EXECUTION COPY
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CREDIT AGREEMENT
Dated as of February 26, 1999
among
NEW PLAYBOY, INC.,
PEI HOLDINGS, INC.,
THE LENDERS NAMED HEREIN,
ING (U.S.) CAPITAL LLC
("ING BARINGS"),
as Syndication Agent
and
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent,
as Collateral Agent and
as Issuing Bank
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[CS&M #2163-494]
TABLE OF CONTENTS
ARTICLE I
Definitions
Page
----
SECTION 1.01. Defined Terms ............................................... 2
SECTION 1.02. Terms Generally ............................................. 26
SECTION 1.03. Accounting and Financial Terms .............................. 26
ARTICLE II
The Credits
SECTION 2.01. Commitments ................................................. 27
SECTION 2.02. Loans ....................................................... 27
SECTION 2.03. Borrowing Procedure ......................................... 29
SECTION 2.04. Evidence of Debt; Repayment of Loans ........................ 30
SECTION 2.05. Fees ........................................................ 31
SECTION 2.06. Interest on Loans ........................................... 31
SECTION 2.07. Default Interest ............................................ 32
SECTION 2.08. Alternate Rate of Interest .................................. 32
SECTION 2.09. Termination and Reduction of Commitments .................... 32
SECTION 2.10. Conversion and Continuation of Borrowings ................... 33
SECTION 2.11. Repayment of Term Borrowings ................................ 35
SECTION 2.12. Optional Prepayments ........................................ 35
SECTION 2.13. Mandatory Prepayments ....................................... 36
SECTION 2.14. Reserve Requirements; Change in Circumstances ............... 39
SECTION 2.15. Change in Legality .......................................... 40
SECTION 2.16. Indemnity ................................................... 41
SECTION 2.17. Pro Rata Treatment .......................................... 41
SECTION 2.18. Sharing of Setoffs .......................................... 42
SECTION 2.19. Payments .................................................... 42
SECTION 2.20. Taxes ....................................................... 43
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate .......................................... 44
SECTION 2.22. Letters of Credit ........................................... 46
Contents, p. 2
ARTICLE III
Representations and Warranties
Page
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SECTION 3.01. Organization; Powers ........................................ 50
SECTION 3.02. Authorization ............................................... 50
SECTION 3.03. Enforceability .............................................. 50
SECTION 3.04. Governmental Approvals ...................................... 50
SECTION 3.05. Financial Statements ........................................ 51
SECTION 3.06. No Material Adverse Change .................................. 51
SECTION 3.07. Title to Properties; Possession Under Leases ................ 51
SECTION 3.08. Subsidiaries ................................................ 52
SECTION 3.09. Litigation; Compliance with Laws ............................ 52
SECTION 3.10. Agreements .................................................. 53
SECTION 3.11. Federal Reserve Regulations ................................. 53
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act ....................................................... 53
SECTION 3.13. Use of Proceeds ............................................. 53
SECTION 3.14. Tax Returns ................................................. 53
SECTION 3.15. No Material Misstatements ................................... 54
SECTION 3.16. Employee Benefit Plans ...................................... 54
SECTION 3.17. Environmental Matters ....................................... 54
SECTION 3.18. Insurance ................................................... 55
SECTION 3.19. Security Documents .......................................... 55
SECTION 3.20. Intellectual Property ....................................... 56
SECTION 3.21. Location of Real Property and Leased Premises ............... 56
SECTION 3.22. Labor Matters ............................................... 56
SECTION 3.23. Solvency .................................................... 56
SECTION 3.24. Merger Agreement ............................................ 57
SECTION 3.25 Year 2000 Compliance ........................................ 57
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events ........................................... 57
SECTION 4.02. Initial Credit Event ........................................ 58
Contents, p. 3
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties, Insurance ............. 60
SECTION 5.02. Obligations and Taxes ....................................... 61
SECTION 5.03. Financial Statements, Reports, etc .......................... 61
SECTION 5.04. Litigation and Other Notices ................................ 63
SECTION 5.05. Employee Benefits ........................................... 63
SECTION 5.06. Maintaining Records; Access to Properties and Inspections ... 63
SECTION 5.07. Use of Proceeds ............................................. 64
SECTION 5.08. Compliance with Environmental Laws .......................... 64
SECTION 5.09. Further Assurances .......................................... 64
SECTION 5.10. Hedging Arrangements ........................................ 65
SECTION 5.11. Transfer of Equity Interests and Rights ..................... 65
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness ................................................ 65
SECTION 6.02. Liens ....................................................... 67
SECTION 6.03. Sale and Lease-Back Transactions ............................ 69
SECTION 6.04. Investments, Loans and Advances ............................. 69
SECTION 6.05. Mergers, Consolidations, Sales of Assets .................... 71
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Restricted Subsidiaries to Pay Dividends .................. 72
SECTION 6.07. Transactions with Affiliates ................................ 72
SECTION 6.08. Business of the Company and Restricted Subsidiaries ......... 72
SECTION 6.09. Amendment of Material Documents ............................. 73
SECTION 6.10. Prepayments, Redemptions and Repurchases of Debt ............ 73
SECTION 6.11. Collateral and Guarantee Requirements ....................... 73
SECTION 6.12. Fiscal Year ................................................. 73
SECTION 6.13. Annual EBITDA ............................................... 73
SECTION 6.14. Consolidated Leverage Ratio ................................. 74
SECTION 6.15. Consolidated Interest Expense Coverage Ratio ................ 75
SECTION 6.16. Consolidated Fixed Charge Coverage Ratio .................... 75
SECTION 6.17. Capital Expenditures ........................................ 75
Contents, p. 4
ARTICLE VII
Events of Default .......................................... 76
Contents, p. 5
ARTICLE VIII
The Agents ................................................. 78
ARTICLE IX
Guarantee .................................................. 81
ARTICLE X
Miscellaneous .............................................. 82
SECTION 10.01. Notices .................................................... 82
SECTION 10.02. Survival of Agreement ...................................... 83
SECTION 10.03. Binding Effect ............................................. 83
SECTION 10.04. Successors and Assigns ..................................... 83
SECTION 10.05. Expenses; Indemnity ........................................ 87
SECTION 10.06. Right of Setoff ............................................ 88
SECTION 10.07. Applicable Law ............................................. 88
SECTION 10.08. Waivers; Amendment ......................................... 89
SECTION 10.09. Interest Rate Limitation ................................... 90
SECTION 10.10. Entire Agreement ........................................... 90
SECTION 10.11. WAIVER OF JURY TRIAL ....................................... 90
SECTION 10.12. Severability ............................................... 91
SECTION 10.13. Counterparts ............................................... 91
SECTION 10.14. Headings ................................................... 91
SECTION 10.15. Jurisdiction; Consent to Service of Process ................ 91
SECTION 10.16. Confidentiality ............................................ 92
SECTION 10.17. Assignment, Delegation and Assumption ...................... 93
Schedule 1.01 Subsidiary Guarantors
Schedule 1.01(c) Mortgaged Properties
Schedule 2.01 Commitments
Contents, p. 6
Schedule 3.07(a) Leases
Schedule 3.07(c) Condemnation Proceedings
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.14 Tax Returns
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.19(d) Mortgage Filing Offices
Schedule 3.21(a) Owned Property
Schedule 3.21(b) Leased Property
Schedule 6.01 Existing Indebtedness
Schedule 6.02 Existing Liens
Schedule 6.04 Existing Investments
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Subsidiary Guarantee Agreement
Exhibit E Form of Indemnity, Subrogation and
Contribution Agreement
Exhibit F Form of Pledge Agreement
Exhibit G Form of Security Agreement
Exhibit H-1 Form of Opinion of Xxxxxx Xxxxxxx, Esq.,
General Counsel of the Company
Exhibit H-2 Form of Opinion of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx,
special counsel for the Company and the Subsidiaries
Exhibit H-3 Form of Opinion of Local Counsel for the
Company and the Subsidiaries
Exhibit H-4 Form of Opinion of Xxxxxx X. Xxxxxx, Esq.,
General Counsel of Spice
Exhibit I-1 Form of Mortgage
Exhibit I-2 Form of Deed of Trust
CREDIT AGREEMENT dated as of February 26, 1999 (this
"Agreement"), among NEW PLAYBOY, INC., a Delaware corporation
to be renamed PLAYBOY ENTERPRISES, INC. immediately following
the Playboy Merger referred to below (the "Company"); PEI
HOLDINGS, INC., a Delaware corporation and wholly owned
subsidiary of the Company ("PHI"); the Lenders (as defined in
Article I); and CREDIT SUISSE FIRST BOSTON, a bank organized
under the laws of Switzerland, acting through its New York
Branch ("CSFB"), as administrative agent (in such capacity,
the "Administrative Agent"), as collateral agent (in such
capacity, the "Collateral Agent") and as issuing bank (in such
capacity, the "Issuing Bank").
The Company, a wholly owned subsidiary of Playboy Enterprises, Inc.
("Playboy"), intends to acquire (the "Spice Acquisition") all the issued and
outstanding shares of capital stock of Spice Entertainment Companies, Inc.
("Spice") pursuant to a merger of Spice Acquisition Corp., a wholly owned
subsidiary of the Company, into Spice, as provided in the Merger Agreement dated
May 29, 1998, as amended as of November 16, 1998 (the "Merger Agreement"), among
the Company, Playboy, Playboy Acquisition Corp., Spice Acquisition Corp. and
Spice. The consideration payable in connection with the Spice Acquisition will
consist of (a) approximately $64,900,000 in cash (including severance costs, net
of option proceeds, payable in connection with the Spice Acquisition), (b)
shares of Class B Common Stock of the Company and (c) the assumption by the
Company of approximately $11,300,000 of Indebtedness of Spice (which will be
refinanced as provided herein), all as described in the Merger Agreement. In
addition, immediately prior to the Spice Acquisition, (a) holders of Spice
common stock will receive shares of common stock of Directrix, Inc., a wholly
owned subsidiary of Spice, and (b) assets related to the Spice Hot Network will
be transferred to Califa Entertainment Group, Inc. (collectively, the "Spin-Off
Transactions"). At or prior to the completion of the Spice Acquisition, Playboy
Acquisition Corp., a wholly owned subsidiary of the Company, will be merged into
Playboy, which will be renamed Playboy Enterprises International, Inc., in a
transaction in which the former shareholders of Playboy will receive common
stock of the Company and Playboy will become a wholly owned subsidiary of the
Company, all as provided in the Merger Agreement (the "Playboy Merger"). Upon
consummation of the Spice Acquisition and the Playboy Merger, the Company, which
will be renamed Playboy Enterprises, Inc., will own 100% of the equity interests
in both Playboy and Spice, and will, on the Transfer Date, transfer all such
equity interests to PHI, which will succeed to and assume the rights and
obligations of the Company as "Borrower" hereunder as provided in Section 10.17.
The Company and PHI have requested the Lenders to extend credit in the
form of (a) Tranche A Term Loans on the Closing Date in an aggregate principal
amount not in
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excess of $35,000,000, (b) Tranche B Term Loans on the Closing Date in an
aggregate principal amount not in excess of $75,000,000, (c) Revolving Loans at
any time and from time to time prior to the Revolving Credit Maturity Date in an
aggregate principal amount at any time outstanding not in excess of $40,000,000
minus the L/C Exposure at such time and (d) Letters of Credit in an aggregate
stated amount at any time outstanding that will not result in the L/C Exposure
exceeding $10,000,000. The proceeds of the Term Loans and of Revolving Loans
made on the Closing Date (the amount of which shall not exceed $10,000,000) are
to be used by the Borrower solely (i) to finance the Spice Acquisition, (ii) to
refinance the Scheduled Playboy Indebtedness and the Scheduled Spice
Indebtedness and (iii) to pay fees and expenses related to the Closing Date
Transactions, the Spin-Off Transactions and the transactions ancillary to the
Spice Acquisition. The proceeds of the remaining Revolving Loans are to be used
by the Borrower and the Subsidiaries to provide working capital and for other
general corporate purposes, including to finance investments in the amount of up
to $12,000,000 in Playboy Online. The Letters of Credit are to be used to
support obligations incurred by the Borrower and the Subsidiaries in the conduct
of their businesses.
The Lenders are willing to extend such credit to the Borrower and the
Issuing Bank is willing to issue Letters of Credit for the account of the
Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, including in the
preamble hereto, the following terms shall have the meanings specified below:
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Acquisition" shall mean the acquisition by the Borrower or any
Subsidiary, including through a merger or consolidation or a purchase of capital
stock, of any other person or any division or business unit of any other person
or any assets (other than
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inventory acquired in the ordinary course of business) that are substantial in
relation to the Company and the Subsidiaries taken as a whole.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum equal to the product of (a)
the LIBO Rate in effect for such Interest Period and (b) Statutory Reserves.
"Administrative Agent" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Administrative Questionnaire" shall mean an Administrative Questionnaire
in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount of
the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the sum of (i)
the Federal Funds Effective Rate in effect on such day and (ii) 1/2 of 1%. If
for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability of the Administrative Agent to obtain sufficient quotations in
accordance with the terms of the definition thereof, the Alternate Base Rate
shall be determined without regard to clause (b) of the preceding sentence until
the circumstances giving rise to such inability no longer exist. Any change in
the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Alternate Currency" shall mean at any time any currency (other than
dollars) approved by the Administrative Agent that is freely tradeable and
exchangeable into dollars in the London market and for which an Exchange Rate
can be determined by reference to the applicable Bloomberg Key Cross Currency
Rates Page.
"Applicable Percentage" shall mean, for any day, with respect to any
Eurodollar Loan or ABR Loan that is part of a Revolving Credit Borrowing or a
Tranche A Term Borrowing, as the case may be, the applicable percentage set
forth below under the caption "Eurodollar Spread" or "ABR Spread", as the case
may be, based upon the Consolidated Leverage Ratio as of the fiscal quarter end
immediately preceding the Determination Date
4
occurring on or most recently prior to such day (provided, that if financial
statements with respect to the fourth fiscal quarter in any year satisfying the
requirements of paragraph (b) of Section 5.03 shall be delivered to the
Administrative Agent within 60 days after the end of such fiscal quarter, then
from the second Business Day following the date on which such financial
statements are so delivered until the Determination Date following such fiscal
quarter end the Applicable Percentage shall be based upon the Consolidated
Leverage Ratio as of such fiscal quarter end, as determined on the basis of such
financial statements):
Eurodollar ABR
Consolidated Leverage Ratio Spread Spread
--------------------------- ---------- --------
Category 1
Greater than or equal to 5.00 to 1.00 3.25% 2.25%
Category 2
Less than 5.00 to 1.00 but greater than or equal to 4.00 to 1.00 3.00% 2.00%
Category 3
Less than 4.00 to 1.00 but greater than or equal to 3.00 to 1.00 2.75% 1.75%
Category 4
Less than 3.00 to 1.00 2.50% 1.50%
provided that (a) until the Determination Date next following June 30, 1999,
the Applicable Percentage shall be determined by reference to (i) prior to the
date on which the Xxxxxxx Xxxxxxxxxxxxx Transaction shall be completed, Category
1 and (ii) on and after the date on which the Xxxxxxx Xxxxxxxxxxxxx Transaction
shall be completed, Category 3, and (b) if the Borrower shall fail to deliver
any financial statements and certificates required to have been delivered under
Section 5.03(a) or (b), then (i) until such financial statements and
certificates are delivered, the Applicable Percentage shall be determined by
reference to the Category indicated by the financial statements most recently
delivered, (ii) after such financial statements and certificates are delivered,
the Applicable Percentage shall be redetermined by reference to the Category
indicated by such financial statements and (iii) if, but only if, the
redetermination referred to in the preceding clause (ii) results in an increase
in the interest rates or fees in effect hereunder, such increase shall be
retroactive to and including the second Business Day following the date by which
such financial statements were required to have been delivered under Section
5.03(a) or (b) (and the Borrower shall promptly pay to the Administrative Agent,
for distribution to the Lenders, the amount of such increase allocable to
periods for which such interest or fees shall already have been paid).
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"Arranger and Agent Fees" shall have the meaning assigned to such term in
Section 2.05(b).
"Arranger" shall mean CSFB.
"Asset Sale" shall mean the sale, transfer, licensing or other disposition
(directly, by way of merger or formation of a joint venture or otherwise, and
including any casualty event or condemnation that results in the receipt of any
insurance or condemnation proceeds) by the Company or any of the Restricted
Subsidiaries (other than a sale, transfer, licensing or other disposition to the
Company or any Restricted Subsidiary) of (a) any capital stock of any of the
Subsidiaries or (b) any other assets, whether real or personal and whether
tangible or intangible, of the Company or any of the Restricted Subsidiaries;
provided that the following shall not be deemed to be "Asset Sales" for purposes
of this Agreement: (i) any disposition of obsolete or worn out assets or
Permitted Investments, (ii) sales of inventory in the ordinary course of
business, (iii) consummation of Playboy's previously announced sale of its
interest in its Greek casino, (iv) Ordinary Licensing Transactions, (v) any
asset sale or series of related asset sales described in clause (b) above
resulting in Net Cash Proceeds not in excess of $1,000,000 in the aggregate
during any fiscal year and (vi) any sale of assets permitted under clause (c) of
Section 6.05 if (w) the Borrower or the Company advises the Administrative Agent
in writing not later than the Business Day following the completion of such sale
that the Borrower intends to use (or cause a Restricted Subsidiary to use) the
Net Cash Proceeds of such sale received by the Company or any of the Restricted
Subsidiaries to purchase additional assets to be used in the business of the
Borrower or the Restricted Subsidiaries, (x) either (A) the Net Cash Proceeds of
such sale received by the Company or any of the Restricted Subsidiaries are
promptly deposited in an escrow account with the Administrative Agent, pursuant
to an escrow agreement reasonably satisfactory to the Borrower and the
Administrative Agent, and held in such account pending any such purchase or the
application of such Net Cash Proceeds pursuant to Section 2.13(b) or (B) the Net
Cash Proceeds of such sale received by the Company or any of the Restricted
Subsidiaries are promptly applied to prepay Revolving Credit Borrowings, in
which case an amount of the Revolving Credit Commitments equal to the amount so
prepaid will be held available and unused pending, and will be made available
(subject to the conditions to borrowing set forth herein) to provide funds for,
any such purchase or the application of such Net Cash Proceeds pursuant to
Section 2.13(b), and (y) such Net Cash Proceeds are in fact used to purchase
additional assets to be used in the business of the Borrower or the Restricted
Subsidiaries within nine months after the date of closing of such sale (or the
Borrower and the Restricted Subsidiaries shall within nine months after the date
of closing of such sale enter into a contract to purchase additional assets to
be used in the business of the Borrower or the Restricted Subsidiaries using
such proceeds and shall close such purchase within 12 months after the date of
closing of such sale), failing which any portion of such Net Cash Proceeds that
have not been used to purchase additional assets to be used in the business of
the Borrower or the Restricted Subsidiaries will immediately be deemed
6
for purposes of Section 2.13(b) to constitute Net Cash Proceeds of an Asset Sale
and applied to prepay Term Loans as provided in such Section. Notwithstanding
clause (vi) of the preceding definition, the aggregate amount of Net Cash
Proceeds held in escrow or held available in the form of unused Revolving Credit
Commitments at any time shall not exceed $10,000,000, and any Net Cash Proceeds
in excess of such amount will immediately be deemed for purposes of Section
2.13(b) to constitute Net Cash Proceeds of an Asset Sale and applied to prepay
Term Loans as provided in such Section.
"Assigned Rights and Obligations" shall mean all rights and obligations of the
Company as the initial Borrower under this Agreement (including the right to
borrow and obtain Letters of Credit hereunder and the obligation to repay
Borrowings and reimburse L/C Disbursements). The Assigned Rights and Obligations
will include only those rights and obligations that under the terms of this
Agreement are rights and obligations, respectively, of the "Borrower", and shall
exclude rights and obligations of the "Company", all of which shall continue to
be rights and obligations of the Company following the Assignment and
Assumption.
"Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent, in
the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Assignment and Assumption" shall have the meaning assigned to such term
in Section 10.17 of this Agreement.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" shall mean (a) initially, the Company, and (b) from and at all
times after the effectiveness of the Assignment and Assumption, PHI.
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C.
"Business Day" shall mean any day other than a Saturday, Sunday or day on
which banks in New York, New York are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan or any
Letter of Credit denominated in an Alternate Currency, the term "Business Day"
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.
7
"Capital Expenditures" shall mean, for any period, additions to property,
plant and equipment and other capital expenditures of the Company and the
Restricted Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of the Company for such period prepared in accordance
with GAAP.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
A "Change in Control" shall be deemed to have occurred if (a) Xxxx X. Xxxxxx
and Xxxxxxxx Xxxxxx, their heirs or estates or trusts for the benefit of
themselves or their heirs shall fail, taken together, to own, beneficially and
of record, shares of capital stock of the Company representing a majority of the
ordinary voting power of all the issued and outstanding capital stock of the
Company; (b) a majority of the Board of Directors of the Company shall consist
at any time of persons who were not either (i) Directors on the date hereof or
(ii) nominated by a majority of the Board of Directors; (c) any change of
control or similar event, however denominated, shall have occurred under any
indenture or other agreement or instrument of the Company or any Restricted
Subsidiary evidencing or governing Material Indebtedness; (d) at any time the
Company shall not directly own, beneficially and of record, 100% of the issued
and outstanding capital stock of PHI; or (e) at any time the Company or, after
the Assignment and Assumption, PHI shall not directly own, beneficially and of
record, 100% of the issued and outstanding capital stock of each of Playboy and
Spice.
