsidiary:
(a) has no Indebtedness other than debt that is non-recourse to such
Subsidiary;
(b) is not party to any agreement, contract, arrangement or understanding
with Playboy or any of its Restricted Subsidiaries unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to
Playboy or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of Playboy or such Restricted
Subsidiary;
(c) is a Person with respect to which neither Playboy nor any of its
Restricted Subsidiaries has any direct or indirect obligation (i) to subscribe
for additional Equity Interests or (ii) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results;
(d) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of Playboy or any of its Restricted Subsidiaries;
and
(e) has at least one director on its Board of Directors that is not a
director or executive officer of Playboy or any of its Restricted Subsidiaries
and has at least one executive officer that is not a director or executive
officer of Playboy or any of its Restricted Subsidiaries.
Any designation of a Restricted Subsidiary of Playboy as an Unrestricted
Subsidiary shall be evidenced to Agent by filing with Agent a certified copy of
the board resolution giving effect to such designation and an officers'
certificate certifying that such designation complied with the preceding
conditions and was otherwise permitted under this Agreement. If, at any time,
any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Agreement
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and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary of Playboy as of such date and, if such Indebtedness is
not permitted to be incurred as of such date under this Agreement, Borrower
shall be in default of such covenant.
"U.S. Person" means a U.S. person as defined in Section 7701(a)(30) of the
Code.
"Wholly Owned Restricted Subsidiary" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
1.02 Other Interpretive Provisions.
With reference to this Agreement and each other Loan Document, unless
otherwise specified herein or in such other Loan Document:
(a) The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.
(b) (i) The words "herein", "hereto", "hereof" and "hereunder" and words
of similar import when used in any Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof; (ii) Article,
Section, Exhibit and Schedule references are to the Loan Document in which such
reference appears; (iii) the term "including" is by way of example and not
limitation; and (iv) the term "documents" includes any and all instruments,
documents, agreements, certificates, notices, reports, financial statements and
other writings, whether in physical or facsimile form.
(c) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including;" the words "to" and
"until" each mean "to but excluding;" and the word "through" means "to and
including."
(d) Section headings herein and in the other Loan Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Loan Document.
1.03 Accounting Terms.
All accounting terms not specifically or completely defined herein shall
be construed in conformity with, and all financial data (including financial
ratios and other financial calculations) required to be submitted pursuant to
this Agreement shall be prepared in conformity with, GAAP applied on a
consistent basis, as in effect from time to time, provided that to the extent
any change in GAAP after the Closing Date affects the computation of any
financial ratio hereunder, GAAP shall mean GAAP as in effect on the Closing
Date.
1.04 Rounding.
Any financial ratios required to be maintained by any Loan Party pursuant
to this Agreement shall be calculated by dividing the appropriate component by
the other component, carrying the result to one place more than the number of
places by which such ratio is expressed herein and rounding the result up or
down to the nearest number (with a rounding-up if there is no nearest number).
1.05 References to Agreements and Laws.
Unless otherwise expressly provided herein, (a) references to Organization
Documents, agreements (including the Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, but only to the extent
that such amendments, restatements, extensions, supplements and other
modifications are not prohibited by any Loan Document; and (b) references to any
Law shall include all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such Law.
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1.06 Letter of Credit Amounts.
Unless otherwise specified, all references herein to the amount of a
Letter of Credit at any time shall be deemed to mean the maximum face amount of
such Letter of Credit after giving effect to (a) all increases thereof
contemplated by such Letter of Credit or the Letter of Credit Application
therefor, whether or not such maximum face amount is in effect at such time and
(b) the operation of any provision which has automatically reduced such maximum
face amount and any amendments thereto which reduced the maximum face amount
thereof.
ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS.
2.01 Committed Loans.
Subject to the terms and conditions set forth herein, each Lender
severally agrees to make loans (each such loan, a "Committed Loan") to Borrower
from time to time, on any Business Day during the Availability Period in an
aggregate amount not to exceed at any time outstanding the amount of such
Lender's Commitment; provided, however, that after giving effect to any
Committed Borrowing, (i) the Total Outstandings shall not exceed the Aggregate
Commitments, and (ii) the aggregate Outstanding Amount of the Committed Loans of
any Lender, plus such Lender's Pro Rata Share of the Outstanding Amount of all
L/C Obligations shall not exceed such Lender's Commitment. Within the limits of
each Lender's Commitment, and subject to the other terms and conditions hereof,
Borrower may borrow under this Section 2.01, prepay under Section 2.05, and
reborrow under this Section 2.01. Committed Loans may be Base Rate Committed
Loans or IBOR Committed Loans, as further provided herein.
2.02 Committed Borrowings, Conversions and Continuations of Committed
Loans.
(a) Each Committed Borrowing, each conversion of Committed Loans from one
Type to the other, and each continuation of IBOR Committed Loans shall be made
upon Borrower's irrevocable notice to Agent, which may be given by telephone.
Each such notice must be received by Agent not later than 11:00 a.m., Chicago
time, (i) two Business Days prior to the requested date of any Committed
Borrowing of, conversion to or continuation of IBOR Committed Loans or of any
conversion of IBOR Committed Loans to Base Rate Committed Loans, and (ii) on the
requested date of any Committed Borrowing of Base Rate Committed Loans. Each
telephonic notice by Borrower pursuant to this Section 2.02(a) must be confirmed
promptly by delivery to Agent of a written Committed Loan Notice, appropriately
completed and signed by a Responsible Officer of Borrower. Except as provided in
Section 2.03(c), each Committed Borrowing of, conversion to or continuation of
IBOR Committed Loans shall be in a principal amount of $1,000,000 or a whole
multiple of $100,000 in excess thereof. Each Committed Borrowing of or
conversion to Base Rate Committed Loans shall be in a principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan
Notice (whether telephonic or written) shall specify (i) whether Borrower is
requesting a Committed Borrowing, a conversion of Committed Loans from one Type
to the other, or a continuation of IBOR Committed Loans, (ii) the requested date
of the Committed Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iii) the principal amount of Committed Loans
to be borrowed, converted or continued, (iv) the Type of Committed Loans to be
borrowed or to which existing Committed Loans are to be converted, and (v) if
applicable, the duration of the Interest Period with respect thereto. If
Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice or
if Borrower fails to give a timely notice requesting a conversion or
continuation, then the applicable Committed Loans shall be made, or converted
to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be
effective as of the last day of the Interest Period then in effect with respect
to the applicable IBOR Committed Loans. If Borrower requests a Committed
Borrowing of, conversion to, or continuation of IBOR Committed Loans in any such
Committed Loan Notice, but fails to specify an Interest Period, it will be
deemed to have specified an Interest Period of one month.
(b) Following receipt of a Committed Loan Notice, Agent shall promptly
notify each Lender of the amount of its Pro Rata Share of the applicable
Committed Loans, and if no timely notice of a conversion or continuation is
provided by Borrower, Agent shall notify each Lender of the details of any
automatic conversion to Base Rate Loans described in the preceding subsection.
In the case of a Committed Borrowing, each Lender shall make the amount of its
Committed Loan available to Agent in immediately available funds at Agent's
Office not later than 1:00 p.m., Chicago time, on the Business Day specified in
the applicable Committed Loan Notice. Upon satisfaction of the applicable
conditions set forth in Section 4.02 (and, if such Committed Borrowing is the
initial Credit Extension, Section 4.01), Agent shall make all funds so received
available to Borrower in like funds as
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received by Agent either by (i) crediting the account of Borrower on the books
of Bank of America with the amount of such funds or (ii) wire transfer of such
funds, in each case in accordance with instructions provided to (and reasonably
acceptable to) Agent by Borrower; provided, however, that if, on the date of the
Committed Loan Notice with respect to such Committed Borrowing is given by
Borrower there are L/C Borrowings outstanding, then the proceeds of such
Committed Borrowing shall be applied, first, to the payment in full of any such
L/C Borrowings, and second, to Borrower as provided above.
(c) Except as otherwise provided herein, an IBOR Committed Loan may be
continued or converted only on the last day of an Interest Period for such an
IBOR Committed Loan. During the existence of an Event of Default, no Loans may
be requested as, converted to or continued as an IBOR Committed Loans without
the consent of the Required Lenders.
(d) Agent shall promptly notify Borrower and Lenders of the interest rate
applicable to any Interest Period for IBOR Committed Loans upon determination of
such interest rate. The determination of the IBOR Rate by Agent shall be
conclusive in the absence of manifest error.
(e) After giving effect to all Committed Borrowings, all conversions of
Committed Loans from one Type to the other, and all continuations of Committed
Loans as the same Type, there shall not be more than 5 Interest Periods in
effect with respect to Committed Loans.
2.03 Letters of Credit.
(a) The Letter of Credit Commitment.
(i) Subject to the terms and conditions set forth herein, (A) Agent
agrees, in reliance upon the agreements of the other Lenders set forth in
this Section 2.03: (1) from time to time on any Business Day during the
period from the Closing Date until the Letter of Credit Expiration Date,
to issue Letters of Credit for the account of Borrower, Playboy or any of
Playboy's Restricted Subsidiaries, and to amend or renew Letters of Credit
previously issued by it, in accordance with subsection (b) below, and (2)
to honor drafts under the Letters of Credit; and (B) Lenders severally
agree to participate in Letters of Credit issued for the account of
Borrower; provided that Agent shall not be obligated to make any L/C
Credit Extension with respect to any Letter of Credit, and no Lender shall
be obligated to participate in, any Letter of Credit if as of the date of
such L/C Credit Extension, (x) the Total Outstandings would exceed the
Aggregate Commitments, (y) the aggregate Outstanding Amount of the
Committed Loans of any Lender, plus such Lender's Pro Rata Share of the
Outstanding Amount of all L/C Obligations, would exceed such Lender's
Commitment, or (z) the Outstanding Amount of the L/C Obligations would
exceed the Letter of Credit Sublimit. Within the foregoing limits, and
subject to the terms and conditions hereof, Borrower's ability to obtain
Letters of Credit shall be fully revolving, and accordingly Borrower may,
during the foregoing period, obtain Letters of Credit to replace Letters
of Credit that have expired or that have been drawn upon and reimbursed.
(ii) Agent shall be under no obligation to issue any Letter of
Credit if:
(A) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain Agent from issuing such Letter of Credit, or any Law
applicable to Agent or any request or directive (whether or not
having the force of law) from any Governmental Authority with
jurisdiction over Agent shall prohibit, or request that Agent
refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon Agent with
respect to such Letter of Credit any restriction, reserve or capital
requirement (for which Agent is not otherwise compensated hereunder
or by Borrower after Agent has proposed to Borrower a reasonable
basis for compensation which Borrower does not accept) not in effect
on the Closing Date, or shall impose upon Agent any unreimbursed
loss, cost or expense which was not applicable on the Closing Date
and which Agent in good faith deems material to it;
(B) subject to Section 2.03(b)(iv), the expiry date of such
requested Letter of Credit would occur more than twelve months after
the date of issuance or last renewal, unless the Required Lenders
have approved such expiry date;
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(C) the expiry date of such requested Letter of Credit would
occur after the Letter of Credit Expiration Date, unless all Lenders
have approved such expiry date;
(D) the issuance of such Letter of Credit would violate one or
more policies of Agent applicable to the issuance of all letters of
credit by Agent; or
(E) such Letter of Credit is in an initial amount less than
$100,000, in the case of a commercial Letter of Credit, or $500,000,
in the case of a standby Letter of Credit, or is to be denominated
in a currency other than Dollars.
(iii) Agent shall be under no obligation to amend any Letter of
Credit if (A) Agent would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed
amendment to such Letter of Credit.
(b) Procedures for Issuance and Amendment of Letters of Credit;
Auto-Renewal Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case
may be, upon the request of Borrower delivered to Agent in the form of a
Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of Borrower. Such Letter of Credit Application must be
received by Agent not later than 11:00 a.m., Chicago time, at least two
Business Days (or such later date and time as Agent may agree in a
particular instance in its sole discretion) prior to the proposed issuance
date or date of amendment, as the case may be.
(ii) Promptly after receipt of any Letter of Credit Application by
Agent at the address set forth in Schedule 10.02 for receiving Letter of
Credit Applications and related correspondence, if the requested issuance
or amendment is permitted in accordance with the terms hereof, then,
subject to the terms and conditions hereof, Agent shall, on the requested
date, issue a Letter of Credit for the account of Borrower, Playboy or the
applicable Restricted Subsidiary of Playboy or enter into the applicable
amendment, as the case may be, in each case in accordance with Agent's
usual and customary business practices. Immediately upon the issuance of
each Letter of Credit, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from Agent a
participation in such Letter of Credit in an amount equal to the product
of such Lender's Pro Rata Share times the amount of such Letter of Credit.
(iii) Promptly after its delivery of any Letter of Credit or any
amendment to a Letter of Credit to an advising bank with respect thereto
or to the beneficiary thereof, Agent will also deliver to Borrower a true
and complete copy of such Letter of Credit or amendment.
(iv) If Borrower so requests in any applicable Letter of Credit
Application, Agent may, in it sole and absolute discretion, agree to issue
a Letter of Credit that has automatic renewal provisions (each, an
"Auto-Renewal Letter of Credit"); provided that any such Auto-Renewal
Letter of Credit must permit Agent to prevent any such renewal at least
once in each twelve-month period (commencing with the date of issuance of
such Letter of Credit) by giving prior notice to the beneficiary thereof
not later than a day (the "Nonrenewal Notice Date") in each such
twelve-month period to be agreed upon at the time such Letter of Credit is
issued. Unless otherwise directed by Agent, Borrower shall not be required
to make a specific request to Agent for any such renewal. Once an
Auto-Renewal Letter of Credit has been issued, Lenders shall be deemed to
have authorized (but may not require) Agent to permit the renewal of such
Letter of Credit at any time to an expiry date not later than the Letter
of Credit Expiration Date; provided, however, that Agent shall not permit
any such renewal if (A) Agent has determined that it would have no
obligation at such time to issue such Letter of Credit in its renewed form
under the terms hereof (by reason of Section 2.03(a)(ii) or otherwise), or
(B) it has received notice (which may be by telephone or in writing) at
least two (2) Business Days before the Nonrenewal Notice Date (1) from the
Required Lenders that they have elected not to permit such renewal or (2)
from any Lender or Borrower that one or more of the applicable conditions
specified in Section 4.02 is not then satisfied. Notwithstanding anything
to the contrary contained herein, Agent shall have no obligation to permit
the renewal of any Auto-Renewal Letter of Credit at any time.
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(c) Drawings and Reimbursements; Funding of Participations.
(i) Upon receipt from the beneficiary of any Letter of Credit of any
notice of drawing under such Letter of Credit, Agent shall notify Borrower
thereof. Not later than 11:00 a.m., Chicago time, on the date of any
payment by Agent under a Letter of Credit (each such date, an "Honor
Date"), Borrower shall reimburse Agent in an amount equal to the amount of
such drawing. If Borrower fails to so reimburse Agent by such time, Agent
shall promptly notify each Lender of the Honor Date, the amount of the
unreimbursed drawing (the "Unreimbursed Amount"), and the amount of such
Lender's Pro Rata Share thereof. In such event, Borrower shall be deemed
to have requested a Committed Borrowing of Base Rate Loans to be disbursed
on the Honor Date in an amount equal to the Unreimbursed Amount, without
regard to the minimum and multiples specified in Section 2.02 for the
principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Commitments and the conditions set
forth in Section 4.02 (other than the delivery of a Committed Loan
Notice). Any notice given by Agent pursuant to this Section 2.03(c)(i) may
be given by telephone if immediately confirmed in writing; provided that
the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
(ii) Each Lender (including Agent in its capacity as a Lender) shall
upon any notice pursuant to Section 2.03(c)(i) make funds available to
Agent at Agent's Office in an amount equal to its Pro Rata Share of the
Unreimbursed Amount not later than 1:00 p.m., Chicago time, on the
Business Day specified in such notice by Agent, whereupon, subject to the
provisions of Section 2.03(c)(iii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Committed Loan to
Borrower in such amount.
(iii) With respect to any Unreimbursed Amount that is not fully
refinanced by a Committed Borrowing of Base Rate Loans because the
conditions set forth in Section 4.02 cannot be satisfied or for any other
reason, Borrower shall be deemed to have incurred from Agent an L/C
Borrowing in the amount of the Unreimbursed Amount that is not so
refinanced, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the Default Rate. In
such event, each Lender's payment to Agent pursuant to Section 2.03(c)(ii)
shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this Section 2.03.
(iv) Until each Lender funds its Committed Loan or L/C Advance
pursuant to this Section 2.03(c) to reimburse Agent for any amount drawn
under any Letter of Credit, interest in respect of such Lender's Pro Rata
Share of such amount shall be solely for the account of Agent.
(v) Each Lender's obligation to make Committed Loans or L/C Advances
to reimburse Agent for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(c), shall be absolute and unconditional
and shall not be affected by any circumstance, including (A) any set-off,
counterclaim, recoupment, defense or other right which such Lender may
have against Agent, Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default or an Event of
Default; or (C) any other occurrence, event or condition, whether or not
similar to any of the foregoing. No such making of an L/C Advance shall
relieve or otherwise impair the obligation of Borrower to reimburse Agent
for the amount of any payment made by Agent under any Letter of Credit,
together with interest as provided herein.
(vi) If any Lender fails to make available to Agent any amount
required to be paid by such Lender pursuant to the foregoing provisions of
this Section 2.03(c) by the time specified in Section 2.03(c)(ii), Agent
shall be entitled to recover from such Lender, on demand, such amount with
interest thereon for the period from the date such payment is required to
the date on which such payment is immediately available to Agent at a rate
per annum equal to the Federal Funds Rate from time to time in effect. A
certificate of Agent submitted to any Lender with respect to any amounts
owing under this clause (vi) shall be conclusive absent manifest error.
(d) Repayment of Participations.
