Credit Agreement [Amendment No. 2] - Playboy Enterprises Inc., Harris Trust and Savings Bank and LaSalle National Bank
PLAYBOY ENTERPRISES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT
Harris Trust and Savings Bank
Chicago, Illinois
LaSalle National Bank
Chicago, Illinois
Ladies and Gentlemen:
Reference is hereby made to the Credit Agreement dated as of February 10,
1995, as amended by the First Amendment to Credit Agreement dated as of March
31, 1995 (said Credit Agreement as so amended being referred to herein as the
"Credit Agreement") currently in effect by and among, Playboy Enterprises, Inc.,
a Delaware corporation (the "Company"), and you (the "Lenders"). All capitalized
terms used herein without definition shall have the same meanings herein as such
terms have in the Credit Agreement.
The Company hereby applies to the Lenders to increase the amount of the
Revolving Credit Commitments to $35,000,000, extend the availability of the
Revolving Credit, amend certain of the financial covenants contained therein and
make certain other amendments to the Credit Agreement, and the Lenders are
willing to do so under the terms and conditions set forth in this Amendment.
1. AMENDMENTS.
Upon the satisfaction of the conditions precedent set forth in Section 2
hereof, the Credit Agreement shall be and hereby is amended as follows:
1.01. Loans in Excess of $30,000,000. The third sentence of Section 1.2 of
the Credit Agreement is hereby amended and as so amended shall be restated in
its entirety to read as follows:
"Each advance made by a Lender of its pro rata share of a Loan shall
be made against and evidenced by a Revolving Credit Note of the
Company (individually an "A-Note" and collectively the "A-Notes")
payable to the order of such Lender in the amount of its Revolving
Credit Commitment, with each A-Note to be in the form (with
appropriate insertions) attached hereto as Exhibit A. Notwithstanding
anything herein to the contrary, each advance made by a Lender of its
pro rata share of a Loan, to the extent that after giving effect
thereto the amount of the Revolving Credit Commitments then in use
would then exceed $30,000,000, shall be made against and evidenced by
promissory notes of the Company in the form (with appropriate
insertions) annexed hereto as
<PAGE>
Exhibit A-1 (individually a "B-Note" and collectively the "B-Notes")
(the A-Notes and the B-Notes being hereinafter referred to
collectively as the "Notes" and individually as a "Note")."
1.02. Letter of Credit Sub-Limit. Section 1.3(a) of the Credit Agreement is
hereby amended by deleting the amount "$7,500,000" appearing therein and
substituting therefor the amount "$10,000,000".
1.03. Termination Fee. Section 3.4 of the Credit Agreement is hereby
amended by adding the following sentence immediately at the end thereof:
"If the Company terminates the Revolving Credit Commitments in whole
at any time prior to September 5, 1997, the Company shall pay to the
Administrative Agent, for the ratable benefit of the Lenders, a
termination fee in the amount of $100,000."
1.04. Deletion of Mandatory Partial Termination Requirement. Section 3.5 of
the Credit Agreement is hereby amended by deleting such Section in its entirety.
1.05. Application of Payments. The seventh sentence of the first paragraph
of Section 3.6 of the Credit Agreement is hereby amended and as so amended shall
be restated in its entirety to read as follows:
"Unless the Company otherwise directs, principal payments on the Notes
shall be first applied to the Domestic Rate Portion evidenced by the
B-Notes until payment in full thereof, then to the Domestic Rate
Portion evidenced by the A-Notes until payment in full thereof, with
any balance applied to the LIBOR Portions of the Notes in the order in
which their Interest Periods expire."
1.06. Collateral Generally. Section 4.1 of the Credit Agreement is hereby
amended by adding the following sentence immediately after the first sentence
thereof:
"The foregoing to the contrary notwithstanding and notwithstanding
anything in the Collateral Documents to the contrary, (i) the Company
and its Material Subsidiaries each shall have the right, without the
consent of the Administrative Agent or the Lenders to enter into bona
fide licensing arrangements at arm's length with unaffiliated third
parties for their use of the Collateral consisting of intellectual
property (copies of which shall be promptly provided by the Company to
the Administrative Agent) so long as the Administrative Agent has a
valid and perfected first priority Lien on such Collateral and the
proceeds thereof and the terms of such licensing arrangements
expressly permit such Lien and recognize the Administrative Agent's
right to collect any sums due the Company or such Material Subsidiary,
as the case may be,
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in accordance with the terms of such arrangements, (ii) whether or
not the Administrative Agent has foreclosed or exercised any other
rights to enforce its Lien on such Collateral, licensees under
licensing arrangements described in the foregoing clause (i) shall
be afforded the use of such Collateral in accordance with the terms
of such licensing arrangements for the duration set forth therein
and (iii) at the request of the Company, the Administrative Agent
shall (with the consent of the Required Lenders, which consent shall
not be unreasonably withheld) execute a nondisturbance agreement in
favor of such licensees to provide for the purposes set forth in the
foregoing clause (ii)."
1.07. Movie Rights. Section 4.2 of the Credit Agreement is hereby amended
and as so amended shall be restated in its entirety to read as follows:
"Section 4.2. Movie Rights. Notwithstanding anything herein or in
any other Loan Document to the contrary, the Collateral shall in no
event include certain film and video-related mediums and related
rights to the extent set forth in that certain Supplement to
Collateral Documents dated as of March 5, 1996 by and among the
Agent, the Company and certain of its Subsidiaries."
The parties hereto agree that the Supplement attached hereto as Exhibit C shall,
when properly completed and executed, constitute the Supplement referred to in
Section 4.2 hereof as amended hereby.
1.08. Changes in Applicable Margins. The definition of "Applicable Margin"
appearing in Section 5.1 of the Credit Agreement is hereby amended and as so
amended shall be restated in its entirety to read as follows:
"'Applicable Margin' means 0% with respect to the Domestic Rate
Portion of the Notes and 2.25% with respect to each LIBOR Portion of
the Notes; provided, however, with respect to each LIBOR Portion of
the Notes, such Applicable Margin shall be decreased to 2.00% on
October 1st of any calendar year (commencing October 1, 1996) if the
Company's Net Income Before Extraordinary Items for the fiscal year
ending on June 30th of such calendar year is equal to or greater
than $1,500,000; provided further, however, that such Applicable
Margin shall return to 2.25% on October 1st of any calendar year
thereafter if the Company's Net Income Before Extraordinary Items
for any fiscal year ending on or after June 30th of such calendar
year is less than $1."