"Closing Date" shall mean the date of the initial Credit Event.
"Closing Date Transactions" shall mean the Spin-Off Transactions, the
Spice Acquisition, the Playboy Merger, the refinancing of the Scheduled Playboy
Indebtedness and the Scheduled Spice Indebtedness, the Borrowings hereunder on
the Closing Date and the creation of the Liens provided for in the Security
Documents.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall mean all the "Collateral" as defined in any Security
Document.
"Collateral Agent" shall have the meaning assigned to such term in the
preamble to this Agreement.
8
"Collateral Requirement" shall mean, at any time, that (a) the Pledge
Agreement (or a supplement referred to in Section 23 thereof) shall have been
duly executed by the Company, PHI and each other Domestic Restricted Subsidiary
existing at such time and owning any Equity Interests, Rights or Indebtedness of
the Company, PHI or any other Subsidiary or other person (including Xxxxxxx
Xxxxxxxxxxxxx), shall have been delivered to the Collateral Agent and shall be
in full force and effect, and all the outstanding Equity Interests and Rights of
the Subsidiaries (after giving effect to the Spice Acquisition and the Playboy
Merger and including PHI, Playboy and Spice) and such other persons (including
Xxxxxxx Xxxxxxxxxxxxx) owned by the Company and the Restricted Subsidiaries and
all such Indebtedness shall have been duly and validly pledged thereunder (or,
to the extent not evidenced by any instrument, under the Security Agreement) to
the Collateral Agent for the ratable benefit of the Secured Parties and
certificates or other instruments representing such Equity Interests and Rights
or Indebtedness (to the extent such Indebtedness is evidenced by instruments),
accompanied by stock powers or other instruments of transfer endorsed in blank,
shall be in the actual possession of the Collateral Agent; provided that none of
the Company, PHI or the Domestic Restricted Subsidiaries shall be required to
pledge more than 65% of the voting Equity Interests (but shall be required to
pledge 100% of the non-voting Equity Interests) of any Foreign Subsidiary; (b)
the Security Agreement (or a supplement referred to in Section 7.15 thereof)
shall have been duly executed by the Company, PHI, each other Domestic
Restricted Subsidiary existing at such time, and shall have been delivered to
the Collateral Agent and shall be in full force and effect, and each document
(including each Uniform Commercial Code financing statement and each filing with
respect to Intellectual Property owned by the Company, PHI or any other Domestic
Restricted Subsidiary party to the Security Agreement) required by law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded in order to create in favor of the Collateral Agent for the benefit of
the Secured Parties a valid, legal and perfected first-priority security
interest in and lien on the Collateral subject to the Security Agreement
(subject to any Lien expressly permitted by Section 6.02) shall have been
delivered to the Collateral Agent in form suitable for filing; (c) each person
required under the terms of the Xxxxxxx Xxxxxxxxxxxxx Agreements to consent to
the assignment pursuant to the Security Agreement of the rights of the Company,
PHI or any other Restricted Subsidiary thereunder in order for such assignment
to be effective shall have executed and delivered a consent to such assignment
reasonably satisfactory to the Collateral Agent; (d) the Indemnity, Subrogation
and Contribution Agreement (or a supplement referred to in Section 12 thereof)
shall have been executed by the Company and each other Loan Party, shall have
been delivered to the Collateral Agent and shall be in full force and effect and
(e)(i) each of the Mortgages, substantially in the form of Exhibit I-1 or I-2,
as applicable, relating to each of the Mortgaged Properties shall have been duly
executed by the parties thereto and delivered to the Collateral Agent and shall
be in full force and effect, (ii) each of such Mortgaged Properties shall not be
subject to any Lien other than those expressly permitted under Section 6.02,
(iii) each of such Mortgages shall have been delivered to the Collateral Agent
in form suitable for filing and recordation in the recording office as specified
on
9
Schedule 3.19(d) and (iv) the Collateral Agent shall have received such other
documents, including a policy or policies of title insurance issued by a
nationally recognized title insurance company, together with such endorsements,
coinsurance and reinsurance as may be requested by the Collateral Agent,
insuring the Mortgages as valid first liens on the Mortgaged Properties, free of
Liens other than those expressly permitted under Section 6.02, together with
such surveys, abstracts, appraisals and legal opinions required to be furnished
pursuant to the terms of the Mortgages or as reasonably requested by the
Collateral Agent.
"Commitments" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitments.
"Commitment Fee" shall have the meaning assigned to such term in Section
2.05(a).
"Company" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Company dated January, 1999.
"Consolidated Adjusted EBITDA" shall mean, for any period, Consolidated
EBITDA for such period minus cash investments in programming during such period.
"Consolidated EBITDA" shall mean, for any period, Consolidated Net Income
for such period, plus, without duplication and to the extent deducted from
revenues in determining Consolidated Net Income for such period, the sum of (a)
the aggregate amount of Consolidated Interest Expense for such period, (b) the
aggregate amount of income tax expense for such period, (c) all amounts
attributable to depreciation and amortization (including programming
amortization) for such period, (d) all extraordinary charges during such period,
and (e) all other non-cash charges during such period, and minus, without
duplication, the sum, to the extent included in Consolidated Net Income for such
period, of (x) the Xxxxxxx Xxxxxxxxxxxxx Rights Acquisition Fee for such period,
(y) all extraordinary gains during such period and (z) all other non-cash gains
during such period, all as determined on a consolidated basis with respect to
the Company and its Restricted Subsidiaries in accordance with GAAP. Anything
contained in this definition or elsewhere in this Agreement to the contrary
notwithstanding, in calculating Consolidated EBITDA (i) for any
four-fiscal-quarter period that includes the fiscal quarter ending June 30,
1999, Consolidated EBITDA for such quarter shall be increased by an amount up to
$3,000,000 of restructuring costs incurred in connection with the Spice
Acquisition to the extent such costs have actually been paid by the Company and
the Restricted Subsidiaries, and (ii) for the four-fiscal-quarter period ending
on June 30, 1999, September 30, 1999 and December 31, 1999, Consolidated EBITDA
shall be deemed to equal Consolidated EBITDA for the period commencing on April
1, 1999, and ending on (x) June 30, 1999, multiplied by 4, (y)
10
September 30, 1999, multiplied by 2, and (z) December 31, 1999, multiplied by
4/3, respectively.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any period, the
ratio of (a) the sum of (i) Consolidated Adjusted EBITDA for such period and
(ii) any amounts received in cash during such period on account of the Xxxxxxx
Xxxxxxxxxxxxx Rights Acquisition Fee (other than amounts required to be applied
to prepay Term Loans pursuant to Section 2.13(f)) to (b) the sum of (i)
Consolidated Interest Expense for such period, (ii) the aggregate amount of
taxes paid by the Company and the Restricted Subsidiaries in cash during such
period, (iii) scheduled principal payments during such period in respect of any
Indebtedness of the Company and the Restricted Subsidiaries, (iv) cash dividends
on capital stock declared by the Company or any Loan Party during such period
(excluding dividends paid to the Company, the Borrower or any of its Wholly
Owned Restricted Subsidiaries), (v) the scheduled principal component of Capital
Lease Obligations paid during such period by the Company and the Restricted
Subsidiaries, (vi) the aggregate amount of investments in foreign networks
(including the Xxxxxxx Xxxxxxxxxxxxx Capital Contributions) made by the Company
and the Restricted Subsidiaries during such period and (vii) Capital
Expenditures (other than (A) expenditures of insurance or condemnation proceeds
for the repair or replacement of assets that have been damaged, destroyed or
taken by condemnation, (B) expenditures of the proceeds of sales of property,
plant and equipment to acquire additional property, plant and equipment to be
used for the same or similar purposes and (C) permitted Acquisitions) during
such period (the items referred to in the foregoing clauses (i) through (vii)
being collectively called "Consolidated Fixed Charges").
"Consolidated Interest Expense" shall mean, for any period, the interest
expense, both expensed and capitalized (including the interest component in
respect of Capital Lease Obligations but excluding the amortization of deferred
financing fees), accrued or paid in cash by the Company and the Restricted
Subsidiaries during such period net of interest income earned on cash balances
during such period, determined on a consolidated basis in accordance with GAAP.
For purposes of the foregoing, interest expense shall give effect to any net
payments made or received by the Company and the Restricted Subsidiaries with
respect to interest rate Hedging Agreements.
"Consolidated Interest Expense Coverage Ratio" shall mean, for any period,
the ratio of (a) Consolidated Adjusted EBITDA for such period to (b)
Consolidated Interest Expense for such period.
"Consolidated Leverage Ratio" shall mean, at any time, the ratio of (a)
Consolidated Total Debt at such time to (b) Consolidated Adjusted EBITDA for the
most recently ended period of four fiscal quarters, all as determined on a
consolidated basis in accordance with GAAP. Solely for purposes of this
definition, if, at any time the Consolidated Leverage Ratio is being determined,
the Borrower or any Restricted Subsidiary shall have completed
11
an Acquisition or Disposition since the beginning of the relevant four fiscal
quarter period, the Consolidated Leverage Ratio shall be determined on a pro
forma basis as if such Acquisition or Disposition, any related incurrence or
repayment of Indebtedness, had occurred at the beginning of such period.
"Consolidated Net Income" shall mean, for any period, net income or loss
of the Company and the Restricted Subsidiaries for such period, as determined on
a consolidated basis in accordance with GAAP, provided that there shall in any
event be excluded (a) the income of any person (other than a Loan Party) in
which any other person (other than the Company or any of the Restricted
Subsidiaries or any director holding qualifying shares in compliance with
applicable law) owns any equity interest, except to the extent of the amount of
dividends or other distributions actually paid to the Company or any of the
Subsidiaries by such person during such period and (b) the income (or loss) of
any person accrued prior to the date it becomes a Subsidiary or is merged into
or consolidated with the Company or any Subsidiary or the date that person's
assets are acquired by the Company or any Subsidiary.
"Consolidated Total Debt" shall mean, as of any date of determination,
without duplication, the aggregate principal amount of Indebtedness of the
Company and the Restricted Subsidiaries outstanding as of such date, determined
on a consolidated basis in accordance with GAAP (other than Indebtedness of the
type referred to in clauses (i) and (j) of the definition of the term
"Indebtedness", except, in the case of clause (j), to the extent of any
unreimbursed drawings thereunder).
"Control" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"CSFB" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Deferment" shall mean a fixed sum obligation (other than a Participation
or a Residual) payable by the Company or any of the Restricted Subsidiaries in
accordance with customary industry practice to a person who is not an Affiliate
of the Company or any of the Restricted Subsidiaries in connection with such
person's furnishing rights or personal services in connection with the
development, acquisition, production, distribution or
12
exploitation of any item of Product or rights in Product, the payment of which
is contingent upon (a) the receipt of revenues from the exploitation of such
item of Product, and/or (b) the occurrence of certain conditions and/or (c) the
passage of time; provided, however, that the term "Deferments" does not include
supplemental market payments or sums included in the budgeted cost of production
for the applicable item of Product.
"Determination Date" shall mean each day that is the second Business Day
after a delivery of financial statements pursuant to Section 5.03(a) or (b).
"Disposition" shall mean the sale or transfer by the Company or any
Restricted Subsidiary, including through a merger or consolidation or a sale of
capital stock, of any subsidiary, division or business unit of the Company or
such Restricted Subsidiary or any assets (other than inventory sold in the
ordinary course of business) that are substantial in relation to the Company and
its Restricted Subsidiaries taken as a whole.
"Dollar Equivalent" shall mean (a) as to any amount denominated in
dollars, the amount thereof, and (b) as to any amount denominated in an
Alternate Currency, the equivalent thereof in dollars determined by the
Administrative Agent pursuant to Section 1.03 using the Exchange Rate with
respect to such currency at the time in effect.
"dollars" or "$" shall mean lawful money of the United States of America.
"Domestic Restricted Subsidiary" shall mean a Domestic Subsidiary that is
a Restricted Subsidiary.
"Domestic Subsidiary" shall mean a Subsidiary incorporated or organized
under the laws of the United States of America, any State thereof or the
District of Columbia.
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon (a) the existence, or
the continuation of the existence, of a Release (including sudden or non-sudden,
accidental or non-accidental Releases), (b) exposure to any Hazardous Material,
(c) the presence, use, handling,
13
transportation, storage, treatment or disposal of any Hazardous Material or (d)
the violation or alleged violation of any Environmental Law or Environmental
Permit.
"Environmental Law" shall mean any and all applicable present and future
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including, but not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. xx.xx. 9601 et seq.
(collectively "CERCLA"), the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. xx.xx. 6901 et seq., the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. xx.xx. 1251 et
seq., the Clean Air Act of 1970, as amended 42 U.S.C. xx.xx. 7401 et seq., the
Toxic Substances Control Act of 1976, 15 U.S.C. xx.xx. 2601 et seq., the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. xx.xx. 651 et
seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
xx.xx. 11001 et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C.
xx.xx. 300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
xx.xx. 5101 et seq., and any similar or implementing state or local law, and all
amendments or regulations promulgated under any of the foregoing.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Equity Interests" shall mean (a) with respect to a corporation, shares of
the capital stock of such corporation and (b) with respect to a partnership,
limited liability company or other person, partnership, limited liability or
other equity interests in such person.
"Equity Issuance" shall mean any issuance and sale by the Company or by
any Subsidiary to a person other than the Company or any Subsidiary, of any
Equity Interests of the Company or any Subsidiary or any Rights in respect
thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
14
"ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan; (b)
the adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the incurrence of any liability under Title IV of ERISA
with respect to the termination of any Plan or the withdrawal or partial
withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or
Multiemployer Plan; (f) the receipt by the Borrower or any ERISA Affiliate from
the PBGC or a plan administrator of any notice relating to the intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (g)
the receipt by the Borrower or any ERISA Affiliate of any notice concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; (h) the occurrence of a "prohibited transaction" with respect
to which the Borrower or any of the Subsidiaries is a "disqualified person"
(within the meaning of Section 4975 of the Code) or with respect to which the
Borrower or any such Subsidiary could otherwise be liable; and (i) any other
event or condition with respect to a Plan or Multiemployer Plan that could
reasonably be expected to result in material liability of the Borrower.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or Eurodollar
Term Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Adjusted LIBO Rate in accordance with
the provisions of Article II.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in Article
VII.
"Excess Cash Flow" shall mean, for any fiscal year, the sum (without
duplication) of:
(a) Consolidated Net Income, adjusted to exclude (i) any income,
gains or losses attributable to any Asset Sale the proceeds of which are
required to be applied
15
to prepay Loans under Section 2.13(b) and (ii) that portion of
Consolidated Net Income attributable to the Xxxxxxx Xxxxxxxxxxxxx Rights
Acquisition Fee; plus
(b) amounts received in cash during such period on account of the
Xxxxxxx Xxxxxxxxxxxxx Rights Acquisition Fee (other than amounts required
to be applied to prepay Term Loans pursuant to Section 2.13(f)); plus
(c) depreciation, amortization and other non-cash charges or losses
deducted in determining Consolidated Net Income for such period; minus
(d) payments during such period on account of charges added to
Excess Cash Flow for an earlier period pursuant to clause (c) above as
"non-cash charges or losses" in such earlier period; plus
(e) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such period, plus (ii) the aggregate principal amount of
Indebtedness (other than Capital Lease Obligations and Revolving Credit
Borrowings) incurred by the Company and the Restricted Subsidiaries during
such period to finance Capital Expenditures taken into account in
computing the Consolidated Fixed Charge Coverage Ratio; minus
(f) the sum of (i) any non-cash gains included in determining such
Consolidated Net Income (or loss) for such period, plus (ii) the amount,
if any, by which Net Working Capital increased during such period; plus
(g) amounts received during such period on account of gains
subtracted from Excess Cash Flow for an earlier period pursuant to clause
(f)(i) above as "non-cash gains" in such earlier period; minus
(h) Capital Expenditures for such period, to the extent taken into
account in computing the Consolidated Fixed Charge Coverage Ratio; minus
(i) the sum of (i) scheduled amortization payments and voluntary
principal payments made in respect of the Term Loans during such period,
(ii) amortization or other required payments of principal made during such
period in respect of other Indebtedness of the Company and the Restricted
Subsidiaries and (iii) mandatory prepayments of principal made during such
period in respect of other Indebtedness of the Company and the
Subsidiaries (other than prepayments that would not be required if the
Company and the Subsidiaries made, or were required to make, prepayments
in respect of Loans outstanding hereunder); minus
16
(j) cash investments by the Company and the Restricted Subsidiaries
in foreign networks (including the Xxxxxxx Xxxxxxxxxxxxx Capital
Contributions); minus
(k) cash investments in programming during such period; plus
(l) the net proceeds of Indebtedness incurred by the Company and the
Subsidiaries during such period to the extent such proceeds were applied
to make payments or prepayments of Indebtedness referred to in clause (i)
above.
"Exchange Rate" shall mean, on any day, with respect to any Alternate
Currency, the rate at which such Alternate Currency may be exchanged into
dollars as set forth at approximately 11:00 a.m., New York City time, on such
date on the applicable Bloomberg Key Cross Currency Rates Page. In the event
that such rate does not appear on any Bloomberg Key Cross Currency Rates Page,
the Exchange Rate shall be determined by reference to such other publicly
available service for displaying exchange rates selected by the Administrative
Agent for such purpose, or, at the discretion of the Administrative Agent, such
Exchange Rate shall instead be the arithmetic average of the spot rates of
exchange of the Administrative Agent in the market where its foreign currency
exchange operations in respect of such Alternate Currency are then being
conducted, at or about 10:00 a.m., local time, on such date for the purchase of
dollars with such Alternate Currency for delivery two Business Days later;
provided that, if at the time of any such determination, for any reason, no such
spot rate is being quoted, the Administrative Agent may use any other reasonable
method it deems appropriate to determine such rate, and such determination shall
be presumed correct absent demonstrable error.
"Excluded Taxes" shall mean, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income and any backup withholding
taxes, in each case imposed by the United States of America or by any
Governmental Authority as a result of a present or former connection between the
recipient and the jurisdiction of the Governmental Authority imposing such tax
or any political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from the recipient having received any
payment under or taking any other action related to any Loan under this
Agreement or any Loan Document), (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction
described in clause (a) above and (c) in the case of a Non-U.S. Lender (other
than an assignee pursuant to a request by the Borrower under Section 2.21(a)),
any withholding tax that (i) is in effect and would apply to amounts payable to
such Non-U.S. Lender at the time such Non-U.S. Lender becomes a party to this
Agreement (or designates a new lending office), except to the extent that the
prior lending office or the assignor, as applicable, of such Non-U.S. Lender was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the
17
Borrower with respect to any withholding tax pursuant to Section 2.20(a), or
(ii) is attributable to such Non-U.S. Lender's failure to comply with Section
2.20(e).
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
the day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Fee Payment Date" shall have the meaning assigned to such term in Section
2.05(a).
"Fees" shall mean the Commitment Fees, the Arranger and Agent Fees, the
L/C Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any entity shall mean the chief financial officer,
principal accounting officer, treasurer or controller of such entity.
"Foreign Lender" shall mean any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean United States generally accepted accounting principles
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee" of or by any person shall mean any obligation, contingent or
otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness;
18
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.
"Guarantee Requirement" shall mean, at any time, that the Subsidiary
Guarantee Agreement (or a supplement referred to in Section 20 thereof) shall
have been executed by each Restricted Subsidiary (other than any Foreign
Subsidiary) existing from time to time, shall have been delivered to the
Collateral Agent and shall be in full force and effect.
"Guarantors" shall mean the Company, PHI (at such times as they are
guarantors of the Obligations under the terms of Article IX hereof) and the
Subsidiary Guarantors.
"Hazardous Materials" shall mean all explosive or radioactive substances
or wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" shall mean any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind (other than prepaid subscriptions and similar deposits),
(b) all obligations of such person evidenced by bonds, debentures, notes or
similar instruments, (c) all obligations of such person upon which interest
charges are customarily paid (other than solely on past due amounts), (d) all
obligations of such person under conditional sale or other title retention
agreements relating to property or assets purchased by such person, (e) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable and accrued obligations
incurred in the ordinary course of business), (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (g) all Guarantees by such person of Indebtedness of others, (h)
all Capital Lease Obligations of such person, (i) all obligations of such person
in respect of Hedging Agreements and (j) all obligations of such person as an
account party in respect of letters of credit. The Indebtedness of any person
shall include the Indebtedness of any partnership in which such person is a
general partner.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
19
"Indemnitee" shall have the meaning assigned to such term in Section
10.05(b).