(i) At any time after Agent has made a payment under any Letter of
Credit and has received from any Lender such Lender's L/C Advance in
respect of such payment in accordance with Section
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2.03(c), if Agent receives any payment in respect of the related
Unreimbursed Amount or interest thereon (whether directly from Borrower or
otherwise, including proceeds of Cash Collateral applied thereto by
Agent), Agent will distribute to such Lender its Pro Rata Share thereof
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's L/C Advance was outstanding) in
the same funds as those received by Agent.
(ii) If any payment received by Agent pursuant to Section 2.03(c)(i)
is required to be returned under any of the circumstances described in
Section 10.06 (including pursuant to any settlement entered into by Agent
in its discretion, each Lender shall pay to Agent its Pro Rata Share
thereof on demand of Agent, plus interest thereon from the date of such
demand to the date such amount is returned by such Lender, at a rate per
annum equal to the Federal Funds Rate from time to time in effect.
(e) Obligations Absolute. The obligation of Borrower to reimburse Agent
for each drawing under each Letter of Credit, and to repay each L/C Borrowing,
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including
the following:
(i) any lack of validity or enforceability of such Letter of Credit,
this Agreement, or any other agreement or instrument relating thereto;
(ii) the existence of any claim, counterclaim, set-off, defense or
other right that Borrower may have at any time against any beneficiary or
any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), Agent or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or
instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented
under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under such
Letter of Credit;
(iv) any payment by Agent under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit; or any payment made by Agent under
such Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit, including any
arising in connection with any proceeding under any Debtor Relief Law; or
(v) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of,
Borrower (other than resulting from the gross negligence or willful
misconduct of Agent).
Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with Borrower's instructions or other irregularity, Borrower will
promptly notify Agent.
(f) Role of Agent. Each Lender and Borrower agree that, in paying any
drawing under a Letter of Credit, Agent shall not have any responsibility to
obtain any document (other than any sight draft, certificates and documents
expressly required by the Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the Person
executing or delivering any such document. None of Agent, any Agent-Related
Person nor any of the respective correspondents, participants or assignees of
Agent shall be liable to any Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of Lenders or the
Required Lenders, as applicable; (ii) any action taken or omitted in the absence
of gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Letter of Credit Application. Borrower hereby assumes
all risks of the acts or omissions of any beneficiary or transferee with respect
to its use of any Letter of Credit; provided, however, that this assumption is
not intended to, and shall not, preclude Borrower's pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
any other agreement. None of Agent, any Agent-
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Related Person, nor any of the respective correspondents, participants or
assignees of Agent, shall be liable or responsible for any of the matters
described in clauses (i) through (v) of Section 2.03(e); provided, however, that
anything in such clauses to the contrary notwithstanding, Borrower may have a
claim against Agent, and Agent may be liable to Borrower, to the extent, but
only to the extent, of any direct, as opposed to consequential or exemplary,
damages suffered by Borrower which Borrower proves were caused by Agent's
willful misconduct or gross negligence or Agent's willful failure to pay under
any Letter of Credit after the presentation to it by the beneficiary of a sight
draft and certificate(s) complying with the terms and conditions of such Letter
of Credit. In furtherance and not in limitation of the foregoing, Agent may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and Agent shall not be responsible for the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason.
(g) Cash Collateral. Upon the request of Agent, (i) if Agent has honored
any full or partial drawing request under any Letter of Credit and such drawing
has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit
Expiration Date, any Letter of Credit may for any reason remain outstanding and
partially or wholly undrawn, Borrower shall promptly Cash Collateralize the then
Outstanding Amount of all L/C Obligations (in an amount equal to such
Outstanding Amount determined as of the date of such L/C Borrowing or the Letter
of Credit Expiration Date, as the case may be). For purposes hereof, "Cash
Collateralize" means to deposit with or deliver to Agent, for the benefit of
Agent, as issuer of Letters of Credit and Lenders, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation in form
and substance reasonably satisfactory to Agent (which documents are hereby
consented to by Lenders). Derivatives of such term have corresponding meanings.
Cash collateral shall be maintained in blocked, interest bearing deposit
accounts at Bank of America.
(h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by
Agent and Borrower when a Letter of Credit is issued, (i) the rules of the
"International Standby Practices 1998" published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to each standby Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary Credits,
as most recently published by the International Chamber of Commerce (the "ICC")
at the time of issuance (including the ICC decision published by the Commission
on Banking Technique and Practice on April 6, 1998 regarding the European single
currency (euro)) shall apply to each commercial Letter of Credit.
(i) Letter of Credit Fees. Borrower shall pay to Agent for the account of
each Lender in accordance with its Pro Rata Share a letter of credit fee for
each Letter of Credit equal to the Applicable Rate times the daily maximum
amount available to be drawn under such Letter of Credit (whether or not such
maximum amount is then in effect under such Letter of Credit). Such letter of
credit fees shall be computed on a quarterly basis in arrears. Such letter of
credit fees shall be due and payable on the last Business Day of each March,
June, September and December, commencing with the first such date to occur after
the issuance of such Letter of Credit, on the Letter of Credit Expiration Date
and thereafter on demand. If there is any change in the Applicable Rate during
any quarter, the actual daily amount of each Letter of Credit shall be computed
and multiplied by the Applicable Rate for IBOR Committed Loans separately for
each period during such quarter that such Applicable Rate was in effect.
(j) Documentary and Processing Charges Payable to Agent. Borrower shall
pay directly to Agent for its own account the customary issuance, presentation,
amendment and other reasonable processing fees, and other standard costs and
charges, of Agent relating to letters of credit as from time to time in effect.
Such customary fees and standard costs and charges are due and payable on demand
from time to time and are nonrefundable.
(k) Conflict with Letter of Credit Application. In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.
(l) Termination of Existing L/C Agreements. The Lenders hereby agree that
any and all prior agreements relating to letters of credit previously issued by
such Lender shall terminate on the Closing Date and all letters of credit
previously issued by such Lender shall become L/C Obligations hereunder and
shall be subject to the terms of this Agreement.
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2.04 Intentionally Omitted.
2.05 Prepayments/Mandatory Commitment Reductions.
(a) Borrower may, upon notice to Agent, at any time or from time to time
voluntarily prepay Committed Loans in whole or in part without premium or
penalty; provided that (i) such notice must be received by Agent not later than
11:00 a.m., Chicago time, (A) three Business Days prior to any date of
prepayment of IBOR Committed Loans, and (B) on the date of prepayment of Base
Rate Committed Loans; (ii) any prepayment of IBOR Committed Loans shall be in a
principal amount of $2,000,000 or a whole multiple of $500,000 in excess
thereof; and (iii) any prepayment of Base Rate Committed Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof,
or, in each case, if less, the entire principal amount thereof then outstanding.
Each such notice shall specify the date and amount of such prepayment and the
Type(s) of Committed Loans to be prepaid. Agent will promptly notify each Lender
of its receipt of each such notice, and of the amount of such Lender's Pro Rata
Share of such prepayment. If such notice is given by Borrower, Borrower shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein. Any prepayment of a IBOR
Committed Loan shall be accompanied by all accrued interest thereon, together
with any additional amounts required pursuant to Section 3.05. Each such
prepayment shall be applied to the Committed Loans of Lenders in accordance with
their respective Pro Rata Shares.
(b) If for any reason the Total Outstandings at any time exceed the
Aggregate Commitments then in effect, Borrower shall immediately prepay Loans
and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to
such excess.
(c) The Aggregate Commitments shall be automatically reduced (i) to
$10,000,000 upon the Disposition of the Playboy Mansion at a time when no Event
of Default or Default is in existence or (ii) by an amount equal to the Net Cash
Proceeds of the Disposition of the Playboy Mansion (up to the amount necessary
to repay in full all Obligations, with any balance applied in accordance with
the Intercreditor Agreement) at a time when an Event of Default or Default is in
existence. If after such reduction of the Aggregate Commitments, the Total
Outstandings exceed the Aggregate Commitments as so reduced, Borrower shall
immediately prepay the Loans and/or Cash Collateralize the L/C Obligations in an
aggregate amount equal to such excess.
(d) If pursuant to the terms of the Senior Secured Note Indenture,
Borrower at any time makes an "Asset Sale Offer" (as defined in the Senior
Secured Note Indenture), and such Asset Sale Offer is accepted by Lenders, the
Aggregate Commitments shall be automatically reduced by the portion of such
Asset Sale Offer paid to Agent and Lenders and applied to the Obligations.
(e) If, after giving effect to any reduction of the Aggregate Commitments,
the Letter of Credit Sublimit exceeds the amount of the Aggregate Commitments,
the Letter of Credit Sublimit shall be automatically reduced by the amount of
such excess.
(f) Agent will promptly notify Lenders of any such reduction in the
Aggregate Commitments. Once reduced in accordance with this Section, the
Aggregate Commitments may not be increased. Any reduction of the Aggregate
Commitments shall be applied to the Commitment of each Lender according to its
Pro Rata Share. All commitment fees accrued until the effective date of any
termination of the Aggregate Commitments shall be paid on the effective date of
such termination.
2.06 Optional Reduction or Termination of Commitments.
Borrower may, upon notice to Agent, terminate the Aggregate Commitments,
or from time to time permanently reduce the Aggregate Commitments; provided that
(i) any such notice shall be received by Agent not later than 11:00 a.m., five
Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $1,000,000 or any whole
multiple of $500,000 in excess thereof, (iii) Borrower shall not terminate or
reduce the Aggregate Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Total Outstandings would exceed the
Aggregate Commitments and (iv) if, after giving effect to any reduction of the
Aggregate Commitments, the Letter of Credit Sublimit exceeds the amount of the
Aggregate Commitments, the Letter of Credit Sublimit shall be automatically
reduced by the amount of such excess. Agent will promptly notify Lenders of any
such notice of termination or reduction of the Aggregate
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Commitments. Once reduced in accordance with this Section, the Aggregate
Commitments may not be increased. Any reduction of the Aggregate Commitments
shall be applied to the Commitment of each Lender according to its Pro Rata
Share. All commitment fees accrued until the effective date of any termination
of the Aggregate Commitments shall be paid on the effective date of such
termination.
2.07 Repayment of Loans.
Borrower shall repay to Lenders on the Maturity Date the aggregate
principal amount of Committed Loans outstanding on such date.
2.08 Interest.
(a) Subject to the provisions of subsection (b) below, (i) each IBOR
Committed Loan shall bear interest on the outstanding principal amount thereof
for each Interest Period at a rate per annum equal to the IBOR Rate for such
Interest Period plus the Applicable Rate; and (ii) each Base Rate Committed Loan
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the
Applicable Rate.
(b) If any amount payable by Borrower under any Loan Document is not paid
when due (without regard to any applicable grace periods), whether at stated
maturity by acceleration or otherwise, then, if Borrower is so notified by Agent
or, Required Lenders, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws, provided that no such notice
shall apply to any interest which accrued more than 60 days prior to the date of
such notice. Furthermore, while any Event of Default exists (or after
acceleration), Borrower shall pay interest on the principal amount of all
outstanding Obligations at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.
Accrued and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.
2.09 Fees.
In addition to certain fees described in subsections (i) and (j) of
Section 2.03:
(a) Commitment Fee. Borrower shall pay to Agent for the account of each
Lender in accordance with its Pro Rata Share, a commitment fee equal to the
Applicable Rate times the actual daily amount by which the Aggregate Commitments
exceed the sum of (i) the Outstanding Amount of Committed Loans and (ii) the
Outstanding Amount of L/C Obligations. The commitment fee shall accrue at all
times during the Availability Period, including at any time during which one or
more conditions in Article IV is not met, and shall be due and payable quarterly
in arrears on the last Business Day of each March, June, September and December,
commencing with the first such date to occur after the Closing Date, and on the
Maturity Date. The commitment fee shall be calculated quarterly in arrears, and
if there is any change in the Applicable Rate during any quarter, the actual
daily amount shall be computed and multiplied by the Applicable Rate separately
for each period during such quarter that such Applicable Rate was in effect.
(b) Agency Fees. Borrower shall pay an agency fee to Agent for Agent's own
account, in the amounts and at the times specified in the letter agreement of
even date herewith (the "Agent Fee Letter"), between Borrower and Agent. Such
fees shall be fully earned when paid and shall be nonrefundable for any reason
whatsoever.
(c) Lenders' Upfront Fee. On the Closing Date, Borrower shall pay to
Agent, for the account of each Lender in accordance with their respective Pro
Rata Shares, an upfront fee in an aggregate amount of $150,000. Such upfront fee
is for the credit facilities committed by Lenders under this Agreement and is
fully earned on the date paid. The upfront fee paid to each Lender is solely for
its own account and is nonrefundable for any reason whatsoever.
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2.10 Computation of Interest and Fees.
All computations of interest for Base Rate Loans when the Base Rate is
determined by Bank of America's prime rate shall be made on the basis of a year
of 365 or 366 days, as the case may be. All other computations of interest and
all fees shall be made on the basis of a year of 360 days and the actual number
of days elapsed, (which results in more fees or interest, as applicable, being
paid than if computed on the basis of a 365 day year). Interest shall accrue on
each Loan for the day on which the Loan is made, and shall not accrue on a Loan,
or any portion thereof, for the day on which the Loan or such portion is paid,
provided that any Loan that is repaid on the same day on which it is made shall,
subject to Section 2.12(a), bear interest for one day.
2.11 Evidence of Debt.
(a) The Credit Extensions made by each Lender shall be evidenced by one or
more accounts or records maintained by such Lender and by Agent in the ordinary
course of business. The accounts or records maintained by Agent and each Lender
shall be conclusive absent manifest error of the amount of the Credit Extensions
made by Lenders to Borrower and the interest and payments thereon. Any failure
to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of Borrower hereunder to pay any amount owing with respect
to the Obligations. In the event of any conflict between the accounts and
records maintained by any Lender and the accounts and records of Agent in
respect of such matters, the accounts and records of Agent shall control in the
absence of manifest error. Upon the request of any Lender made through Agent,
Borrower shall execute and deliver to such Lender (through Agent) a Note, which
shall evidence, such Lender's Loans, in addition to such accounts or records.
Each Lender may attach schedules to its Note and endorse thereon the date, Type
(if applicable), amount and maturity of the applicable Loans and payments with
respect thereto.
(b) In addition to the accounts and records referred to in subsection (a),
each Lender and Agent shall maintain in accordance with its usual practice
accounts or records evidencing the purchases and sales by such Lender of
participations in Letters of Credit. In the event of any conflict between the
accounts and records maintained by Agent and the accounts and records of any
Lender in respect of such matters, the accounts and records of Agent shall
control in the absence of manifest error.
2.12 Payments Generally.
(a) All payments to be made by Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by Borrower hereunder shall be
made to Agent, for the account of the respective Lenders to which such payment
is owed, at Agent's Office in Dollars and in immediately available funds not
later than 12:00 noon, Chicago time, on the date specified herein. Agent will
promptly distribute to each Lender its Pro Rata Share (or other applicable share
as provided herein) of such payment in like funds as received by wire transfer
to such Lender's Lending Office. All payments received by Agent after 12:00
noon, Chicago time, shall be deemed received on the next succeeding Business Day
and any applicable interest or fee shall continue to accrue.
(b) If any payment to be made by Borrower shall come due on a day other
than a Business Day, payment shall be made on the next following Business Day,
and such extension of time shall be reflected in computing interest or fees, as
the case may be.
(c) Unless Borrower or any Lender has notified Agent, prior to the date
any payment is required to be made by it to Agent hereunder, that Borrower or
such Lender, as the case may be, will not make such payment, Agent may assume
that Borrower or such Lender, as the case may be, has timely made such payment
and may (but shall not be so required to), in reliance thereon, make available a
corresponding amount to the Person entitled thereto. If and to the extent that
such payment was not in fact made to Agent in immediately available funds, then:
(i) if Borrower failed to make such payment, each Lender shall
forthwith on demand repay to Agent the portion of such assumed payment
that was made available to such Lender in immediately available funds,
together with interest thereon in respect of each day from and including
the date such amount was made available by Agent to such Lender to the
date such amount is repaid to Agent in immediately available funds, at the
Federal Funds Rate from time to time in effect; and
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(ii) if any Lender failed to make such payment, such Lender shall
forthwith on demand pay to Agent the amount thereof in immediately
available funds, together with interest thereon for the period from the
date such amount was made available by Agent to Borrower to the date such
amount is recovered by Agent (the "Compensation Period") at a rate per
annum equal to the Federal Funds Rate from time to time in effect. If such
Lender pays such amount to Agent, then such amount shall constitute such
Lender's Committed Loan included in the applicable Committed Borrowing. If
such Lender does not pay such amount upon Agent's demand therefor, Agent
may make a demand therefor upon Borrower, and Borrower shall pay such
amount to Agent, together with interest thereon for the Compensation
Period at a rate per annum equal to the rate of interest applicable to the
applicable Committed Borrowing. Nothing herein shall be deemed to relieve
any Lender from its obligation to fulfill its Commitment or to prejudice
any rights which Agent or Borrower may have against any Lender as a result
of any default by such Lender hereunder.
A notice of Agent to any Lender or Borrower with respect to any amount
owing under this subsection (c) shall be conclusive, absent manifest error.
(d) If any Lender makes available to Agent funds for any Loan to be made
by such Lender as provided in the foregoing provisions of this Article II, and
such funds are not made available to Borrower by Agent because the conditions to
the applicable Credit Extension set forth in Article IV are not satisfied or
waived in accordance with the terms hereof, Agent shall return such funds (in
like funds as received from such Lender) to such Lender, without interest.
(e) The obligations of Lenders hereunder to make Committed Loans and to
fund participations in Letters of Credit are several and not joint. The failure
of any Lender to make any Committed Loan or to fund any such participation on
any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Committed Loan or
purchase its participation.
(f) Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.