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1.09. Extension of Termination Date. The definition of "Termination Date
appearing in Section 5.1 of the Credit Agreement is hereby amended and as so
amended shall be restated in its entirety to read as follows:
" 'Termination Date' means March 5, 1999, or such earlier date on
which the Revolving Credit Commitments are terminated in whole
pursuant to Section 3.4, 3.5, 9.2 or 9.3 hereof or such later date
to which the Revolving Credit Commitments are extended pursuant to
Section 11.20 hereof. THE COMPANY ACKNOWLEDGES AND AGREES THAT THE
LENDERS HAVE ABSOLUTELY NO OBLIGATION WHATSOEVER TO EXTEND THE
TERMINATION DATE BEYOND MARCH 5, 1999."
1.10. New Definitions. Section 5.1 of the Credit Agreement is hereby
amended by adding the following new definitions in the appropriate alphabetical
order:
"Deferments" means sums in fixed amounts (other than Participations
or Residuals) payable by the Company or any of its Subsidiaries in
accordance with customary industry practice to a Person who is not
an Affiliate of the Company or any of its Subsidiaries in connection
with such Person's furnishing rights or personal services in
connection with the development or production of any item of
Product, the payment of which is contingent upon (a) the receipt of
revenues from the exploitation of such item of Product, and/or (b)
the occurrence of certain conditions and/or (c) the passage of time;
provided, however, that the term "Deferments" does not include
supplemental market payments or sums included in the budgeted cost
of production for the applicable item of Product.
"EBITDA" means, with reference to any period, Net Income Before
Extraordinary Items for such period plus all amounts deducted in
arriving at such Net Income Before Extraordinary Items amount in
respect of (i) Interest Expense for such period, plus (ii) federal,
state and local income taxes for such period, plus (iii) all amounts
properly charged for depreciation of fixed assets and amortization
of intangible assets (including without limitation the amortization
of investments in entertainment programming) during such period on
the books of the Company and its Subsidiaries.
"Net Income After Extraordinary Items" means, with reference to any
period, the net income (or net loss) of the Company and its
Subsidiaries for such period as computed on a consolidated basis in
accordance with GAAP, and, without limiting the foregoing, after
deduction from gross income of all expenses and reserves,
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including reserves for all taxes on or measured by income, and in
any event including any extraordinary profits and losses and also in
any event including any taxes on such profits and any tax credits on
account of such losses.
"Net Income Before Extraordinary Items" means, with reference to any
period, the net income (or net loss) of the Company and its
Subsidiaries for such period as computed on a consolidated basis in
accordance with GAAP, and, without limiting the foregoing, after
deduction from gross income of all expenses and reserves, including
reserves for all taxes on or measured by income, but in any event
excluding any extraordinary profits and losses and also in any event
excluding any taxes on such profits and any tax credits on account
of such losses.
"Participation" means all obligations (other than Deferments and
Residuals) payable by the Company or any of its Subsidiaries in
accordance with customary industry practice to Persons other than
Persons who are Affiliates of the Company or any of its Subsidiaries
in connection with the development, acquisition, production,
distribution or exploitation of an item of Product or rights in
Product, the payment of which is contingent upon and payable only to
the extent of the receipt by the obligor of revenues from the
exploitation of such item of Product or rights in Product.
"Product" means any motion pictures, films, video or movies or
similar audio or visual medium of communication in use now or in the
future or any elements thereof in which the Company or any
Subsidiary has any proprietary interest.
"Residuals" means all obligations (other than Participations and
Deferments) payable by the Company or any of its Subsidiaries in
accordance with customary industry practice pursuant to guild
agreements or collective bargaining agreements in connection with
the development, acquisition, production, distribution or
exploitation of an item of Product or rights in Product."
1.11. Unnecessary Definitions. Section 5.1 of the Credit Agreement is
hereby further amended by deleting from such Section the definition of the term
"Rights Offering" appearing therein.
1.12. Net Worth Requirement. Section 8.7 of the Credit Agreement is
hereby amended and as so amended shall be restated in its entirety to read as
follows:
"Section 8.7. Net Worth. The Company will at all times maintain Net
Worth of not less than the sum of (i) $43,000,000 and
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(ii) 50% of Net Income After Extraordinary Items for the immediately
preceding fiscal year (only if positive for such year), commencing
with the fiscal year ending June 30, 1996."
1.13. EBITDA Requirement. Section 8.9 of the Credit Agreement is hereby
amended and as so amended shall be restated in its entirety to read as follows:
"Section 8.9. EBITDA. The Company will, as of the last day of each
fiscal quarter ending during each of the periods specified below,
maintain EBITDA for the four fiscal quarters then ended of not less
than:
<TABLE>
<CAPTION>
From and To and EBITDA shall
Including Including not be less than
--------- --------- ----------------
<S> <C> <C>
The date hereof 9/30/96 $23,500,000
10/1/96 3/31/97 $26,000,000
4/1/97 9/30/97 $28,500,000
10/1/97 3/31/98 $30,750,000
4/1/98 all times thereafter $33,000,000
</TABLE>
1.14. Additional Permitted Liens. Section 8.11 of the Credit Agreement is
hereby amended by adding the following new subsections (g), (h), (i), (j) and
(k) immediately after subsection (f) thereof:
"(g) Liens on items of Product and rights in Product to the
extent securing Residuals, Deferments and Participations owed by the
Company and its Subsidiaries relating exclusively to such Product;
(h) rights of licensees which are not Affiliates of the
Company or any of its Subsidiaries under access agreements pursuant
to which such licensees have access to duplicating material for the
purpose of making prints or other copies of items of Product
licensed to them, and rights of distributors, exhibitors, licensees
and other Persons which are not Affiliates of the Company or any of
its Subsidiaries in items of Product created in connection with the
distribution and exploitation of such items of Product in the
ordinary course of business pursuant to arms-length agreements in
accordance with customary industry practice;
(i) Liens on any asset relating to any item of Product or
rights in Product acquired by the Company or any of its Subsidiaries
granted in accordance with customary industry practice in favor of
any lender financing the production costs of such item of Product,
provided such Lien is and will remain confined to the same Products
or rights in Product so acquired;
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(j) Liens granted in accordance with customary industry
practice to distributors or licensees which are not Affiliates of
the Company or any of its Subsidiaries to secure the exploitation
rights in items of Product licensed or leased to such distributors
or licensees, provided that the collateral subject to any such Lien
shall be limited to the exploitation rights licensed or leased to
such distributor or licensee, the Product and proceeds of such
exploitation rights and a non-exclusive right of access to necessary
duplicating materials to exercise such exploitation rights; and
(k) Liens of film laboratories and sound studios which are
not Affiliates of the Company or any of its Subsidiaries incurred in
the ordinary course of business for sums not yet due or being
contested in good faith."