"Indemnity, Subrogation and Contribution Agreement" shall mean an
Indemnity, Subrogation and Contribution Agreement substantially in the form of
Exhibit E among the Company, PHI, the Subsidiary Guarantors and the Collateral
Agent.
"Intellectual Property" shall have the meaning assigned to such term in
Section 3.20.
"Interest Payment Date" shall mean, with respect to any Loan, (i) each day
that is the last day of an Interest Period applicable to the Borrowing of which
such Loan is a part, (ii) in the case of a Loan with an Interest Period of
longer than three months, each day that would have been the last day of an
Interest Period had a series of three month Interest Periods been applicable to
such Loan and (iii) the date of any prepayment of such Loan or conversion of
such Loan to a Loan of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
preceding Interest Period applicable thereto and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3, or 6 (or, if available from all
applicable Lenders, 9 or 12) months thereafter, as the Borrower may elect and
(b) as to any ABR Borrowing, the period commencing on the date of such Borrowing
or on the last day of the preceding Interest Period applicable thereto and
ending on the earliest of (i) the next succeeding March 31, June 30, September
30 or December 31, (ii) the Revolving Credit Maturity Date, Tranche A Maturity
Date or Tranche B Maturity Date, as applicable, and (iii) the date such
Borrowing is converted to a Borrowing of a different Type in accordance with
Section 2.10 or repaid or prepaid in accordance with Section 2.11, 2.12 or 2.13;
provided, however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Eurodollar Borrowing only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Issuing Bank" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"L/C Commitment" shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.22.
20
"L/C Disbursement" shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the Dollar Equivalent
of the aggregate undrawn amount of all outstanding Letters of Credit at such
time plus (b) the Dollar Equivalent of the aggregate amount of all L/C
Disbursements that have not yet been reimbursed at such time. The L/C Exposure
of any Lender at any time shall mean its Pro Rata Percentage of the aggregate
L/C Exposure at such time.
"L/C Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c).
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01 and (b) any financial institution that has become a party hereto pursuant
to an Assignment and Acceptance (in either case other than any such financial
institution that has ceased to be a party hereto pursuant to an Assignment and
Acceptance).
"Letter of Credit" shall mean any letter of credit issued pursuant to
Section 2.22.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m., London time, on the date which is two Business Days
prior to the beginning of such Interest Period by reference to the British
Bankers' Association Interest Settlement Rates for deposits in dollars (as set
forth by any service selected by the Administrative Agent which has been
nominated by the British Bankers' Association as an authorized information
vendor for the purpose of displaying rates) for a period equal to such Interest
Period, provided that, to the extent that an interest rate is not ascertainable
pursuant to the foregoing provisions of this definition, the "LIBO Rate" shall
be the interest rate per annum determined by the Administrative Agent equal to
the rate per annum at which deposits in dollars are offered for such Interest
Period by the Administrative Agent in the London interbank market in London,
England at approximately 11:00 a.m., London time, on the date which is two
Business Days prior to the beginning of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Loan Documents" shall mean this Agreement, the Subsidiary Guarantee
Agreement, the Security Documents and the Indemnity, Subrogation and
Contribution Agreement.
21
"Loan Parties" shall mean the Company, PHI and each other Restricted
Subsidiary that is, or is required by this Agreement to be, a party to the
Subsidiary Guarantee Agreement or any Security Document.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Margin Stock" shall have the meaning assigned to such term in Regulation
U.
"Material Adverse Effect" shall mean one or more events, changes or
effects which, individually or in the aggregate, could reasonably be expected to
have a materially adverse effect on (a) the business, assets, results of
operations or condition (financial or otherwise) of the Company and the
Restricted Subsidiaries (including, on and after the Closing Date, Spice), taken
as a whole, or on their ability to perform their obligations under the Loan
Documents, or (b) the validity or enforceability of any Loan Document or any
other document entered into in connection with the Transactions or the other
transactions contemplated hereby or the rights, remedies or benefits available
to the Lenders, the Administrative Agent or the Collateral Agent.
"Material Indebtedness" shall mean Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Company and its Restricted Subsidiaries in an
aggregate principal amount for all such Indebtedness and obligations of
$5,000,000 or more. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of the Company or any Restricted
Subsidiary in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Company or
such Restricted Subsidiary would be required to pay if such Hedging Agreement
were terminated at such time.
"Merger Agreement" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Moody's" shall mean Xxxxx'x Investors Service, Inc., and any successor
thereto.
"Mortgaged Properties" shall mean the real properties of the Loan Parties
specified on Schedule 1.01(c) and all other real properties hereafter acquired
by any of the Loan Parties in which the Collateral Agent shall acquire a
security interest.
"Mortgages" shall mean mortgages, deeds of trust, assignments of rents,
modifications and other security documents reasonably satisfactory to the
Collateral Agent, delivered pursuant to Section 4.02(f) or Section 5.09. Each
mortgage shall be substantially in the form of Exhibit I-1 and each deed of
trust shall be substantially in the form of Exhibit I-2.
22
"Multiemployer Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the cash
proceeds thereof, including any cash received in respect of any non-cash
proceeds, but only as and when received, and any insurance or condemnation
proceeds, net of (i) costs of sale (including payment of the outstanding
principal amount of, premium or penalty, if any, interest and other amounts on
any Indebtedness (other than Loans) required to be repaid under the terms
thereof as a result of such Asset Sale), (ii) taxes attributable to such Asset
Sale as a direct result thereof and (iii) amounts provided as a reserve, in
accordance with GAAP, against any liabilities under any indemnification
obligations, purchase price adjustment provisions or similar provisions
associated with such Asset Sale (provided that, to the extent and at the time
any such amounts are released from such reserve, such amounts shall constitute
Net Cash Proceeds), and (b) with respect to any Equity Issuance or any issuance
or other incurrence of Indebtedness for borrowed money, the cash proceeds
thereof net of underwriting commissions or placement fees and expenses directly
incurred in connection therewith.
"Net Working Capital" shall mean, at any date, (a) the consolidated
current assets of the Company and the Restricted Subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of the Company and the Restricted Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive number or negative number. Net Working Capital
increases when it becomes more positive or less negative and decreases when it
becomes less positive or more negative.
"Obligations" shall mean (a) the due and punctual payment by the Borrower
or the applicable Loan Parties of (i) the principal of and premium, if any, and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral, and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Administrative Agent,
the Collateral Agent, the Lenders, the Issuing Bank or any other person under
the Credit Agreement and the other Loan Documents, whether such Loans shall have
been made or such interest, fees or other amounts shall have accrued prior to,
on or after the Transfer Date,
23
(b) the due and punctual payment and performance of all covenants, agreements,
obligations and liabilities of the Loan Parties, monetary or otherwise, under or
pursuant to the Loan Documents and (c) the due and punctual payment and
performance of all obligations of the Company or any Restricted Subsidiary,
monetary or otherwise, under each Hedging Agreement entered into to limit
interest rate risk with a counterparty that was a Lender or an Affiliate of a
Lender at the time such Hedging Agreement was entered into.
"Ordinary Licensing Transaction" shall mean any licensing arrangement (a)
entered into by the Company or any Restricted Subsidiary in the ordinary course
of its business or (b) that is terminable by the Company or the applicable
Restricted Subsidiary without the payment of any material penalty or other
consideration within one year.
"Other Taxes" shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Participation" shall mean any obligation (other than a Deferment or a
Residual) payable by the Company or any of its Restricted Subsidiaries in
accordance with customary industry practice to a person who is not an Affiliate
of the Company or any of the Subsidiaries in connection with the development,
acquisition, production, distribution or exploitation of an item of Product or
rights in Product, the payment of which is contingent upon and payable only to
the extent of the receipt by the obligor of revenues from the exploitation of
such item of Product or rights in Product.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 1 to the Security Agreement.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 180 days from
the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or Moody's;
24
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days of the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any Lender or any commercial
bank organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of
not less than $500,000,000;
(d) other investment instruments approved in writing by the
Administrative Agent.
"person" shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"PHI" shall have the meaning assigned to such term in the preamble to this
Agreement.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Playboy" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Xxxxxxx Xxxxxxxxxxxxx" shall mean Playboy TV International, LLC, a
California limited liability company formed pursuant to the Xxxxxxx
Xxxxxxxxxxxxx Agreements.
"Xxxxxxx Xxxxxxxxxxxxx Agreements" shall mean the Playboy TV
International, LLC Agreement Outline dated as of December 16, 1998, in the form
heretofore delivered to the Administrative Agent, and the "Superceeding
Agreements" referred to therein.
"Xxxxxxx Xxxxxxxxxxxxx Capital Contributions" shall mean the capital
contributions that Playboy Entertainment Group, Inc. is contractually obligated
to make to Xxxxxxx Xxxxxxxxxxxxx pursuant to the Playboy TV International, LLC
Agreement Outline referred to in the definition of "Xxxxxxx Xxxxxxxxxxxxx
Agreements", to the extent such capital contributions are actually made.
"Xxxxxxx Xxxxxxxxxxxxx Initial Fee" shall mean the fee payable under
Section 8.1.1 of the Playboy TV International, LLC Agreement Outline referred to
in the definition of "Xxxxxxx Xxxxxxxxxxxxx Agreements" on the Funding Date (as
defined therein).
25
"Xxxxxxx Xxxxxxxxxxxxx Rights Acquisition Fee" shall mean the fees payable
under Section 8.1 of the Playboy TV International, LLC Agreement Outline
referred to in the definition of "Xxxxxxx Xxxxxxxxxxxxx Agreements".
"Xxxxxxx Xxxxxxxxxxxxx Transaction" shall mean the transactions provided
for in the Xxxxxxx Xxxxxxxxxxxxx Agreements.
"Playboy Merger" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Playboy Online" shall mean Playboy Online, Inc., a Delaware corporation
which is initially an Unrestricted Subsidiary.
"Pledge Agreement" shall mean a Pledge Agreement substantially in the form
of Exhibit F between the Company, PHI and each other Restricted Subsidiary
owning Equity Interests, Rights or Indebtedness of the Company, PHI or any other
Subsidiary and the Collateral Agent for the benefit of the Secured Parties.
"Prime Rate" shall mean the rate of interest per annum publicly announced
from time to time by the Administrative Agent as its prime rate for dollar loans
in effect at its principal office in New York City, New York; each change in the
Prime Rate shall be effective on the date such change is publicly announced as
being effective.
"Product" shall mean any still or motion pictures, films, videos, movies,
sound recordings, script or similar audio, print or visual media of
communication in use now, in the past, or in the future or any elements thereof
in which the Company or any Subsidiary has any proprietary or financial interest
including merchandising rights related to such Product.
"Pro Rata Percentage" of any Revolving Credit Lender at any time shall
mean the percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit Commitment. In the event the Revolving Credit
Commitments shall have been terminated, the Pro Rata Percentages of the
Revolving Credit Lenders shall be determined by reference to the Revolving
Credit Commitments most recently in effect (giving effect to any assignments
pursuant to Section 10.04).
"Register" shall have the meaning assigned to such term in Section
10.04(d).
"Regulation D" shall mean Regulation D of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
26
"Regulation U" shall mean Regulation U of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.
"Related Fund" shall mean, with respect to any Lender that is a fund that
invests in loans, any other fund that invests in loans and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is defined
in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any
Governmental Authority or voluntarily undertaken to: (i) clean up, remove,
treat, xxxxx or in any other way address any Hazardous Material in the
environment; (ii) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not migrate or endanger or
threaten to endanger public health, welfare or the environment; or (iii) perform
studies and investigations in connection with, or as a precondition to, clause
(i) or (ii) above.
"Required Lenders" shall mean, at any time, Lenders having Loans, L/C
Exposures and unused Revolving Credit Commitments and Term Loan Commitments
representing a majority of the sum of all Loans outstanding, L/C Exposures and
unused Revolving Credit Commitments and Term Loan Commitments at such time.
"Residual" shall mean any obligation (other than a Participation or a
Deferment) payable by the Company or any of the Restricted Subsidiaries in
accordance with customary industry practice pursuant to guild agreements or
collective bargaining agreements in connection with the development,
acquisition, production, distribution or exploitation of any item of Product or
rights in Product.
"Responsible Officer" of any entity shall mean any executive officer or
Financial Officer of such entity and any other officer or similar official
thereof responsible for the administration of the obligations of such entity in
respect of this Agreement.
"Restricted Subsidiary" shall mean any Subsidiary other than an
Unrestricted Subsidiary.
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"Revolving Credit Borrowing" shall mean a Borrowing comprised of Revolving
Loans.
"Revolving Credit Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Revolving Loans and to participate in Letters
of Credit hereunder as set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender assumed its Revolving Credit
Commitment, as applicable, as the same may be (a) reduced from time to time
pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04.
"Revolving Credit Exposure" shall mean, with respect to any Lender at any
time, the aggregate principal amount at such time of all outstanding Revolving
Loans of such Lender plus the aggregate amount at such time of such Lender's L/C
Exposure.
"Revolving Credit Lender" shall mean a Lender that has a Revolving Credit
Commitment (or that had such a Commitment at the time the Revolving Credit
Commitments were terminated).
"Revolving Credit Maturity Date" shall mean the fifth anniversary of the
Closing Date.
"Revolving Loans" shall mean the revolving loans made by the Lenders to
the Borrower pursuant to clause (c) of Section 2.01. Each Revolving Loan shall
be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"Rights" shall mean, with respect to any person, warrants, options or
other rights to acquire Equity Interests in such person.
"S&P" shall mean Standard & Poor's Ratings Service and any successor
thereto.
"Sale and Lease-Back Transaction" shall have the meaning assigned to such
term in Section 6.03 of this Agreement.
"Scheduled Playboy Indebtedness" shall mean all Indebtedness incurred
under the Credit Agreement dated as of February 10, 1995, among Playboy, the
lenders party thereto, Xxxxxx Trust and Savings Bank, individually and as
administrative agent, and LaSalle National Bank, individually and as Co-Agent,
as amended to the date hereof.
"Scheduled Spice Indebtedness" shall mean all Indebtedness under the Loan
and Security Agreement dated as of January 15, 1997, between Spice and Xxxxx
L.L.C., as amended to the date hereof.
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"Secured Parties" shall mean the Administrative Agent, the Collateral
Agent, each Lender, the Issuing Bank and each other person to which any of the
Obligations is owed.
"Security Agreement" shall mean a Security Agreement substantially in the
form of Exhibit G between the Company, PHI and the other Restricted Subsidiaries
from time to time party thereto and the Collateral Agent for the benefit of the
Secured Parties, as the same may be amended, modified or supplemented from time
to time in accordance with the provisions hereof.
"Security Documents" shall mean the Security Agreement, the Pledge
Agreement, the Mortgages and each of the security agreements and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.09.
"Spice" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Spice Acquisition" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Spin-Off Transactions" shall have the meaning assigned to such term in
the preamble to this Agreement.
"Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board for Eurocurrency Liabilities (as defined in Regulation
D). Such reserve percentages shall include those imposed pursuant to Regulation
D. Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and
to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under Regulation D. Statutory Reserves shall be adjusted automatically on
and as of the effective date of any change in any reserve percentage.
"Stock Transfer" shall mean the Company's contribution to PHI of 100% of
the Equity Interests and Rights (if any) of each of Playboy and Spice.
"Subsidiary" shall mean, with respect to any person (herein referred to as
the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power are, at the
time any determination is being made, owned, controlled or held, or (b) that is,
at the time any determination is made, otherwise
29
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Company.
"Subsidiary Guarantee Agreement" shall mean a Subsidiary Guarantee
Agreement substantially in the form of Exhibit D by the Subsidiary Guarantors in
favor of the Collateral Agent for the benefit of the Secured Parties.
"Subsidiary Guarantors" shall mean each person listed on Schedule 1.01 and
each other person that becomes party to the Subsidiary Guarantee Agreement as a
Subsidiary Guarantor, and the permitted successors and assigns of each such
person.
"Taxes" shall mean any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Borrowing" shall mean a Borrowing comprised of Tranche A Term Loans
or Tranche B Term Loans.
"Term Loan Commitments" shall mean the Tranche A Commitments and the
Tranche B Commitments.
"Term Loan Repayment Dates" shall mean the Tranche A Term Loan Repayment
Dates and the Tranche B Term Loan Repayment Dates as set forth in Section
2.11(a).
"Term Loans" shall mean the Tranche A Term Loans and the Tranche B Term
Loans.
"Total Revolving Credit Commitment" shall mean, at any time, the aggregate
amount of the Revolving Credit Commitments, as in effect at such time.
"Tranche A Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche A Term Loans as set forth on Schedule
2.01 or in the Assignment and Acceptance pursuant to which such Lender shall
have assumed its Tranche A Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 10.04.
"Tranche A Lender" shall mean a Lender with a Tranche A Commitment or with
outstanding Tranche A Term Loans.
"Tranche A Maturity Date" shall mean the fifth anniversary of the Closing
Date.
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"Tranche A Term Borrowing" shall mean a Borrowing comprised of Tranche A
Term Loans.
"Tranche A Term Loan Repayment Date" shall mean each of the 15 consecutive
calendar quarter end dates commencing with June 30, 2000 (or, if any such day
shall not be a Business Day, the next preceding Business Day).
"Tranche A Term Loans" shall mean the term loans made by the Lenders to
the Borrower pursuant to clause (a) of Section 2.01. Each Tranche A Term Loan
shall be either a Eurodollar Term Loan or an ABR Term Loan.
"Tranche B Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche B Term Loans as set forth on Schedule
2.01 or in the Assignment and Acceptance pursuant to which such Lender shall
have assumed its Tranche B Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09 and (b`) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 10.04.
"Tranche B Lender" shall mean a Lender with a Tranche B Commitment or with
outstanding Tranche B Term Loans.
"Tranche B Maturity Date" shall mean the seventh anniversary of the
Closing Date.
"Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche B
Term Loans.
"Tranche B Term Loan Repayment Date" shall mean each of the 24 consecutive
calendar quarter end dates commencing with March 31, 2000 (or, if any such day
shall not be a Business Day, the next preceding Business Day).
"Tranche B Term Loans" shall mean the term loans made by the Lenders to
the Borrower pursuant to clause (b) of Section 2.01. Each Tranche B Term Loan
shall be either a Eurodollar Term Loan or an ABR Term Loan.
"Transactions" shall mean the execution, delivery and performance by each
Loan Party of each of the Loan Documents, the Closing Date Transactions and the
Borrowings and issuances of Letters of Credit hereunder after the Closing Date.
"Transfer Date" shall mean the Business Day immediately following the
Closing Date.
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"Type" shall refer, when used in respect of any Loan or Borrowing, to the
Rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, the term "Rate" shall include the
Adjusted LIBO Rate and the Alternate Base Rate.
"Unrestricted Subsidiary" shall mean Playboy Online or any of its
subsidiaries.
"Wholly Owned Subsidiary" shall mean a Subsidiary of which securities
(except for directors' qualifying shares) or other ownership interests
representing 100% of the equity and 100% of the ordinary voting power are, at
the time any determination is being made, owned, controlled or held, directly or
indirectly, by the Borrower or one or more wholly owned subsidiaries of the
Borrower.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly
provided herein, any reference in this Agreement to any Loan Document shall mean
such document as amended, restated, supplemented or otherwise modified from time
to time.
SECTION 1.03. Accounting and Financial Terms. (a) Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided,
however, that, if the Borrower notifies the Administrative Agent that the
Borrower requests an amendment to any provision hereof to eliminate the effect
of any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
32
(b) All computations required to be made hereunder with respect to the
Company and the Subsidiaries to demonstrate compliance with any of the financial
covenants contained in Article VI shall exclude the assets, liabilities, results
of operations and cash flows of the Unrestricted Subsidiaries; provided that if
the Company shall deliver to the Administrative Agent a written election to have
the assets, liabilities, results of operations and cash flows of the
Unrestricted Subsidiaries included for purposes of determining compliance with
such covenants, together with a certificate of a Financial Officer (i) stating
that no Default or Event of Default has occurred and is continuing or will have
occurred and be continuing after giving effect to such election and (ii)
demonstrating to the satisfaction of the Administrative Agent that the Borrower
shall be in compliance with the financial covenants set forth in Article VI
giving pro forma effect to the inclusion of such assets, liabilities, results of
operations and cash flows from the beginning of the most recent period of four
fiscal quarters for which financial statements shall have been delivered
pursuant to Section 5.03(a) or (b), as applicable, the assets, liabilities,
results of operations and cash flows of the Unrestricted Subsidiaries shall at
all times thereafter be included in such computations and the Unrestricted
Subsidiaries shall at all times thereafter be deemed Restricted Subsidiaries, it
being understood that any such election shall be permanent and irrevocable.