2.13 Sharing of Payments.
If, other than as expressly provided elsewhere herein, any Lender shall
obtain on account of Committed Loans made by it, or the participations in L/C
Obligations held by it, any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) in excess of its ratable share
(or other share contemplated hereunder) thereof, such Lender shall immediately
(a) notify Agent of such fact, and (b) purchase from the other Lenders such
participations in the Committed Loans made by them and/or such subparticipations
in the participations in L/C Obligations held by them as shall be necessary to
cause such purchasing Lender to share the excess payment in respect of such
Committed Loans or such participations, as the case may be, pro rata with each
of them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Lender under any of the circumstances
described in Section 10.06 (including pursuant to any settlement entered into by
the purchasing Lender in its discretion), such purchase shall to that extent be
rescinded and each other Lender shall repay to the purchasing Lender the
purchase price paid therefor, together with an amount equal to such paying
Lender's ratable share (according to the proportion of (i) the amount of such
paying Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered, without further
interest thereon. Borrower agrees that any Lender so purchasing a participation
from another Lender may, to the fullest extent permitted by law, exercise all
its rights of payment (including the right of set-off, but subject to Section
10.09) with respect to such participation as fully as if such Lender were the
direct creditor of Borrower in the amount of such participation. Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased under this Section and will in each case notify
Lenders following any such purchases or repayments. Each Lender that purchases a
participation pursuant to this Section shall from and after such purchase have
the right to give all notices, requests, demands, directions and other
communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased.
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ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) Except as otherwise provided in this Section 3.01, any and all
payments by Borrower to or for the account of Agent or any Lender under any Loan
Document shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and all liabilities with respect thereto,
excluding, in the case of Agent and each Lender, taxes imposed on or measured by
its net income, net profits or receipts, branch profits taxes, and franchise
taxes imposed on it, by the jurisdiction (or any political subdivision thereof)
under the Laws of which Agent or such Lender, as the case may be, is organized,
incorporated, maintains a lending office or otherwise carries on business
("Excluded Taxes") (all such non-excluded taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and liabilities
with respect thereto being hereinafter referred to as "Taxes"). If Borrower
shall be required by any Laws to deduct any Taxes from or in respect of any sum
payable under any Loan Document to Agent or any Lender, (i) if Agent or such
Lender, as applicable, has complied with its obligations under this Section
3.01, the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section), Agent or such Lender, as applicable, receives an amount
equal to the sum it would have received had no such deductions been made (such
amount to be determined pursuant to Section 3.01(c)), (ii) Borrower shall make
such deductions, (iii) Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
Laws, and (iv) Borrower shall furnish to Agent (which shall forward the same to
such Lender) the original or a certified copy of a receipt evidencing payment
thereof upon receipt thereof by Borrower, or other documentation reasonably
satisfactory to Agent evidencing such payment upon receipt thereof by Borrower.
(b) In addition, provided that all of the requirements of this Section
3.01 have been complied with, Borrower agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document to the extent
not an Excluded Tax (hereinafter referred to as "Other Taxes").
(c) If Borrower shall be required to deduct or pay any Taxes or Other
Taxes from or in respect of any sum payable under any Loan Document to Agent or
any Lender and Agent or such Lender has fully complied with its obligations
under this Section 3.01, Borrower shall also pay to Agent or to such Lender, as
applicable, at the time interest is paid, such additional amount that Agent or
such Lender, as applicable, reasonably specifies is necessary to preserve the
after-tax yield (after factoring in all taxes, including taxes imposed on or
measured by net income) that Agent or such Lender, as applicable, would have
received if such Taxes or Other Taxes had not been imposed, provided that Agent
or such Lender, as applicable, provides Borrower with a certificate showing in
reasonable detail the basis for the calculation of the additional amount.
(d) Borrower agrees to indemnify Agent and each Lender that has, in each
case, complied with its obligations under this Section 3.01, for (i) the full
amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section) paid by
Agent and such Lender with respect to payments under the Loan Documents, (ii)
amounts payable under Section 3.01(c) to the extent paid by Agent or such
Lender, as applicable, and (iii) any liability (including additions to tax,
penalties, interest and expenses) arising therefrom or with respect thereto, in
each case whether or not such Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. Agent and each
Lender agrees that if Agent or such Lender receives any amounts hereunder in
respect of Taxes or Other Taxes and it is subsequently determined by the
relevant Governmental Authority or a court of competent jurisdiction that such
Taxes or Other Taxes were not correctly or legally imposed, Agent or such
Lender, as applicable, shall promptly return to Borrower any such amounts
refunded, credited, returned, or for which any tax benefit is made available to
Agent or such Lender by such Governmental Authority; provided, that no such
amounts will be returned to Borrower during the existence of an Event of
Default. Payment under this subsection (d) shall be made within 30 days after
the date Lender or Agent makes a demand therefore and provides Borrower with a
certificate showing in reasonable detail the basis for the calculation of the
amount demanded.
(e) Each Lender and Participant (as if a Lender for purposes of the
definition of the term "Lending Office") agrees to designate a different Lending
Office if such designation will avoid or decrease the amount of
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Taxes, Other Taxes and indemnity payments pursuant to this Section 3.01 and will
not, in the good faith judgment of such Lender or Participant, otherwise be
materially disadvantageous to such Lender.
(f) Each Lender and Agent that is a Non-U.S. Person shall deliver to
Borrower and Agent on or prior to the date of this Agreement, or with respect to
assignees (including Replacement Lenders) and Participants, on or prior to the
date such assignee or Participant becomes a party to this Agreement, together
with any other certificate, form, or statement of exemption required under the
Code, two or more (as the Borrower or Agent may reasonably request) accurate and
properly completed original signed copies of IRS Form W-8BEN or W-8ECI or W-8IMY
(or successor forms), establishing complete exemption from withholding of United
States withholding tax with respect to payments under any Loan Document. In
addition, each Non-U.S. Person shall from time to time, when a lapse in time or
change in circumstances renders the previous certification obsolete or
inaccurate in any material respect, promptly (and before the expiration or
obsolescence of the prior forms) deliver to Borrower and Agent, together with
any other certificate, form, or statement of exemption required under the Code,
two or more (as the Borrower or Agent may reasonably request) accurate and
properly completed original signed copies of IRS Form W-8BEN or W-8ECI or W-8IMY
(or successor forms), confirming or establishing complete exemption from
withholding of United States withholding tax with respect to payments under any
Loan Document.
(g) Each Lender and Agent that is a U.S. Person and that is not a
corporation for U.S. federal income tax purposes, shall deliver to Borrower and
Agent on or prior to the date of this Agreement, or with respect to assignees
(including Replacement Lenders) and Participants, on or prior to the date such
assignee or Participant becomes a party to this Agreement, two accurate and
properly completed original signed copies of IRS Form W-9 (or successor forms)
certifying such Lender's, Agent's or Participant's entitlement to receive
payments under the Loan Documents without deduction for United States backup
withholding tax.
(h) Each Agent, Lender, or Participant, as applicable, shall promptly and
diligently pursue any available refund, credit, or other tax benefit that, in
the reasonable and good faith judgment of such Agent, Lender, or Participant, is
attributable to any payment made pursuant to this Agreement by Borrower to or
for the account of such Agent, Lender, or Participant and shall promptly remit
immediately available funds to Borrower in an amount equal to such refund,
credit, or other tax benefit (including any interest received thereon).
3.02 Illegality.
If any Lender determines that any change in Law or the interpretation
thereof has made it unlawful, or that any Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable Lending Office to make,
maintain or fund IBOR Committed Loans, or to determine or charge interest rates
based upon the IBOR Rate, then, on notice thereof by such Lender to Borrower
through Agent, any obligation of such Lender to make or continue IBOR Committed
Loans or to convert Base Rate Committed Loans to IBOR Committed Loans shall be
suspended until such Lender notifies Agent and Borrower that the circumstances
giving rise to such determination no longer exist. Upon receipt of such notice,
Borrower shall, upon demand from such Lender (with a copy to Agent), prepay or
convert all IBOR Committed Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such IBOR Committed Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such IBOR Committed Loans.
Upon any such prepayment or conversion, Borrower shall also pay accrued interest
on the amount so prepaid or converted and all amounts due under Section 3.05 in
accordance with the terms thereof due to such prepayment or conversion. Each
Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of such
Lender, otherwise be materially disadvantageous to such Lender.
3.03 Inability to Determine Rates.
If Agent determines in connection with any request for a IBOR Committed
Loan or a conversion to or continuation thereof for any reason that (a) Dollar
deposits are not being offered to banks in the Grand Cayman, British West Indies
offshore dollar interbank market for the applicable amount and Interest Period
of such IBOR Committed Loan, (b) by reason of circumstances arising after the
Closing Date affecting the relevant market, adequate and reasonable means do not
exist for determining the IBOR Rate for any requested Interest Period with
respect to a proposed IBOR Committed Loan, or (c) the IBOR Rate for any
requested Interest Period with respect to a proposed IBOR Committed Loan does
not adequately and fairly reflect the cost to Lenders of funding such
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IBOR Committed Loan, Agent will promptly so notify Borrower and all Lenders.
Thereafter, the obligation of Lenders to make or maintain IBOR Committed Loans
shall be suspended until Agent revokes such notice. Upon receipt of such notice,
Borrower may revoke any pending request for a Committed Borrowing of, conversion
to or continuation of IBOR Committed Loans or, failing that, will be deemed to
have converted such request into a request for a Committed Borrowing of Base
Rate Loans in the amount specified therein.
3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on IBOR
Committed Loans.
(a) If any Lender determines that as a result of any change in or in the
interpretation of any Law, or such Lender's compliance therewith, there shall be
any increase in the cost to such Lender of agreeing to make or making, funding
or maintaining IBOR Committed Loans or (as the case may be) issuing or
participating in Letters of Credit, or a reduction in the amount received or
receivable by such Lender in connection with any of the foregoing (excluding for
purposes of this subsection (a) any such increased costs or reduction in amount
resulting from (i) any taxes (including Taxes, Other Taxes and Excluded Taxes),
(ii) changes in the basis of taxation of overall net income or overall gross
income by the United States or any foreign jurisdiction or any political
subdivision of either thereof under the Laws of which such Lender is organized
or has its Lending Office, and (iii) reserve requirements utilized, as to IBOR
Committed Loans, in the determination of the IBOR Rate), then from time to time
upon demand of such Lender (with a copy of such demand to Agent), Borrower shall
pay to such Lender such additional amounts as will compensate such Lender for
such increased cost or reduction following receipt by Borrower of the
certificate described in Section 3.06; provided, that no Lender shall be
entitled to claim any such additional amount for reductions incurred more than 6
months prior to the date of delivery of such certificate.
(b) If any Lender determines that the introduction of any Law regarding
capital adequacy or any change therein or in the interpretation thereof, or
compliance by such Lender (or its Lending Office) therewith, has the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such Lender's obligations hereunder
(taking into consideration its policies with respect to capital adequacy and
such Lender's desired return on capital), then from time to time upon demand of
such Lender (with a copy of such demand to Agent), Borrower shall pay to such
Lender such additional amounts as will compensate such Lender for such reduction
following receipt by Borrower of the certificate described in Section 3.06;
provided, that no Lender shall be entitled to claim any such additional amount
for reductions incurred more than 6 months prior to the date of delivery of such
certificate.
(c) Each Lender agrees to designate a different Lending Office if such
designation will avoid the need for such payment pursuant to this Section 3.04
and will not, in the good faith judgment of such Lender, otherwise be materially
disadvantageous to such Lender.
3.05 Funding Losses.
Upon demand of any Lender pursuant to a certificate described in Section
3.06 (with a copy to Agent) from time to time, Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other
than a Base Rate Loan on a day other than the last day of the Interest Period
for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise); or
(b) any failure by Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by Borrower;
including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained. Borrower shall also pay any
customary administrative fees charged by such Lender in connection with the
foregoing.
For purposes of calculating amounts payable by Borrower to Lenders under this
Section 3.05, each Lender shall be deemed to have funded each IBOR Committed
Loan made by it at the IBOR Base Rate used in determining the
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IBOR Rate for such Loan by a matching deposit or other borrowing in the Grand
Cayman, British West Indies offshore dollar interbank market for a comparable
amount and for a comparable period, whether or not such IBOR Committed Loan was
in fact so funded.
3.06 Matters Applicable to all Requests for Compensation.
A certificate of Agent or any Lender claiming compensation under this
Article III and setting forth in reasonable detail the calculation of the
additional amount or amounts to be paid to it hereunder and the basis therefor
shall be conclusive in the absence of manifest error. In determining such
amount, Agent or such Lender may use any reasonable averaging and attribution
methods.
3.07 Replacement of Affected Lenders.
(a) If any Lender becomes a Defaulting Lender or otherwise defaults in its
Obligations to make Loans or fund Unreimbursed Amounts, (b) if any Lender is
owed increased costs under Section 3.04 or Borrower is required to make any
payments under Section 3.01 to any Lender that Borrower determines are
materially in excess of those to the other Lenders or (c) in the case of refusal
by a Lender to consent to a proposed amendment, change, supplement, waiver,
discharge or termination with respect to this Agreement which under Section
10.01 requires the approval of all Lenders, but has received the approval of
only the Required Lenders, Borrower shall have the right to replace such Lender
(the "Replaced Lender") with one or more other Eligible Assignee or Eligible
Assignees, none of whom shall constitute a Defaulting Lender at the time of such
replacement (collectively, the "Replacement Lender") reasonably acceptable to
Agent, provided that, (i) at the time of any replacement pursuant to this
Section 3.07, the Replacement Lender shall enter into an Assignment and
Assumption Agreement, in form and substance reasonably satisfactory to Agent,
pursuant to which the Replacement Lender shall acquire all of the Commitments
and outstanding Loans of, and participation in Letters of Credit by, the
Replaced Lender and (ii) all obligations of Borrower owing to the Replaced
Lender (including, without limitation, such increased costs and excluding those
amounts and obligations specifically described in clause (i) above in respect of
which the assignment purchase price has been, or is concurrently being paid)
shall be paid in full to such Replaced Lender concurrently with such
replacement. Upon the execution of the applicable Assignment and Assumption
Agreement, the payment of amounts referred to in clauses (i) and (ii) above and,
if so requested by the Replacement Lender, delivery to the Replacement Lender of
the appropriate Note or Notes executed by the Borrower, the Replacement Lender
shall become a Lender hereunder and the Replaced Lender shall cease to
constitute a Lender hereunder, except with respect to indemnification provisions
under this Agreement, which shall survive as to such Replaced Lender.
Notwithstanding anything to the contrary contained above, no Lender that acts as
a L/C issuer may be replaced hereunder at any time which it has Letters of
Credit outstanding hereunder unless arrangements reasonably satisfactory to such
L/C issuer (including the furnishing of a standby letter of credit in form and
substance, and issued by an issuer satisfactory to such L/C issuer or the
depositing of cash collateral in amounts and pursuant to arrangements reasonably
satisfactory to such L/C issuer) have been made with respect to such outstanding
Letters of Credit.
3.08 Survival.
All of Borrower's obligations under this Article III shall survive
termination of the Aggregate Commitments and repayment of all other Obligations
hereunder.
ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 Conditions of Initial Credit Extension.
The obligation of each Lender to make its initial Credit Extension
hereunder is subject to satisfaction of the following conditions precedent:
(a) Agent's receipt of the following, each of which shall be originals or
facsimiles (followed promptly by originals) unless otherwise specified, each
properly executed by a Responsible Officer (or in the case of clause (vi) below,
a secretary or assistant secretary) of the signing Loan Party, each dated the
Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance reasonably
satisfactory to Agent:
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(i) executed counterparts of this Agreement, all Collateral
Documents, the Loan Guaranty and all other Loan Documents to be delivered
on the Closing Date, sufficient in number for distribution to Agent, each
Lender and Borrower;
(ii) a Note executed by Borrower in favor of each Lender requesting
a Note;
(iii) an executed deed of trust with respect to the Playboy Mansion,
together with a lender's title insurance commitment and ALTA land survey
relating thereto;
(iv) evidence of the filing of all Uniform Commercial Code financing
statements required by Agent in connection with the perfection of Agent's
Lien on the Collateral;
(v) certified copies of the Califa Debt Documents;
(vi) (A) a copy of the certificate or articles of incorporation,
including all amendments thereto, of each Loan Party, certified as of a
recent date by the Secretary of State or comparable official of the state
or other jurisdiction of its organization, and, except with respect to
jurisdictions that do not issue such certificates for persons organized in
the manner of such Loan Party, a certificate as to the good standing of
each Loan Party as of a recent date, from such Secretary of State or other
official; (B) a certificate of the secretary or assistant secretary of
each Loan Party dated the Closing Date and certifying (1) that attached
thereto is a true and complete copy of the by-laws of such Loan Party as
in effect on the Closing Date, (2) that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of
such Loan Party authorizing the execution, delivery and performance of the
Loan Documents to which such person is a party and that such resolutions
have not been modified, rescinded or amended and are in full force and
effect, (3) that the certificate or articles of incorporation of such Loan
Party have not been amended since the date of the last amendment thereto
shown on the certified copy thereof furnished pursuant to clause (A)
above, and (4) as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in connection
herewith on behalf of such Loan Party; and (C) a certificate of another
officer as to the incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant to (B) above;
(vii) one or more favorable opinions of counsel to the Loan Parties
acceptable to Agent, addressed to Agent and each Lender, as to such
matters concerning the Loan Parties and the Loan Documents in form and
substance satisfactory to Agent;
(viii) a certificate signed by a Responsible Officer of Borrower
certifying (A) that the conditions specified in Sections 4.02(a) and (b)
have been satisfied, and (B) that there has been no event or circumstance
since the date of the Audited Financial Statements that has had or would
reasonably be expected to have a Material Adverse Effect;
(ix) evidence that all insurance required to be maintained pursuant
to the Loan Documents has been obtained and is in effect;
(x) evidence that the Credit Agreement dated February 26, 1999 among
Borrower, Playboy, Credit Suisse First Boston, as administrative agent and
collateral agent and a syndicate of lenders, as amended to date (the
"Existing Credit Agreement") has been or concurrently with the Closing
Date is being terminated and all Liens securing obligations under the
Existing Credit Agreement have been or concurrently with the Closing Date
are being released;
(xi) evidence of the issuance of the Senior Secured Notes pursuant
to the Senior Secured Note Indenture and the other Senior Secured Note
Documents, together with fully executed copies of the Senior Secured Note
Documents and an original executed Intercreditor Agreement;
(xii) evidence of the consummation of the Hefner Debt Exchange, on
the terms set forth in the Offering Memorandum or on other terms
reasonably satisfactory to Agent and the Required Lenders; and
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(xiii) such other assurances, certificates, documents or consents as
Agent or the Required Lenders reasonably may require.