1.15. Various Investments. Subsections (e), (g), (i) and (k) of Section
8.12 of the Credit Agreement are each hereby amended and as so amended shall be
restated in their entirety to read, respectively, as follows:
"(e) investments outstanding as of March 5, 1996 in present
Subsidiaries;"
"(g) the currently existing guaranty by the Company of the 10%
Subordinated Note of Lifestyle Brands, Ltd. dated June 28, 1993
payable to Seaward & Co. (the "Sarah Coventry Note") provided the
aggregate principal amount so guaranteed does not at any time exceed
$750,000;"
"(i) investments in Playboy Gaming Greece, Ltd. provided the
amount so invested aggregates not more than $2,100,000 at any one
time outstanding;"
"(k) investments, loans, advances and guaranties not otherwise
permitted by this Section 8.12 provided the aggregate amount of such
investments, loans, advances and guaranties made in each fiscal year
of the Company does not exceed $6,000,000 and no single such
investment, loan, advance or guaranty (with a series of related
investments, loans, advances or guaranties comprising a single
transaction to be deemed a single investment, loan, advance or
guaranty, as the case may be, for the purposes of this Section) is
in an amount greater than $1,500,000."
1.16. Extension of Revolving Credit Commitments. Section 11 of the Credit
Agreement is hereby amended by inserting the following new Section 11.20
immediately after Section 11.19 thereof:
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"Section 11.20. Extensions of the Revolving Credit Commitments. Not
less than thirty (30) or more than ninety (90) days prior to the
date occurring two years prior to the Termination Date (as the same
may have been extended pursuant to this Section 11.20), the Company
may advise the Administrative Agent in writing of its desire to
extend the Termination Date for an additional twelve (12) months and
the Administrative Agent shall promptly notify the Lenders of each
such request. In the event that the Lenders are agreeable to such
extension (it being understood that the Lenders may accept or
decline such a request in their sole discretion), the Administrative
Agent shall so notify the Company and the Company and the Lenders
shall enter into such documents as the Administrative Agent may
reasonably deem necessary or appropriate to reflect such extension
and to assure that all extensions of credit pursuant to the
Revolving Credit Commitments as so extended are secured by the liens
of the Collateral Documents and the Administrative Agent may call
for financing statement searches or endorsements to its mortgagee's
policy of title insurance to assure that such is the case, all costs
and expenses incurred by the Administrative Agent in connection
therewith to be paid by the Company."
1.17. Increase in Revolving Credit Commitments. The amount of each
Lender's Revolving Credit Commitment set forth opposite its name on its
signature page to the Credit Agreement shall be amended and as so amended shall
be restated as follows:
AMOUNT OF REVOLVING
LENDER CREDIT COMMITMENT
Harris Trust and Savings Bank $17,500,000
LaSalle National Bank $17,500,000
1.18. Exhibit A-1. The Credit Agreement shall be amended by adding thereto
an Exhibit A-1 in the form annexed to this Amendment as Exhibit A-1.
2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:
2.01. The Company, the Agent and the Lenders shall have executed and
delivered this Amendment.
2.02. The Company shall have executed a Second Supplemental Deed of Trust,
Fixture Filing and Security Agreement in the form of Exhibit B hereto (the
"First
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Supplement") supplementing the California Mortgage so that the same shall secure
the Revolving Credit as extended hereby.
2.03. The Company shall have paid to the Administrative Agent for the
ratable benefit of the Lenders a transaction fee in the amount $155,000.
2.04. No Default or Event of Default shall have occurred and be continuing
as of the date this Amendment would otherwise take effect.
2.05. Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Lenders and their counsel; and the
Lenders shall have received the favorable written opinion of counsel for the
Company in form and substance satisfactory to the Lenders and their counsel.
3. CALIFORNIA MORTGAGE.
Within fifteen Business Days of the recordation of the Second Supplement,
the Company shall at its expense furnish the Agent with an endorsement to the
Agent's February 16, 1995 title insurance policy issued by Chicago Title
Insurance Company under its number 9428314, the effect of which is to insure the
validity and priority of the California Mortgage as security for the Revolving
Credit as extended hereby, which endorsement shall bring the effective date of
coverage thereunder down to the date of such recordation and show no exceptions
to title or coverage other than those shown on the February 8, 1995 commitment
for such policy (provided that the mortgage identified at Section E of Schedule
B to such commitment shall not show as an exception). The failure to furnish
such endorsement shall constitute an Event of Default.
4. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this Amendment, the
Company hereby represents to the Lenders that as of the date hereof, the
representations and warranties set forth in Section 6 of the Credit Agreement
are and shall be and remain true and correct (except that for purposes of this
paragraph, (i) the representations contained in Section 6.3 shall be deemed to
include this Amendment as and when it refers to Loan Documents and (ii) the
representations contained in Section 6.5 shall be deemed to refer to the most
recent financial statements of the Company delivered to the Lenders) and the
Company is in full compliance with all of the terms and conditions of the Credit
Agreement and no Default or Event of Default has occurred and is continuing
under the Credit Agreement or shall result after giving effect to this
Amendment.
5. MISCELLANEOUS.
5.01. The Company acknowledges and agrees that all of the Collateral
Documents to which it is a party remain in full force and effect for the benefit
and security of, among other things, the Revolving Credit as modified hereby.
The Company further acknowledges and agrees that all references in such
Collateral Documents to the Revolving Credit shall be
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deemed a reference to the Revolving Credit as so modified. The Company further
agrees to execute and deliver any and all instruments or documents as may be
required by the Agent or Required Lenders to confirm any of the foregoing.
5.02. Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.
5.03. This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
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Dated as of March 5, 1996.
PLAYBOY ENTERPRISES INC.
By /s/ Rebecca S. Maskey
--------------------------------
Its Senior V.P.