(c) All pro forma computations required to be made hereunder giving effect
to any acquisition, investment, sale, disposition or similar event shall reflect
on a pro forma basis such event and, to the extent applicable, the historical
earnings and cash flows associated with the assets acquired or disposed of and
any related incurrence or reduction of Indebtedness, but shall not take into
account any projected synergies or similar benefits expected to be realized as a
result of such event except to the extent such benefits would be permitted to be
taken into account in the preparation of pro forma financial statements
complying with Regulation S-X of the Securities and Exchange Commission and are
approved by the Company's independent certified public accountants.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, each Lender agrees,
severally and not jointly, (a) to make a Tranche A Term Loan to the Borrower on
the Closing Date in a principal amount equal to its Tranche A Commitment, (b) to
make a Tranche B Term Loan to the Borrower on the Closing Date in a principal
amount equal to its Tranche B Commitment and (c) to make Revolving Loans to the
Borrower, at any time and from time to time on or after the Closing Date and
until the earlier of the Revolving Credit Maturity Date and the termination of
the Revolving Credit Commitment of such Lender in accordance
33
with the terms hereof, in an aggregate principal amount at any time outstanding
that will not result in such Lender's Revolving Credit Exposure exceeding such
Lender's Revolving Credit Commitment. Within the limits set forth in clause (c)
of the preceding sentence and subject to the terms, conditions and limitations
set forth herein, the Borrower may borrow, pay or prepay and reborrow Revolving
Loans. Amounts paid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
applicable Commitments; provided, that the failure of any Lender to make any
Loan shall not in itself relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be responsible for
the failure of any other Lender to make any Loan required to be made by such
other Lender). Except for Loans deemed made pursuant to paragraph (f) below, the
Loans comprising any Borrowing shall be in an aggregate principal amount that is
(i) an integral multiple of $250,000 and not less than $1,000,000 or (ii) equal
to the remaining available balance of the applicable Commitments.
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant
to Section 2.03. Each Lender may at its option make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accord ance with the terms of this
Agreement. Borrowings of more than one Type may be outstanding at the same time;
provided, however, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than ten Eurodollar Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Eurodollar
Borrowings having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Borrowings.
(c) Except with respect to Loans made pursuant to paragraph (f) below,
each Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account in New
York City as the Administrative Agent may designate not later than 12:00 (noon),
New York City time, and the Administrative Agent shall promptly transfer the
amounts so received to an account in the name of the Borrower designated by the
Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur
on such date because any condition precedent herein specified shall not have
been met, return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that
34
such Lender has made such portion available to the Administrative Agent on the
date of such Borrowing in accordance with paragraph (c) above and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If the Administrative Agent
shall have so made funds available then, to the extent that such Lender shall
not have made such portion available to the Administrative Agent, such Lender
and the Borrower severally agree to repay to the Administrative Agent forthwith
on demand such corresponding amount together with interest thereon for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent at (i) in the case of the Borrower,
the interest rate applicable at the time to the Loans comprising such Borrowing
and (ii) in the case of such Lender, a rate determined by the Administrative
Agent to represent its cost of overnight or short-term funds (which
determination shall be conclusive absent manifest error). If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(e) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Borrowing if the Interest Period requested
with respect thereto would end after the Revolving Credit Maturity Date.
(f) If the Issuing Bank shall not have received from the Borrower the
payment required to be made by Section 2.22(e) in respect of any L/C
Disbursement within the time specified in such Section, the Issuing Bank will
promptly notify the Administrative Agent of the amount of such L/C Disbursement
and the dollar amount of the Revolving Credit Borrowing that will be required
(in the case of an L/C Disbursement denominated in an Alternate Currency, at
current exchange rates, as determined by the Issuing Bank, with such
determination to be conclusive absent demonstrable error) to refinance such L/C
Disbursement. The Administrative Agent will promptly notify each Revolving
Credit Lender of the amount of such Revolving Credit Borrowing and its Pro Rata
Percentage thereof. Each Revolving Credit Lender shall pay by wire transfer of
immediately available funds to the Administrative Agent not later than 2:00
p.m., New York City time, on such date (or, if such Revolving Credit Lender
shall have received such notice later than 12:00 (noon), New York City time, on
any day, not later than 11:00 a.m., New York City time, on the immediately
following Business Day), an amount equal to such Lender's Pro Rata Percentage of
such Revolving Credit Borrowing (it being understood that such amount shall be
deemed to constitute an ABR Revolving Loan of such Lender and that the Revolving
Credit Borrowing made pursuant to this paragraph will be deemed to have reduced
the L/C Exposure by the Dollar Equivalent of such L/C Disbursement), and the
Administrative Agent will promptly pay to the Issuing Bank amounts so received
by it from the Revolving Credit Lenders. The Administrative Agent will promptly
pay to the Issuing Bank any amounts received by it from the Borrower pursuant to
Section 2.22(e) prior to the time that any Revolving Credit Lender makes any
payment pursuant to this paragraph (f); any such amounts received by the
Administrative Agent thereafter will be promptly remitted by the
35
Administrative Agent to the Revolving Credit Lenders that shall have made such
payments (after being converted into dollars, in the case of amounts received in
any Alternate Currency) and to the Issuing Bank, as their interests may appear.
If any Revolving Credit Lender shall not have made its Pro Rata Percentage of
such Revolving Credit Borrowing available to the Administrative Agent as
provided above, such Lender and the Borrower severally agree to pay interest on
such amount, for each day from and including the date such amount is required to
be paid in accordance with this paragraph to but excluding the date such amount
is paid, to the Administrative Agent for the account of the Issuing Bank at (i)
in the case of the Borrower, a rate per annum equal to the interest rate
applicable to ABR Revolving Loans pursuant to Section 2.06(a), and (ii) in the
case of such Lender, for the first such day, the Federal Funds Effective Rate,
and for each day thereafter, the Alternate Base Rate.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing (other
than a deemed Borrowing pursuant to Section 2.02(f), as to which this Section
2.03 shall not apply), the Borrower shall hand deliver or telecopy to the
Administrative Agent a duly completed Borrowing Request (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before a proposed Borrowing, and (b) in the case of an ABR
Borrowing, not later than 12:00 (noon), New York City time, on the Business Day
of a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall be
signed by or on behalf of the Borrower and shall specify the following
information: (i) whether the Borrowing then being requested is to be a Tranche A
Term Borrowing, a Tranche B Term Borrowing or a Revolving Credit Borrowing, and,
subject to the third sentence of Section 2.02(b), whether such Borrowing is to
be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing
(which shall be a Business Day), (iii) the number and location of the account to
which funds are to be disbursed; (iv) the amount of such Borrowing; and (v) if
such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect
thereto; provided, however, that, notwithstanding any contrary specification in
any Borrowing Request, each requested Borrowing shall comply with the
requirements set forth in Section 2.02. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing
is specified in any such notice, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration. The Administrative Agent
shall promptly advise the applicable Lenders of any notice given pursuant to
this Section 2.03 (and the contents thereof), and of each Lender's portion of
the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender (i) the then unpaid principal amount of each Revolving
Loan on the Revolving Credit Maturity Date and (ii) the principal amount of each
Term Loan of such Lender as provided in Section 2.11.
36
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs (b)
and (c) above shall be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans in
accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the event
any Lender shall request and receive a promissory note payable to such Lender
and its registered assigns, the interests represented by such note shall at all
times (including after any assignment of all or part of such interests pursuant
to Section 10.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender, through
the Administrative Agent, on the last day of each calendar quarter commencing
with the first such day after the date hereof (or, if any such day shall not be
a Business Day, the next preceding Business Day), and on the date on which the
last of the Commitments of such Lender shall expire or be terminated as provided
herein (each such day being called a "Fee Payment Date"), a commitment fee (a
"Commitment Fee") equal to .50% per annum on the average daily unused amount
(with Letters of Credit counting as usage) of the Commitments of such Lender
during the preceding quarter (or other period commencing with the date hereof or
ending with the date on which the last of the Commitments of such Lender shall
expire or be terminated). All Commitment Fees shall be computed on the basis of
the actual number of days elapsed in a year of 360 days. The Commitment Fee due
to each Lender shall commence to accrue on the date hereof and shall cease to
accrue on the date on which the last of the Commitments of such Lender shall
expire or be terminated as provided herein.
(b) The Borrower agrees to pay to the Arranger and to the Administrative
Agent, for their own accounts, the fees separately agreed upon by the Borrower,
the Arranger and the Administrative Agent (the "Arranger and Agent Fees").
37
(c) The Borrower agrees to pay (i) to each Revolving Credit Lender,
through the Administrative Agent, on each Fee Payment Date, a fee (an "L/C
Participation Fee") calculated on such Lender's Pro Rata Percentage of the
average daily aggregate L/C Exposure (excluding the portion thereof attributable
to unreimbursed L/C Disbursements) during the preceding quarter (or shorter
period commencing with the date hereof or ending with the Revolving Credit
Maturity Date or the date on which all Letters of Credit have been canceled or
have expired and the Revolving Credit Commitments of all Lenders shall have been
terminated) at a rate equal to the Applicable Percentage from time to time used
to determine the interest rate on Revolving Credit Borrowings comprised of
Eurodollar Loans pursuant to Section 2.06, and (ii) to the Issuing Bank, (A) on
each Fee Payment Date and on the date on which the Letter of Credit Commitment
shall be terminated as provided herein and no Letters of Credit shall be
outstanding, a fronting fee of .25% per annum (or such other rate per annum, if
any, as the Borrower and the Issuing Bank may agree upon from time to time) on
the undrawn face amount of each outstanding Letter of Credit, and (B) issuance
and drawing fees specified from time to time by the Issuing Bank as its
applicable issuance and drawing fees for letters of credit similar to the
Letters of Credit (collectively, the "Issuing Bank Fees"). All L/C Participation
Fees and Issuing Bank Fees shall be computed on the basis of the actual number
of days elapsed in a year of 360 days.
All Fees shall be paid on the dates due, in immediately available funds,
to the Administrative Agent for distribution, if and as appropriate, among the
Lenders, except that the Issuing Bank Fees shall be paid directly to the Issuing
Bank. Once paid, none of the Fees shall be refundable.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of Section
2.07, the Loans comprising each ABR Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 365 or 366 days,
as the case may be, when the Alternate Base Rate is determined by reference to
the Prime Rate and over a year of 360 days at all other times) at a rate per
annum equal to the Alternate Base Rate plus (x) in the case of Revolving Loans
and Tranche A Term Loans, the Applicable Percentage in effect for such Loans
from time to time and (y) in the case of Tranche B Term Loans, (i) prior to the
date on which the Xxxxxxx Xxxxxxxxxxxxx Transaction shall be completed, 2.75%
per annum and (ii) on and after the date on which the Xxxxxxx Xxxxxxxxxxxxx
Transaction shall be completed, the greater of (A) the Applicable Percentage
that would be used to determine the interest rate applicable to a Tranche A Term
Loan plus .50% per annum and (B) 2.25% per annum.
(b) Subject to the provisions of Section 2.07, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus (x)
in the case of Revolving Loans and Tranche A Term Loans, the Applicable
Percentage in effect for such Loans from time to time and (y) in
38
the case of Tranche B Term Loans, (i) prior to the date on which the Xxxxxxx
Xxxxxxxxxxxxx Transaction shall be completed, 3.75% per annum and (ii) on and
after the date on which the Xxxxxxx Xxxxxxxxxxxxx Transaction shall be
completed, the greater of (A) the Applicable Percentage that would be used to
determine the interest rate applicable to a Tranche A Term Loan plus .50% per
annum and (B) 3.25% per annum.
(c) Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent
demonstrable error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
the Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of overdue principal,
at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2%
per annum and (b) in all other cases, at the rate per annum applicable at such
time to ABR Loans comprising Revolving Credit Borrowings plus 2% per annum.
SECTION 2.08. Alternate Rate of Interest. In the event and on each
occasion that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately reflect the cost to the Required Lenders of making or maintaining its
Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written or telecopy notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist (which advice the Administrative Agent agrees to give promptly after it
learns that such circumstances no longer exist), any request by the Borrower for
a Eurodollar Borrowing pursuant to Section 2.03 or 2.10 shall be deemed to be a
request for an ABR Borrowing. Each determination by the Administrative Agent
hereunder shall be conclusive absent demonstrable error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The Term Loan
Commitments shall automatically terminate at 5:00 p.m., New York City time, on
the Closing Date. The Revolving Credit Commitments and the L/C Commitment shall
automatically terminate at 5:00 p.m., New York City time, on the Revolving
Credit Maturity
39
Date. Notwithstanding the foregoing, all the Commitments shall automatically
terminate at 5:00 p.m., New York City time, on March 18, 1999, if the initial
Credit Event shall not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Tranche A Commitments, the Tranche B Commitments or the Revolving Credit
Commitments; provided, however, that (i) each partial reduction of the Tranche A
Commitments, the Tranche B Commitments or the Revolving Credit Commitments shall
be in an integral multiple of $250,000 and in a minimum amount of $1,000,000 and
(ii) the Total Revolving Credit Commitment shall not be reduced to an amount
that is less than the sum of (A) the Aggregate Revolving Credit Exposure at the
time and (B) any portion of the Total Revolving Credit Commitment at the time
being held available to fund the purchase of additional assets, as contemplated
by the definition of "Asset Sale" in Section 1.01.
(c) Each reduction in the Tranche A Commitments, the Tranche B Commitments
or the Revolving Credit Commitments hereunder shall be made ratably among the
Lenders in accordance with their respective applicable Commitments. The Borrower
shall pay to the Administrative Agent for the accounts of the Revolving Credit
Lenders, on the date of each termination or reduction, the Commitment Fees due
on the amount of the Revolving Credit Commitments so terminated or reduced
accrued to but excluding the date of such termination or reduction.
SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower
shall have the right (subject to the limitations specified in Section 2.02) at
any time upon prior irrevocable notice to the Administrative Agent (a) not later
than 12:00 (noon), New York City time, one Business Day prior to conversion, to
convert any Eurodollar Borrowing into an ABR Borrowing, (b) not later than 12:00
(noon), New York City time, three Business Days prior to conversion or
continuation, to convert any ABR Borrowing into a Eurodollar Borrowing or to
continue any Eurodollar Borrowing as a Eurodollar Borrowing for an additional
Interest Period, and (c) not later than 12:00 (noon), New York City time, three
Business Days prior to conversion, to convert the Interest Period with respect
to any Eurodollar Borrowing to another permissible Interest Period, subject in
each case to the following:
(i) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting Borrowing
shall satisfy the limitations
40
specified in Sections 2.02(a) and (b) regarding the principal amount and
maximum number of Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the new
Type or Interest Period for each Loan of such Lender resulting from such
conversion; accrued interest on any Eurodollar Loan (or portion thereof)
being converted shall be paid by the Borrower at the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other than
the end of the Interest Period applicable thereto, the Borrower shall pay,
upon demand, any amounts due to the Lenders pursuant to Section 2.16;
(v) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a Eurodollar
Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be converted
into or continued as a Eurodollar Borrowing by reason of the immediately
preceding clause shall be automatically converted at the end of the
Interest Period in effect for such Borrowing into an ABR Borrowing;
(vii) no Interest Period may be selected for any Tranche A Term
Borrowing or Tranche B Term Borrowing that is a Eurodollar Borrowing that
would end later than a Term Loan Repayment Date occurring on or after the
first day of such Interest Period if, after giving effect to such
selection, the aggregate outstanding amount of (A) the Tranche A Term
Borrowings or Tranche B Term Borrowings, as the case may be, that are
Eurodollar Borrowings with Interest Periods ending on or prior to such
Term Loan Repayment Date and (B) the Tranche A Term Borrowings or Tranche
B Term Borrowings, as the case may be, that are ABR Borrowings would not
be at least equal to the principal amount of Tranche A Term Borrowings or
Tranche B Term Borrowings to be paid on such Term Loan Repayment Date; and
(viii) upon notice to the Borrower from the Administrative Agent
given at the request of the Required Lenders, after the occurrence and
during the continuance of a Default or Event of Default, no outstanding
Loan may be converted into, or continued as, a Eurodollar Loan. The
foregoing is without prejudice to the other rights and remedies available
hereunder upon an Event of Default.
Each notice pursuant to this Section 2.10 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Borrowing
that the Borrower requests be converted or continued, (ii) whether such
Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR
Borrowing, (iii) if such notice requests a
41
conversion, the date of such conversion (which shall be a Business Day) and (iv)
if such Borrowing is to be converted to or continued as a Eurodollar Borrowing,
the Interest Period with respect thereto. If no Interest Period is specified in
any such notice with respect to any conversion to or continuation as a
Eurodollar Borrowing, the Borrower shall be deemed to have selected an Interest
Period of one month's duration. The Administrative Agent shall advise the
Lenders of any notice given pursuant to this Section 2.10 and of each Lender's
portion of any converted or continued Borrowing. If the Borrower shall not have
given notice in accordance with this Section 2.10 to continue any Borrowing into
a subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.10 to convert such Borrowing), such Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be continued into a new Interest
Period as an ABR Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) (i) The Borrower shall pay
to the Administrative Agent, for the accounts of the Lenders, on each Tranche A
Term Loan Repayment Date, a principal amount of the Tranche A Term Loans equal
to the percentage of the Tranche A Term Loans made on the Closing Date set forth
below opposite the number corresponding to such Tranche A Term Loan Repayment
Date (subject to adjustment from time to time pursuant to Sections 2.12 and
principal amount to be paid to but excluding the date of such payment:
Tranche A Term Loan
Repayment Date Percentage
------------------- ----------
1-4 3.6%
5-8 5.0%
9-12 7.1%
13-15 9.3%
(ii) The Borrower shall pay to the Administrative Agent, for the accounts
of the Lenders, on each Tranche B Term Loan Repayment Date, a principal amount
of the Tranche B Term Loans equal to the percentage of the Tranche B Term Loans
made on the Closing Date set forth below opposite the number corresponding to
such Tranche B Term Loan Repayment Date (subject to adjustment from time to time
pursuant to Sections 2.12 and 2.13(h)), together in each case with accrued and
unpaid interest on the principal amount to be paid to but excluding the date of
such payment:
42
Tranche B Term Loan Percentage
Repayment Date ----------
------------------
1-17 0.3%
18-24 11.9%
(b) To the extent not previously paid, all Tranche A Term Loans and
Tranche B Term Loans shall be due and payable on the Tranche A Maturity Date and
Tranche B Matu rity Date, respectively, together with accrued and unpaid
interest on the principal amount to be paid to but excluding the date of
payment.
(c) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12. Optional Prepayments. (a) The Borrower shall have the right
at any time and from time to time to prepay any Borrowing, in whole or in part,
upon at least three Business Days' prior written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) to the
Administrative Agent before 12:00 noon, New York City time; provided, however,
that each partial prepayment shall be in an amount that is an integral multiple
of $250,000 and not less than $1,000,000.
(b) Optional prepayments of Term Borrowings shall be allocated pro rata
between the then-outstanding Tranche A Term Borrowings and Tranche B Term
Borrowings and applied pro rata against the remaining scheduled installments of
principal due in respect of the Tranche A Term Borrowings and Tranche B Term
Borrowings under Sections 2.11(a)(i) and (ii), respectively.
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments of Borrowings under
this Section 2.12 shall be subject to Section 2.16, but otherwise without
premium (except, in the case of Tranche B Term Borrowings, as provided in
paragraph (d) below) or penalty. All prepayments under this Section 2.12 shall
be accompanied by accrued interest on the principal amount being prepaid to the
date of payment.
(d) Any voluntary prepayment of Tranche B Term Loans made at any time (i)
from the Closing Date to and including the first anniversary thereof will be in
an amount equal to 102% of the principal amount of such loans prepaid, (ii)
after the first anniversary of the Closing Date to and including the second
anniversary of the Closing Date will be in an
43
amount equal to 101% of the principal amount of such loans prepaid and (iii)
thereafter will be in an amount equal to 100% of the principal amount of such
loans prepaid.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any termination
of all the Revolving Credit Commitments, the Borrower shall repay or prepay all
the outstanding Revolving Credit Borrowings on the date of such termination. In
the event of any partial reduction of the Revolving Credit Commitments, then (i)
at or prior to the effective date of such reduction, the Administrative Agent
shall notify the Borrower and the Revolving Credit Lenders of the Aggregate
Revolving Credit Exposure after giving effect thereto and (ii) if the Total
Revolving Credit Commitment after giving effect to such reduction or termination
would be less than the sum of (A) the Aggregate Revolving Credit Exposure at the
time and (B) any portion of the Total Revolving Credit Commitment at the time
being held available to fund the purchase of additional assets, as contemplated
by the definition of "Asset Sale" in Article I, then the Borrower shall, on the
date of such reduction or termination, repay or prepay Revolving Credit
Borrowings in an amount sufficient to eliminate such deficiency.