(b) Any fees required to be paid on or before the Closing Date shall have
been paid.
(c) Unless waived by Agent, Borrower shall have paid all Attorney Costs of
Agent to the extent invoiced prior to or on the Closing Date.
4.02 Conditions to all Credit Extensions.
The obligation of each Lender to honor any Request for Credit Extension is
subject to the following conditions precedent:
(a) The representations and warranties of Borrower and each other Loan
Party contained in Article V or any other Loan Document shall be true and
correct in all material respects on and as of the date of such Credit Extension,
except to the extent that such representations and warranties specifically refer
to an earlier date, in which case they shall be true and correct in all material
respects as of such earlier date, and except that for purposes of this Section
4.02, the representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01.
(b) No Default shall exist, or would result from such proposed Credit
Extension.
(c) Agent shall have received a Request for Credit Extension in accordance
with the requirements hereof.
Each Request for Credit Extension submitted by Borrower shall be deemed to
be a representation and warranty that the conditions specified in Sections
4.02(a) and (b) have been satisfied on and as of the date of the applicable
Credit Extension.
ARTICLE V REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent and Lenders that on and as of
the Closing Date and each date referred to in Section 4.02(a):
5.01 Existence, Qualification and Power; Compliance with Laws.
Each Company (a) is duly organized or formed, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation or
organization, (b) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to (i) own its
assets and carry on its business and (ii) execute, deliver, and perform its
obligations under the Loan Documents to which it is a party, and (c) is duly
qualified and is licensed and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or licenses, except in each
case referred to above, to the extent that failure to do so would not reasonably
be expected to have a Material Adverse Effect.
5.02 Authorization; No Contravention.
The execution, delivery and performance by each Loan Party of each Loan
Document to which such Person is party, have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (a)
contravene the terms of any of such Person's Organization Documents; (b)
conflict with or result in any breach or contravention of, (i) any Contractual
Obligation (other than the Collateral Documents) to which such Person is a party
or (ii) any order, injunction, writ or decree of any Governmental Authority or
any arbitral award to which such Person or its property is subject, except for
any such conflict, breach or contravention that would not be reasonably likely
to have a Material Adverse Effect; (c) result in the creation of any Lien under
any Contractual
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Obligations to which such Person is a party (other than Liens permitted by this
Agreement); or (d) violate any Law, except for any such violation that would not
be reasonably likely to have a Material Adverse Effect.
5.03 Governmental Authorization.
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, any Loan Party of this Agreement or any other Loan
Document except for filings necessary to create or perfect Liens in the
Collateral and except for any such approval, consent, exemption, authorization
or other action, or notice or filing that if not obtained would not be
reasonably likely to have a Material Adverse Effect.
5.04 Binding Effect.
This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that
is party thereto. This Agreement constitutes, and each other Loan Document when
so delivered will constitute, valid, binding and enforceable obligation of such
Loan Party, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
5.05 Financial Statements; No Material Adverse Effect.
(a) The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise noted therein; (ii) fairly present in all material respects the
financial condition of Playboy and its Subsidiaries as of the date thereof and
their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise noted therein; and (iii) show all material Indebtedness and other
liabilities, direct or contingent, of Playboy and its Subsidiaries as of the
date thereof, including liabilities for taxes, material commitments.
(b) The unaudited consolidated financial statements of Playboy and its
Subsidiaries dated September 30, 2002, and the related consolidated statements
of income or operations, shareholders' equity and cash flows for the fiscal
quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
noted therein and (ii) fairly present in all material respects the financial
condition of Playboy and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby, subject in the case of
clauses (i) and (ii), to normal year-end adjustments.
5.06 Litigation.
Except as specifically disclosed in Schedule 5.06 hereto and except as
disclosed on the most recent 10-K and 10-Q filings of Playboy, as of the Closing
Date, there are no actions, suits, proceedings, claims or disputes pending or,
to the knowledge of Borrower, threatened in writing, at law, in equity, in
arbitration or before any Governmental Authority, by or against Playboy or any
of its Restricted Subsidiaries that (a) assert the invalidity or
unenforceability of this Agreement or any other Loan Document, or any of the
transactions contemplated hereby, or (b) either individually or in the
aggregate, if determined adversely, would reasonably be expected to have a
Material Adverse Effect.
5.07 No Default.
No Default or Event of Default has occurred and is continuing or would
result from the consummation of the transactions contemplated by this Agreement
or any other Loan Document.
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5.08 Environmental Compliance.
Except as specifically disclosed in Schedule 5.08 hereto, to their
knowledge, Playboy and its Restricted Subsidiaries have no liability for
violation of any Environmental Laws, except any such liability that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
5.09 Insurance.
The properties of Playboy and its Restricted Subsidiaries are insured with
reputable insurance companies in such amounts, after giving effect to any
self-insurance compatible with the following standards, with such deductibles
and covering such risks as are customarily carried by companies engaged in
similar businesses.
5.10 Taxes.
Playboy and its Restricted Subsidiaries have filed all material Federal,
state and other tax returns and reports required to be filed, and have paid all
material Federal, state and other taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP (or in the case of Foreign
Subsidiaries, generally accepted accounting principles in effect from time to
time in their respective jurisdictions of organization). To Borrower's
knowledge, there is no proposed tax assessment against Playboy or any Restricted
Subsidiary of Playboy that would reasonably be expected to have a Material
Adverse Effect.
5.11 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws, except
for any such noncompliance which would not reasonably be expected to have a
Material Adverse Effect. Each Plan that is intended to qualify under Section
401(a) of the Code has received a favorable determination letter from the IRS or
an application for such a letter is currently being processed by the IRS with
respect thereto and, to the knowledge of Borrower, nothing has occurred which
would prevent, or cause the loss of, such qualification, except for any
non-qualification which would not reasonably be expected to have a Material
Adverse Effect. Playboy and each ERISA Affiliate have made all required
contributions to each Plan subject to Section 412 of the Code, except where the
failure to do so would not reasonably be expected to have a Material Adverse
Effect, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.
(b) There are no pending or, to the knowledge of Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that would reasonably be expected to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or would
reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Playboy
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
Playboy nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Playboy nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA, except for any such events that would not
reasonably be expected to have a Material Adverse Effect.
5.12 Subsidiaries.
As of the Closing Date, Playboy has no Subsidiaries other than those
disclosed in Part (a) of Schedule 5.12 and neither Playboy or any of its
Subsidiaries has any equity investments in any other corporation or entity other
than those disclosed in Part (b) of Schedule 5.12. All Restricted Subsidiaries
of Playboy as of the Closing Date are identified as such on Part (a) of Schedule
5.12.
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5.13 Disclosure.
All factual information (taken as a whole) heretofore or contemporaneously
furnished by or on behalf of Playboy, Borrower or any of its Subsidiaries in
writing to Agent or any Lender (including, without limitation, all information
contained in the Loan Documents) for purposes of or in connection with this
Agreement or any transaction contemplated herein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Playboy,
Borrower or any of its Subsidiaries in writing to Agent or any Lender for
purposes of or in connection with this Agreement or any transaction contemplated
herein, when taken as a whole, does not contain as of the date furnished any
untrue statement of material fact or omit to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading; provided that to the
extent any such factual information was based upon or constituted a forecast or
projection, Playboy, Borrower and each Subsidiary represent only that they acted
in good faith and utilized reasonable assumptions and due care in the
preparation of such factual information.
5.14 Compliance with Laws.
Playboy, each Restricted Subsidiary of Playboy and each other Company is
in compliance in all material respects with the requirements of all Laws
applicable to it and all orders, writs, injunctions and decrees applicable to it
or to its properties, except in such instances in which (a) such requirement of
Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
5.15 Margin Regulations; Investment Company Act; Public Utility Holding
Company Act.
(a) Borrower is not engaged, principally, or as one of its important
activities, in the business of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the Federal Reserve Board), or extending
credit for the purpose of purchasing or carrying margin stock.
(b) None of Playboy or any Restricted Subsidiary of Playboy (i) is a
"holding company" within the meaning of, or subject to regulations under, the
Public Utility Holding Company Act of 1935, or (ii) an "investment company"
under the Investment Company Act of 1940.
5.16 Senior Secured Note Debt.
On the Closing Date, Borrower has issued $115,000,000 of Senior Secured
Notes pursuant to the terms of the Senior Secured Note Documents and in
accordance with applicable law.
ARTICLE VI AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation shall remain unpaid or unsatisfied (other than unasserted
contingent indemnity obligations), or any Letter of Credit shall remain
outstanding, Borrower shall, and shall (except in the case of the covenants set
forth in Sections 6.01, 6.02, 6.03 and 6.08) cause Playboy and each Restricted
Subsidiary of Playboy, as applicable, to:
6.01 Financial Statements.
Deliver to Agent the following and Agent shall provide copies thereof to
each Lender:
(a) as soon as available, but in any event within 95 days after the end of
each fiscal year of Borrower, a consolidated balance sheet of Playboy and its
Restricted Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year and prepared in accordance with GAAP,
audited and accompanied by a report and opinion of Ernst & Young, LLP or another
independent certified public accountant of nationally recognized standing
reasonably acceptable to the Required Lenders, which report and opinion shall be
prepared in accordance with generally accepted auditing standards and shall not
be
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subject to any "going concern" or like qualification or exception or any
qualification or exception as to the scope of such audit; and
(b) as soon as available, but in any event within 65 days after the end of
each of the first three fiscal quarters of each fiscal year of Playboy, a
consolidated balance sheet of Playboy and its Restricted Subsidiaries as at the
end of such fiscal quarter, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such fiscal quarter and for
the portion of Playboy's fiscal year then ended, setting forth in each case in
comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all certified by a Responsible Officer of Playboy as fairly presenting in all
material respects the financial condition, results of operations, shareholders
equity and cash flows of Playboy and its Restricted Subsidiaries in accordance
with GAAP, subject only to normal year-end adjustments.
6.02 Certificates; Other Information.
Deliver to Agent the following (and Agent shall provide copies thereof to
each Lender):
(a) concurrently with the delivery of the financial statements referred to
in Section 6.01(a), a certificate of its independent certified public
accountants certifying such financial statements and stating that in making the
examination necessary therefor no knowledge was obtained of any Event of Default
or, if any such Event of Default shall exist, stating the nature and status of
such event, which certificate may be limited to accounting matters and disclaim
responsibility for legal interpretations;
(b) concurrently with the delivery of the financial statements referred to
in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a
Responsible Officer of Borrower;
(c) as soon as reasonably practicable, after any request by Agent or any
Lender (through Agent), copies of any audit reports or management letters
submitted to the Board of Directors (or the audit committee of the Board of
Directors) of Playboy by independent accountants in connection with the accounts
or books of Playboy or any audit of Playboy;
(d) promptly after the same are publicly available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of Playboy, and copies of all annual, regular, periodic and
special reports and registration statements which Playboy may file or be
required to file with the Securities and Exchange Commission, whether under
Section 13 or 15(d) of the Securities Exchange Act of 1934, or otherwise,
including each Form 10-K Annual Report, Form 10-Q Quarterly Report and Form 8-K
Current Report and not otherwise required to be delivered to Agent pursuant
hereto; and
(e) as soon as reasonably practicable, such additional information
regarding the business, financial or corporate affairs of Playboy or any
Subsidiary, or compliance with the terms of the Loan Documents, as Agent or any
Lender (through Agent) may from time to time reasonably request, in form and
detail reasonably satisfactory to Agent.
6.03 Notices.
Promptly notify Agent:
(a) of the occurrence of any Default or Event of Default;
(b) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect; and
(c) the occurrence of any ERISA Event.
Each notice pursuant to this Section shall be accompanied by a statement
of a Responsible Officer of Playboy setting forth details of the occurrence
referred to therein and stating what action Playboy has taken and proposes to
take with respect thereto.
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6.04 Preservation of Existence, Etc.
(a) Preserve, renew and maintain in full force and effect its legal
existence and good standing under the Laws of the jurisdiction of its
organization, except in a transaction permitted by Section 7.04 or 7.05 and
except when the failure to maintain good standing would not be reasonably likely
to have a Material Adverse Effect; and (b) take all action to maintain all
material rights, privileges, permits, licenses and franchises, except to the
extent that failure to do so would not reasonably be expected to have a Material
Adverse Effect.
6.05 Compliance with Laws.
Comply in all material respects with the requirements of all Laws, and all
orders, writs, injunctions and decrees applicable to it or to its business or
property, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (b) the failure to comply
therewith would not reasonably be expected to have a Material Adverse Effect.
6.06 Books and Records.
(a) Maintain in all material respects proper books of record and account,
in which correct entries in conformity with GAAP consistently applied shall be
made of all appropriate transactions and matters of Playboy or each Restricted
Subsidiary of Playboy, as the case may be; and (b) maintain such books of record
and account in material conformity with all applicable requirements of any
Governmental Authority having regulatory jurisdiction over Playboy or any
material Restricted Subsidiary, as the case may be.
6.07 Inspection Rights.
Permit representatives and independent contractors of Agent to visit and
inspect any of its properties, to examine its corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and, provided that an
officer of Borrower is then present, to discuss its affairs, finances and
accounts with its officers and Playboy's or Borrower's independent public
accountants, all at the reasonable expense of Borrower and at reasonable times
during normal business hours, upon reasonable advance notice to Borrower;
provided, however, that Borrower's obligation to reimburse Agent for reasonable
expenses incurred in connection with such inspections shall be limited to (a)
one (1) such inspection to be completed within 60 days after the Closing Date
and (b) no more than one (1) additional inspection during any calendar year if
such inspections are conducted at a time when no Event of Default or Default
shall have occurred and is continuing.
6.08 Use of Proceeds.
Use the proceeds of the Credit Extensions for general corporate purposes
not in contravention of any Law or of any Loan Document; provided, however, that
except as provided in Sections 7.08 and 7.09, in no event shall proceeds of the
Credit Extensions be used to make any payment in respect of the Califa
Obligation or the Senior Secured Note Debt, except for regularly scheduled
payments of principal and interest thereunder (and not payments by way of
optional or mandatory prepayment, after acceleration or in respect of an Asset
Sale Offer or change of control or similar offer thereunder).
6.09 Financial Covenants
(a) Net Worth. Maintain Net Worth on the last day of each calendar quarter
hereafter commencing on March 31, 2003, at least equal to the Base Amount plus
the Increase Amount applicable as of such day.
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(b) Interest Coverage Ratio. Maintain an Interest Coverage Ratio of at
least the ratio indicated below for the twelve (12) month period ending on each
date below:
Date Ratios
---- ------
December 31, 2003 and March 31, 2004 1.25 : 1.0
June 30, 2004 and each September 30, 1.75 : 1.0 December 31, March 31 and
June 30 thereafter
(c) Capital Expenditures. Not to spend or incur obligations (including the
total amount of any capital leases) to acquire fixed assets for more than Seven
Million Dollars ($7,000,000) in any single fiscal year on a consolidated basis.
6.10 Additional Guarantors.
Notify Agent at the time that any Person becomes a Domestic Restricted
Subsidiary of Playboy, and in the case of the Playboy.com entities, at such time
as Playboy.com becomes a Wholly-Owned Subsidiary of Playboy, and promptly
thereafter (and in any event within 30 days), cause such Person to (a) become a
Guarantor by executing and delivering to Agent a Loan Guaranty or Loan Guaranty
joinder in a form reasonably acceptable to Agent, (b) deliver to Agent documents
reasonably necessary to grant to Agent (and permit Agent to perfect) a Lien on
the personal property of such Person to the extent permitted herein, (c) cause
the appropriate Person to deliver to Agent a Pledge Agreement granting to Agent
a Lien on the Equity Interests of such Person and (d) deliver to Agent documents
of the types referred to in clause (vi) of Section 4.01(a) and favorable
opinions of counsel (including in-house counsel) to such Person (which shall
cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to in clauses (a), (b) and (c)),
all in form, content and scope reasonably satisfactory to Agent.
6.11 Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors of Playboy may designate any Restricted Subsidiary
of Playboy as an Unrestricted Subsidiary if that designation would not cause a
Default or an Event of Default; provided that in no event shall (a) the business
currently operated by any Playboy.com Entity be transferred to or held by an
Unrestricted Subsidiary or (b) Borrower be designated as an Unrestricted
Subsidiary. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate fair market value of all outstanding Investments owned
by Playboy and its Restricted Subsidiaries in the Subsidiary so designated will
be deemed to be an Investment made as of the time of such designation and that
designation will only be permitted if such Investment would be permitted at that
time and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors of Playboy may at any time
designate any Unrestricted Subsidiary as a Restricted Subsidiary of Playboy;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of Playboy of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 7.03, calculated
on a proforma basis as if such designation had occurred at the beginning of the
four-quarter reference period; and (ii) no Default or Event of Default would
have occurred and be continuing following such designation. Designation of a
Person as an Unrestricted Subsidiary or a Restricted Subsidiary is also subject
to the terms of Section 4.16 of the Senior Secured Note Indenture.
6.12 Appraisal of Playboy Mansion.
Borrower agrees to permit a third party appraiser selected by Borrower and
acceptable to Agent to have access to the Playboy Mansion in order to perform an
appraisal thereof within 60 days after the Closing Date. The reasonable
out-of-pocket costs of such appraisal will be at the expense of Borrower;
provided that if Sommer Appraisal Service, of Los Angeles California, is not
acceptable to Agent, Lenders will pay the costs of such appraisal by a third
party appraiser acceptable to Agent.