-----------------------------
Each of the undersigned acknowledges and agrees that while the following is
not required, each confirms that: (i) all of the Collateral Documents to which
it is a party remain in full force and effect for the benefit and security of,
among other things, the Revolving Credit as modified hereby; (ii) all references
in such Collateral Documents to the Credit Agreement shall be deemed a reference
to the Credit Agreement as amended hereby; (iii) each of the undersigned will
continue to execute and deliver any and all instruments or documents as may be
required by the Agent or Required Lenders to confirm any of the foregoing.
PLAYBOY ENTERTAINMENT GROUP, INC.
By /s/ Robert D. Campell
--------------------------------
Its Treasurer
-----------------------------
CRITICS' CHOICE VIDEO, INC.
By /s/ Robert D. Campell
--------------------------------
Its Treasurer
-----------------------------
LIFESTYLE BRANDS, LTD.
By /s/ Robert D. Campell
--------------------------------
Its Treasurer
-----------------------------
Accepted and agreed to in Chicago, Illinois as of the date and year last
above written.
HARRIS TRUST AND SAVINGS BANK
By /s/ R.L. Dell'Artino
--------------------------------
Its Vice President
LASALLE NATIONAL BANK
By /s/ Robert Kastenholz
--------------------------------
Its Senior Vice President
-----------------------------
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EXHIBIT A-1
B-NOTE
Chicago, Illinois
$2,500,000 March 5, 1996
On the Termination Date, for value received, the undersigned, PLAYBOY
ENTERPRISES, INC., a Delaware corporation (the "Company"), hereby promises to
pay to the order of Harris Trust and Savings Bank (the "Lender"), at the
principal office of Harris Trust and Savings Bank in Chicago, Illinois, the
principal sum of (i) Two Million Five Hundred Thousand and no/100 Dollars
($2,500,000), or (ii) such lesser amount as may at the time of the maturity
hereof, whether by acceleration or otherwise, be the aggregate unpaid principal
amount of all Loans owing from the Company to the Lender under the Revolving
Credit provided for in the Credit Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Credit Agreement
dated as of February 10, 1995, as amended, between the Company, Harris Trust and
Savings Bank, individually and as Administrative Agent thereunder, and the other
Lenders which are now or may from time to time hereafter become parties thereto
(said Credit Agreement, as the same may be amended, modified or restated from
time to time, being referred to herein as the "Credit Agreement") made and to be
made to the Company by the Lender under the Revolving Credit provided for under
the Credit Agreement, and the Company hereby promises to pay interest at the
office described above on each loan evidenced hereby at the rates and at the
times and in the manner specified therefor in the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees that
in any action or proceeding instituted to collect or enforce collection of this
Note, the entries so endorsed on a schedule to this Note or recorded on the
books and records of the holder hereof shall be prima facie evidence of the
unpaid principal balance of this Note, the status of each such loan from time to
time as part of the Domestic Rate Portion or a LIBOR Portion, and, in the case
of any LIBOR Portion, the interest rate and Interest Period applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
<PAGE>
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit Agreement.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAWS.
The Company hereby promises to pay all costs and expenses (including
reasonable attorneys' fees) suffered or incurred by the holder hereof in
collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand.
PLAYBOY ENTERPRISES, INC.
/s/ Rebecca S. Maskey
By --------------------------------------
Rebecca S. Maskey
Name: --------------------------------
Senior V. P.
Title: -------------------------------
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B-NOTE
Chicago, Illinois
$2,500,000 March 5, 1996
On the Termination Date, for value received, the undersigned, PLAYBOY
ENTERPRISES, INC., a Delaware corporation (the "Company"), hereby promises to
pay to the order of LaSalle National Bank (the "Lender"), at the principal
office of Harris Trust and Savings Bank in Chicago, Illinois, the principal sum
of (i) Two Million Five Hundred Thousand and no/100 Dollars ($2,500,000), or
(ii) such lesser amount as may at the time of the maturity hereof, whether by
acceleration or otherwise, be the aggregate unpaid principal amount of all Loans
owing from the Company to the Lender under the Revolving Credit provided for in
the Credit Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Credit Agreement
dated as of February 10, 1995, as amended, between the Company, Harris Trust and
Savings Bank, individually and as Administrative Agent thereunder, and the other
Lenders which are now or may from time to time hereafter become parties thereto
(said Credit Agreement, as the same may be amended, modified or restated from
time to time, being referred to herein as the "Credit Agreement") made and to
be made to the Company by the Lender under the Revolving Credit provided for
under the Credit Agreement, and the Company hereby promises to pay interest at
the office described above on each loan evidenced hereby at the rates and at
the times and in the manner specified therefor in the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees that
in any action or proceeding instituted to collect or enforce collection of this
Note, the entries so endorsed on a schedule to this Note or recorded on the
books and records of the holder hereof shall be prima facie evidence of the
unpaid principal balance of this Note, the status of each such loan from time to
time as part of the Domestic Rate Portion or a LIBOR Portion, and, in the case
of any LIBOR Portion, the interest rate and Interest Period applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
<PAGE>
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit Agreement.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAWS.
The Company hereby promises to pay all costs and expenses (including
reasonable attorneys' fees) suffered or incurred by the holder hereof in
collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand.
PLAYBOY ENTERPRISES, INC.
By /s/ Rebecca S. Maskey
--------------------------------------
Rebecca S. Maskey
Name: --------------------------------
Senior V. P.
Title: -------------------------------
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EXHIBIT B
|
Recording Requested By: | COPY of Document Recorded
James E. Basta | .........................
| Mar 07 1996
When Recorded Mail To: | Has not been compared with
James E. Basta | original. Original will be
Chapman and Cutler | returned when processing
111 West Monroe Street | has been completed.
Chicago, Illinois 60603 | LOS ANGELES COUNTY REGISTRAR-
| RECORDER
|
|SPACE ABOVE THIS LINE RESERVED FOR
|RECORDER'S USE ONLY
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SECOND SUPPLEMENT TO
DEED OF TRUST, FIXTURE FILING AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
Dated as of
March 5, 1996
FROM
PLAYBOY ENTERPRISES, INC.
("Grantor")
to
CHICAGO TITLE INSURANCE COMPANY, AS TRUSTEE
("Trustee")
in Trust for the Benefit of
HARRIS TRUST AND SAVINGS BANK,
AS ADMINISTRATIVE AGENT
FOR THE LENDERS
("Beneficiary")
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THE OBLIGATION THE PERFORMANCE OF WHICH IS SECURED BY THIS SUPPLEMENTAL DEED
OF TRUST PROVIDES FOR A VARIABLE INTEREST RATE AND A REVOLVING LINE OF CREDIT.