(b) Not later than the Business Day following the receipt by the Company
or any Restricted Subsidiary of any Net Cash Proceeds of any Asset Sale (other
than the Xxxxxxx Xxxxxxxxxxxxx Transaction), the Borrower shall prepay
outstanding Term Loans and, if the Term Loans shall have been paid in full, to
prepay Revolving Loans (without reducing the Revolving Credit Commitments) in an
aggregate principal amount equal to (x) 100% of the Net Cash Proceeds received
with respect thereto if on the date of such Asset Sale the Consolidated Leverage
Ratio is greater than or equal to 3.00 to 1.00 and (y) 75% of the Net Cash
Proceeds received with respect thereto if on the date of such Asset Sale the
Consolidated Leverage Ratio is less than 3.00 to 1.00, in each case after giving
pro forma effect to such Asset Sale and any substantially simultaneous
prepayment of Term Loans (or prepayment of Revolving Loans) made pursuant to
this paragraph or Section 2.12 as if such Asset Sale and such prepayment had
occurred at the beginning of the most recent period of four fiscal quarters for
which financial statements shall have been delivered pursuant to Section 5.03
(a) or (b), as applicable. Not later than the Business Day following the date on
which any Net Cash Proceeds are deemed for purposes of this paragraph to
constitute Net Cash Proceeds of an Asset Sale pursuant to clause (y) or the last
sentence of the definition of "Asset Sale", the Borrower shall apply such Net
Cash Proceeds to prepay outstanding Term Loans in accordance with the preceding
sentence.
(c) Not later than the Business Day following the receipt by the Company
or any Subsidiary of Net Cash Proceeds from any Equity Issuance (other than (i)
Net Cash Proceeds of Equity Issuances by Unrestricted Subsidiaries in an
aggregate amount not greater than $25,000,000 and (ii) Net Cash Proceeds of
Equity Issuances by the Company and Restricted Subsidiaries that do not in the
aggregate for all such Equity Issuances exceed $40,000,000 minus the aggregate
Net Cash Proceeds of Equity Issuances referred to in the preceding clause (i)),
the Borrower shall prepay outstanding Term Loans and, if the Term Loans shall
44
have been paid in full, to prepay Revolving Loans (without reducing the
Revolving Credit Commitments) in an aggregate principal amount equal to (i) 75%
of such Net Cash Proceeds at any time when the Consolidated Leverage Ratio is
greater than or equal to 4.00 to 1.00, (ii) 50% of such Net Cash Proceeds at any
time when the Consolidated Leverage Ratio is greater than or equal to 3.00 to
1.00, but less than 4.00 to 1.00 and (iii) 25% of such Net Cash Proceeds at any
time when the Consolidated Leverage Ratio is less than 3.00 to 1.00.
(d) Not later than the earlier of (i) 90 days after the end of each fiscal
year of the Borrower, commencing with the fiscal year ending December 31, 1999,
and (ii) the date on which the financial statements with respect to such fiscal
year are delivered pursuant to Section 5.03(a), the Borrower shall prepay
outstanding Term Loans and, if the Term Loans shall have been paid in full, to
prepay Revolving Loans (without reducing the Revolving Credit Commitments) in an
aggregate principal amount equal to (A) 75% of Excess Cash Flow for such fiscal
year if the Consolidated Leverage Ratio at the end of such fiscal year shall
have been greater than or equal to 3.50 to 1.00, and (B) 50% of Excess Cash Flow
for such fiscal year if the Consolidated Leverage Ratio at the end of such
fiscal year shall have been less than 3.50 to 1.00.
(e) In the event that the Company or any Restricted Subsidiary shall
receive Net Cash Proceeds from the incurrence or disposition of any Indebtedness
(other than Indebtedness permitted under Section 6.01), the Borrower shall, as
promptly as practicable and in any event not later than the Business Day
following the receipt of such Net Cash Proceeds, apply 100% of such Net Cash
Proceeds to prepay outstanding Term Loans and, if the Term Loans shall have been
paid in full, to prepay Revolving Loans (without reducing the Revolving Credit
Commitments).
(f) Not later than the Business Day following receipt by the Company or
any Subsidiary of the Xxxxxxx Xxxxxxxxxxxxx Initial Fee, the Borrower shall (i)
prepay outstanding Tranche A Term Loans in an aggregate principal amount equal
to 25% of the lesser of (A) $20,000,000 and (B) the amount of such fee and (ii)
prepay outstanding Tranche B Term Loans in an aggregate principal amount equal
to 75% of the lesser of (A) $20,000,000 and (B) the amount of such fee, in each
case minus the corresponding Xxxxxxx Xxxxxxxxxxxxx Capital Contribution.
(g) In the event the Borrower shall receive or hold Net Cash Proceeds from
any Asset Sale, Equity Issuance or incurrence of Indebtedness or other amounts
that would, if not applied to the prepayment of senior Indebtedness or to
purchase assets, be required to be applied to prepay, redeem, repurchase or
defease any Indebtedness that is subordinated in right of payment to any of the
Obligations, and if the Borrower shall not apply such Net Cash Proceeds to the
voluntary prepayment of senior Indebtedness or to purchase assets, in either
case in such manner as to avoid the requirement that subordinated Indebtedness
be so prepaid, redeemed, repurchased or defeased, the Borrower shall, prior to
the date on which
45
such Net Cash Proceeds or other amounts would be required to be applied to
prepay, redeem, repurchase or defease any such subordinated Indebtedness, apply
an amount equal to 100% of such Net Cash Proceeds or such other amounts to
prepay outstanding Term Loans in accordance with paragraph (h) below or, after
the Term Loans shall have been paid in full, to prepay Revolving Loans (without
reducing the Revolving Credit Commitments).
(h) Mandatory prepayments of Term Loans shall, subject to paragraph (f)
above and paragraph (l) below, be allocated ratably between the then-outstanding
Tranche A Term Loans and Tranche B Term Loans and applied ratably against the
remaining scheduled installments of principal due in respect of Tranche A Term
Loans or Tranche B Term Loans under Section 2.11(a)(i) and (ii), respectively.
(i) If on any date the aggregate Revolving Credit Exposure shall exceed
the aggregate Revolving Credit Commitments the Borrower shall on such date apply
an amount equal to such excess to prepay the then outstanding Revolving Loans.
(j) The Borrower shall deliver to the Administrative Agent, at the time of
each pre payment required under this Section 2.13, (i) a certificate signed by a
Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such pre payment and (ii) to the extent
practicable, at least three days prior written notice of such prepayment. Each
notice of prepayment shall specify the prepayment date and the Type and
principal amount of each Loan (or portion thereof) to be prepaid. All
prepayments under this Section 2.13 shall be subject to Section 2.16, but shall
otherwise be without premium or penalty.
(k) Amounts to be applied pursuant to this Section 2.13 to the prepayment
of Term Loans and Revolving Loans shall be applied first to reduce outstanding
ABR Term Loans or ABR Revolving Loans, as the case may be, and then to prepay
Eurodollar Term Loans or Eurodollar Revolving Loans, as the case may be. In the
event the amount of any prepayment required to be made pursuant to this Section
shall exceed the aggregate principal amount of the ABR Tranche A Term Loans, ABR
Tranche B Term Loans or ABR Revolving Loans, as the case may be, outstanding
(the amount of any such excess being called the "Excess Amount"), the Borrower
shall have the right, in lieu of making such prepayment in full, to prepay all
the outstanding ABR Loans of the applicable class and to deposit an amount equal
to the Excess Amount with the Collateral Agent in a cash collateral account
maintained (pursuant to documentation reasonably satisfactory to the
Administrative Agent) by and in the sole dominion and control of the Collateral
Agent. Any amounts so deposited shall be held by the Collateral Agent as
collateral for the Obligations and applied to the prepayment of the applicable
Eurodollar Loans at the ends of the current Interest Periods applicable thereto.
At the request of the Borrower, amounts so deposited shall be invested by the
Collateral Agent in Permitted Investments maturing prior to the date or dates on
which it is anticipated that such amounts will be applied to prepay Eurodollar
Loans; any
46
interest earned on such Permitted Investments will be for the account of the
Borrower, and the Borrower will deposit with the Administrative Agent the amount
of any loss on any such Permitted Investment to the extent necessary in order
that the amount of the prepayment to be made with the deposited amounts may not
be reduced.
(l) Any Tranche B Lender may elect, by notice to the Administrative Agent
in writing (or by telephone or telecopy promptly confirmed in writing) at least
one Business Day prior to any prepayment of Tranche B Term Loans required to be
made by the Borrower for the account of such Lender pursuant to this Section
2.13, to cause all or a portion of such prepayment to be applied instead to
prepay Tranche A Term Loans in accordance with paragraph (h) above (and any
prepayment or portion thereof as to which such an election is made shall be so
applied); provided that no Tranche B Lender shall be entitled to make such
election to the extent that at the time thereof the portion of the prepayment as
to which such election is made exceeds the outstanding amount of the Tranche A
Term Loans.
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or the Issuing
Bank of the principal of or interest on any Eurodollar Loan made by such Lender
or any Fees or other amounts payable hereunder (other than (i) changes in
respect of taxes with respect to which the Borrower is required to make payments
under Section 2.20 and (ii) taxes imposed on the overall net income of such
Lender or the Issuing Bank or branch or franchise taxes imposed on such Lender
(or its applicable lending office) or the Issuing Bank, in each case by the
jurisdiction in which such Lender or the Issuing Bank has its principal office
or applicable lending office or by any political subdivision or taxing authority
therein), or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of or credit extended by any Lender or the Issuing Bank (except any such
reserve requirement which is reflected in the Adjusted LIBO Rate) or shall
impose on such Lender or the Issuing Bank or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such Lender
or any Letter of Credit or participation therein, and the result of any of the
foregoing shall be to increase the cost to such Lender or the Issuing Bank of
making or maintaining any Eurodollar Loan or increase the cost to any Lender of
issuing or maintaining any Letter of Credit or purchasing or maintaining a
participation therein or to reduce the amount of any sum received or receivable
by such Lender or the Issuing Bank hereunder (whether of principal, interest or
otherwise) by an amount deemed by such Lender or the Issuing Bank to be
material, then the Borrower will pay to such Lender or the Issuing Bank, as the
case may be, upon demand such additional amount or amounts as will compensate
such Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.
47
(b) If any Lender or the Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or the Issuing Bank or any Lender's or the
Issuing Bank's holding company with any request or directive issued after the
date hereof regarding capital adequacy (whether or not having the force of law)
of any Governmental Authority has or would have the effect of reducing the rate
of return on such Lender's or the Issuing Bank's capital or on the capital of
such Lender's or the Issuing Bank's holding company, if any, as a consequence of
this Agreement or the Loans made or participations in Letters of Credit
purchased by such Lender pursuant hereto or the Letters of Credit issued by the
Issuing Bank pursuant hereto to a level below that which such Lender or the
Issuing Bank or such Lender's or the Issuing Bank's holding company could have
achieved but for such applicability, adoption, change or compliance (taking into
consideration such Lender's or the Issuing Bank's policies and the policies of
such Lender's or the Issuing Bank's holding company with respect to capital
adequacy) by an amount deemed by such Lender or the Issuing Bank to be material,
then from time to time the Borrower shall pay to such Lender or the Issuing
Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding
company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as applicable, as specified in paragraph (a) or (b) above,
together with supporting documentation or computations, in each case in
reasonable detail, shall be delivered to the Borrower and shall be conclusive
absent demonstrable error. The Borrower shall pay such Lender or the Issuing
Bank the amount shown as due on any such certificate delivered by it within 10
days after its receipt of the same.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 120 days prior to the date that such Bank notifies the Borrower in
writing of the change giving rise to such increased costs or reductions and of
such Bank's intention to claim compensation therefor; provided further that, if
the change giving rise to such increased costs or reductions shall be
retroactive, then the 120-day period referred to above shall be extended to
include the period of retroactive effect thereof. The protection of this Section
shall be available to each Lender and the Issuing Bank regardless
48
of any possible contention of the invalidity or inapplicability of the law,
rule, regulation, agreement, guideline or other change or condition that shall
have occurred or been imposed.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other provision
of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such Lender
hereunder (or, for such duration, be continued for additional Interest
Periods and ABR Loans will not thereafter (for such duration) be converted
into Eurodollar Loans), whereupon any request for a Eurodollar Borrowing
(or to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period) shall, as to such
Lender only, be deemed a request for an ABR Loan (or a request to continue
an ABR Loan as such for an additional Interest Period or to convert a
Eurodollar Loan into an ABR Loan, as the case may be), unless such
declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar Loans
made by it be converted to ABR Loans, in which event all such Eurodollar
Loans shall be automatically converted to ABR Loans as of the effective
date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender against
any loss (other than any loss of margin over funding cost or anticipated profit)
or expense that such Lender may sustain or incur as a consequence of (a) any
event, other than a default by such Lender in the performance of its obligations
hereunder, which results in (i) such Lender
49
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor
(including by reason of any assignment pursuant to Section 2.21), (ii) the
conversion of any Eurodollar Loan to an ABR Loan, or the conversion of the
Interest Period with respect to any Eurodollar Loan, in each case other than on
the last day of the Interest Period in effect therefor, or (iii) any Eurodollar
Loan to be made by such Lender (including any Eurodollar Loan to be made
pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this clause (a) being called a "Breakage Event") or
(b) any default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.16, together with
supporting documentation or computations, shall be delivered to the Borrower and
shall be conclusive absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as required under Sections 2.13
and 2.15, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the Commitment
Fees, each reduction of the Term Loan Commitments or the Revolving Credit
Commitments and each conversion of any Borrowing to or continuation of any
Borrowing as a Borrowing of any Type shall be allocated pro rata among the
Lenders in accordance with their respective applicable Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their applicable outstanding Loans), and the
Borrower and each Lender agrees to take all such actions as shall be necessary
to give effect to such requirement. Each Lender agrees that in computing such
Lender's portion of any Borrowing to be made hereunder, the Administrative Agent
may, in its discretion, round each Lender's percentage of such Borrowing to the
next higher or lower whole dollar amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law, or by any other
means, obtain payment, voluntary or involuntary, in respect of any Loan or Loans
or L/C Disbursement as a result of which the unpaid principal portion of its
Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and
participations in L/C
50
Disbursements shall be proportionately less than the unpaid principal portion of
the Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and
participations in L/C Disbursements of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
Tranche A Term Loans, Tranche B Term Loans, Revolving Loans or L/C Exposure, as
the case may be, of such other Lender, so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate unpaid
principal amount of the Tranche A Term Loans, Tranche B Term Loans and Revolving
Loans and L/C Exposure and participations in Tranche A Term Loans, Tranche B
Term Loans, Revolving Loans and L/C Exposure held by the Lenders; provided,
however, that (i) if any such participations are purchased pursuant to this
Section 2.18 and the payment giving rise thereto shall thereafter be recovered,
such participations shall be rescinded to the extent of such recovery and the
purchase price restored without interest, and (ii) the provisions of this
paragraph shall not be construed to apply to any payment made by the Borrower
pursuant to and in accordance with the express terms of this Agreement or any
payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in L/C Disbursements to any
assignee or participant, other than to the Borrower or any of the Subsidiaries
or any Affiliate thereof (as to which the provisions of this paragraph shall
apply). The Borrower expressly consents to the foregoing arrangements and agrees
that any Lender holding a participation in a Term Loan or Revolving Loan or L/C
Disbursement deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower to such Lender by reason of such participation as fully as if
such Lender had made a Loan directly to the Borrower in the amount of such
participation.
SECTION 2.19. Payments. (a) The Borrower shall make each payment (including
principal of or interest on any Borrowing or any L/C Disbursement or any Fees or
other amounts) hereunder and under any other Loan Document not later than 1:00
p.m., New York City time, on the date when due in immediately available dollars,
without setoff, defense or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. Each such payment (other than (i) Issuing Bank Fees, which
shall be paid directly to the Issuing Bank, and (ii) payments pursuant to
Sections 2.14, 2.16, 2.20 and 10.05, which shall be made directly to the persons
entitled thereto) shall be made to the Administrative Agent at its offices at
Eleven Madison Avenue, New York, New York 10010, or as otherwise directed.
(b) The Administrative Agent shall distribute any such payments received by
it for the account of any other person to the appropriate recipient promptly
following receipt thereof. Whenever any payment (including principal of or
interest on any Borrowing or any Fees or other amounts) hereunder or under any
other Loan Document shall become due, or
51
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
(c) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed L/C
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed L/C Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed
L/C Disbursements then due to such parties.
SECTION 2.20. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) 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 2.20(a)) the Administrative Agent,
Lender or Issuing Bank, as the case may be, receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender and
the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under Section 2.20(a)) and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto (the "Assessed
Amount"), whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority; provided
that in the event that the Administrative Agent, Lender or Issuing Bank, as the
case may be, successfully contests the assessment of the Assessed Amount, such
Administrative Agent, Lender or Issuing Bank shall refund, to the extent of any
refund thereof made to such Administrative Agent, Lender or Issuing Bank, any
amounts paid by the Borrower under this Section 2.20(c) in respect of such
Assessed Amount net of all out-of-pocket expenses of the Administrative Agent,
such Lender or Issuing Bank attributable thereto. The Borrower, upon the request
of the
52
Administrative Agent, Lender or Issuing Bank, agrees to repay the amount paid
over to the Borrower pursuant to the preceding sentence (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent, Lender or Issuing Bank in the event the Administrative
Agent, such Lender or Issuing Bank, as applicable, is required to repay such
refund to such Governmental Authority. Each Lender, the Administrative Agent and
the Issuing Bank agree that it will contest any Assessed Amount if (i) the
Borrower furnishes to it an opinion of reputable tax counsel acceptable to such
Lender, the Administrative Agent or the Issuing Bank, as the case may be, to the
effect that such Assessed Amount was wrongfully or illegally imposed and (ii)
the Administrative Agent, Lender or Issuing Bank, as the case may be, determines
in its sole discretion that it would not be disadvantaged or prejudiced in any
manner whatsoever as a result of such contest. Nothing contained in this Section
2.20(c) shall require the Administrative Agent or any Lender to make available
its Tax returns (or any other information relating to its Taxes which it deems
confidential) to the Borrower or any other person. A certificate as to the
amount of such Assessed Amount delivered to the Borrower by a Lender or the
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a
Lender or the Issuing Bank, shall be conclusive absent demonstrable error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Each Lender that is not a "United States person" or whose lending
office is not a "United States person" within the meaning of Section 7701(a)(30)
of the Code, and the Administrative Agent or the Issuing Bank if it is not a
"United States person," (a "Non-U.S. Lender") shall deliver to the Borrower
(with a copy to the Administrative Agent) two copies of either United States
Internal Revenue Service Form 1001 or Form 4224 (or successor forms) and either
Internal Revenue Service Form W-8 or Form W-9 (or successor forms), or, in the
case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest", a Form W-8, or any subsequent versions thereof or
successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, a
certificate representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder of the Borrower
(within the meaning of Section 871(h)(3)(B) of the Code) and is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from, or a reduced rate of, U.S. Federal
withholding tax on payments by the Borrower under this Agreement or any other
Loan Document. Such forms shall be delivered by each Non-U.S. Lender on or
before the date it becomes a party to this Agreement or
53
designates a new lending office. In addition, each Non-U.S. Lender shall deliver
such forms promptly upon the obsolescence, expiration or invalidity of any form
previously delivered by such Non-U.S. Lender. Notwithstanding any other
provision of this Section 2.20, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this Section 2.20(e) that such Non-U.S. Lender is
not legally able to deliver.
SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to
Mitigate. (a) In the event (i) any Lender or the Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or
the Issuing Bank delivers a notice described in Section 2.08 or 2.15, (iii) the
Borrower is required to pay any amount to any Lender or the Issuing Bank or any
Governmental Authority on account of any Lender or the Issuing Bank pursuant to
Section 2.20 or (iv) any Lender refuses to consent to any amendment, waiver or
other modification of any Loan Document requested by the Borrower that requires
the consent of a greater proportion of the Lenders than the Required Lenders and
such amendment, waiver or other modification is consented to by the Required
Lenders, the Borrower may, at its sole expense and effort (including with
respect to the processing and recordation fee referred to in Section 10.04(b)),
upon notice to such Lender or the Issuing Bank and the Administrative Agent,
require such Lender or the Issuing Bank to transfer and assign, without recourse
(in accordance with and subject to the restrictions contained in Section 10.04),
all of its interests, rights and obligations under this Agreement to an assignee
designated by the Borrower that shall assume such assigned obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (w) such assignment will result in a reduction in the claim for
compensation under Section 2.14 or in the withdrawal of the notice under Section
2.08 or 2.15 or in the reduction of payments under Section 2.20, as the case may
be, (x) such assignment shall not conflict with any law, rule or regulation or
order of any court or other Governmental Authority having jurisdiction, (y) the
Borrower shall have received the prior written consent of the Administrative
Agent (and, if a Revolving Credit Commitment is being assigned, of the Issuing
Bank), which consent shall not unreasonably be withheld, and (z) the Borrower or
such assignee shall have paid to the affected Lender or the Issuing Bank in
immediately available funds an amount equal to the sum of the principal of and
interest accrued to the date of such payment on the outstanding Loans or L/C
Disbursements of such Lender or the Issuing Bank, respectively, plus all Fees
and other amounts accrued for the account of such Lender or the Issuing Bank
hereunder (including any amounts under Section 2.14 and Section 2.20); provided
further that, if prior to any such transfer and assignment the circumstances or
event that resulted in such Lender's or the Issuing Bank's claim for
compensation under Section 2.14 or notice under Section 2.08 or 2.15 or the
amounts paid pursuant to Section 2.20, as the case may be, cease to cause such
Lender or the Issuing Bank to suffer increased costs or reductions in amounts
received or receivable or reduction in return on capital, or cease to have the
consequences specified in Section 2.15, or cease to result in amounts being
payable under Section 2.20, as the case may be (including as a result of any
action taken by such Lender or the Issuing Bank pursuant to paragraph (b)
below),
54
or if such Lender or the Issuing Bank shall waive its right to claim further
compensation under Section 2.14 in respect of such circumstances or event or
shall withdraw its notice under Section 2.08 or 2.15 or shall waive its right to
further payments under Section 2.20 in respect of such circumstances or event or
shall consent to the requested amendment, waiver or other modification, as the
case may be, then such Lender or the Issuing Bank shall not thereafter be
required to make any such transfer and assignment hereunder.