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ARTICLE VII NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied (other than
unasserted contingent indemnity obligations), or any Letter of Credit shall
remain outstanding, Borrower shall not, nor shall it permit Playboy or any
Restricted Subsidiary of Playboy to, directly or indirectly:
7.01 Liens.
Create, incur, assume or suffer to exist, any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than Liens permitted in Section 4.08 of the Senior Secured Note Indenture;
provided, that notwithstanding the foregoing, in no event shall (a) any Liens
granted to any Person on the Protected Collateral be senior to or pari passu
with the Liens of Agent on the Protected Collateral and (b) any Liens granted to
any Person on any Collateral which is not Protected Collateral (other than the
Primary Collateral) be senior to the Liens of Agent on such Collateral, if such
Liens secure aggregate Indebtedness under one or more facilities in excess of
$10,000,000.
7.02 Investments.
Make any Investments, except for Investments permitted in Section 4.07 of
the Senior Secured Note Indenture.
7.03 Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness, except
Indebtedness permitted in Section 4.06 of the Senior Secured Note Indenture.
7.04 Fundamental Changes.
Merge, dissolve, liquidate, consolidate with or into, another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except as permitted in Section 4.13 or Article 5 of the
Senior Secured Note Indenture.
7.05 Dispositions.
Make any Disposition or enter into any agreement to make any Disposition,
except for Dispositions permitted in Section 4.13 of the Senior Secured Note
Indenture; provided that notwithstanding anything to the contrary contained
herein or in the Senior Secured Note Indenture, (a) any Disposition of assets by
Playboy or a Domestic Restricted Subsidiary of Playboy to Playboy or any other
Subsidiary of Playboy shall be made subject to Agent's Lien on such assets,
which Lien shall not be released or deemed released in connection with such
Disposition and (b) in no event shall Borrower, Playboy or any Restricted
Subsidiary, without the prior written consent of Required Lenders, make a
Disposition or enter into any agreement to make a Disposition of (i) any
accounts receivable or inventory which is Protected Collateral out of the
ordinary course of business as conducted prior to the Closing Date (and not by
way of bulk sale) or (ii) the Playboy Mansion and the Mansion Personal Property
at any time that a Default or Event of Default is in existence except pursuant
to the Hefner Option. Notwithstanding any provision of this Agreement or any of
the other Loan Documents to the contrary, if a Default or Event of Default then
exists, either of Agent or Trustee may notify Borrower as provided herein and
Hefner at the address and in the manner set forth in the Hefner Option, each in
writing (the "Option Notice"), that Hefner shall have 30 days after receipt of
such notice from Agent or Trustee to notify Agent, Trustee and Borrower in
writing (the "Exercise Notice") that Hefner has elected to exercise the Hefner
Option. If Hefner fails to timely give the Exercise Notice, Agent may proceed
with such foreclosure without regard to the Hefner Option. If Hefner elects to
exercise the Hefner Option (which, notwithstanding anything to the contrary
contained in this Agreement, Hefner shall have the right to do in accordance
with the terms hereof and the terms of the Hefner Option without the consent of
any other Person) and gives the Exercise Notice, Playboy Enterprises
International, Inc. shall have the right to proceed to a closing of the sale of
the Playboy Mansion and the Mansion Personal Property pursuant to the Hefner
Option, and Agent and Lenders will forbear in enforcing the Deed of Trust for up
to 90 days after Hefner has given the
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Exercise Notice, provided further that upon such closing (if any Default or
Event of Default then exists) all Net Cash Proceeds from such sale shall be paid
to Agent for application to the Obligations until payment in full of the
Obligations (other than unasserted contingent indemnification obligations). To
the full extent permitted by law, the forbearance described in this Section 7.05
shall not be deemed to affect or delay the enforcement of any of Agent's or
Lenders' other rights or remedies. In no event shall Agent commence any
foreclosure action with respect to the Playboy Mansion until Agent or Trustee
has provided the Option Notice to Borrower and Hefner as provided above, and
Hefner has had an opportunity to exercise the Hefner Option as provided above.
Hefner shall have the right to remain a tenant of the Playboy Mansion in
accordance with Hefner's then-existing lease thereof during the 30 and, if
applicable, 90 day periods for exercise of the Hefner Option.
7.06 Restricted Payments.
Declare or make, directly or indirectly, any Restricted Payment, or incur
any obligation (contingent or otherwise) to do so, except as permitted in
Section 4.07 of the Senior Secured Note Indenture.
7.07 Limitations in respect of Subordinated Liabilities.
Make any payment on, or with respect to, or purchase, redeem, defease or
otherwise acquire or return for value any Subordinated Liabilities, except as
permitted in Section 4.07 of the Senior Secured Note Indenture.
7.08 Limitations in respect of Senior Secured Note Debt.
Make any payment on, or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value, any of the Senior Secured Note Debt,
other than (a) payments of principal and interest when due pursuant to the terms
of the Senior Secured Note Documents, as they exist on the Closing Date (and not
as they may be amended, modified or supplemented from time to time thereafter);
(b) in exchange for or out of the net cash proceeds from the substantially
concurrent sale or issuance of Equity Interests of Playboy (other than
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisitions shall be excluded from clause (a)(C)(b) of Section 4.07
described in the Senior Secured Note Indenture; (c) optional prepayments of the
Senior Secured Note Debt at any time after August 11, 2004, so long as (i) no
Event of Default is in existence at the time of such payment, (ii) Borrower is
in compliance with the covenants contained in Section 6.09(a) and (b) computed
as of the last day of the most recently ended calendar quarter, but after giving
proforma effect to such payment and (iii) after making such payment, Borrower
has satisfied the Liquidity Test; and (d) so long as no Event of Default is in
existence, optional prepayments in respect of the Senior Secured Note Debt at
any time after April 11, 2006; except for the foregoing, none of Playboy,
Borrower or any Guarantor shall make any optional redemption of the Senior
Secured Notes, any mandatory payment in respect of a "Change of Control"
pursuant to a "Change of Control Offer" (as each is defined in the Senior
Secured Note Indenture, as it exists on the Closing Date), or any payment
pursuant to a "Legal Defeasance" or "Covenant Defeasance" (as each is defined in
the Senior Secured Note Indenture, as it exists on the Closing Date); or amend,
modify or otherwise alter the terms of any Senior Secured Note Document if the
effect of such amendment or modification is to (i) increase the interest rate or
fees on such Indebtedness; (ii) advance the dates upon which payments of
principal or interest are due on, or increase the principal amount of, such
Indebtedness; or (iii) change the mandatory prepayment provisions of such
Indebtedness, other than to defer or reduce such prepayments. Borrower agrees to
promptly provide Agent with copies of any amendments or modifications to any
Senior Secured Note Document. Borrower further agrees that if the effect of any
modification or amendment to the Senior Secured Note Indenture is to add any new
covenant thereto or make any existing covenant contained therein more
restrictive, the Borrower agrees to execute a comparable amendment hereto.
7.09 Limitations in respect of Califa Obligation.
Make any payment on, or with respect to, or purchase, redeem, defease or
otherwise acquire or return for value any of the Califa Obligation, other than
(a) payments in exchange for or out of the net cash proceeds from the
substantially concurrent sale or issuance of Equity Interests of Playboy (other
than Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisitions shall be excluded from clause (a)(C)(b) of Section 4.07 of
the Senior Secured Note Indenture; (b) payments on or with respect to the Califa
Obligation that are, pursuant to the terms of the Califa Debt Documents as in
effect on the Closing Date, (A) due during the year ending December 31, 2003,
(B) due
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during the year ended December 31, 2004 and, in either case required to be paid
in cash; (d) prepayments of the installments of the Califa Obligation that are
scheduled to become due during the calendar years 2003 and 2004; and (e)
optional prepayments of the Califa Obligation at any time after August 11, 2004,
so long as (i) no Event of Default is in existence; (ii) Borrower is in
compliance with the covenants contained in Section 6.09(a) and (b) computed as
of the last day of the most recently ended calendar quarter, but after giving
proforma effect to such payment and (iii) after making such payment, Borrower
has satisfied the Liquidity Test; or amend, modify or otherwise alter the terms
of any Califa Debt Documents if the effect of such amendment or modification is
to (i) increase the interest rate or fees on the Califa Obligation; (ii) advance
the dates upon which payments in respect of the Califa Obligation are due on, or
the principal amount of, the Califa Obligation; or (iii) change the prepayment
provisions of the Califa Obligation, other than to defer or reduce such
prepayments.
7.10 Change in Nature of Business.
Engage in any business other than as permitted in Section 4.15 of the
Senior Secured Note Indenture.
7.11 Transactions with Affiliates.
Make any payment to, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or purchase any property or assets from, or
enter into or make or amend any transaction, contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate, unless
such Affiliate transaction is permitted in Section 4.14 of the Senior Secured
Note Indenture.
7.12 Margin Regulations.
Use the proceeds of any Credit Extension, whether directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System of the United States) or to extend credit to others for
the purpose of purchasing or carrying margin stock or to refund indebtedness
originally incurred for such purpose.
7.13 Disqualified Stock.
Issue any Disqualified Stock, except as permitted in Section 4.10 of the
Senior Secured Note Indenture.
7.14 Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.
Create or permit to exist or become effective any consensual encumbrance
or restriction on the ability of any Restricted Subsidiary to:
(a) pay dividends or make any other distribution on its Capital Stock to
Playboy or any of its Restricted Subsidiaries, or with respect to any other
interest or participation in, or measured by, its profits, or pay any
Indebtedness owed to Playboy or any of its Restricted Subsidiaries;
(b) make loans or advances to Playboy or any of its Restricted
Subsidiaries; or
(c) transfer any of its properties or assets to Playboy or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of this Agreement, the Senior Secured
Note Documents or as otherwise permitted in Section 4.09 of the Senior Secured
Note Indenture.
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
8.01 Events of Default.
The occurrence and continuation of any of the following shall constitute
an Event of Default:
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(a) Non-Payment. Borrower or any other Loan Party fails to pay (i) when
and as required to be paid herein, any amount of principal of any Loan, or any
L/C Obligation, or (ii) within five Business Days after the same becomes due,
any interest on any Loan or on any L/C Obligation, or any commitment fee or
other fee due hereunder, or any other amount payable hereunder or under any
other Loan Document or under any Swap Contract constituting part of the
Obligations; or
(b) Specific Covenants. Any Loan Party fails to perform or observe any
term, covenant or agreement contained in any of Section 6.01 or 6.02, and such
failure continues for five Business Days; or any Loan Party fails to perform or
observe any term, covenant or agreement contained in any Section 6.03, 6.07,
6.09 or Article VII; or
(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days after notice thereof from Agent to Borrower; or
(d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of
Borrower or any other Loan Party herein or in any other Loan Document shall be
incorrect in any material respect when made or deemed made; or
(e) Cross-Default. (i) Playboy or any Restricted Subsidiary of Playboy (A)
fails to make any payment when due after the expiration of any applicable grace
period (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) in respect of any Indebtedness or Guarantee (other than
Indebtedness hereunder) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than the Threshold
Amount, or (B) fails to observe or perform any other agreement or condition
relating to any such Indebtedness or Guarantee or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause, or to permit the holder
or holders of such Indebtedness or the beneficiary or beneficiaries of such
Guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be required; or (ii) there occurs any event of default or default
under any Senior Secured Note Document after the expiration of any applicable
grace period; or
(f) Insolvency Proceedings, Etc. Any Company or any of its Restricted
Subsidiaries institutes or consents to the institution of any proceeding under
any Debtor Relief Law, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or a
substantial part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding under any
Debtor Relief Law relating to any such Person or to all or any substantial part
of its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or
(g) Judgments. Other than the judgment in the Gongora litigation, there is
entered against Playboy or any Restricted Subsidiary of Playboy (i) a final
judgment or order for the payment of money in an aggregate amount exceeding the
Threshold Amount (to the extent not covered by independent third-party
insurance, but only to the extent the insurer does not dispute coverage), or
(ii) any one or more non-monetary final judgments that have, or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any creditor
to levy upon the assets or property of Borrower or any Restricted Subsidiary
upon such judgment or order, or (B) there is a period of 30 consecutive days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or
(h) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) Playboy or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment
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payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of the Threshold
Amount; or
(i) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect; or any Loan Party contests in any manner the validity or
enforceability of any Loan Document; or any Loan Party denies that it has any or
further liability or obligation under any Loan Document (unless such denial is
based solely upon all such liabilities and obligations having been paid,
satisfied or performed by such Loan Party), or purports to revoke, terminate or
rescind any Loan Document, or any Lien with respect to any material portion of
the Collateral intended to be secured thereby ceases to be, or, subject to
Section 7.01, is not, valid, perfected and prior to all other Liens or is
terminated, revoked or declared void by or as a result of any conduct of a Loan
Party; or
(j) Change of Control. There occurs any Change of Control.
8.02 Remedies Upon Event of Default.
If any Event of Default occurs, Agent shall, at the request of, or may,
with the consent of, the Required Lenders, take any or all of the following
actions:
(a) declare the commitment of each Lender to make Loans and any obligation
of Agent to make L/C Credit Extensions to be terminated, whereupon such
commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by Borrower;
(c) require that Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and
(d) exercise on behalf of itself and Lenders all rights and remedies
available to it and Lenders under the Loan Documents or applicable Law;
provided, however, that upon the occurrence of an actual or deemed entry
of an order for relief with respect to Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation of
Agent to make L/C Credit Extensions shall automatically terminate, the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable, and the obligation of
Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of Agent or any
Lender.
Anything in this Section 8.02 to the contrary notwithstanding, Agent
shall, at the request of the Required Lenders, rescind and annul any
acceleration of the Loans by written instrument filed with Borrower, provided
that, at the time such acceleration is so rescinded and annulled: (A) all past
due interest and principal, if any, on the Loans and all other sums payable
under this Agreement and the other Loan Documents shall have been duly paid, and
(B) no other Event of Default shall have occurred and be continuing which shall
not have been waived in accordance with the provision of Section 10.01 hereof.
8.03 Application of Funds.
Subject to the Intercreditor Agreement, after the exercise of remedies
provided for in the Intercreditor Agreement and Section 8.02 (or after the Loans
have automatically become immediately due and payable and the L/C Obligations
have automatically been required to be Cash Collateralized as set forth in the
proviso to Section 8.02), any amounts received on account of the Obligations
shall be applied by Agent, to the extent legally permitted, in the following
order:
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First, to payment of that portion of the Obligations constituting
fees, indemnities, expenses and other amounts (including Attorney Costs
and amounts payable under Article III) payable to Agent in its capacity as
such;
Second, to payment of that portion of the Obligations constituting
fees, indemnities and other amounts (other than principal and interest)
payable to Lenders (including Attorney Costs and amounts payable under
Article III), ratably among them in proportion to the amounts described in
this clause Second payable to them;
Third, to payment of that portion of the Obligations constituting
accrued and unpaid interest on the Loans and L/C Borrowings, ratably among
Lenders in proportion to the respective amounts described in this clause
Third payable to them;
Fourth, to payment of that portion of the Obligations constituting
unpaid principal of the Loans and L/C Borrowings and unpaid liabilities in
respect of Swap Contracts, ratably among Lenders in proportion to the
respective amounts described in this clause Fourth held by them;
Fifth, to Agent, to Cash Collateralize that portion of L/C
Obligations comprised of the aggregate undrawn and unexpired amount of
Letters of Credit; and
Last, the balance, if any, after all of the Obligations (other than
unasserted contingent indemnity obligations) have been indefeasibly paid
in full, to Borrower or as otherwise required by Law.
Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.
ARTICLE IX AGENT.
9.01 Appointment and Authorization of Agent.
Each Lender hereby irrevocably appoints, designates and authorizes Agent
to take such action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere herein or in
any other Loan Document, Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall Agent have or be deemed to
have any fiduciary relationship with any Lender or participant, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Agent. Without limiting the generality of the foregoing sentence, the
use of the term "agent" herein and in the other Loan Documents with reference to
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable Law. Instead, such
term is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting
parties. All benefits and immunities provided to Agent in this Article IX shall
apply to Agent as issuer of Letters of Credit with respect to any acts taken or
omissions suffered by Agent in connection with Letters of Credit issued by it or
proposed to be issued by it and the applications and agreements for letters of
credit pertaining to such Letters of Credit, and as additionally provided herein
with respect to Agent as issuer of Letters of Credit.
9.02 Delegation of Duties.
Agent may execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel and other consultants or experts concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in the
absence of gross negligence or willful misconduct.
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9.03 Liability of Agent.
No Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the transactions contemplated hereby (except for its
own gross negligence or willful misconduct in connection with its duties
expressly set forth herein), or (b) be responsible in any manner to any Lender
or Participant for any recital, statement, representation or warranty made by
any Loan Party or any officer thereof, contained herein or in any other Loan
Document, or in any certificate, report, statement or other document referred to
or provided for in, or received by Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Loan Party or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender or Participant to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of any Loan Party or any Affiliate
thereof.
9.04 Reliance by Agent.
(a) Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, communication, signature, resolution, representation,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, electronic mail message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to any Loan Party), independent accountants and
other experts selected by Agent. Agent shall be fully justified in failing or
refusing to take any action under any Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by all Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Lenders (or such greater number of Lenders as
may be expressly required by any instance), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all Lenders.
(b) For purposes of determining compliance with the conditions specified
in Section 4.01, each Lender that has signed this Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter required thereunder to be consented to or approved by or
acceptable or satisfactory to a Lender unless Agent shall have received notice
from such Lender prior to the proposed Closing Date specifying its objection
thereto.
9.05 Notice of Default.
Agent shall not be deemed to have knowledge or notice of the occurrence of
any Event of Default or Default, except with respect to Default or Events of
Default occurring because of the failure to timely pay principal, interest or
fees required to be paid to Agent for the account of Lenders, unless Agent shall
have received written notice from a Lender or Borrower referring to this
Agreement, describing such Event of Default or Default and stating that such
notice is a "notice of default." Agent will notify Lenders of its receipt of any
such notice. Agent shall take such action with respect to such Default as may be
directed by the Required Lenders in accordance with Article VIII; provided,
however, that unless and until Agent has received any such direction, Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default as it shall deem advisable or in the best
interest of Lenders.