<PAGE>
PLAYBOY ENTERPRISES, INC.
SECOND SUPPLEMENT TO DEED OF TRUST,
FIXTURE FILING AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
This Second Supplement to Deed of Trust, Fixture Filing and Security Agreement
with Assignment of Rents dated as of March 5, 1996 (the "Supplement") from
PLAYBOY ENTERPRISES, INC., a Delaware corporation 680 North Lake Shore Drive,
Chicago, Illinois 60611 (the "Grantor" ), to CHICAGO TITLE INSURANCE COMPANY, a
Missouri corporation, as Trustee, having an office at 700 South Flower, Suite
900, Los Angeles, California 90017 (the "Trustee"), and in trust for the benefit
of HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation whose post
office address is 111 West Monroe Street, Chicago, Illinois 60690 (hereinafter
referred to individually as "Harris"), as Administrative Agent hereunder for the
Lenders hereinafter defined (Harris acting as such agent and any successor or
successors to Harris in such capacity being hereinafter referred to as the
"Beneficiary");
WITNESSETH THAT:
WHEREAS, the Grantor did heretofore execute and deliver to the Beneficiary
that certain Deed of Trust, Fixture Filing and Security Agreement with
Assignment of Rents dated as of February 10, 1995 and recorded in the Recorder's
Office of Los Angeles County, California on February 16, 1995 as Document No.
95-263308, as amended by that certain First Supplement to Deed of Trust, Fixture
Filing and Security Agreement with Assignment of Rents dated as of March 31,
1995 and recorded in the Recorder's Office of Los Angeles County, California on
April 6, 1995 as Document No. 95-483045 (said Deed of Trust, Fixture Filing and
Security Agreement with Assignment of Rents, as so amended, being hereinafter
referred to as the "Deed of Trust") to mortgage, among other things, the real
estate described in Schedule I attached hereto; and
WHEREAS, the Deed of Trust currently secures, among other things, loans (the
"Revolving Loans") and letters of credit (the "Letters of Credit") extended and
to be extended from time to time by the Lenders (as hereinafter defined) on a
revolving basis under a revolving credit facility (the "Revolving Credit") in a
principal amount not to exceed $30,000,000 at any one time outstanding provided
for by that certain Credit Agreement dated as of February 10, 1995, as
heretofore amended, by and among the Grantor, Harris and LaSalle National Bank,
a national banking association (hereinafter referred to individually as
"LaSalle"), individually and as Co-Agent for the Lenders hereinafter defined
(LaSalle acting as such agent and any successor or successors to LaSalle
This Instrument Prepared By:
James E. Basta
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
<PAGE>
in such capacity being hereinafter referred to as "Co-Agent"), and such other
lenders which may from time to time hereafter become parties thereto (Harris,
LaSalle and such other lenders hereafter party to the Credit Agreement being
herein referred to collectively as the "Lenders" and individually a "Lender";
and such Credit Agreement as so amended and as the same may from time to time be
further modified or amended being hereinafter referred to as the "Credit
Agreement"); and
WHEREAS, the Revolving Loans are evidenced by those certain Revolving Credit
Notes of the Grantor dated February 10, 1995 payable to the order of the
respective Lenders in the aggregate face principal amount of $30,000,000 (such
Revolving Credit Notes and any and all notes issued in substitution or
replacement therefor or in extension or renewal thereof in whole or in part,
together with any and all modifications and amendments of any of the foregoing,
being hereinafter referred to collectively as the "Notes"); and
WHEREAS, the Grantor has entered into a Second Amendment to Credit Agreement
with the Lenders bearing even date herewith (the "Second Amendment"), pursuant
to which the Grantor and the Lenders have agreed to, among other things, extend
to March 5, 1999 (the "New Termination Date") (i) the availability of the
Revolving Credit so as to continue through the New Termination Date the
availability to the Grantor under the Revolving Credit on a revolving basis of
new Revolving Loans, Letters of Credit and other financial accommodations, (ii)
the deadline by which Letters of Credit must expire and thus the date by which
drawings thereunder must be made and (iii) the final maturity of the Notes,
Reimbursement Obligations and all other obligations under the Credit Agreement;
and
WHEREAS, as a condition precedent to extending the period of availability of
their respective commitments under the Revolving Credit as provided by the
Second Amendment, the Lenders require the Grantor, and to accommodate that
requirement the Grantor desires by this Supplement, to confirm and assure that
all the real estate and other properties, rights, interests and privileges of
the Grantor which are currently subject to the lien of the Deed of Trust be and
constitute collateral security not only for the indebtedness currently secured
thereby but also for the additional credit which may from time to time be
extended under the Revolving Credit as so modified; and
WHEREAS, the Deed of Trust is to continue to secure all the indebtedness now
secured thereby, and this Supplement is being executed and delivered to confirm
and assure the foregoing;
NOW, THEREFORE, for and in consideration of the execution and delivery by the
Lenders of the Second Amendment and other good and valuable consideration,
receipt whereof is hereby acknowledged, the Deed of Trust shall be and hereby is
supplemented as follows, to wit:
NOW, THEREFORE, to secure (i) the payment of the principal and premium, if
any, of and interest on the Notes (as amended by, without limitation, the Second
Amendment) as and when the same become due and payable (whether by lapse of
time, acceleration or otherwise) and all Revolving Loans now or hereafter
evidenced thereby, (ii) the payment of
-2-
<PAGE>
all sums owing in connection with the Letters of Credit issued under the
Revolving Credit as extended by the Second Amendment (collectively, the
"Reimbursement Obligations") as and when the same become due and payable,
including without limitation the obligation to reimburse the issuer for each
drawing on each Letter of Credit issued by it, (iii) the payment of all sums due
or owing with respect to the Hedging Liability (as defined in the Deed of
Trust), (iv) the obligation of Grantor to pay Beneficiary, Co-Agent and the
Lenders certain fees, costs, expenses, indemnities and other amounts pursuant to
the Credit Agreement (as amended by, without limitation, the Second Amendment)
and the applications and agreements for the Letters of Credit, (v) the payment
of all other indebtedness, obligations and liabilities which the Deed of Trust
as supplemented secures pursuant to any of its terms and (vi) the observance and
performance of all covenants and agreements contained herein or in the Notes,
the Credit Agreement or in any other instrument or document at any time
evidencing or securing any of the foregoing or setting forth terms and
conditions applicable thereto (all of such indebtedness, obligations and
liabilities described in clauses (i), (ii), (iii), (iv), (v) and (vi) above
being hereinafter collectively referred to as the "indebtedness hereby
secured"), GRANTOR DOES HEREBY IRREVOCABLY GRANT, TRANSFER, BARGAIN, SELL,
CONVEY, MORTGAGE, WARRANT, ASSIGN AND PLEDGE UNTO TRUSTEE IN TRUST WITH POWER OF
SALE AND RIGHT OF ENTRY AND POSSESSION, all and singular the properties, rights,
interests and privileges described in Granting Clauses I, II, III, IV, V and VI
below, all of the same being collectively referred to herein as the "Mortgaged
Premises", and does hereby grant to Beneficiary, Beneficiary's successors and
assigns, a security interest in that portion of the Mortgaged Premises
constituting personal property described in Granting Clause II, III, IV and V
below:
GRANTING CLAUSE I
That certain real estate lying and being in Los Angeles, County of Los Angeles
and State of California more particularly described in Schedule I attached
hereto and made a part hereof.
