Acknowledgement of Assignment - Playboy Entertainment Group Inc., The Walden Asset Group LLC and General Electric Capital Corp.
Playboy Entertainment Group, Inc.
680 North Lakeshore Drive
Chicago, Illinois 60611
Dear Mr. Campbell:
This Acknowledgement of Assignment (the "Notice") is made this 22nd day of
December 2003 among Playboy Entertainment Group, Inc. ("Lessee"), The Walden
Asset Group, LLC ("Lessor"), and General Electric Capital Corporation
("Assignee").
In order to induce us to accept an assignment of all of Lessor's right, title
and interest in the Lease, but none of Lessor's obligations with respect
thereto, you confirm to us the following:
BACKGROUND
A. Lessor and Lessee have executed Equipment Schedule No. 1 (collectively the
"Schedule") pursuant to and incorporating therein, the terms and
conditions of the Master Lease dated December 22, 2003 (the "Master
Lease") between The Walden Asset Group, LLC as Lessor, and Playboy
Entertainment Group, Inc. as Lessee, (the Schedule and each Acceptance
Certificate thereunder, being hereinafter collectively referred to as the
"Lease");
B. Lessor has assigned all of its right, title and interest in, to and under,
the Lease; but none of its obligations thereunder, to Assignee.
C. The parties desire to clarify certain of their rights and obligations with
respect to each other.
NOW, THERETOFORE, IT IS AGREED:
1. Lessee hereby acknowledges notice of and consents to Lessor's assignment
to Assignee of all of Lessor's right, title and interest in the Lease, but
none of Lessor's obligations with respect thereto, all Basic Rent,
commencing with the Basic Rent payment due on January 1, 2004, Casualty
Value payments, and all other payments from time to time payable by Lessee
under the Lease from and after the date hereof (said rents and all other
payments being hereafter collectively referred to as the "Moneys").
2. Lessee represents and warrants, as of the date hereof, as follows: (a)
that Lessee has executed an Acceptance Certificate and has therefore
accepted the equipment described therein (collectively, the "Equipment")
under Lease, and (b) that the Basic Rent Amount is payable (subject to the
terms and conditions of the Lease, including Lessee's buyout option and
renewal option) in 60 consecutive monthly installments on the first day of
each month, as follows:
First Basic First Assignee
Schedule Rent Date Rent Date Rent Amount
-------- --------- --------- -----------
1 January 1, 2004 January 1, 2004 $244,814.64
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and; (c) that Exhibit A hereto is a true and complete copy of the Lease,
with all amendments and modifications thereto; (d) that, notwithstanding
anything to the contrary in the Lease, there is only one original of each
Schedule marked "Original"; any other Schedule containing original
signatures is marked "Duplicate", and only the counterpart marked
"Original" will be considered chattel paper with respect to which a
security interest may be created; and Assignee shall maintain possession
of the "Original" Schedule; (e) that Lessor is not in default of any of
its obligations as Lessor under the Lease, and Lessee is not in default
under the terms of the Lease; (f) there has been no material adverse
change in the financial condition of Lessee since its last published
annual report; (g) that the Lease and Master Lease are in full force and
effect and represent valid and binding obligations of Lessee; (h) that
Lessee has received no notice of a prior sale, transfer, assignment,
hypothecation, or pledge of the Lease, the Moneys, or the Equipment
(except for the grant of security interest in the leasehold under the bank
facilities and indenture, which bank facilities security interests have
been released/subordinated for the benefit of Lessor pursuant to certain
release agreements); (i) that all representations and duties of Lessor
intended to induce Lessee to enter into the Lease whether required by the
Lease or any other written agreement entered into in connection therewith
have been fulfilled; (j) that the Lease, Master Lease, and this Notice are
the sole agreements between Lessee and Lessor respecting the Equipment and
the Moneys; (k) that Assignee shall be entitled to the benefits of each
and every right accorded an Assignee pursuant to the terms of the Lease;
and (l) that no assignment or sublease by Lessee of any of its rights
under the Lease, Master Lease or in the Equipment shall in any way
discharge or diminish any of Lessee's obligations under the Lease, it
being the intention that Lessee shall remain primarily liable to pay and
perform all of its obligations under the Lease; (m) that, other than as
set forth herein and in the Lease, the assignment to Assignee does not
materially change Lessee's duties or obligations under the Lease nor
materially increase the burdens or risks imposed on Lessee; (n) the Lease
is a "finance lease" as defined in and for the purposes of Article 2A of
the Uniform Commercial Code.
3. Lessee agrees, in accordance with Section 18 of the Lease, that so long as
Assignee does not breach its Covenant of Quiet Enjoyment (as defined in
paragraph 6 hereof), Lessee will not assert against Assignee any defense,
claim, counterclaim, recoupment, setoff, or right which Lessee may have
against Lessor or any other party. Lessee agrees that it will remit all
Moneys directly to Assignee as set forth in Section 1 hereof (in
sufficient advance time to reach Assignee on their scheduled due dates),
via Lessee's check payable to and at the address as follows:
General Electric Capital Corporation
GE Capital-CEF
Lock Box 640387
Pittsburgh, Pennsylvania 15219
without regard to any defense, claim, counterclaim, recoupment, setoff, or
right it may have against Lessor arising under the Lease or otherwise and
will not seek to recover any part of the same from Assignee.
Notwithstanding the foregoing, nothing herein shall be deemed to relieve
Lessor from any of its obligations to Lessee under the Lease.