9.06 Credit Decision; Disclosure of Information by Agent.
Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by Agent hereafter taken,
including any consent to and acceptance of any assignment or review of the
affairs of any Company or any Affiliate thereof, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender as to
any matter, including whether Agent-Related Persons have disclosed material
information in their possession. Each Lender represents to Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed
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appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Companies and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Borrower hereunder. Each Lender also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower and the other Companies. Except for notices,
reports and other documents expressly required to be furnished to Lenders by
Agent herein, Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of any
of the Companies or any of their respective Affiliates which may come into the
possession of any Agent-Related Person.
9.07 Indemnification of Agent.
Whether or not the transactions contemplated hereby are consummated,
Lenders shall indemnify upon demand each Agent-Related Person (to the extent not
reimbursed by or on behalf of any Loan Party and without limiting the obligation
of any Loan Party to do so), pro rata, and hold harmless each Agent-Related
Person from and against any and all Indemnified Liabilities incurred by it;
provided, however, that no Lender shall be liable for the payment to any
Agent-Related Person of any portion of such Indemnified Liabilities to the
extent determined in a final, nonappealable judgment by a court of competent
jurisdiction to have been caused primarily by such Agent-Related Person's own
gross negligence or willful misconduct; it being agreed by all Lenders that no
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section. Without limitation of the foregoing, each Lender shall reimburse Agent
upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs and costs and expenses in connection with the use of
IntraLinks, Inc. or other similar information transmission systems in connection
with this Agreement) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that Agent is not reimbursed for such expenses by or on behalf of
Borrower (to the extent required in this Agreement). The undertaking in this
Section shall survive termination of the Aggregate Commitments, the payment of
all other Obligations and the resignation of Agent.
9.08 Agent in its Individual Capacity.
Bank of America and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with each of the Companies and their respective Affiliates as
though Bank of America were not Agent hereunder and without notice to or consent
of Lenders. Lenders acknowledge that, pursuant to such activities, Bank of
America or its Affiliates may receive information regarding any Company or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of such Company or such Affiliate) and acknowledge that
Agent shall be under no obligation to provide such information to them. With
respect to its Loans, Bank of America shall have the same rights and powers
under this Agreement as any other Lender and may exercise such rights and powers
as though it were not Agent, and the terms "Lender" and "Lenders" include Bank
of America in its individual capacity.
9.09 Successor Agent.
Agent may resign as Agent upon 30 days' written notice to Lenders and
Borrower; provided that any such resignation by Bank of America shall also
constitute its resignation as Agent in its capacity of issuer of Letters of
Credit (as it relates to the issuance of new Letters of Credit after the date of
such resignation). If Agent resigns under this Agreement, the Required Lenders
shall appoint from among Lenders a successor Agent for Lenders, which successor
Agent shall be consented to by Borrower at all times other than during the
existence of a Default (which consent of Borrower shall not be unreasonably
withheld or delayed). If no successor Agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with
Lenders and
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Borrower, a successor Agent from among Lenders. Upon the acceptance of its
appointment as successor Agent hereunder, the Person acting as such successor
Agent shall succeed to all the rights, powers and duties of the retiring Agent
(including those in its capacity as issuer of Letters of Credit) and the term
"Agent" shall mean such successor Agent in all such capacities and the retiring
Agent's appointment, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such retiring Agent or any other
Lender, other than the obligation of the successor Agent to issue letters of
credit in substitution for the Letters of Credit, if any, outstanding at the
time of such succession or to make other arrangements satisfactory to the
retiring Agent to effectively assume the obligations of the retiring Agent with
respect to such Letters of Credit. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article IX and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement. If no successor Agent has
accepted appointment as Agent by the date which is 30 days following a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
9.10 Agent May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Loan Party, Agent (irrespective of whether
the principal of any Loan or L/C Obligation shall then be due and payable as
herein expressed or by declaration or otherwise and irrespective of whether
Agent shall have made any demand on Borrower) shall be entitled and empowered,
by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of Lenders and Agent
(including any claim for the reasonable compensation, expenses, disbursements
and advances of Lenders and Agent and their respective agents and counsel and
all other amounts due Lenders and Agent under Sections 2.03(i) and (j), 2.09 and
10.04) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Lender to make such payments to Agent and, in the event that Agent shall
consent to the making of such payments directly to Lenders, to pay to Agent any
amount due for the reasonable compensation, expenses, disbursements and advances
of Agent and its agents and counsel, and any other amounts due Agent under
Sections 2.09 and 10.04.
Nothing contained herein shall be deemed to authorize Agent to authorize
or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender or to authorize Agent to vote in respect of the
claim of any Lender in any such proceeding.
9.11 Loan Guaranty Matters.
Each Lender hereby irrevocably authorizes Agent, at its option and in its
discretion, to release any Guarantor from its obligations under the Loan
Guaranty if such Person ceases to be a Domestic Restricted Subsidiary of
Borrower as a result of a transaction permitted hereunder. Upon request by Agent
at any time, each Lender will confirm in writing Agent's authority to release
any Guarantor from its obligations under the Loan Guaranty pursuant to this
Section 9.11.
9.12 Collateral Matters.
(a) Each Lender hereby irrevocably authorizes and directs Agent to enter
into the Collateral Documents for the benefit of such Lender. Each Lender hereby
agrees, and each holder of any Note by the acceptance thereof will be deemed to
agree, that, except as otherwise set forth in Section 10.01, any action taken
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by the Required Lenders, in accordance with the provisions of this Agreement or
the Collateral Documents, and the exercise by the Required Lenders of the powers
set forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of Lenders. Agent
is hereby authorized on behalf of all of Lenders, without the necessity of any
notice to or further consent from any Lender from time to time prior to, an
Event of Default, to take any action with respect to any Collateral or
Collateral Documents which may be necessary to perfect and maintain perfected
the Liens upon the Collateral granted pursuant to the Collateral Documents.
(b) Each Lender hereby irrevocably authorizes Agent and Agent agrees (in
the case of clauses (i), (ii), (iii) and (iv) below):
(i) to release any Lien on any property granted to or held by Agent
under any Loan Document (A) upon termination of the Aggregate Commitments
and payment in full of all Obligations (other than contingent
indemnification obligations) and the expiration or termination of all
Letters of Credit, (B) in connection with any Disposition permitted
hereunder or under any other Loan Document, provided that the provisions
of Section 10.02 of the Senior Secured Note Indenture have been compiled
with, (C) in connection with any release of a guarantee in accordance with
Section 11.09 of the Senior Secured Note Indenture or in connection with
any release of Collateral permitted pursuant to Section 10.03 of the
Senior Secured Note Indenture (in each case so long as such release is not
restricted under this Agreement) or (D) subject to Section 10.01, if
approved, authorized or ratified in writing by the Required Lenders;
(ii) to subordinate the Lien granted to or held by Agent on
Collateral other than Protected Collateral in connection with the
incurrence of up to $10,000,000 of Indebtedness to be secured by such
Collateral (other than Protected Collateral), provided that such
Indebtedness and the Lien securing such Indebtedness is incurred or
granted in compliance with this Agreement;
(iii) to execute such "Intercreditor Documentation" (as defined in
the Senior Secured Note Indenture) as shall be necessary to effectuate the
subordination described in clause (ii) above;
(iv) to execute an acknowledgement or other Intercreditor
Documentation as shall be necessary to permit any Loan Party to grant
Liens on the "Collateral" (as defined in the Senior Secured Note
Indenture) which are either pari passu with or subordinated to the Liens
on the "Collateral" (as defined in the Senior Secured Note Indenture) that
secure the Senior Secured Note Debt; and
(v) at Agent's option and in its discretion, but subject to
satisfaction of any conditions set forth in the Loan Documents, to
subordinate or release any Lien on any property granted to or held by
Agent under any Loan Document to the holder of any Lien on such property
that is permitted by this Agreement or any other Loan Document.
Upon request by Agent at any time, each Lender will confirm in writing Agent's
authority to release or subordinate its interest in particular types or items of
Collateral pursuant to this Section 9.12.
(c) Subject to (b) above, Agent shall (and is hereby irrevocably
authorized by each Lender, to) execute such documents as may be necessary to
evidence the release or subordination of the Liens granted to Agent for the
benefit of Agent and Lenders herein or pursuant hereto upon the applicable
Collateral; provided that (i) Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would expose Agent to or create any
liability or entail any consequence other than the release or subordination of
such Liens without recourse or warranty and (ii) such release or subordination
shall not in any manner discharge, affect or impair the Obligations or any Liens
upon (or obligations of Borrower or any other Loan Party in respect of) all
interests retained by Borrower or any other Loan Party, including the proceeds
of the sale, all of which shall continue to constitute part of the Collateral.
In the event of any sale or transfer of Collateral, or any foreclosure with
respect to any of the Collateral, Agent shall be authorized to deduct all
expenses reasonably incurred by Agent from the proceeds of any such sale,
transfer or foreclosure.
(d) Agent shall have no obligation whatsoever to any Lender or any other
Person to assure that the Collateral exists or is owned by Borrower or any other
Loan Party or is cared for, protected or insured or that the Liens granted to
Agent herein or in any of the Collateral Documents or pursuant hereto or thereto
have been
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properly or sufficiently or lawfully created, perfected, protected or enforced
or are entitled to any particular priority, or to exercise or to continue
exercising at all or in any manner or under any duty of care, disclosure or
fidelity any of the rights, authorities and powers granted or available to Agent
in this Section 9.12 or in any of the Collateral Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission or event
related thereto, Agent may act in any manner it may deem appropriate, in its
sole discretion, given Agent's own interest in the Collateral as one of Lenders
and that Agent shall have no duty or liability whatsoever to Lenders.
(e) Each Lender hereby appoints each other Lender as agent for the purpose
of perfecting Lenders' security interest in assets which, in accordance with
Article 9 of the UCC can be perfected only by possession. Should any Lender
(other than Agent) obtain possession of any such Collateral, such Lender shall
notify Agent thereof, and, promptly upon Agent's request therefor shall deliver
such Collateral to Agent or in accordance with Agent's instructions.
9.13 Remedial Action.
Each Lender agrees that it shall not take or institute any actions or
proceedings, judicial or otherwise, for any right or remedy against Borrower,
any Guarantor or any other obligor under any of the Loan Documents (including,
without limitation, the exercise of any right of set-off, rights on account of
any banker's lien or similar claim or other rights of self-help), or institute
any actions or proceedings, or otherwise commence any remedial procedures, with
respect to any Collateral, without the prior written consent of Agent and
Required Lenders.
9.14 Co-Agent.
LaSalle Bank National Association is hereby appointed as Co-Agent for the
Lenders hereunder. The Co-Agent, in its capacity as such, shall have no rights,
powers, duties or responsibilities and no rights, powers, duties or
responsibilities shall be read into this Agreement or any other Loan Document or
otherwise exist on behalf of or against LaSalle Bank National Association in
such capacity as Co-Agent. If the Co-Agent resigns as such, no successor
co-agent shall be appointed.
ARTICLE X MISCELLANEOUS
10.01 Amendments, Etc.
No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent to any departure by Borrower or any other Loan
Party therefrom, shall be effective unless in writing signed by the Required
Lenders and Borrower or the applicable Loan Party, as the case may be, and
acknowledged by Agent, and each such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.01(a) without the written
consent of each Lender; provided, however, in the sole discretion of Agent, only
a waiver by Agent shall be required with respect to immaterial matters;
(b) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.02) without the written consent of
such Lender;
(c) postpone any date fixed by this Agreement or any other Loan Document
for any payment (excluding mandatory prepayments) of principal, interest, fees
or other amounts due to Lenders (or any of them) hereunder or under any other
Loan Document without the written consent of each Lender directly affected
thereby;
(d) reduce the principal of, or the rate of interest specified herein on,
any Loan or L/C Borrowing, or (subject to clause (ii) of the fourth proviso to
this Section 10.01) any fees or other amounts payable hereunder or under any
other Loan Document without the written consent of each Lender directly affected
thereby; provided, however, that only the consent of the Required Lenders shall
be necessary (i) to amend the definition of "Default Rate" or to waive any
obligation of Borrower to pay interest at the Default Rate or (ii) to amend any
financial
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covenant hereunder (or any defined term used therein) even if the effect of such
amendment would be to reduce the rate of interest on any Loan or L/C Borrowing
or to reduce any fee payable hereunder;
(e) change Section 2.13 or Section 8.03 in a manner that would alter the
pro rata sharing of payments required thereby without the written consent of
each Lender;
(f) change any provision of this Section or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender; or
(g) release any Guarantor from its Loan Guaranty or release the Liens on
all or substantially all of the Collateral except in accordance with the terms
of any Loan Document (including Section 9.12(b) hereof) without the written
consent of each Lender.
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by Agent in addition to Lenders required above, affect the
rights or duties of Agent under this Agreement or any other Loan Document, (A)
as Administrative Agent or (B) as Letter of Credit issuer or under any Letter of
Credit Application relating to any Letter of Credit issued or to be issued by it
(including, without limitation, any reduction in any fee, charge, expense, cost
or other amount payable to Agent for its own account under this Agreement in any
such capacity); and (ii) the Agent Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed only by the respective
parties thereto. Notwithstanding anything to the contrary herein, no Defaulting
Lender shall have any right to approve or disapprove any amendment, waiver or
consent hereunder, except that the Commitment of such Defaulting Lender may not
be increased or extended without the consent of such Defaulting Lender.
10.02 Notices and Other Communications; Facsimile Copies.
(a) General. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including by
facsimile transmission). All such written notices shall be mailed, faxed or
delivered, to the applicable address, facsimile number or (subject to subsection
(c) below) electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, specified for such Person on Schedule 10.02 or to
such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the other parties.
All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, upon delivery; (B) if delivered by
mail, four Business Days after deposit in the mails, postage prepaid; (C) if
delivered by facsimile, when sent and the sender has received electronic
confirmation of error free receipt; and (D) if delivered by electronic mail
(which form of delivery is subject to the provisions of subsection (c) below),
when delivered; provided, however, that notices and other communications to
Agent pursuant to Article II shall not be effective until actually received by
Agent. In no event shall a voicemail message be effective as a notice,
communication or confirmation hereunder.
(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents
may be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same force
and effect as manually-signed originals and shall be binding on all Loan
Parties, Agent and Lenders. Agent may also require that any such documents and
signatures be confirmed by a manually-signed original thereof; provided,
however, that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile document or signature.
(c) Limited Use of Electronic Mail. Electronic mail and internet and
intranet websites may be used only to distribute routine communications, such as
financial statements, and to distribute Loan Documents for execution by the
parties thereto, and may not be used for any other purpose.
(d) Reliance by Agent and Lenders. Agent and Lenders shall be entitled to
reasonably rely and act upon any notices (including telephonic Committed Loan
Notices) purportedly given by or on behalf of Borrower even if (i) such notices
were not made in a manner specified herein, were incomplete or were not preceded
or
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followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof.
Borrower shall indemnify each Agent-Related Person and each Lender from all
losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice purportedly given by or on behalf of Borrower. All
telephonic notices to and other communications with Agent may be recorded by
Agent, and each of the parties hereto hereby consents to such recording.
10.03 No Waiver; Cumulative Remedies.
No failure by any Lender or Agent to exercise, and no delay by any such
Person in exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.04 Attorney Costs, Expenses and Taxes.
Borrower agrees (a) to pay or reimburse Agent for all reasonable costs and
expenses incurred in connection with the development, preparation, negotiation
and execution of this Agreement and the other Loan Documents and any amendment,
waiver, consent or other modification of the provisions hereof and thereof
(whether or not the transactions contemplated hereby or thereby are
consummated), and the consummation and administration of the transactions
contemplated hereby and thereby, including all Attorney Costs and reasonable
costs and expenses in connection with the use of IntraLinks, Inc. or other
similar information transmission systems in connection with this Agreement, and
(b) to pay or reimburse Agent and each Lender for all reasonable costs and
expenses incurred in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or the other Loan
Documents (including all such reasonable costs and expenses incurred during any
"workout" or restructuring in respect of the Obligations and during any legal
proceeding, including any proceeding under any Debtor Relief Law), including all
Attorney Costs. The foregoing costs and expenses shall include all reasonable
search, filing, recording, title insurance and appraisal charges and reasonable
fees and taxes related thereto (to the extent not already covered by Section
3.01), but excluding other taxes (including Taxes, Other Taxes and Excluded
Taxes), and other reasonable out-of-pocket expenses incurred by Agent and the
cost of independent public accountants and other outside experts retained by
Agent or any Lender. The agreements in this Section shall survive the
termination of the Aggregate Commitments and repayment of all other Obligations.
10.05 Indemnification by Borrower.
Whether or not the transactions contemplated hereby are consummated,
Borrower shall indemnify and hold harmless each Agent-Related Person, each
Lender and their respective Affiliates, directors, officers, employees, counsel,
agents and attorneys-in-fact (collectively the "Indemnitees") from and against
any and all liabilities, obligations, losses, damages, penalties, claims,
demands, actions, judgments, suits, reasonable costs, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever (other than any
taxes (including Taxes, Other Taxes and Excluded Taxes)) which may at any time
be imposed on, incurred by or asserted against any such Indemnitee in any way
relating to or arising out of or in connection with (a) the execution, delivery,
enforcement, performance or administration of any Loan Document or any other
agreement, letter or instrument delivered in connection with the transactions
contemplated thereby or the consummation of the transactions contemplated
thereby, (b) any Commitment, Loan or Letter of Credit or the use or proposed use
of the proceeds therefrom (including any refusal by Agent to honor a demand for
payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit), (c)
any actual or alleged presence or release of Hazardous Materials on or from any
property currently or formerly owned or operated by Borrower, Playboy, any
Restricted Subsidiary of Playboy or any other Company, or any Environmental
Liability related in any way to Borrower, Playboy, any Restricted Subsidiary of
Playboy or any other Company, or (d) any actual or threatened claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether Indemnitee is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demand, actions,
judgments, suits, costs, expenses or disbursements are determined
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by a court of competent jurisdiction by final judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee, provided that if such
final judgment is reversed on appeal, such indemnification obligation will be
deemed reinstated subject to final resolution of the matter. No Indemnitee shall
be liable for any damages arising from the use by others of any information or
other materials obtained through IntraLinks or other similar information
transmission systems in connection with this Agreement, nor shall any Indemnitee
have any liability for any indirect or consequential damages relating to this
Agreement or any other Loan Document or arising out of its activities in
connection herewith or therewith (whether before or after the Closing Date). The
agreements in this Section shall survive the resignation of Agent, the
replacement of any Lender, the termination of the Aggregate Commitments and the
repayment, satisfaction or discharge of all the other Obligations.