GRANTING CLAUSE II
All buildings and improvements of every kind and description heretofore or
hereafter erected or placed on the property described in Granting Clause I and
all materials intended for construction, reconstruction, alteration and repairs
of the buildings and improvements now or hereafter erected thereon, all of which
materials shall be deemed to be included within the premises immediately upon
the delivery thereof to the said real estate, and all fixtures, machinery,
apparatus, equipment, fittings and articles of personal property of every kind
and nature whatsoever now or hereafter attached to or contained in or used or
useful in connection with said real estate and the buildings and improvements
now or hereafter located thereon and the operation, maintenance and protection
thereof, including but not limited to all machinery, motors, fittings,
radiators, awnings, shades, screens, all gas, coal, steam, electric, oil and
other heating, cooking, power and lighting apparatus and fixtures, all fire
prevention and extinguishing equipment and apparatus, all cooling and
ventilating apparatus and systems, all plumbing, incinerating, and sprinkler
equipment and
-3-
<PAGE>
fixtures, all elevators and escalators, all communication and electronic
monitoring equipment, all window and structural cleaning rigs and all other
machinery and equipment of every nature and fixtures and appurtenances thereto
and all items of furniture, appliances, draperies, carpets, other furnishings,
equipment and personal property used or useful in the operation, maintenance and
protection of the said real estate and the buildings and improvements now or
hereafter located thereon and all renewals or replacements thereof or articles
in substitution therefor, whether or not the same are or shall be attached to
said real estate, buildings or improvements in any manner, and all proceeds of
any of the foregoing; it being mutually agreed, intended and declared that all
the aforesaid property shall, so far as permitted by law, be deemed to form a
part and parcel of the real estate and for the purpose of the Deed of Trust as
supplemented to be real estate and covered by the Deed of Trust as supplemented.
GRANTING CLAUSE III
All right, title and interest of Grantor now owned or hereafter acquired in
and to all and singular the estates, tenements, hereditaments, privileges,
easements, licenses, franchises, appurtenances and royalties, mineral, oil, and
water rights belonging or in any wise appertaining to the property described in
the preceding Granting Clause I and the buildings and improvements now or
hereafter located thereon and the reversions, rents, issues, revenues and
profits thereof, including all interest of Grantor in all rents, issues and
profits of the aforementioned property and all rents, issues, profits, revenues,
royalties, bonuses, rights and benefits due, payable or accruing (including all
deposits of money as advanced rent or for security) under any and all leases or
subleases and renewals thereof of, or under any contracts or options for the
sale of all or any part of, said property (including during any period allowed
by law for the redemption of said property after any foreclosure or other sale),
together with the right, but not the obligation, to collect, receive and receipt
for all such rents and other sums and apply them to the indebtedness hereby
secured and to demand, sue for and recover the same when due or payable;
provided that the assignments made hereby shall not impair or diminish the
obligations of Grantor under the provisions of such leases or other agreements
nor shall such obligations be imposed upon Trustee, Beneficiary, Co-Agent or any
Lender.
GRANTING CLAUSE IV
All judgments, awards of damages, settlements and other compensation
heretofore or hereafter made resulting from condemnation proceedings or the
taking of the property described in Granting Clause I or any part thereof or any
building or other improvement now or at any time hereafter located thereon or
any easement or other appurtenance thereto under the power of eminent domain, or
any similar power or right (including any award from the United States
Government at any time after the allowance of the claim therefor, the
ascertainment of the amount thereof and the issuance of the warrant for the
payment thereof), whether permanent or temporary, or for any damage (whether
caused by such taking or otherwise) to said property or any part thereof or the
improvements thereon or any part thereof, or to any rights appurtenant thereto,
including severance and consequential
-4-
<PAGE>
damage, and any award for change of grade of streets (collectively,
"Condemnation Awards") and all insurance policies required hereunder and the
proceeds thereof.
GRANTING CLAUSE V
All property and rights, if any, which are by the express provisions of this
instrument required to be subjected to the lien hereof and any additional
property and rights that may from time to time hereafter, by installation or
writing of any kind, be subjected by Grantor or by anyone in Grantor's behalf to
the lien of the Deed of Trust as supplemented.
GRANTING CLAUSE VI
All rights in and to common areas and access roads on adjacent properties
heretofore or hereafter granted to Grantor and any after-acquired title or
reversion in and to the beds of any ways, roads, streets, avenues and alleys
adjoining the property described in Granting Clause I or any part thereof.
TO HAVE AND TO HOLD the Mortgaged Premises and the properties, rights and
privileges hereby granted, transferred, bargained, sold, conveyed, mortgaged,
warranted, assigned and pledged, and in which a security interest is granted, or
intended so to be, unto Trustee, and to Trustee's successors and assigns,
forever.
BUT IN TRUST NEVERTHELESS, upon the terms and trust herein set forth, for the
equal and proportionate benefit, security and protection of all present and
future holders of the Notes and the other indebtedness hereby secured; provided,
however, that this instrument is made by Grantor and accepted by Trustee and
Beneficiary upon the express condition that if the principal of and interest on
the Notes and all sums from time to time advanced thereon shall be paid in full
and all other indebtedness hereby secured shall be fully paid and performed
(including all sums payable under or according to the provisions of the
Applications), all Letters of Credit shall have expired and any commitment
contained in the Credit Agreement as amended by, without limitation, the Second
Amendment to extend credit thereunder shall have terminated, then this
instrument and the estate and rights hereby shall cease, terminate and be void
and this instrument shall be released by Trustee upon written request and at the
expense of Grantor, otherwise to remain in full force and effect.