(b) If (i) any Lender or the Issuing Bank requests compensation under Section
2.14, (ii) any Lender or the Issuing Bank delivers a notice described in Section
2.08 or 2.15 or (iii) the Borrower is required to pay any amount to any Lender,
the Issuing Bank or any Governmental Authority on account of any Lender or the
Issuing Bank pursuant to Section 2.20, then such Lender or the Issuing Bank
shall use reasonable efforts (which shall not require such Lender or the Issuing
Bank to incur an unreimbursed loss or unreimbursed cost or expense or otherwise
take any action inconsistent with its internal policies or legal or regulatory
restrictions or suffer any disadvantage or burden deemed by it to be
significant) (x) to file any certificate or document reasonably requested in
writing by the Borrower or (y) to assign its rights and delegate and transfer
its obligations hereunder to another of its offices, branches or affiliates, if
such filing or assignment would reduce its claims for compensation under Section
2.14 or enable it to withdraw its notice pursuant to Section 2.08 or 2.15 or
would reduce amounts payable pursuant to Section 2.20, as the case may be, in
the future. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender or the Issuing Bank in connection with any such filing or
assignment, delegation and transfer.
SECTION 2.22. Letters of Credit. (a) General. The Borrower may request the
issuance of Letters of Credit denominated in dollars or any Alternate Currency
for its own account, at any time and from time to time while the Revolving
Credit Commitments remain in effect (but not after the date that is five
Business Days prior to the Revolving Credit Maturity Date), to support
obligations (other than trade payables) incurred by the Borrower and the
Subsidiaries in the conduct of their businesses. Each Letter of Credit will be
in a form reasonably acceptable to the Administrative Agent and the Issuing
Bank. This Section shall not be construed to impose an obligation upon the
Issuing Bank to issue any Letter of Credit that is inconsistent with the terms
and conditions of this Agreement.
(b) Notice of Issuance; Certain Conditions. In order to request the issuance
of a Letter of Credit, the Borrower shall hand deliver or telecopy to the
Issuing Bank and the Administrative Agent (reasonably in advance of the
requested date of issuance) a notice requesting the issuance of a Letter of
Credit and setting forth the date of issuance, the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) below), the amount of
such Letter of Credit and the currency in which it is to be denominated, the
name and address of the beneficiary thereof and such other information as shall
be necessary to prepare such Letter of Credit. A Letter of Credit shall be
issued only if, and upon issuance
55
of each Letter of Credit the Borrower shall be deemed to represent and warrant
that, after giving effect to such issuance (A) the L/C Exposure shall not exceed
$10,000,000 and (B) the Aggregate Revolving Credit Exposure shall not exceed the
Total Revolving Credit Commitment.
(c) Expiration Date. Each Letter of Credit shall expire at the close of
business on the earlier of the date one year after the date of the issuance of
such Letter of Credit and the date that is five Business Days prior to the
Revolving Credit Maturity Date, unless such Letter of Credit expires by its
terms on an earlier date; provided that a Letter of Credit may provide for
automatic renewals for additional periods of up to one year, subject to a right
on the part of the Issuing Bank to prevent any such renewal from occurring by
giving reasonable notice to the beneficiary during a period satisfactory to the
Administrative Agent.
(d) Participations. By the issuance of a Letter of Credit and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Credit Lender, and each such Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Pro Rata Percentage of the aggregate amount available to be
drawn under such Letter of Credit, effective upon the issuance of such Letter of
Credit. In consideration and in furtherance of the foregoing, each Revolving
Credit Lender hereby irrevocably, absolutely and unconditionally agrees, in the
event any L/C Disbursement shall not be reimbursed by the Borrower forthwith on
the date due as provided in paragraph (e) below, to pay to the Administrative
Agent, for the account of the Issuing Bank, promptly after the receipt of a
demand from the Issuing Bank, on account of such Lender's Pro Rata Percentage of
such L/C Disbursement, the amount specified in Section 2.02(f). Each Revolving
Credit Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
irrevocable, absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default or the termination of the Revolving Credit Commitments,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any L/C Disbursement in
respect of a Letter of Credit, the Borrower shall pay to the Administrative
Agent an amount equal to such L/C Disbursement, in the currency in which such
L/C Disbursement shall have been made, not later than two hours after the
Borrower shall have received notice from the Issuing Bank that payment of such
draft will be made, or, if the Borrower shall have received such notice later
than 10:00 a.m., New York City time, on any Business Day, not later than 10:00
a.m., New York City time, on the immediately following Business Day.
(f) Obligations Absolute. The Borrower's obligations to reimburse L/C
Disbursements as provided in paragraph (e) above shall be absolute,
unconditional and
56
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, under any and all circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit or any
Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure from all or any
of the provisions of any Letter of Credit or any Loan Document;
(iii) the existence of any claim, setoff, defense or other right that the
Borrower, any other party guaranteeing, or otherwise obligated with, the
Borrower, any Subsidiary or other Affiliate thereof or any other person may at
any time have against the beneficiary under any Letter of Credit, the Issuing
Bank, the Administrative Agent or any Lender or any other person, whether in
connection with this Agreement, any other Loan Document or any other related
or unrelated agreement or transaction;
(iv) any draft or other document presented under a 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;
(v) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms
of such Letter of Credit; and
(vi) any other act, or omission to act, or delay of any kind of the Issuing
Bank, the Lenders, the Administrative Agent or any other person or any other
event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of the Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly understood
and agreed that the absolute and unconditional obligation of the Borrower
hereunder to reimburse L/C Disbursements will not be excused by the gross
negligence or wilful misconduct of the Issuing Bank. However, the foregoing
shall not be construed to excuse the Issuing Bank from liability to the Borrower
to the extent of any direct damages (as opposed to consequential damages, claims
in respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
gross negligence or wilful misconduct in determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof; it
is understood that the Issuing Bank may accept documents that appear on their
face to be in substantial compliance with the terms of a Letter of Credit,
without responsibility for further
57
investigation, and make payment under such Letter of Credit, unless, in the
Issuing Bank's judgment, it has received information that proves any such
documents to be forged or fraudulent; provided that the Issuing Bank shall not
be liable in any respect for any error made as a result of, or damages resulting
from, the exercise of its judgment with regard to any such documents if such
judgment is made in good faith. The parties hereto expressly agree that (i) the
Issuing Bank's exclusive reliance on the documents presented to it under such
Letter of Credit as to any and all matters set forth therein, including reliance
on the amount of any draft presented under such Letter of Credit, whether or not
the amount due to the beneficiary thereunder equals the amount of such draft and
whether or not any document presented pursuant to such Letter of Credit proves
to be insufficient in any respect, if such document on its face appears to be in
substantial compliance with the terms of a Letter of Credit, and whether or not
any other statement or any other document presented pursuant to such Letter of
Credit proves to be forged, fraudulent or invalid or any statement therein
proves to be inaccurate or untrue in any respect whatsoever and (ii) any
noncompliance in any immaterial respect of the documents presented under such
Letter of Credit with the terms thereof shall, in each case, be deemed not to
constitute wilful misconduct or gross negligence of the Issuing Bank.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall as promptly as possible
give telephonic notification, confirmed by telecopy, to the Administrative Agent
and the Borrower of such demand for payment and whether the Issuing Bank has
made or will make an L/C Disbursement thereunder; provided that any failure to
give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the Revolving Credit Lenders with
respect to any such L/C Disbursement. The Administrative Agent shall promptly
give each Revolving Credit Lender notice thereof.
(h) Interim Interest. If the Issuing Bank shall make any L/C Disbursement in
respect of a Letter of Credit, then, unless the Borrower shall reimburse such
L/C Disbursement in full on such date, the unpaid amount thereof shall bear
interest for the account of the Issuing Bank, for each day from and including
the date of such L/C Disbursement, to but excluding the earlier of the date of
payment by the Borrower or the date on which interest shall commence to accrue
thereon as provided in Section 2.02(f), (i) in the case of any L/C Disbursement
denominated in dollars, at the rate per annum that would apply to such amount if
such amount were an ABR Revolving Credit Loan, and (ii) in the case of any L/C
Disbursement denominated in an Alternate Currency, at a rate determined by the
Issuing Bank (which determination shall be conclusive absent manifest error) to
reflect its cost of overnight or short-term funds in such currency, plus the
Applicable Percentage that would be employed in computing interest on a
Eurodollar Revolving Loan.
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(i) Resignation or Removal of the Issuing Bank. The Issuing Bank may
resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to the Issuing Bank, the Administrative Agent and
the Lenders. Subject to the next succeeding paragraph, upon the acceptance of
any appointment as the Issuing Bank hereunder by a Lender that shall agree to
serve as a successor Issuing Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Issuing
Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder. At the time such removal or
resignation shall become effective, the Borrower shall pay all accrued and
unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of any appointment
as the Issuing Bank hereunder by a successor Lender shall be evidenced by an
agreement entered into by such successor, in a form satisfactory to the Borrower
and the Administrative Agent, and, from and after the effective date of such
agreement, (i) such successor Lender shall have all the rights and obligations
of the previous Issuing Bank under this Agreement and the other Loan Documents
and (ii) references herein and in the other Loan Documents to the term "Issuing
Bank" shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the resignation or removal of the Issuing Bank hereunder, the
retiring Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement and the other
Loan Documents with respect to Letters of Credit issued by it prior to such
resignation or removal, but shall not be required to issue additional Letters of
Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, the Borrower shall, on the Business Day it receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Credit Lenders holding participations in
outstanding Letters of Credit representing greater than 50% of the aggregate
undrawn amount of all outstanding Letters of Credit) thereof and of the amount
to be deposited, deposit in an account with the Collateral Agent, for the
benefit of the Revolving Credit Lenders, an amount in cash in dollars equal to
the L/C Exposure as of such date, and shall thereafter from time to time deposit
with the Collateral Agent such additional amounts in dollars as shall be
necessary in order that the amount on deposit shall at all times equal or exceed
the L/C Exposure. Such deposit shall be held by the Collateral Agent as
collateral for the payment and performance of the Obligations. The Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits in Permitted Investments, which investments shall be
made at the option and sole discretion of the Collateral Agent, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall (i) automatically be
applied by the Administrative Agent to reimburse the Issuing Bank for L/C
Disbursements for which it has not been reimbursed, (ii) be held for the
satisfaction of the reimbursement obligations of the Borrower for the L/C
Exposure at such time and (iii)
59
if the maturity of the Loans has been accelerated (but subject to the consent of
Revolving Credit Lenders holding participations in outstanding Letters of Credit
representing greater than 50% of the aggregate undrawn amount of all outstanding
Letters of Credit), be applied to satisfy the Obligations. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived.
ARTICLE III
Representations and Warranties
The Company and PHI represent and warrant to the Administrative Agent, the
Issuing Bank and each of the Lenders that:
SECTION 3.01. Organization; Powers. The Company and each of the Subsidiaries
(a) is an entity duly organized, validly existing and in good standing (where
applicable) under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority, and all requisite licenses and permits from
Governmental Authorities, to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, except where the
failure to have such licenses and permits could not reasonably be expected to
result in a Material Adverse Effect, (c) is qualified to do business, and is in
good standing (where applicable), in every jurisdiction where such qualification
is required, except where the failure so to qualify could not reasonably be
expected to result in a Material Adverse Effect, and (d) has the corporate power
and authority to execute, deliver and perform its obligations under each of the
Loan Documents and each other agreement or instrument contemplated hereby to
which it is or will be a party and, in the case of the Company and PHI, to
borrow hereunder.
SECTION 3.02. Authorization. The Transactions (a) have been duly authorized by
all requisite corporate and, if required, stockholder action and (b) will not
(i) violate (A) any material provision of law, statute, rule or regulation, or
of the certificate or articles of incorporation or other constitutive documents
or by-laws of the Company or any of the Subsidiaries, (B) any order of any
Governmental Authority or (C) any provision of any indenture, or any other
material agreement or instrument, to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their property is or
may be bound, (ii) be in conflict with, result in a breach of or constitute
(alone or with notice or
60
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by the Company or any of the Subsidiaries
(other than any Lien created hereunder or under the Security Documents).
SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by each of the Company and PHI and constitutes, and each other Loan
Document when executed and delivered by each Loan Party party thereto will
constitute, a legal, valid and binding obligation of the Company, PHI or such
Loan Party enforceable against the Company, PHI or such Loan Party in accordance
with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with the Transactions, except for (a) the
filing of Uniform Commercial Code financing statements and filings with the
United States Patent and Trademark Office and the United States Copyright Office
(including terminations of such filings related to the Scheduled Playboy
Indebtedness and the Scheduled Spice Indebtedness), (b) recordation of the
Mortgages (including terminations of such mortgages and fixture filings related
to the Scheduled Playboy Indebtedness), (c) such as have been made or obtained
and are in full force and effect and (d) such actions, consents, approvals,
registrations or filings, the failure of which to make or obtain could not, in
the Administrative Agent's judgment, be expected to result in a Material Adverse
Effect.
SECTION 3.05. Financial Statements. (a) The Company has heretofore delivered
to the Lenders (i) consolidated balance sheets and statements of income and cash
flows of Playboy (A) as of the end of and for each fiscal year in the three-
fiscal year period ended June 30, 1997, and as of the end of the transition
period ending December 31, 1997, audited, in the case of such consolidated
financial statements, by PricewaterhouseCoopers LLP, independent public
accountants and (B) as of the end of and for the fiscal quarters ended March 31,
June 30 and September 30, 1998, certified by a Financial Officer of the Company
and (ii) consolidated balance sheets and statements of income and cash flows of
Spice (A) as of the end of and for each of the fiscal years ended December 31,
1997 and December 31, 1996, audited, in the case of such consolidated financial
statements, by Xxxxx Xxxxxxxx LLP, independent public accountants, (B) as of the
end of and for the fiscal year ended December 31, 1995, audited by
PricewaterhouseCoopers LLP, independent public accountants and (C) as of the end
of and for the fiscal quarters ended March 31, June 30 and September 30, 1998,
certified by a Financial Officer of Spice. Such financial statements present
fairly the financial condition and results of operations and cash flows of
Playboy and its consolidated subsidiaries and, to the knowledge of the Company,
Spice and its consolidated subsidiaries, as of such dates and for such periods.
Such balance sheets and the notes thereto disclose all
61
material liabilities, direct or contingent, of Playboy and Spice and their
respective consolidated subsidiaries as of the dates thereof. Such financial
statements were prepared in accordance with GAAP applied on a consistent basis.
(b) The Company has heretofore delivered to the Lenders (i) its unaudited pro
forma combined consolidated statements of income for the nine and 12 month
periods ended September 30, 1998, and for the 12 month period ended December 31,
1997, and (ii) its unaudited pro forma combined consolidated balance sheets as
of September 30, 1998, in each case prepared giving effect to the Closing Date
Transactions as if they had occurred on each such date and at the beginning of
each such period. Such financial statements have been prepared in good faith by
the Company and its subsidiaries, based on the assumptions used to prepare the
pro forma financial information contained in the Confidential Information
Memorandum (which assumptions were at the time made believed by the Company and
its subsidiaries to be reasonable), were based on the best information available
to the Company and its subsidiaries as of the date of delivery thereof,
accurately reflect all adjustments required to be made to give effect to the
Closing Date Transactions and present fairly on a pro forma basis the
consolidated financial condition and results of operations of the Company and
its consolidated subsidiaries as of the dates and for the periods set forth
therein, assuming that the Closing Date Transactions had actually occurred at
such dates and at the beginnings of such periods.
SECTION 3.06. No Material Adverse Change. Since December 31, 1997, there has
not occurred or become known any event, condition or change in or affecting
Playboy, Spice, the Company or their subsidiaries that, individually or in the
aggregate with other such events, conditions or changes, has had or could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) The Company
and each of the Restricted Subsidiaries has good and marketable title to, or
valid leasehold interests in, all its material properties and assets (including
the Collateral and Mortgaged Properties), except for minor defects in title that
do not interfere with its ability to conduct its business as currently conducted
or to utilize such properties and assets for their intended purposes. All such
material properties and assets are free and clear of Liens, other than Liens
expressly permitted by Section 6.02, and no material portion of any Mortgaged
Property is subject to any lease, license, sublease or other agreement granting
to any person any right to use, occupy or enjoy the same, except as set forth on
Schedule 3.07(a).
(b) The Company and each Restricted Subsidiary has complied with all material
obligations under all material leases to which it is a party and all such leases
are in full force and effect and the Company and each Restricted Subsidiary
enjoys peaceful and undisturbed possession under all such material leases to
which it is a party.
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(c) Except as set forth on Schedule 3.07(c), the Company has not received any
notice of, and has no knowledge of, any pending or contemplated condemnation
proceeding affecting any Mortgaged Property or any sale or disposition thereof
in lieu of condemnation.
(d) Neither the Company nor any Restricted Subsidiary is obligated under any
right of first refusal, option or other contractual right to sell, assign or
otherwise dispose of any Mortgaged Property or any interest therein.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing Date,
after giving effect to the Spice Acquisition and the Playboy Merger, a list of
all Subsidiaries, setting forth for each Subsidiary the jurisdiction of its
organization, a description of each class of its capital stock and the ownership
interest of the Company and each other Subsidiary therein. The shares of capital
stock or other ownership interests so indicated on Schedule 3.08 are fully paid
and non-assessable and are owned by the persons indicated on such Schedule, free
and clear of all Liens.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set forth on
Schedule 3.09, there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of the Company or PHI, threatened in writing against or affecting the
Company or any of the Subsidiaries or any business, property or rights of any
such person (i) that involve any Loan Document or the Transactions, (ii) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect, (iii) as to which there is a
reasonable possi bility of an adverse determination and that, if adversely
determined, could materially and adversely affect the ability of the Loan
Parties fully and timely to perform their respective obligations under the Loan
Documents or the other documents executed in connection with the Transactions or
the ability of the parties to consummate the Transactions or (iv) as to which
there is a reasonable possibility of an adverse determination and that have or,
if adversely determined, would have, individually or in the aggregate, a
reasonable likelihood of restraining, preventing or imposing burdensome
conditions on the Transactions.
(b) The Company and each Subsidiary is in compliance with all laws,
regulations, consent decrees and orders of any Governmental Authority applicable
to it or its property and all indentures, agreements and other instruments
binding upon it or its property, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
(c) None of the Company, any Subsidiary or any of their respective material
properties or assets is in violation of, nor will the continued operation of
their material properties and assets as currently conducted violate, any law,
rule or regulation (including
63
any zoning, building, Environmental Law, ordinance, code or approval or any
building permit) or any restrictions of record or agreements affecting the
Mortgaged Property, or is in default with respect to any judgment, writ,
injunction, decree or order of any Governmental Authority, where such violation
or default could reasonably be expected to result in a Material Adverse Effect.
(d) Certificates of occupancy and permits are in effect as required by
applicable law for each Mortgaged Property as currently constructed, and true
and complete copies of such certificates of occupancy have been delivered to the
Collateral Agent as mortgagee with respect to each Mortgaged Property.
SECTION 3.10. Agreements. Neither the Company nor any of the Subsidiaries is
in default in any manner under any provision of any indenture or other agreement
or instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which it or any of its properties or
assets are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) Neither the Company nor any of
the Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of buying or carrying Margin
Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be used,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the Regulations of the Board, including Regulation U or
X. The Company and the Subsidiaries will at no time acquire or hold any Margin
Stock unless the Borrower shall have delivered to the Administrative Agent
evidence (including, if the Administrative Agent shall so request, a duly
completed and executed Form U-1) demonstrating to the satisfaction of the
Administrative Agent that the credit extended hereunder will not violate
Regulation U.
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act.
Neither the Company nor any of the Subsidiaries is (a) an "investment company"
as defined in, or subject to regulation under, the Investment Company Act of
1940 or (b) a "holding company" as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The proceeds of the Loans and the Letters of
Credit will be used only for the purposes specified in the preamble to this
Agreement.
SECTION 3.14. Tax Returns. Except as set forth on Schedule 3.14, the Company
and each Subsidiary has filed or caused to be filed all Federal, state, local
and foreign income tax returns
64
and all other material Federal, state, local and foreign tax returns required to
have been filed by it and has paid or caused to be paid all material taxes due
and payable by it and all material assessments received by it, except taxes that
are being contested in good faith by appropriate proceedings and for which the
Company or such Subsidiary, as applicable, shall have set aside on its books
adequate reserves.