10.06 Payments Set Aside.
To the extent that any payment by or on behalf of Borrower is made to
Agent or any Lender, or Agent or any Lender exercises its right of set-off, and
such payment or the proceeds of such set-off or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by Agent or such Lender in
its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Lender severally agrees to pay to Agent upon demand its applicable share of
any amount so recovered from or repaid by Agent, plus interest thereon from the
date of such demand to the date such payment is made at a rate per annum equal
to the Federal Funds Rate from time to time in effect.
10.07 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of subsection (b) of this Section, (ii) by way of participation in
accordance with the provisions of subsection (d) of this Section, or (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of subsection (f) of this Section (and any other attempted assignment or
transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (including for purposes of this
subsection (b), participations in L/C Obligations) at the time owing to it);
provided that (i) except in the case of an assignment of the entire remaining
amount of the assigning Lender's Commitment and the Loans at the time owing to
it or in the case of an assignment to a Lender or an Affiliate of a Lender, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) subject to each such assignment, determined as of the
date the Assignment and Assumption Agreement with respect to such assignment is
delivered to Agent, shall not be less than $5,000,000 unless Agent otherwise
consents (such consent not to be unreasonably withheld or delayed); (ii) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender's rights and obligations under this Agreement with respect
to the Loans or the Commitment assigned, (iii) any assignment of a Commitment
must be approved by Agent, unless the Person that is the proposed assignee is
itself a Lender (whether or not the proposed assignee would otherwise qualify as
an Eligible Assignee), (iv) the parties to each assignment shall execute and
deliver to Agent an Assignment and Assumption Agreement, together with a
processing and recordation fee of $3,500, with a copy of the Assignment and
Assumption Agreement to Borrower, along with any forms required under Section
3.01 and (v) if no Default or Event of Default has occurred and is then
continuing, Borrower consents to such assignment (such consent not to be
unreasonably withheld or delayed). Subject to acceptance and recording thereof
by Agent pursuant to subsection (c) of this Section, from and after the
effective date specified in each Assignment and Assumption Agreement, the
Eligible Assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption Agreement, have the rights
and obligations of a Lender under this Agreement,
-52-
<PAGE>
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption Agreement, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption Agreement covering all of the assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05,
10.04 and 10.05 with respect to facts and circumstances occurring prior to the
date of such assignment, subject to the requirements and restrictions contained
in Section 3.01). Upon written request from Agent, Borrower (at its expense)
shall execute and deliver a Note to the assignee Lender and any existing Note
shall be delivered by Agent or the assigning Lender to Borrower marked
"cancelled". Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this subsection shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with subsection (d) of this Section.
(c) Agent, acting solely for this purpose as an agent of Borrower, shall
maintain at Agent's Office a copy of each Assignment and Assumption Agreement
delivered to it and a register for the recordation of the names and addresses of
Lenders, and the Commitments of, and principal amount of the Loans and L/C
Obligations owing to, each Lender pursuant to the terms hereof from time to time
(the "Register"). Upon delivery of the applicable Assignment and Assumption
Agreement and the processing and recordation described in Section 10.07(b),
Agent shall record the information therein in the Register and provide notice of
such recordation to Borrower. The entries in the Register shall be conclusive,
and Borrower, Agent and Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by Borrower and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.
(d) Any Lender may, without the consent of, or notice to, Borrower or
Agent, and in accordance with applicable Law, sell participations to any Person
(other than a natural person or Borrower or any of Borrower's Affiliates or
Subsidiaries (each a "Participant") in all or a portion of such Lender's rights
and obligations under this Agreement (including all or a portion of its
Commitment and/or the Loans (including such Lender's participations in L/C
Obligations) owing to it); provided that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) Borrower, Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other modification
described in the first provision to Section 10.01 that directly affects such
Participant. Subject to subsection (e) of this Section, Borrower agrees that
each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and
3.05 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section. To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 10.09
as though it were a Lender, provided such Participant agrees to be subject to
Section 2.13 as though it were a Lender.
(e) A Participant shall not be entitled to receive any greater payment
under Section 3.01, 3.04, 3.05 or 10.09 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant.
(f) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank and the provisions of clause (b)
above shall not apply to such assignment; provided that no such pledge or
assignment shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
(g) Notwithstanding anything to the contrary contained herein, if at any
time Bank of America assigns all of its Commitment and Loans pursuant to
subsection (b) above, Bank of America may, upon 30 days' notice to Borrower and
Lenders, resign in its capacity as issuer of Letters of Credit hereunder (the
"L/C Issuer"). In the event of any such resignation as L/C Issuer, Borrower
shall be entitled to appoint from among Lenders a successor L/C Issuer
hereunder; provided, however, that no failure by Borrower to appoint any such
successor shall affect the resignation of Bank of America as L/C Issuer. If Bank
of America resigns as L/C Issuer, it shall retain all the rights
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<PAGE>
and obligations of Agent as the L/C Issuer hereunder with respect to all Letters
of Credit outstanding as of the effective date of its resignation as L/C Issuer
and all L/C Obligations with respect thereto (including the right to require
Lenders to make Base Rate Committed Loans or fund risk participations in
Unreimbursed Amounts pursuant to Section 2.03(c)). Borrower, Lenders and Bank of
America agree that they shall amend this Agreement as necessary to reflect that
Bank of America remains Agent for purposes of administering this Agreement, but
has resigned in its capacity as L/C Issuer and another Lender(s) shall provides
such service, including the obligation of the successor to Bank of America as
L/C Issuer to issue letters of credit in substitution for the Letters of Credit,
if any, outstanding at the time of such succession or to make other arrangements
satisfactory to Bank of America to effectively assume the obligations of Bank of
America with respect to such Letters of Credit.
(h) As used herein, "Eligible Assignee" means (a) a Lender; (b) an
Affiliate of a Lender; and (c) any other bank, financial institution or other
entity that is engaged in the business of lending money (other than a natural
Person); provided that notwithstanding the foregoing, "Eligible Assignee" shall
not include Playboy, Borrower or any of Playboy's Affiliates or Subsidiaries.
10.08 Confidentiality.
Each of Agent and Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other financial advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential); (b) to the extent requested by any regulatory authority;
provided, however, that in such event, if Agent or the applicable Lender is able
to do so, Agent or such Lender shall provide Borrower with prompt notice of such
requested disclosure so that Borrower may seek a protective order or other
appropriate remedy, and, in any event, Agent or such Lender will endeavor in
good faith to provide only that portion of such information which, in the
reasonable judgment of Agent or such Lender, is relevant and legally required to
be provided; (c) to the extent required by applicable Laws or regulations or by
any subpoena or similar legal process; provided, however, that in such event, if
Agent or the applicable Lender is able to do so, Agent or such Lender shall
provide Borrower with prompt notice of such requested disclosure so that
Borrower may seek a protective order or other appropriate remedy, and, in any
event, Agent or such Lender will endeavor in good faith to provide only that
portion of such information which, in the reasonable judgment of Agent or such
Lender, is relevant and legally required to be provided; (d) to any other party
to this Agreement; (e) in connection with the exercise of any remedies hereunder
or any other Loan Document or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
under any other Loan Document; (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any Eligible Assignee of
or Participant in, or any prospective Eligible Assignee of or Participant in,
any of its rights or obligations under this Agreement or (ii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty's or prospective counterparty's professional advisor)
to any credit derivative transaction relating to obligations of a Loan Party;
(g) with the written consent of Borrower; (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section or
(ii) becomes available to Agent or any Lender on a nonconfidential basis from a
source other than Borrower; or (i) to the National Association of Insurance
Commissioners or any other similar organization. In addition, Agent and Lenders
may disclose the existence of this Agreement and information about this
Agreement to market data collectors, similar service providers to the lending
industry, and service providers to Agent and Lenders in connection with the
administration and management of this Agreement, the other Loan Documents, the
Commitments, and the Credit Extensions. For the purposes of this Section,
"Information" means all non-public information received from any Loan Party
relating to any Loan Party or its business, other than any such information that
is available to Agent or any Lender on a nonconfidential basis prior to
disclosure by any Loan Party. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
10.09 Set-off.
In addition to any rights and remedies of Lenders provided by Law, upon
the occurrence and during the continuance of any Event of Default, each Lender
is authorized at any time and from time to time, without prior notice to
Borrower or any other Loan Party, any such notice being waived by Borrower (on
its own behalf and on
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<PAGE>
behalf of each Loan Party) to the fullest extent permitted by Law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held by, and other Indebtedness at any time owing by, such
Lender to or for the credit or the account of the respective Loan Parties
against any and all Obligations owing to such Lender hereunder or under any
other Loan Document, now or hereafter existing, irrespective of whether or not
Agent or such Lender shall have made demand under this Agreement or any other
Loan Document and although such Obligations may be contingent or unmatured or
denominated in a currency different from that of the applicable deposit or
Indebtedness. Each Lender agrees promptly to notify Borrower and Agent after any
such set-off and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application.
10.10 Interest Rate Limitation.
Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not exceed
the maximum rate of non-usurious interest permitted by applicable Law (the
"Maximum Rate"). If Agent or any Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest to the extent permitted by
applicable Law, shall be applied to the principal of the Loans or, if it exceeds
such unpaid principal, refunded to Borrower. In determining whether the interest
contracted for, charged, or received by Agent or a Lender exceeds the Maximum
Rate, such Person may, to the extent permitted by applicable Law, (a)
characterize any payment that is not principal as an expense, fee, or premium
rather than interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations
hereunder.
10.11 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
10.12 Integration.
This Agreement, together with the other Loan Documents, comprises the
complete and integrated agreement of the parties on the subject matter hereof
and thereof and supersedes all prior agreements, written or oral, on such
subject matter. In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, the provisions of this Agreement
shall control; provided that the inclusion of supplemental rights or remedies in
favor of Agent or Lenders in any other Loan Document shall not be deemed a
conflict with this Agreement. Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.
10.13 Survival of Representations and Warranties.
All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in connection
herewith or therewith shall survive the execution and delivery hereof and
thereof. Such representations and warranties have been or will be relied upon by
Agent and each Lender, regardless of any investigation made by Agent or any
Lender or on their behalf and notwithstanding that Agent or any Lender may have
had notice or knowledge of any Default at the time of any Credit Extension, and
shall continue in full force and effect as long as any Loan or any other
Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit
shall remain outstanding.
10.14 Severability.
If any provision of this Agreement or the other Loan Documents is held to
be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan
Documents shall not be affected or impaired thereby and (b) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
-55-
<PAGE>
10.15 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
the LAWS OF THE STATE OF ILLINOIS applicable to agreements made and to be
performed entirely within such State; PROVIDED THAT BORROWER, AGENT AND EACH
LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS
SITTING IN COOK COUNTY, ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
BORROWER, Agent AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. BORROWER, Agent AND
EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.
BORROWER, Agent AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
THE LAW OF SUCH STATE.
10.16 Waiver of Right to Trial by Jury.
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN
DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
10.17 Restrictions on Foreign Collateral.
Notwithstanding anything to the contrary in any Loan Document, (i) no more
than 65% of the stock of any Subsidiary that is a Non-U.S. Person (and such
stock shall not represent more than 65% of the total combined voting power of
all classes of stock of such Subsidiary entitled to vote) shall be pledged to
Agent as security for the Obligations, (ii) no Subsidiary that is a Non-U.S.
Person shall be required to pledge to Agent as security for the Obligations the
stock of any other Subsidiary that is a Non-U.S. Person, (iii) no assets of any
Subsidiary that is a Non-U.S. Person shall be pledged to Agent as security for
the Obligations and (iv) no Subsidiary that is a Non-U.S. Person shall be
required to guarantee the Obligations either through a Loan Guaranty or
otherwise.
10.18 Right of First Refusal.
In the event Borrower intends to incur permitted Indebtedness to be
secured by a Lien on Collateral (other than Protected Collateral) with respect
to which Agent will be requested to release its Lien, Lender shall have a right
of first refusal to provide such Indebtedness on the same terms than those
proposed by the alternative financial institution or investor or by Borrower,
provided that if Lenders decline to offer financing of such Indebtedness on such
proposed terms, Borrower shall have the right to incur such Indebtedness with
another financial institution or investor only on such terms or terms more
favorable to Borrower than those refused by Lenders. Otherwise the provisions of
this Section 10.18 shall apply to any other terms proposed by an alternative
financial institution or investor or Borrower. Lenders will accept or refuse
such proposed financing within 30 days after receipt by Agent from Borrower of a
bona fide written proposal in reasonable detail setting forth the terms of such
proposed financing. Agent's failure to notify Borrower of Lenders' acceptance or
refusal of such proposed financing terms within said 30 day period shall be
deemed to be a refusal thereof.
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<PAGE>
10.19 Agent's Liens.
Except as provided in Section 9.12(b)(i), Section 9.12(b)(ii), Section
9.12(b)(iii) or in respect of Primary Collateral, Section 9.12(b)(iv), Agent
shall not be obligated to release or subordinate Agent's Liens or grant pari
passu status to the Liens of any other Person.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
PEI HOLDINGS, INC., as Borrower
By /s/ Robert Campbell
-------------------------------------------
Name Robert Campbell
-----------------------------------------
Title Treasurer
----------------------------------------
BANK OF AMERICA, N.A., as Agent
By /s/ David A. Johanson
-------------------------------------------
Name David A. Johanson
-----------------------------------------
Title Vice President
----------------------------------------
BANK OF AMERICA, N.A., as a Lender
By /s/ Craig W. McGuire
-------------------------------------------
Name Craig W. McGuire
-----------------------------------------
Title Vice President
----------------------------------------
LASALLE BANK NATIONAL ASSOCIATION, as a Lender
By /s/ Kyle Freimuth
-------------------------------------------
Name Kyle Freimuth
-----------------------------------------
Title Vice President
----------------------------------------
S-1
<PAGE>
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
Lender Commitment Pro Rata Share
--------------------------------------------------------------------------------
Bank of America, N.A. $10,000,000 50%
LaSalle Bank National Association $10,000,000 50%
----------- ---
Total $20,000,000 100%
Schedule 2.01
<PAGE>
SCHEDULE 5.06
LITIGATION
None.
<PAGE>
SCHEDULE 5.08
ENVIRONMENTAL MATTERS
None.
<PAGE>
SCHEDULE 5.12
SUBSIDIARIES
AND OTHER EQUITY INVESTMENTS
(a) Restricted Subsidiaries
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Name Ownership (100% unless specified)
-------------------------------------------------------------------------------------------------------
<S> <C>
PEI Holdings, Inc. Playboy Enterprises, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Enterprises International, Inc. PEI Holdings, Inc.
-------------------------------------------------------------------------------------------------------
Spice Entertainment, Inc. PEI Holdings, Inc.
-------------------------------------------------------------------------------------------------------
Alta Loma Entertainment, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Itasca Holdings, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Lake Shore Press, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Lifestyle Brands, Ltd. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Planet Playboy, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Gaming Nevada, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Clubs International, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Gaming International, Ltd. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Japan, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Models, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Entertainment Group, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Properties, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Steelton, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Telecom International, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Special Editions, Ltd. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Shows, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Spice Hot Entertainment, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Spice Platinum Entertainment, Inc. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Australia Pty. Ltd. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Products and Services International, B.V. Playboy Enterprises International, Inc.
-------------------------------------------------------------------------------------------------------
Adultvision Communications, Inc. Playboy Entertainment Group, Inc.
-------------------------------------------------------------------------------------------------------
After Dark Video, Inc. Playboy Entertainment Group, Inc.
-------------------------------------------------------------------------------------------------------
AL Entertainment, Inc. Playboy Entertainment Group, Inc.
-------------------------------------------------------------------------------------------------------
Alta Loma Distribution, Inc. Playboy Entertainment Group, Inc.
-------------------------------------------------------------------------------------------------------
Impulse Productions, Inc. Playboy Entertainment Group, Inc.
-------------------------------------------------------------------------------------------------------
Indigo Entertainment, Inc. Playboy Entertainment Group, Inc.
-------------------------------------------------------------------------------------------------------
Mystique Films, Inc. Playboy Entertainment Group, Inc.
-------------------------------------------------------------------------------------------------------
Precious Films, Inc. Playboy Entertainment Group, Inc.
-------------------------------------------------------------------------------------------------------
Women Productions, Inc. Playboy Entertainment Group, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Gaming UK, Ltd. Playboy Gaming International, Ltd.
-------------------------------------------------------------------------------------------------------
Playboy Cruise Gaming, Inc. Playboy Gaming International, Ltd.
-------------------------------------------------------------------------------------------------------
Playboy Club of Hollywood, Inc. Playboy Clubs International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Club of New York, Inc. Playboy Clubs International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy of Lyons, Inc. Playboy Clubs International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Preferred, Inc. Playboy Clubs International, Inc.
-------------------------------------------------------------------------------------------------------
Playboy of Sussex, Inc. Playboy Clubs International, Inc.
-------------------------------------------------------------------------------------------------------
Planet Spice, Inc. Spice Entertainment, Inc.
-------------------------------------------------------------------------------------------------------
CPV Productions, Inc. Spice Entertainment, Inc.
-------------------------------------------------------------------------------------------------------
Cyberspice, Inc. Spice Entertainment, Inc.