In order to induce the Lenders to enter the Second Amendment and to induce the
Beneficiary to accept this Supplement, the Grantor hereby further covenants and
agrees with, and represents and warrants to, the Beneficiary as follows:
1. The foregoing Granting Clauses are in addition to and supplemental
of and not in substitution for the granting clauses contained in the Deed of
Trust. Nothing herein contained shall in any manner affect or impair the
priority of the lien of the Deed of Trust as to the indebtedness which would
be secured thereby prior to giving effect to this Supplement.
-5-
<PAGE>
2. Grantor hereby represents and warrants to Beneficiary that as of the
date hereof each of the representations and warranties set forth in the Deed of
Trust as supplemented hereby are true and correct and that no event of default
(as such term is defined in the Deed of Trust), or any other event which with
the lapse of time, the giving of notice, or both, would constitute such an event
of default, has occurred and is continuing or shall result after giving effect
to this Supplement. The Grantor hereby repeats and reaffirms all covenants and
warranties contained in the Deed of Trust, each and all of which shall be
applicable to all of the indebtedness secured by the Deed of Trust as
supplemented hereby. The Grantor repeats and reaffirms its covenant that all the
indebtedness secured by the Deed of Trust as supplemented hereby will be
promptly paid as and when the same becomes due and payable.
3. All capitalized terms used herein without definition shall have the same
meanings herein as they have in the Credit Agreement as amended by, without
limitation, the Second Amendment. The definitions provided herein of any
capitalized terms shall apply to such capitalized terms as the same appear in
the Deed of Trust as supplemented hereby, all to the end that any such
capitalized terms defined herein and used in the Deed of Trust as supplemented
hereby shall now have the meaning given to such capitalized terms herein.
Without limiting the foregoing, all references in the Deed of Trust to the term
"Termination Date" or the date "September 30, 1997" shall be deemed references
to the New Termination Date; all references in the Deed of Trust to the term
"indebtedness hereby secured" shall be deemed references to all the
indebtedness, obligations and liabilities secured by the Deed of Trust as
supplemented hereby; and all references in the Deed of Trust to the Credit
Agreement shall be deemed references to the Credit Agreement as amended by the
Second Amendment and as the same may from time to time be further modified or
amended.
4. All of the provisions, stipulations, powers and covenants contained in
the Deed of Trust shall stand and remain unchanged and in full force and effect
except to the extent specifically modified hereby and shall be applicable to all
of the indebtedness secured by the Deed of Trust as supplemented hereby.
5. The Deed of Trust as hereby supplemented is given to secure, among other
things, loans and letters of credit extended on a revolving basis and shall
secure not only presently existing indebtedness under the Credit Agreement as
amended by the Second Amendment but also future advances, whether such advances
are obligatory or to be made at the option of Beneficiary, or otherwise, as are
made within ten (10) years from the date hereof, to the same extent as if such
future advances were made on the date of the execution of the Deed of Trust,
although there may be no advance made at the time of execution of this
Supplement and although there may be no indebtedness hereby secured outstanding
at the time any advance is made. The lien of the Deed of Trust as hereby
supplemented shall be valid as to all indebtedness hereby secured, including
future advances, from the time of its filing for record in the recorder's or
registrar's office in the county in which the Mortgaged Premises are located.
The total amount of indebtedness hereby secured may increase or decrease from
time to time, but the total unpaid balance of indebtedness secured
-6-
<PAGE>
(including disbursements which Beneficiary may make under the Deed of Trust as
hereby supplemented, the Credit Agreement as amended by the Second Amendment or
any other documents related thereto) at any one time outstanding shall not
exceed a maximum principal amount of Sixty Million Dollars ($60,000,000) plus
interest thereon and any disbursements made for payment of taxes, special
assessments or insurance on the Mortgaged Premises and interest on such
disbursements (all such indebtedness being hereinafter referred to as the
"maximum amount secured hereby"). The Deed of Trust as hereby supplemented shall
be valid and have priority over all subsequent liens and encumbrances, including
statutory liens, excepting solely taxes and assessments levied on the Mortgaged
Premises, to the extent of the maximum amount secured hereby.
6. This Supplement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which when so
executed shall be an original but all of which to constitute one and the same
instrument.
7. No reference to this Supplement need be made in any note, instrument or
other document making reference to the Deed of Trust, any reference to the Deed
of Trust in any of such to be deemed to be a reference to the Deed of Trust as
supplemented hereby.
8. Wherever herein any of the parties hereto is referred to, such reference
shall be deemed to include the successors and assigns of such party; and all the
covenants, promises and agreements by or on behalf of the Grantor, or by or on
behalf of the Beneficiary, or by or on behalf of the holder or holders of the
indebtedness hereby secured contained in the Deed of Trust as supplemented
hereby shall bind and inure to the benefit of the respective successors and
assigns of such parties, whether so expressed or not.
-7-
<PAGE>
IN WITNESS WHEREOF, the Grantor has caused these presents to be duly
executed the day and year first above written.
PLAYBOY ENTERPRISES, INC.
By /s/ Rebecca S. Maskey
-----------------------------------------
Its Senior V.P.
----------------------------------------
R. Maskey
----------------------------------------
(Type or Print Name)
Accepted and agreed to in Chicago, Illinois as of the day and date first
above written.
HARRIS TRUST AND SAVINGS BANK, as
Beneficiary and Administrative Agent for
the Lenders as aforesaid
By /s/ R. L. Dell'Artino
-----------------------------------------
Its Vice President
RONALD L. DELL'ARTINO
-----------------------------------------
(Type or Print Name)
-8-
<PAGE>
STATE OF ILLINOIS )
)SS.
COUNTY OF COOK )
On this 5th day of March, 1996, before me, the undersigned, a Notary Public
of said State, duly commissioned and sworn, personally appeared Rebecca Maskey
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person who executed the within instrument as the Senior Vice President
of Playboy Enterprises, Inc., the corporation therein named, and acknowledged to
me that said corporation executed the within instrument pursuant to its by-laws
or resolution of its board of directors.
WITNESS my hand and official seal.
/s/ Kathleen L. Burde
----------------------------------------
Notary Public
(SEAL)
MY COMMISSION EXPIRES:
11-16-98
------------------------------------
<PAGE>
STATE OF ILLINOIS )
)SS.