SECTION 3.15. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit, schedule or document furnished by or on behalf of the
Company or the Subsidiaries to the Administrative Agent or any Lender in
connection with the negotiation of any Loan Document or included therein or
delivered pursuant thereto, contained, contains or will contain any material
misstatement of fact or omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not misleading; provided that to the
extent any such information, report, financial statement, exhibit, schedule or
document was based upon or constituted a forecast or projection, the Company and
PHI represent only that they acted in good faith and utilized reasonable
assumptions and due care in the preparation of such information, report,
financial statement, exhibit or schedule.
SECTION 3.16. Employee Benefit Plans. Each of the Company, PHI and each ERISA
Affiliate is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in material liability of the Company, PHI
or any ERISA Affiliate. The present value of all benefit liabilities under each
Plan (based on those assumptions used to fund such Plan) did not, as of the last
annual valuation date applicable thereto, exceed the fair market value of the
assets of such Plan, and the present value of all benefit liabilities of all
underfunded Plans (based on those assumptions used to fund each such Plan) did
not, as of the last annual valuation dates applicable thereto, exceed the fair
market value of the assets of all such underfunded Plans.
SECTION 3.17. Environmental Matters. Except as set forth in Schedule 3.17:
(a) The properties owned, leased or operated by the Company and the
Subsidiaries (the "Properties") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute, or constituted a violation of,
(ii) require Remedial Action under, or (iii) could reasonably be expected to
give rise to liability under, Environmental Laws, which violations, Remedial
Actions and liabilities, in the aggregate, could reasonably be expected to
result in a Material Adverse Effect;
(b) The Properties and all operations of the Company and the Subsidiaries are
in compliance, and in the last five years have been in compliance, with all
Environmental Laws and all necessary Environmental Permits have been obtained
and are in effect, except to the
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extent that such non-compliance or failure to obtain any necessary permits, in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect;
(c) There have been no Releases or threatened Releases at, from, under or
proximate to the Properties or otherwise in connection with the operations of
the Company or the Subsidiaries, which Releases or threatened Releases, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;
(d) Neither the Company nor any of the Subsidiaries has received any notice of
an Environmental Claim in connection with the Properties or the operations of
the Company or the Subsidiaries or with regard to any person whose liabilities
for environmental matters the Company or the Subsidiaries has retained or
assumed, in whole or in part, contractually, by operation of law or otherwise,
which, in the aggregate, could reasonably be expected to result in a Material
Adverse Effect, nor do the Company or the Subsidiaries have reason to believe
that any such Environmental Claim is being threatened; and
(e) Hazardous Materials have not been transported from the Properties, and
have not been generated, treated, stored or disposed of at, on or under any of
the Properties, in any case in a manner that could give rise to liability under
any Environmental Law, nor have the Company or the Subsidiaries retained or
assumed any liability, contractually, by operation of law or otherwise, with
respect to the generation, treatment, storage or disposal of Hazardous
Materials, which transportation, generation, treatment, storage or disposal, or
retained or assumed liabilities, in the aggregate, could reasonably be expected
to result in a Material Adverse Effect.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and correct
description of all insurance maintained by the Company or the Subsidiaries as of
the Closing Date. As of the Closing Date, such insurance is in full force and
effect and all premiums have been duly paid. The Company and the Subsidiaries
have insurance in such amounts and covering such risks and liabilities as are in
accordance with normal industry practice.
SECTION 3.19. Security Documents. (a) The Pledge Agreement is effective to
create in favor of the Collateral Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable security interest in the Collateral (as
defined in the Pledge Agreement), and when the Collateral is delivered to the
Collateral Agent the Pledge Agreement will constitute a fully perfected first
priority Lien on and security interest in all right, title and interest of each
pledgor thereunder in the Collateral, in each case prior and superior in right
to any other person.
(b) The Security Agreement is effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral (as defined in the Security
Agreement), and when financing statements in
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appropriate form are filed in the offices specified on Schedule 6 to the
Perfection Certificate, the Security Agreement will constitute a fully perfected
Lien on and security interest in all right, title and interest of the grantors
thereunder in such Collateral, in each case prior and superior in right to any
other person, other than with respect to Liens expressly permitted by Section
6.02.
(c) When the Security Agreement is filed in the United States Patent and
Trademark Office and the United States Copyright Office, the Security Agreement
will constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the grantors thereunder in the Intellectual Property (as
defined in the Security Agreement) that is registered in the United States, in
each case prior and superior in right to any other person.
(d) The Mortgages are effective to create in favor of the Collateral Agent,
for the ratable benefit of the Secured Parties, a legal, valid and enforceable
Lien on all of the Loan Parties' right, title and interest in and to the
Mortgaged Properties and the proceeds thereof, and when the Mortgages are filed
in the offices specified on Schedule 3.19(d), the Mortgages will constitute
fully perfected Liens on, and security interest in, all right, title and
interest of the Loan Parties in the Mortgaged Properties and the proceeds
thereof, in each case prior and superior in right to any other person, other
than with respect to the rights of persons pursuant to Liens expressly permitted
by Section 6.02.
(e) On the Closing Date, after giving effect to the Closing Date Transactions,
and at all times thereafter, the Collateral Requirement and the Guarantee
Requirement will have been satisfied.
SECTION 3.20. Intellectual Property. The Company and each Restricted
Subsidiary owns, or is licensed to use, all patents, trademarks, tradenames,
service marks, copyrights, technology, know-how and processes (together with all
applications therefor and licenses granting rights therein, "Intellectual
Property") reasonably necessary for the conduct of its business as currently
conducted, except for those the failure to own or be licensed to use which could
not reasonably be expected to result in a Material Adverse Effect. To the
knowledge of the Company, (a) the use of Intellectual Property by the Company
and its Restricted Subsidiaries does not infringe on the rights of any person,
(b) no Intellectual Property of the Company or any of its Restricted
Subsidiaries is being infringed upon by any Person, and (c) no claim is pending
or threatened in writing challenging the use or the validity of any Intellectual
Property of the Company or any Restricted Subsidiary, except for infringements
and claims referred to in the foregoing clauses (a), (b) and (c) that, in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.21. Location of Real Property and Leased Premises. (a) Schedule
3.21(a) lists completely and correctly as of the Closing Date all real property
owned by the Company and the Restricted Subsidiaries and the addresses thereof.
The
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Company and the Restricted Subsidiaries own in fee all the real property set
forth on Schedule 3.21(a).
(b) Schedule 3.21(b) lists completely and correctly as of the Closing Date all
real property leased by the Company and the Restricted Subsidiaries and the
addresses thereof. The Company and the Restricted Subsidiaries have valid leases
in all the real property set forth on Schedule 3.21(b).
SECTION 3.22. Labor Matters As of the Closing Date, there are no strikes,
lockouts or slowdowns against the Company or any of the Restricted Subsidiaries
pending or, to the knowledge of the Company or any of the Restricted
Subsidiaries, threatened in writing. The hours worked by and payments made to
employees of the Company and the Restricted Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters. All payments due from the
Company or any of the Restricted Subsidiaries, or for which any claim has been
earned against the Company or any of the Restricted Subsidiaries, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of the Company or the applicable
Subsidiary. The consummation of the Transactions will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Company or any of the Subsidiaries
is bound.
SECTION 3.23. Solvency. Immediately after the consummation of the Closing Date
Transactions, (i) the fair value of the assets of each Loan Party will exceed
its debts and liabilities, subordinated, contingent or otherwise; (ii) the
present fair saleable value of the property of each Loan Party will be greater
than the amount that will be required to pay its probable liability on its debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) each Loan Party will be
able to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (iv) each Loan Party
will not have unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be
conducted following the Closing Date.
SECTION 3.24. Merger Agreement. The representations and warranties of Playboy
and the Company and, to the best knowledge of the Company, Spice, set forth in
the Merger Agreement are true and correct in all material respects.
SECTION 3.25. Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Company's and each
Subsidiary's computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others or, to the Company's
knowledge, with which the Company's and each Subsidiary's systems interface) and
the testing of all such material
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systems and equipment, as so reprogrammed, will be completed by September 30,
1999. The cost to the Company and each of the Subsidiaries of such reprogramming
and testing and of the reasonably foreseeable consequences of year 2000 to the
Company and the Subsidiaries (including, without limitation, reprogramming
errors and the failure of others' systems or equipment) will not result in a
Default or a Material Adverse Effect. Except for such of the reprogramming
referred to in the preceding sentence as may be necessary, the computer and
management information systems of the Company and the Subsidiaries are and, with
ordinary course upgrading and maintenance, will continue for the term of this
Agreement to be, sufficient to permit the Company and each Subsidiary to conduct
its business without Material Adverse Effect.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder are subject to the satisfaction of the following
conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing and on the date
of each issuance of a Letter of Credit (each such event being called a "Credit
Event"):
(a) The Administrative Agent shall have received a notice of such Borrowing as
required by Section 2.03 (or such notice shall have been deemed given in
accordance with Section 2.03) or, in the case of the issuance of a Letter of
Credit, the Issuing Bank and the Administrative Agent shall have received a
notice requesting the issuance of such Letter of Credit as required by Section
2.22(b).
(b) The representations and warranties set forth in Article III shall be true
and correct in all material respects on and as of the date of such Credit Event
with the same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Credit Event, no Event of
Default or Default shall have occurred and be continuing.
Each Credit Event shall be deemed to constitute a representation and warranty
by the Company and PHI on the date of such Credit Event as to the satisfaction
of the conditions set forth in paragraphs (b) and (c) of this Section 4.01. In
the case of the Credit Events occurring on the Closing Date, the conditions set
forth in paragraphs (b) and (c) of this
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Section 4.01 shall be construed after giving effect to the Spice Acquisition and
the other Closing Date Transactions.
SECTION 4.02. Initial Credit Event. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of itself, the
Lenders and the Issuing Bank, favorable written opinions of (i) Xxxxxx Xxxxxxx,
Esq., General Counsel of the Company, substantially to the effect set forth in
Exhibit H-1, (ii) Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, special counsel for
the Company and the Subsidiaries, substantially to the effect set forth in
Exhibit H-2, (iii) local counsel for the Company and the Subsidiaries
satisfactory to the Administrative Agent in each jurisdiction where any
Mortgaged Property is located, substantially to the effect set forth in Exhibit
H-3 and (iv) Xxxxxx X. Xxxxxx, Esq., General Counsel of Spice, substantially to
the effect set forth in Exhibit H-4, in each case dated the Closing Date,
addressed to the Administrative Agent, the Lenders and the Issuing Bank and
covering such other matters relating to the Loan Documents and the Transactions
as the Administrative Agent shall reasonably request, and the Company hereby
requests such counsel to deliver such opinions.
(b) The Administrative Agent shall have received (i) 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; (ii) a certificate of the Secretary or Assistant Secretary of
each Loan Party dated the Closing Date and certifying (A) that attached thereto
is a true and complete copy of the by-laws of such Loan Party as in effect on
the Closing Date and at all times since a date prior to the date of the
resolutions described in clause (B) below, (B) 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, in the case of the Company and
PHI, the Borrowings hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) 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 (i) above, and (D) 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; (iii) a
certificate of another officer as to the incumbency and specimen signature of
the Secretary or Assistant Secretary executing the certificate pursuant to (ii)
above; and (iv) such other documents as the Lenders, the Issuing Bank or the
Administrative Agent may reasonably request.
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(c) The Administrative Agent shall have received a certificate, dated the
Closing Date and signed by a Financial Officer of the Company, confirming
compliance with the conditions precedent set forth in paragraphs (b) and (c) of
Section 4.01.
(d) The Administrative Agent shall have received all Fees and other amounts
due and payable on or prior to the Closing Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder or under any other Loan Document.
(e) Each of the Spice Acquisition and the Playboy Merger shall have been, or
shall substantially simultaneously with the initial Credit Event be, consummated
in accordance with the Merger Agreement and applicable law, without any
amendment to or waiver of any material terms or conditions of the Merger
Agreement not approved by the Lenders, and arrangements reasonably satisfactory
to the Administrative Agent shall have been made for the completion of the Stock
Transfer on the Transfer Date, as required by Section 5.11. The Lenders and the
Issuing Bank shall have received executed copies of the Merger Agreement and all
certificates, opinions and other documents delivered in connection therewith,
all certified by a Financial Officer as complete and correct.
(f) The Collateral Requirement shall be satisfied.
(g) The Collateral Agent shall have received the results of a search of the
Uniform Commercial Code (or equivalent) filings made with respect to the Loan
Parties in the states (or other jurisdictions) in which the chief executive
office of each such person is located, any offices of such persons in which
records have been kept relating to accounts receivable and the other
jurisdictions in which Uniform Commercial Code filings (or equivalent filings)
are to be made pursuant to clause (b) of the definition of "Collateral
Requirement", together with copies of the financing statements (or similar
documents) disclosed by such search, and accompanied by evidence satisfactory to
the Collateral Agent that the Liens indicated in any such financing statement
(or similar document) are permitted under Section 6.02 or have been released.
(h) The Collateral Agent shall have received a Perfection Certificate dated
the Closing Date and duly executed by a Responsible Officer of the Company.
(i) The Guarantee Requirement shall be satisfied.
(j) All requisite Governmental Authorities and third parties shall have
approved or consented to the Transactions and the other transactions
contemplated in connection therewith to the extent required, in each case to the
extent failure to obtain such approvals or consents could, individually or in
the aggregate, result in a Material Adverse Effect or could materially and
adversely affect the rights or interests of the Lenders, the
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Administrative Agent or the Issuing Bank, and there shall be no action by any
Governmental Authority, actual or threatened, that has a reasonable likelihood
of restraining, preventing or imposing burdensome conditions on the Transactions
or the other transactions contemplated in connection therewith.
(k) The Administrative Agent shall have received pro forma computations
satisfactory to it indicating that the Consolidated Adjusted EBITDA for the
twelve months ended September 30, 1998, giving pro forma effect to the Closing
Date Transactions as if they had occurred at the beginning of such period, shall
have been not less than $24,800,000.
(l) The terms on which the Closing Date Transactions shall have been completed
and the capitalization (including Indebtedness) of the Company and the
Subsidiaries after giving effect to the Closing Date Transactions shall be
consistent in all material respects with the pro forma financial statements and
projections provided to the Lenders prior to the date hereof.
(m) The assets and obligations of the "Playboy Online" business shall have
been contributed to Playboy Online.
(n) The Administrative Agent shall have received a copy of, or a certificate
as to coverage under, the insurance policies required by applicable provisions
of the Security Documents, each of which shall be endorsed or otherwise amended
to include a "standard" or "New York" lender's loss payable endorsement and to
name the Collateral Agent as additional insured, in form and substance
reasonably satisfactory to the Administrative Agent.
(o) The Scheduled Playboy Indebtedness and the Scheduled Spice Indebtedness
shall have been or shall simultaneously be repaid in full, all agreements and
instruments evidencing or governing such Indebtedness and all lending or other
commitments thereunder shall have been terminated and all Liens securing such
Indebtedness shall have been released, and the Administrative Agent shall have
received such evidence as it shall reasonably have requested as to the
satisfaction of such conditions. After giving effect to the Closing Date
Transactions, neither the Company nor any Restricted Subsidiary shall have
outstanding any Indebtedness or preferred stock (or similar Equity Interests)
other than as set forth in Schedule 6.01.
(p) If requested, the Administrative Agent shall have received for each Lender
a statement on Federal Reserve Form U-1 demonstrating compliance with Regulation
U.
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ARTICLE V
Affirmative Covenants
Each of the Company and PHI covenants and agrees with each Lender that so long
as this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and, to the
extent at the time due and owing, all other expenses or amounts payable under
any Loan Document shall have been paid in full and all Letters of Credit have
been canceled or have expired and all amounts drawn thereunder have been
reimbursed in full, unless the Required Lenders shall otherwise consent in
writing, it will, and will cause each of the Restricted Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties, Insurance. (a) Do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except, in the case of any Restricted Subsidiary
other than PHI, as otherwise expressly permitted under Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve, renew,
extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; comply in all material respects with
all applicable laws, rules, regulations (including any zoning, building,
Environmental Law, ordinance, code or approval) and decrees and orders of any
Governmental Authority, whether now in effect or hereafter enacted; at all times
maintain and preserve all property material to the conduct of such business and
keep such property in good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at all
times; and maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations.
SECTION 5.02. Obligations and Taxes. Pay its material Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all Taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; provided, however,
that (a) such payment and discharge shall not be required with respect to any
such tax, assessment, charge, levy or claim so long as the validity or amount
thereof shall be contested in good faith by appropriate proceedings and the
Company shall have set aside on its books adequate reserves with respect thereto
in accordance with GAAP and such
73
contest operates to suspend collection of the contested obligation, tax,
assessment or charge and enforcement of a Lien and, in the case of Mortgaged
Property, there is no risk of forfeiture of such property and (b) failure to pay
any Indebtedness shall not be a breach of this covenant unless such failure
would give rise to an Event of Default under paragraph (f) of Article VII.
SECTION 5.03. Financial Statements, Reports, etc. In the case of the Company,
furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, consolidated balance
sheets and related statements of operations, cash flows and stockholders'
equity showing the financial condition of the Company and its consolidated
subsidiaries as of the close of such fiscal year and the results of its
operations and the operations of such subsidiaries during such year and the
immediately preceding year, all audited by PricewaterhouseCoopers LLP or other
independent public accountants of recognized national standing reasonably
acceptable to the Required Lenders and accompanied by an opinion of such
accountants (which shall not be qualified as to the scope of the audit or
going concern) to the effect that such consolidated financial statements
fairly present in all material respects the financial condition and results of
operations of the Company and its consolidated subsidiaries on a consolidated
basis in accordance with GAAP;
(b) within 60 days after the end of each of the first three fiscal quarters
of each fiscal year, consolidated balance sheets and related statements of
operations and cash flows showing the financial condition of the Company and
its consolidated subsidiaries as of the close of such fiscal quarter and the
results of its operations and the operations of such subsidiaries during such
fiscal quarter and the then elapsed portion of the fiscal year and during the
corresponding periods in the immediately preceding fiscal year, all certified
by a Financial Officer of the Company as fairly presenting in all material
respects the financial condition and results of operations of the Company and
its consolidated subsidiaries on a consolidated basis in accordance with GAAP,
subject to normal year-end audit adjustments;
(c) within 60 days after the end of each fiscal quarter of each fiscal
year, a management report in form satisfactory to the Administrative Agent
setting forth the consolidating revenues of the Company and its consolidated
subsidiaries for such quarter and the operating income before depreciation and
amortization for each business segment during such quarter;
(d) concurrently with any delivery of financial statements under paragraph
(a) or (b) above, a certificate of the accounting firm or Financial Officer
opining on or certifying such statements (which certificate, when furnished by
an accounting
74
firm, may be limited to accounting matters and disclaim responsibility for
legal interpretations) (i) certifying that no Event of Default or Default has
occurred or, if such an Event of Default or Default has occurred, specifying
the nature and extent thereof and any corrective action taken or proposed to
be taken with respect thereto, (ii) setting forth computations in reasonable
detail reasonably satisfactory to the Administrative Agent demonstrating
compliance with the financial covenants contained in Article VI (excluding the
assets, liabilities, results of operations and cash flows of the Unrestricted
Subsidiaries to the extent required by Section 1.03) and (iii) identifying the
Determination Date associated with the delivery of such financial statements;
(e) concurrently with each delivery of financial statements under paragraph
(a) above, beginning with the financial statements for the fiscal year ending
December 31, 1999, a certificate of a Financial Officer in form and detail
satisfactory to the Administrative Agent setting forth a calculation of Excess
Cash Flow for the fiscal year to which such statements relate;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Company or any of the Restricted Subsidiaries with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange;
(g) as soon as available, and in any event within 90 days after the
commencement of each fiscal year of the Company, a copy of the consolidated
business and financial plan of the Company and the Restricted Subsidiaries for
such fiscal year, month by month, together with such supporting schedules and
other information as the Required Lenders may reasonably request, but in any
event including projected cash flow information and a projected income
statement, in each case for the following 12 months and in form and detail
reasonably satisfactory to the Required Lenders;
(h) promptly after their execution and delivery, copies certified by
a Responsible Officer of the Borrower of the Superceeding Agreements
referred to in the definition of "Xxxxxxx Xxxxxxxxxxxxx Agreements" in
Section 1.01;
(i) concurrently with any delivery of financial statements under
paragraph (a) above, the certificates executed by the chief legal officer
of the Company required to be delivered under Section 4.02 of the Security
Agreement; and
(j) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Company or any of
the
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Subsidiaries, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request through the
Administrative Agent.