4. Lessee agrees (a) that it shall not enter into any waiver, consent, or
other agreement amending, modifying or terminating the Lease (other than
its exercise of any right or option reserved for the Lessee under the
Lease or any related agreement) to which Assignee is not a party without
the written consent of Assignee and any such attempted waiver, consent, or
agreement to amend, modify or terminate the Lease without such consent
shall be void; (b) that Assignee has not assumed and shall not be
obligated to perform any of Lessor's obligations under the Lease, other
than those set forth in
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this Notice, unless agreed upon by the parties to this agreement in
writing; (c) that it will deliver to Assignee a copy of all notices and
other communications relating to the Lease and the Equipment at the same
time any such notice is required to be given to Lessor in accordance with
the Lease; (d) that, provided neither Lessee nor any guarantor is required
to file regular periodic reports, forms and other filings with the
Securities and Exchange Commission, including (without limitation) Forms
8K, 10K and 10Q, Lessee or its guarantor shall promptly within 60 days of
the end of each fiscal quarter (other than the fourth fiscal quarter)
deliver to Lessor copies of guarantor's quarterly unaudited financial
statements and within 120 days after the end of each fiscal year deliver
to Lessor copies of guarantor's annual audited financial statements,
including the opinion of the auditor and upon reasonable request by
Lessor, Lessee shall promptly within 60 days of the end of each fiscal
quarter deliver to Lessor copies of its quarterly unaudited financial
statements, at Assignee's address for notices set forth below, and (e)
Lessee hereby agrees with Assignee that it will promptly designate
Assignee as "Additional Insured" as required in the Master Lease.
6. Lessee agrees to do any further act and execute any further documents that
Assignee reasonably requests in order to protect and secure its interest
in the Equipment and its benefits under the Lease. Assignee shall have all
the rights of a secured party under the Uniform Commercial Code, as well
as those of Lessor under the Lease, in enforcing its interest. Lessee
hereby authorizes Assignee to file all necessary UCC's with respect to the
interests granted herein and in the Lease in the appropriate
jurisdictions.
7. Assignee hereby covenants to Lessee that, so long as no Event of Default
(as defined in Section 19 of the Master Lease) shall have occurred and be
continuing and Lessor has not given notice (or been deemed to have given
notice) thereof, neither it or any person acting at Assignee's direction
will disturb or cause the disturbance of Lessee's (or any of its permitted
sublessees' or assignees') quiet and peaceful possession of the Equipment
and its unrestricted use of the Equipment for its intended purpose under
the terms of the Lease (the foregoing covenant being referred to herein as
the "Covenant of Quiet Enjoyment").
8. The validity of this Notice, the construction and enforcement of the terms
hereof, and the interpretation of the rights and duties of the parties
hereto shall be governed by the laws of the State of Illinois.
8. Any notices required or permitted to be given or delivered hereunder shall
be in writing (unless otherwise specifically provided herein or in the
Lease) and shall be sufficiently given if sent by overnight courier to the
parties at their addresses as set forth in the signature blocks below; or
to such other address or addresses as the parties may specify from time to
time. Any such notice shall be deemed to be given on the earlier of three
days after mailing or upon receipt.
9. Lessee further agrees that its obligations to make rent payments
thereunder, in accordance with the terms thereof, are absolute and
unconditional and are independent of Lessee's use and enjoyment of the
Equipment or the performance by Lessor of any of its obligations under the
Lease or otherwise. All payments will be made to the Assignee regardless
of: any bankruptcy, insolvency, reorganization or similar event with
respect to the Lessor, the failure of the Equipment to perform to Lessee's
expectation or the failure of Lessor or any maintenance or service
provider in repairing, maintaining or servicing the Equipment subject to
the Lease.
10. This Notice may be executed separately or independently in any number of
counterparts. When each party has executed the same or a different
counterpart, each and all of which together shall be deemed to have
executed by all parties simultaneously and for all purposes to be one
Notice.
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11. Lessee agrees that neither it nor its affiliates will in the future issue
any press releases or other public disclosure using the name of Assignee
or its affiliates or referring to this Lease or any related document
without the prior written consent of Assignee unless (and only to the
extent that) Lessee is required to do so under any law, rule or regulation
of any governmental authority and then, in any event, Lessee or affiliate
will consult with Assignee before issuing such press release or other
public disclosure. Lessee consents to the publication by Assignee of a
tombstone or similar advertising material relating to the financing
transactions contemplated by this Lease. Assignee shall provide a draft of
any such tombstone or similar advertising material to Lessee for review
and comment prior to the publication thereof. Assignee reserves the right
to provide to industry trade organizations information necessary and
customary for inclusion in league table measurements.
IN WITNESS WHEREOF, the parties hereto have executed this Notice as of the day,
month, and year first above written.
THE WALDEN ASSET GROUP, LLC GENERAL ELECTRIC CAPITAL
(LESSOR) CORPORATION
(ASSIGNEE)
By: /s/ David L. Burmon By: /s/ Joseph B. Williams
--------------------------------- --------------------------------
Name: David L. Burmon Name: Joseph B. Williams
------------------------------- ------------------------------
Title: Chief Operating Officer Title: Senior Risk Manager
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PLAYBOY ENTERTAINMENT GROUP, INC.
(LESSEE)
By: /s/ Robert D. Campbell
---------------------------------
Name: Robert D. Campbell
-------------------------------
Title: Treasurer and Asst. Secretary
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