COUNTY OF COOK )
On this 5th day of March, 1996, before me, the undersigned, a Notary Public
of said State, duly commissioned and sworn, personally appeared Ronald
Dellartino, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed the within instrument as the Vice
President of Harris Trust and Savings Bank, the banking corporation therein
named, and acknowledged to me that said corporation executed the within
instrument pursuant to its by-laws or resolution of its board of directors.
WITNESS my hand and official seal.
/s/ Kathleen L. Burde
---------------------------------------
Notary Public
(SEAL)
MY COMMISSION EXPIRES:
11-16-98
---------------------------------
<PAGE>
SCHEDULE I
LEGAL DESCRIPTION
PARCEL 1:
ALL THAT PORTION OF LOT 33 OF TRACT NO. 9061, IN THE CITY OF LOS ANGELES, COUNTY
OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 121 PAGES 64
TO 66 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
LYING SOUTHEASTERLY OF A LINE PARALLEL WITH AND DISTANT 40 FEET NORTHWESTERLY,
MEASURED AT RIGHT ANGLES FROM THE SOUTHEASTERLY LINE OF SAID LOT 33.
PARCEL 2:
LOT 34 OF TRACT NO. 9061, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 121 PAGES 64, 65 AND 66 OF
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
<PAGE>
EXHIBIT C
PLAYBOY ENTERPRISES, INC.
SUPPLEMENT TO COLLATERAL DOCUMENTS
This Supplement to Collateral Documents dated as of March 5, 1996 by and
among Playboy Enterprises, Inc., a Delaware corporation (the "Company"), Playboy
Entertainment Group, Inc., a Delaware corporation ("PEG"), Critics' Choice
Video, Inc., an Illinois corporation ("Critics' Choice"), and Lifestyle Brands,
Ltd., a Delaware corporation ("Lifestyle") (the Company, PEG, Critics' Choice
and Lifestyle being hereinafter referred to as the "Pledgors"), and Harris Trust
and Savings Bank, an Illinois banking corporation, not in its individual
capacity, but solely in its capacity as agent under the Credit Agreement and
Collateral Documents hereinafter identified and defined (such banking
corporation in such capacity being hereinafter referred to as the "Agent"):
WITNESSETH THAT:
WHEREAS, the Company has entered into a Credit Agreement dated as of
February 10, 1995 with the Agent and the various lenders (such Credit Agreement
as the same has been and may from time to time hereafter be modified or amended
being hereinafter referred to as the "Credit Agreement"), under which the
lenders party thereto have extended and from time to time will extend credit to
the Company;
WHEREAS, the Pledgors have executed and delivered to the Agent various
security agreements, mortgages, assignments, financing statements and other
documents to secure, among other things, the credit extended under the Credit
Agreement (such security agreements, mortgages, assignments, financing
statements and other documents as from time to time amended, modified or
otherwise supplemented being hereinafter referred to as the "Collateral
Documents");
WHEREAS, the Pledgors have requested that the Agent release certain
collateral subject to the Collateral Documents and otherwise confirm that such
collateral is not subject to the Collateral Documents, and the Agent is willing
to do so on the terms and conditions set forth in this Supplement;
NOW, THEREFORE, in consideration of the credit arrangements created and
provided for by the Credit Agreement, the Agent and the Pledgors hereby agree as
follows:
1. The Agent hereby releases from the liens and security interests granted
and provided for by the Collateral Documents, and hereby agrees that such liens
and security interests do not encumber, each motion picture, film, video or
movie or similar audio or visual medium of communication in use now or in the
future in which any Pledgor has any proprietary interest (each such motion
picture, film, video or other medium being hereinafter referred to as a "Playboy
film"), and all rights incident to such Playboy film (such as the right to
distribute and otherwise exploit the same), in each case to the extent
<PAGE>
rights to distribute or otherwise exploit such Playboy film have been contracted
by any Pledgor to an unaffiliated third party in a bona fide, arm's-length
transaction prior to the acceleration pursuant to the terms of the Credit
Agreement or nonpayment at final maturity of the Company's obligations for such
consideration to such Pledgor (such as royalties) which such Pledgor in good
faith deems adequate and the terms of such contractual arrangements either
prohibit the Agent's lien on such Playboy film or require the Agent enter into a
specific non-disturbance agreement with such party to assure such party's use of
such Playboy film; provided, however, that the Agent has and shall at all times
retain a security interest in the Pledgor's right to the consideration due and
to become due to such Pledgor under such contractual arrangements (including the
proceeds of such consideration).
2. All the provisions, stipulations, powers and covenants contained in the
Collateral Documents shall stand and remain unchanged and in full force and
effect except to the extent specifically modified hereby. This Supplement shall
in no way affect or impair the validity or priority of any liens or security
interests on the Collateral not specifically released hereby. All references in
any instrument or document delivered in connection with the Credit Agreement to
any Collateral Document shall be deemed a reference to such Collateral Document
as modified hereby.
3. Notwithstanding anything to the contrary contained in the Credit
Agreement or any Collateral Document, the terms and conditions of this
Supplement shall control the subject matter hereof in the event of any conflict
with the Credit Agreement or any Collateral Document.
4. This Supplement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which when so
executed to be an original but all of which are to constitute one and the same
instrument. Except as specifically modified hereby, all of the terms and
conditions of the Collateral Documents shall stand and remain unchanged and in
full force and effect. No reference to this Supplement need be made in any note,
instrument or other document taking reference to any Collateral Document, any
reference to a Collateral Document in any of such to be deemed to be a reference
to such Collateral Document as modified hereby. This instrument shall be
construed and governed by and in accordance with the laws of the State of
Illinois.
<PAGE>
Dated as of the date first above written
HARRIS TRUST AND SAVINGS BANK, as Agent
By: /s/ R. L. Dell'Artino
------------------------------------
Its: Vice President
---------------------------------
PLAYBOY ENTERPRISES, INC.
By: /s/ Rebecca S. Maskey
------------------------------------
Its: Senior V.P.
---------------------------------
PLAYBOY ENTERTAINMENT GROUP, INC.
By: /s/ Robert D. Campell
------------------------------------
Its: Treasurer
---------------------------------
CRITIC'S CHOICE VIDEO, INC.
By: /s/ Robert D. Campell
------------------------------------
Its: Treasurer
---------------------------------
LIFESTYLE BRANDS, LTD.
By /s/ Robert D. Campell
------------------------------------
Its: Treasurer
---------------------------------