-------------------------------------------------------------------------------------------------------
Spice Direct, Inc. Spice Entertainment, Inc.
-------------------------------------------------------------------------------------------------------
Spice Networks, Inc. Spice Entertainment, Inc.
-------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Name Ownership (100% unless specified)
-------------------------------------------------------------------------------------------------------
<S> <C>
Spice Productions, Inc. Spice Entertainment, Inc.
-------------------------------------------------------------------------------------------------------
Spice International, Inc. Spice Entertainment, Inc.
-------------------------------------------------------------------------------------------------------
MH Pictures, Inc. CPV Productions, Inc.
-------------------------------------------------------------------------------------------------------
Playboy TV International, LLC Playboy Entertainment Group, Inc.
-------------------------------------------------------------------------------------------------------
Claridge Organization LLC Playboy TV International, LLC
-------------------------------------------------------------------------------------------------------
Chelsea Court Holdings LLC Playboy TV International, LLC
-------------------------------------------------------------------------------------------------------
Candlelight Management LLC Playboy TV International, LLC
-------------------------------------------------------------------------------------------------------
SpiceTV.com, Inc. Playboy.com, Inc.
-------------------------------------------------------------------------------------------------------
Playboy.com KGLP, Inc. Playboy.com, Inc.
-------------------------------------------------------------------------------------------------------
Playboy.com Internet Gaming, Inc. Playboy.com, Inc.
-------------------------------------------------------------------------------------------------------
Playboy.com Internet Gaming Gibraltar Limited Playboy.com Internet Gaming, Inc.
-------------------------------------------------------------------------------------------------------
Playboy.com Racing, Inc. Playboy.com Internet Gaming, Inc.
-------------------------------------------------------------------------------------------------------
Playboy Canada, Inc. Planet Playboy, Inc.
-------------------------------------------------------------------------------------------------------
Playboy TV-GmbH Germany Playboy TV International, LLC
-------------------------------------------------------------------------------------------------------
STV International, B.V. Playboy TV International, LLC
-------------------------------------------------------------------------------------------------------
Playboy TV International B.V. Playboy TV International, LLC
-------------------------------------------------------------------------------------------------------
Playboy TV UK Limited Playboy TV International, LLC
-------------------------------------------------------------------------------------------------------
Stichting 1945/1947 La Laguna Claridge Organization LLC
-------------------------------------------------------------------------------------------------------
1945/1947 Cedar River C.V. Candlelight Management LLC - 99.998%
Chelsea Court Holdings LLC - 0.001%
Stichting 1945/1947 La Laguna - 0.001%
-------------------------------------------------------------------------------------------------------
SEI Inc. ApS Playboy Entertainment Group, Inc.
-------------------------------------------------------------------------------------------------------
SEI 4 ApS Spice Entertainment, Inc.
-------------------------------------------------------------------------------------------------------
SEI 1 ApS Spice Hot Entertainment, Inc.
-------------------------------------------------------------------------------------------------------
Playboy TV/UK Benelux Ltd. Playboy TV UK Limited
-------------------------------------------------------------------------------------------------------
PTVI Limited 1945/1947 Cedar River C.V.
-------------------------------------------------------------------------------------------------------
</TABLE>
(b) Equity Interests
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Name Ownership Percentage
-------------------------------------------------------------------------------------------------------
<S> <C>
Playboy Channel Japan, Inc. Playboy TV International, LLC - 19.9%
-------------------------------------------------------------------------------------------------------
Playboy TV Holdings, LLC Playboy Entertainment Group, Inc. - 19%
-------------------------------------------------------------------------------------------------------
Playboy TV-Latin America, LLC Playboy Entertainment Group, Inc. - 19%
-------------------------------------------------------------------------------------------------------
PTVLA US, LLC Playboy Entertainment Group, Inc. - 19%
-------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 10.02
ADDRESSES FOR NOTICES
PEI HOLDINGS, INC.
680 North Lake Shore Drive
Chicago, Illinois 60611
Attn: Executive Vice President,
Finance and Operations and
Chief Financial Officer,
with a copy to Executive Vice President,
Law and Administration and General Counsel
Telephone: 312.373.2180
Facsimile: 312.649.1395
Electronic Mail: bobc@playboy.com
BANK OF AMERICA
Address for Payments and Requests for Loans
Bank of America, N.A.
901 Main Street
Dallas, Texas 75202
Attn: Runzia Bob
Credit Services
Telephone: 214.209.9732
Facsimile: 214.290.9646
Account No.: 129-2000-883
Ref: PEI Holdings, Inc.
ABA# 111000012
Address for Receiving Letter of Credit Applications and related correspondence
Standby Letters of Credit:
Bank of America, N.A.
Trade Operations-Chicago
231 South LaSalle Street
Mail Code: IL1-231-17-00
Chicago, Illinois 60604
Attn: Riyaz Kaka
Vice President and Operations Manager
Telephone: 312.923.5924
Facsimile: 312.987.6828
Electronic Mail: riyaz.n.kaka@bankofamerica.com
Commercial Letters of Credit
Bank of America, N.A.
Trade Operations-Chicago
231 South LaSalle Street
Mail Code: IL1-231-17-00
Chicago, Illinois 60604
Attn: Carmen Chavez
Vice President and Operations Manager
Telephone: 312.923.5867
Facsimile: 312.987.6828
Electronic Mail: carmen.chavez@bankofamerica.com
Page 1
<PAGE>
Other Notices as Agent:
Bank of America, N.A.
Agency Management
231 South LaSalle Street
Mail Code: IL1-231-08-30
Chicago, Illinois 60604
Attn: Linda Lov
Agency Officer
Telephone: 312.828.8010
Facsimile: 877.206.1766
Electronic Mail: linda.k.lov@bankofamerica.com
Other Notices as a Lender:
Bank of America, N.A.
231 South LaSalle Street
Mail Code: IL1-231-06-38
Chicago, Illinois 60604
Attn: Craig McGuire
Vice President
Telephone: 312.828.1320
Facsimile: 312.828.1974
Electronic Mail: craig.w.mcguire@bankofamerica.com
LASALLE BANK NATIONAL ASSOCIATION
Requests for Credit Extensions:
LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603
Attn: Jeannette Lanart
Operations Officer
Telephone: 312.904.0598
Facsimile: 312.904.6373
Electronic Mail: jeannette.lanart@abnamro.com
Account No. 1378018-7300
ABA# 071000505
Notices (other than Requests for Credit Extensions):
LaSalle Bank National Association
135 South LaSalle Street
Suite 1126
Chicago, Illinois 60603
Attn: Kyle Freimuth
Vice President
Telephone: 312.904.4623
Facsimile: 312.904.6546
Electronic Mail: kyle.freimuth@abnamro.com
Page 2
<PAGE>
EXHIBIT A
FORM OF COMMITTED LOAN NOTICE
Date: ___________, _____
To: Bank of America, N.A., as Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of March 11,
2003 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Credit Agreement;" the terms defined therein
being used herein as therein defined), among PEI Holdings, Inc. ("Borrower"),
Lenders from time to time party thereto, and Bank of America, N.A., as Agent.
The undersigned hereby requests (select one):
|_| A Committed Borrowing of Committed Loans
|_| A conversion or continuation of Committed Loans
1. On _______________________________________________________ (a
Business Day).
2. In the amount of $_________________________________.
3. Comprised of _________________________________________. [Type of
Committed Loan requested]
4. For IBOR Committed Loans: with an Interest Period of _______ months.
[The Committed Borrowing requested herein complies with the proviso to the
first sentence of Section 2.01 of the Credit Agreement.]
PEI HOLDINGS, INC.
By________________________________________
Name______________________________________
Title_____________________________________
Exhibit A
<PAGE>
EXHIBIT B
FORM OF NOTE
$___________________ ____________________
FOR VALUE RECEIVED, the undersigned ("Borrower"), hereby promises to pay
to the order of _____________________________ ("Lender"), in accordance with the
provisions of the Agreement (as hereinafter defined) the principal amount of
each Loan from time to time made by Lender to Borrower under that certain Credit
Agreement, dated as of March 11, 2003 (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the
"Agreement;" the terms defined therein being used herein as therein defined),
among Borrower, Lenders from time to time party thereto, and Bank of America,
N.A., as Agent.
Borrower promises to pay interest on the unpaid principal amount of each
Loan from the date of such Loan until such principal amount is paid in full, at
such interest rates and at such times as provided in the Agreement. All payments
of principal and interest shall be made to Agent for the account of Lender in
Dollars in immediately available funds at Agent's Office. If any amount is not
paid in full when due hereunder, such unpaid amount shall bear interest, to be
paid upon demand, from the due date thereof until the date of actual payment
(and before as well as after judgment) computed at the per annum rate set forth
in the Agreement.
This Note is one of the Notes referred to in the Agreement, is entitled to
the benefits thereof and may be prepaid in whole or in part subject to the terms
and conditions provided therein. This Note is also entitled to the benefits of
the Loan Guaranties and is secured by the Collateral. Upon the occurrence and
continuation of one or more of the Events of Default specified in the Agreement,
all amounts then remaining unpaid on this Note shall become, or may be declared
to be, immediately due and payable all as provided in the Agreement. Loans made
by Lender shall be evidenced by one or more loan accounts or records maintained
by Lender in the ordinary course of business. Lender may also attach schedules
to this Note and endorse thereon the date, amount and maturity of its Loans and
payments with respect thereto.
Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF ILLINOIS.
PEI HOLDINGS, INC.
By______________________________________
Name____________________________________
Title___________________________________
Exhibit B - Page 1
<PAGE>
LOANS AND PAYMENTS WITH RESPECT THERETO
<TABLE>
<CAPTION>
Amount of Outstanding
End of Principal or Principal
Type of Loan Amount of Interest Interest Paid Balance This Notation
Date Made Loan Made Period This Date Date Made By
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
___________ ____________ __________ ___________ __________ __________ __________
</TABLE>
Exhibit B - Page 2
<PAGE>
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date: _____________,
To: Bank of America, N.A., as Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of March 11,
2003 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Agreement;" the terms defined therein being used
herein as therein defined), among PEI Holdings, Inc. ("Borrower"), Lenders from
time to time party thereto, and Bank of America, N.A., as Agent.
The undersigned Responsible Officer hereby certifies as of the date hereof
that he/she is the _____________________________________________________ of
Borrower, and that, as such, he/she is authorized to execute and deliver this
Certificate to Agent on behalf of Borrower, and that:
[Use following for fiscal year-end financial statements]
1. Attached hereto as Schedule 1 are the year-end audited financial
statements required by Section 6.01(a) of the Agreement for the fiscal year of
Borrower ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section.
[Use following for fiscal quarter-end financial statements]
1. Attached hereto as Schedule 1 are the unaudited financial statements
required by Section 6.01(b) of the Agreement for the fiscal quarter of Borrower
ended as of the above date. Such financial statements fairly present in all
material respects the financial condition, results of operations and cash flows
of Borrower and its Subsidiaries in accordance with GAAP as at such date and for
such period, subject only to normal year-end adjustments.
2. The undersigned has reviewed and is familiar with the terms of the
Agreement and has made, or has caused to be made under his/her supervision, a
review of the transactions and condition (financial or otherwise) of Borrower
during the accounting period covered by the attached financial statements.
3. A review of the activities of Borrower during such fiscal period has
been made under the supervision of the undersigned with a view to determining
whether during such fiscal period Borrower performed and observed all its
Obligations under the Loan Documents, and
[no knowledge was obtained of any Event of Default]
--or--
[the following is a list of each such Default or Event of Default and its
nature and status:]
4. The representations and warranties of the Borrower contained in Article
V of the Agreement, or which are contained in any document furnished at any time
under or in connection with the Loan Documents, are true and correct in all
material respects on and as of the date hereof, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct as of such earlier date, and except that for
purposes of this Compliance Certificate, the representations and warranties
contained in subsections (a) and (b) of Section 5.05 of the Agreement shall be
deemed to refer to the most recent statements
Exhibit C - Page 1
<PAGE>
furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the
Agreement, including the statements in connection with which this Compliance
Certificate is delivered.
5. The financial covenant analyses and information set forth on Schedule 2
attached hereto are true and accurate on and as of the date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
______________, _______.
PEI HOLDINGS, INC.
By__________________________________
Name________________________________
Title_______________________________
Exhibit C - Page 2
<PAGE>
For the Quarter/Year ended ___________________("Statement Date")
SCHEDULE 2
to the Compliance Certificate
($ in 000's)
<TABLE>
<S> <C>
I. Section 6.12(a) - Net Worth.
A. Net Worth at Statement Date: $_______________
1. Total Assets: $_______________
2. Total Liabilities: $_______________
3. Net Worth (Line I.A.1 less Line I.A.2): $_______________
Minimum Required Net Worth: $_______________
B. 1. $_________, plus $_______________
2. the sum of 70% of net income after income taxes
(without subtracting losses) earned in each fiscal
quarter ending after the date of the Agreement $_______________
3. Minimum Required Net Worth (I.B.1 plus I.B.2) $_______________
C. Excess (deficient) for covenant compliance (Line I.A.3 less I.B.3: $_______________
II. Section 6.12(b) - Interest Coverage Ratio.
A. Adjusted EBITDA: $_______________
1. net income $_______________
2. discontinued operations $_______________
3. extraordinary items $_______________
4. interest expense on all obligations $_______________
5. depreciation, depletion and amortization $_______________
6. restructuring charges, $_______________
7. Non-cash expenses or losses $_______________
8. Other non-cash charges, less $_______________
9. cash investments in programming $_______________
10. Total EBITDA $_______________
B. Cash interest expense $_______________
C. Ratio (Line II.A.8 / Line II.B) _________ to 1.0
Minimum Required: _____ to 1.0
III. Section 6.12(c) -- Capital Expenditures.
A. Obligations incurred (including capital leases) for fixed
assets during fiscal year to date $_______________
B. Maximum permitted capital expenditures: $7,000,000
C. Excess (deficient) for covenant compliance (Line III.A -
III.B): $_______________
</TABLE>
Exhibit C - Page 3
<PAGE>
EXHIBIT D
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this "Assignment") is dated as
of the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the "Assignor") and [Insert name of Assignee] (the
"Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (the "Credit
Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee.
The Standard Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
Agent as contemplated below, (i) all of the Assignor's rights (subject to
Section 10.07(b) of the Credit Agreement) and obligations as a Lender under the
Credit Agreement and any other documents or instruments delivered pursuant
thereto to the extent related to the amount and percentage interest identified
below of all of such outstanding rights and obligations of the Assignor under
the respective facilities identified below (including, to the extent included in
any such facilities and Letters of Credit) included in such facilities and, (ii)
to the extent permitted to be assigned under applicable law, all claims,
including, without limitation, suits, causes of action and any other right of
the Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as, (the "Assigned Interest"). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment, without representation or warranty by the Assignor.
1. Assignor: ______________________________
2. Assignee: ______________________________ [and is an Affiliate of Assignor]
3. Borrower(s): PEI Holdings, Inc.
4. Agent: Bank of America, N. A., as Agent under the Credit Agreement
5. Credit Agreement: The Credit Agreement, dated as of March 11, 2003, among
PEI Holdings, Inc., Lenders parties thereto, and Agent
6. Assigned Interest:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Aggregate
Amount of Amount of Percentage
Commitment/Loans Commitment/Loans Assigned of
Facility Assigned for all Lenders Assigned Commitment/Loans
----------------- --------------- -------- ----------------
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
____________ $_______________ $_______________ ______________%
-----------------------------------------------------------------------------------------------------------------------
____________ $_______________ $_______________ ______________%
-----------------------------------------------------------------------------------------------------------------------
____________ $_______________ $_______________ ______________%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
Effective Date: __________________, 20__ [TO BE INSERTED BY AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]
Exhibit D - Page 1
<PAGE>
The terms set forth in this Assignment are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By________________________________________
Title_________________________________
ASSIGNEE
[NAME OF ASSIGNEE]
By________________________________________
Title_________________________________
[Consented to and] Accepted:
Bank of America, N.A., as Agent
By____________________________________
Title_____________________________
Exhibit D - Page 2
<PAGE>
ANNEX 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT
STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT
AND ASSUMPTION AGREEMENT
1. Representations and Warranties.
1.1. Assignor. The Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents , or any collateral thereunder, (iii) the financial condition of
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by Borrower,
any of its Subsidiaries or Affiliates or any other Person of any of their
respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and to consummate the transactions contemplated hereby
and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an Eligible Assignee under the Credit Agreement, (iii) it has
provided all forms required under Section 3.01 of the Credit Agreement, (iv)
from and after the Effective Date, it shall be bound by the provisions of the
Credit Agreement as a lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, and (v) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 6.01 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on Agent or any other Lender;
and (b) agrees that (i) it will, independently and without reliance on Agent,
the Assignor or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Loan Documents, and (ii) it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Documents are required to be performed by it as a Lender.
1.3 Assignee's Address for Notices, etc. Attached hereto as Schedule
1 is all contact information, address, account and other administrative
information relating to the Assignee.
2. Payments. From and after the Effective Date, Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignee whether such amounts have
accrued prior to or on or after the Effective Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments by Agent for periods
prior to the Effective Date or with respect to the making of this assignment
directly between themselves.
3. General Provisions. This Assignment shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and assigns.
This Assignment may be executed in any number of counterparts, which together
shall constitute one instrument. Delivery of an executed counterpart of a
signature page of this Assignment by telecopy shall be effective as delivery of
a manually executed counterpart of this Assignment. This Assignment shall be
governed by, and construed in accordance with, the laws of the State of
Illinois.
Exhibit D - Page 3
<PAGE>
SCHEDULE 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT
ADMINISTRATIVE DETAILS
(ASSIGNEE TO LIST NAMES OF CREDIT CONTACTS, ADDRESSES, PHONE AND FACSIMILE
NUMBERS, ELECTRONIC MAIL ADDRESSES AND ACCOUNT AND PAYMENT INFORMATION)
Exhibit D - Page 4