SECTION 5.04. Litigation and Other Notices. Furnish to the Administrative
Agent prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) taken or proposed to be taken with
respect thereto;
(b) the filing or commencement of, or any threat or notice of intention of
any person to file or commence, any action, suit or proceeding, whether at law
or in equity or by or before any Governmental Authority, against the Company
or any Affiliate thereof that could reasonably be expected to result in a
Material Adverse Effect;
(c) the loss, suspension or material impairment of any material license,
approval, certification or authorization granted by any Governmental Authority
that could reasonably be expected to result in a Material Adverse Effect; and
(d) any other development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
SECTION 5.05. Employee Benefits. (a) Comply in all material respects with the
applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent as soon as possible after, and in any event within 10 days
after any Responsible Officer of the Company or any ERISA Affiliate knows or has
reason to know that, any ERISA Event has occurred that, alone or together with
any other ERISA Events that have occurred could reasonably be expected to result
in liability of the Company and/or the Subsidiaries in an aggregate amount
exceeding $5,000,000 or requiring payments exceeding $1,000,000 in any year, a
statement of a Financial Officer of the Borrower setting forth details as to
such ERISA Event and the action, if any, that the Company and/or the
Subsidiaries propose to take with respect thereto.
SECTION 5.06. Maintaining Records; Access to Properties and Inspections. Keep
proper books of record and account in which full, true and correct entries in
conformity with GAAP and all requirements of law are made of all dealings and
transactions in relation to its business and activities. Subject to the
provisions of Section 10.16, each Loan Party will, and will cause each of the
Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender to visit and inspect the properties (limited, in the case of
any Lender, to the corporate offices) and the financial records of the Company
or any of the Subsidiaries, and to make extracts from and copies of such
financial records, at
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reasonable times and as often as reasonably requested and to discuss the
affairs, finances and condition of the Company or any of the Subsidiaries with
the officers thereof and independent accountants therefor.
SECTION 5.07. Use of Proceeds. Use the proceeds of the Loans and request the
issuance of Letters of Credit only for the purposes set forth in the preamble to
this Agreement.
SECTION 5.08. Compliance with Environmental Laws. (a) Comply, and use its best
efforts to cause all lessees and other persons occupying its properties to
comply, in all material respects with all Environmental Laws and Environmental
Permits applicable to its operations and properties; obtain and renew all
Environmental Permits necessary for its operations and properties; and conduct
any Remedial Action required in accordance with Environmental Laws; provided,
however, that neither the Company nor any of the Subsidiaries shall be required
to undertake any compliance or Remedial Action, to the extent that its
obligation to do so is being contested in good faith and by proper proceedings
and appropriate reserves are being maintained with respect to such
circumstances.
(b) If a Default caused by reason of a breach of Section 3.17 or paragraph (a)
of this 5.08 shall have occurred and be continuing, at the request of the
Required Lenders through the Administrative Agent, provide to the Lenders within
45 days after such request, at the expense of the Borrower, a report relating to
the matters that are the subject of such breach and any matter reasonably
related to such breach, prepared by an environmental consulting firm acceptable
to the Administrative Agent and indicating the estimated cost of any compliance
or Remedial Action required to address such breach and any such related matter.
SECTION 5.09. Further Assurances. (a) Execute any and all further documents,
financing statements, agreements and instruments, and take all further action
(including filing Uniform Commercial Code and other financing statements,
mortgages and deeds of trust) that may be required under applicable law, or that
the Required Lenders, the Administrative Agent or the Collateral Agent may
reasonably request, in order to cause the Guarantee Requirement and the
Collateral Requirement to be satisfied at all times.
(b) From time to time, at the request of the Administrative Agent or the
Required Lenders, take all such actions as the Collateral Agent shall reasonably
specify to create and perfect Liens on any properties or assets of the Company
or the Domestic Restricted Subsidiaries that have substantial value and are not
subject to the Liens created by the Security Documents to secure the Obligations
or are subject to such Liens that are unperfected.
(c) From time to time, at the request of the Administrative Agent or the
Required Lenders, use commercially reasonable best efforts to cause each person
required under the
77
terms of any material agreement to which the Company, PHI or any Subsidiary
shall be party to consent to the assignment pursuant to the Security Agreement
of the rights of the Company, PHI or any other Restricted Subsidiary under such
material agreement in order for such assignment to be effective to execute and
deliver a consent to such assignment reasonably satisfactory to the Collateral
Agent.
SECTION 5.10. Hedging Arrangements. The Borrower will enter into, as promptly
as practicable and in any event not later than the 90th day following the
Closing Date, and will thereafter maintain in effect for a period of not less
than two years, one or more Hedging Agreements with any of the Lenders or other
financial institutions reasonably satisfactory to the Administrative Agent, on
customary terms reasonably satisfactory to the Administrative Agent, the effect
of which is to limit the weighted average effective interest rate applicable to
at least 50% of the initial principal amount of the Term Loans to a rate
reasonably satisfactory to the Administrative Agent.
SECTION 5.11. Transfer of Equity Interests and Rights. On the Transfer Date,
upon or prior to the effectiveness of the Assignment and Assumption, the Company
will (a) consummate the Stock Transfer in the manner previously approved by the
Administrative Agent and in accordance with applicable law and (b) deliver to
the Administrative Agent a notice to the effect that the Stock Transfer has been
so consummated, together with certified copies of all instruments and documents
executed in connection therewith.
ARTICLE VI
Negative Covenants
Each of the Company and PHI covenants and agrees with each Lender that, so
long as this Agreement shall remain in effect and until the Commitments have
been terminated and the principal of and interest on each Loan, all Fees and, to
the extent at the time due and owing, all other expenses or amounts payable
under any Loan Document have been paid in full and all Letters of Credit have
been canceled or have expired and all amounts drawn
78
thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, it will not, and will not cause or permit any of
the Restricted Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness for borrowed money existing on the date hereof and set
forth in Schedule 6.01 and any extensions, renewals and replacements of such
Indebtedness to the extent the principal amount of such Indebtedness is not
increased, the weighted average life to maturity of such Indebtedness is not
decreased, such Indebtedness, if subordinated to the Obligations, remains so
subordinated on terms not less favorable to the Lenders and the original
obligors in respect of such Indebtedness remain the only obligors thereon;
(b) Indebtedness created hereunder and under the other Loan Documents;
(c) Prior to the Closing Date, the Scheduled Playboy Indebtedness and the
Scheduled Spice Indebtedness;
(d) Indebtedness of the Borrower to any Wholly Owned Subsidiary and of any
Wholly Owned Subsidiary to the Borrower or any other Wholly Owned Subsidiary;
provided, that (i) in the case of any such Indebtedness in an amount greater
than $2,000,000 owed to the Borrower or any Domestic Restricted Subsidiary by
a Foreign Subsidiary, an Unrestricted Subsidiary or a non-Wholly Owned
Subsidiary, such Indebtedness is evidenced by a promissory note that has been
pledged as security for the Obligations under the Pledge Agreement, and (ii)
in the case of all such Indebtedness, the loans and advances giving rise
thereto are permitted under Section 6.04;
(e) Indebtedness of the Borrower or any Restricted Subsidiary consisting of
(i) Capital Lease Obligations, (ii) purchase money obligations in respect of
(A) real property or equipment, in either case incurred in the ordinary course
of business after the Closing Date, and (B) Acquisitions and (iii) extensions,
renewals and replacements of such Capital Lease Obligations or purchase money
obligations; provided that the aggregate principal amount of the Capital Lease
Obligations, purchase money obligations and extensions, renewals and
replacements thereof incurred pursuant to this clause (e) and outstanding at
any time shall not exceed $5,000,000;
(f) Indebtedness of the Borrower created under Hedging Agreements required
under Section 5.10 or entered into to hedge or mitigate risks to which the
79
Borrower or any Subsidiary is exposed in the conduct of its business or the
management of its liabilities and not for speculative purposes;
(g) Indebtedness of any Subsidiary that existed at the time such person
became a Subsidiary and that was not incurred in contemplation of the
acquisition by the Borrower or a Subsidiary of such person;
(h) up to $20,000,000 aggregate principal amount of unsecured Indebtedness
of the Company or PHI that is not by its terms required to be repaid, prepaid,
redeemed, purchased or defeased prior to the Tranche B Maturity Date, that is
subordinated to the obligations of the Company or PHI, as the case may be,
hereunder and under the other Loan Documents on terms not less favorable to
the Lenders than those customary for publicly offered subordinated debt
obligations, and the subordination and other terms of which have been approved
by the Administrative Agent;
(i) up to $2,000,000 aggregate principal amount of Indebtedness of Foreign
Subsidiaries; and
(j) other Indebtedness of the Company or PHI in an aggregate principal
amount not exceeding $5,000,000, of which $2,000,000 may be secured.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien on any
property or assets (including stock or other securities of any person, including
any Restricted Subsidiary) now owned or hereafter acquired by it or on any
income or revenues or rights in respect thereof, or assign or transfer any such
income or revenues or rights in respect thereof, except:
(a) Liens on property or assets existing on the date hereof and set forth
in Schedule 6.02; provided that such Liens shall extend only to those assets
to which they extend on the date hereof and shall secure only those
obligations which they secure on the date hereof;
(b) any Lien created under the Loan Documents;
(c) any Lien existing on any property or asset prior to the acquisition
thereof by the Borrower or any of the Subsidiaries; provided that (i) such
Lien is not created in contemplation of or in connection with such
acquisition, (ii) such Lien does not apply to any property or assets of the
Borrower or any of the Subsidiaries other than such acquired property or
assets and (iii) such Lien does not (A) materially interfere with the use,
occupancy and operation of any asset or property subject thereto, (B)
materially reduce the fair market value of such asset or property but for such
80
Lien or (C) result in any material increase in the cost of operating,
occupying or owning or leasing such asset or property;
(d) Liens for taxes not yet due or which are being contested in compliance
with Section 5.02;
(e) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business and securing
obligations that are not due and payable or that are being contested in
compliance with Section 5.02;
(f) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other
social security laws or regulations;
(g) deposits to secure the performance of bids, trade contracts (other than
for Indebtedness), leases (other than Capital Lease Obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business;
(h) zoning restrictions, easements, rights-of-way, restrictions on use of
real property and other similar encumbrances incurred in the ordinary course
of business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Borrower and the Restricted
Subsidiaries;
(i) Liens that are contractual rights of setoff (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance of Indebtedness or (ii) pertaining to pooled deposit and/or sweep
accounts of the Company or any Subsidiary to permit satisfaction of overdraft
or similar obligations incurred in the ordinary course of business of the
Company and the Subsidiaries;
(j) judgment liens securing judgments that have not resulted in an Event of
Default under paragraph (i) of Article VII;
(k) purchase money security interests in real property, improvements
thereto or equipment hereafter acquired (or, in the case of improvements,
constructed) by the Borrower or any of the Subsidiaries; provided that (i)
such security interests secure Indebtedness permitted by Section 6.01(e), (ii)
such security interests are incurred, and the Indebtedness secured thereby is
created, within 90 days after such acquisition (or construction), (iii) the
Indebtedness secured thereby does not exceed 100% of the lesser of the cost or
the fair market value of such real property, improvements or
81
equipment at the time of such acquisition (or construction) and (iv) such
security interests do not apply to any other property or assets of the Company
or any of the Subsidiaries;
(l) the interests of lessors under Capital Leases permitted under Section
6.01;
(m) Liens on any item of Product or rights in Product to the extent
securing Residuals, Deferments or Participations payable by the Company or any
of the Subsidiaries relating exclusively to such items of Product or rights in
Product;
(n) rights of licensees under Ordinary Licensing Transactions;
(o) rights of Xxxxxxx Xxxxxxxxxxxxx as licensee under the Xxxxxxx
Xxxxxxxxxxxxx Agreements;
(p) rights of licensees which are not Affiliates of the Company or any of
the Subsidiaries under agreements pursuant to which such licensees have access
to duplicating material for the purpose of making prints or other copies of
any item of Product licensed to them, and rights of distributors, exhibitors,
licensees and other Persons which are not Affiliates of the Company or any of
the Restricted Subsidiaries in any item of Product created in connection with
the distribution or exploitation of any such item of Product or rights in
Product in the ordinary course of business pursuant to arm's-length agreements
in accordance with customary industry practice;
(q) Liens on any asset relating to any item of Product or rights in Product
acquired by the Company or any of the Subsidiaries granted in accordance with
customary industry practice in favor of any lender or financier financing any
or all of the development, acquisition or production costs of such item of
Product or in favor of any person guaranteeing the completion of production or
delivery of such item of Product, provided such Lien is and will remain
confined to the same Product or rights in Product so acquired;
(r) Liens granted in accordance with customary industry practice to
distributors or licensees which are not Affiliates of the Company or any of
the Restricted Subsidiaries to secure the exploitation rights or any rights
ancillary thereto in items of Product or rights in Product licensed or leased
to such distributors or licensees, provided that the collateral subject to any
such Lien shall be limited to such rights licensed or leased to such
distributor or licensee, the Product and proceeds of such rights and a non-
exclusive right of access to customary duplicating materials to exercise such
rights;
82
(s) Liens of film laboratories, sound studios or similar production or post
production facilities which are not Affiliates of the Company or any of the
Restricted Subsidiaries incurred in the ordinary course of business for sums
not yet due or being contested in good faith; and
(t) other Liens securing obligations in an aggregate principal amount not
exceeding (i) $2,000,000 minus (ii) the proceeds of any Sale and Lease-Back
Transactions permitted under Section 6.03.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred (a "Sale and Lease-Back Transaction") unless
(a) such sale is permitted under Section 6.05, (b) any Indebtedness arising
therefrom is permitted under Section 6.01 and (c) the aggregate proceeds of all
Sale and Lease-Back Transactions permitted under this Section does not exceed
$2,000,000 minus the aggregate amount of the obligations secured by Liens
permitted only under Section 6.02(t).
SECTION 6.04. Investments, Loans and Advances. Purchase, hold or acquire any
capital stock, evidences of Indebtedness or other securities of, make or permit
to exist any loans or advances to, or make or permit to exist any investment or
any other interest in, any other person, except:
(a) investments by the Company and PHI existing on the date hereof and set
forth on Schedule 6.04 or resulting from the Spice Acquisition and the Playboy
Merger;
(b) investments existing on the date hereof in the Borrower or any
Subsidiary;
(c) additional investments in (i) Wholly Owned Domestic Restricted
Subsidiaries, and (ii) Wholly Owned Foreign Restricted Subsidiaries in an
aggregate amount for all investments under this clause (ii) not greater than
$2,500,000;
(d) loans and advances to the Borrower or any Restricted Subsidiary to the
extent the resulting Indebtedness is permitted under section 6.01(d);
(e) investments in and loans and advances to Playboy Online made (i) with
Net Cash Proceeds of Asset Sales not required to be applied to prepay Term
Loans
83
under Section 2.13(b), (ii) with Excess Cash Flow for any fiscal year not
required to be applied to prepay Term Loans under Section 2.13(d); provided
that if the Consolidated Leverage Ratio at the end of such fiscal year is
greater than or equal to 3.00 to 1.00, the amount of Excess Cash Flow for such
fiscal year that may be applied to make investments in and loans and advances
to Playboy Online shall be limited to $2,000,000, (iii) with Net Cash Proceeds
of any Equity Issuance by the Company; provided that investments, loans and
advances made at any time pursuant to this clause (iii) shall not in the
aggregate exceed (A) $25,000,000 (the "Base Amount") plus (B) an amount equal
to (1) 25% of any such Net Cash Proceeds in excess of the Base Amount if at
the time of the applicable Equity Issuance the Consolidated Leverage Ratio
shall have been greater than 4.00 to 1.00, (2) 50% of any such Net Cash
Proceeds in excess of the Base Amount if at the time of the applicable Equity
Issuance the Consolidated Leverage Ratio shall have been greater than 3.00 to
1.00 but less than or equal to 4.00 to 1.00 and (3) 75% of any such Net Cash
Proceeds in excess of the Base Amount if at the time of the applicable Equity
Issuance the Consolidated Leverage Ratio shall have been less than or equal to
3.00 to 1.00, minus (C) the aggregate Net Cash Proceeds of all Equity
Issuances after the date hereof by Unrestricted Subsidiaries not used to
prepay Term Loans and (iv) with proceeds of Revolving Credit Loans in an
aggregate principal amount not to exceed $12,000,000; provided that in the
case of clauses (i) and (ii) of this paragraph (e), the amounts required to be
applied to prepay Term Loans under Section 2.13 shall be determined as though
the entire amounts of the Term Loans made on the Closing Date remained
outstanding, notwithstanding that the Term Loans shall have been paid in full;
(f) loans and advances to employees in an aggregate amount outstanding at
any time not to exceed $1,000,000;
(g) investments by the Borrower and the Restricted Subsidiaries in Equity
Interests of persons (other than Playboy Online) that, upon the making of such
investments, become Wholly Owned Subsidiaries; provided that (i) the ownership
by the Borrower of such persons is consistent with the limitations of Section
6.08, (ii) no Default or Event of Default results from the making of any such
investment and (iii) prior to the making of any such investment the Borrower
shall have delivered to the Administrative Agent calculations demonstrating
pro forma compliance with the covenants contained in Sections 6.13, 6.14, 6.15
and 6.16 as of the end of and for the most recent period of four fiscal
quarters for which financial statements shall have been delivered pursuant to
Section 5.03(a) or (b), giving effect to such investment and any related
incurrence or repayment of Indebtedness as if they had occurred at the
beginning of such period;
84
(h) the initial investment of Playboy Entertainment Group, Inc. in Xxxxxxx
Xxxxxxxxxxxxx, as described in the Xxxxxxx Xxxxxxxxxxxxx Agreements;
(i) investments of funds set aside to meet the Company's or any
Subsidiary's obligations under any nonqualified deferred compensation plan or
arrangement; provided that such investments do not in the aggregate at any
time exceed 105% of the liabilities of such plans or arrangements;
(j) investments in and loans and advances to Restricted Subsidiaries to
procure assets, properties or contract rights to be used in gaming operations
in an aggregate amount not to exceed $7,500,000;
(k) investments in the Unrestricted Subsidiaries to fund administrative
services for such Unrestricted Subsidiaries including, but not limited to,
payroll, cash management, corporate administration, billing, and procurement;
provided that the Unrestricted Subsidiary in which such investments are made
agrees to reimburse the provider of such services for the cost of the
provision of such services and such Unrestricted Subsidiary indemnifies and
holds the Company (or the Restricted Subsidiary providing such services)
harmless for all losses, claims and expenses arising out of the provision of
such services and arising under any contracts that the provider of such
services enters into so that it may provide such services to the Unrestricted
Subsidiary;
(l) investments by the Company and the Subsidiaries in foreign networks
(including Xxxxxxx Xxxxxxxxxxxxx) in an aggregate amount not to exceed
$10,000,000 during any fiscal year;
(m) investments by Playboy Entertainment Group, Inc. that it is
contractually obligated to make pursuant to the Xxxxxxx Xxxxxxxxxxxxx
Agreements;
(n) investments received in settlement of obligations owed to the Company
or any Restricted Subsidiary in the ordinary course of business;
(o) investments consisting of non-cash proceeds of asset dispositions for
which the consideration consists of at least 80% cash as required under
Section 6.05;
(p) Permitted Investments ; and
(q) other investments, loans and advances (other than investments in or
loans or advances to Playboy Online) in an aggregate amount (valued at cost or
outstanding principal amount, as the case may be) not greater than
$15,000,000.
85
SECTION 6.05. Mergers, Consolidations and Sales of Assets. Merge into or
consolidate with any other person, or permit any other person to merge into or
consolidate with it, or sell, transfer, lease, license or otherwise dispose of
(in one transaction or in a series of transactions) all or any substantial part
of its assets (whether now owned or here after acquired), or any capital stock
of any Subsidiary, or permit any Restricted Subsidiary to issue any shares of
its capital stock to any person other than the Borrower or another Subsidiary,
or, except as expressly permitted under Section 6.04, purchase, lease, license
or otherwise acquire (in one transaction or a series of transactions) all or any
substantial part of the assets of any other person or assets that are
substantial in relation to the Company and its subsidiaries taken as a whole,
except that (a) the Borrower and any of the Subsidiaries may (i) purchase and
dispose of inventory in the ordinary course of business and enter into Ordinary
Licensing Transactions and (ii) dispose of obsolete or worn out assets, (b) if
at the time thereof and immediately after giving effect thereto no Event of
Default or Default shall have occurred and be continuing and the Collateral
Requirement and the Guarantee Requirement shall be satisfied, (i) any subsidiary
of the Borrower may merge into the Borrower in a transaction in which the
Borrower is the surviving corporation and no person other than the Borrower
receives any consideration and (ii) any subsidiary of the Borrower may merge
into or consolidate with any other subsidiary of the Borrower in a transaction
in which, after giving effect to such merger, the percentage ownership of the
surviving entity is not less than the Company's or the subsidiary's ownership in
either of the subsidiaries prior to such merger or consolidation and no person
other than the Borrower or a Wholly Owned Subsidiary receives any consideration,
(c) the Borrower or any subsidiary of the Borrower may sell, transfer or
otherwise dispose of other assets (other than the Equity Interests of Restricted
Subsidiaries, but including the Playboy Mansion in Los Angeles, California) for
consideration at least 80% of which consists of cash in one or more arm's length
transactions so long as (i) the proceeds of any such sale are held and applied
in accordance with the terms of this Agreement and (ii) after giving effect to
such sale, the aggregate fair market value of the assets sold by the Borrower
and its subsidiaries pursuant to this clause (c), excluding any sale of the
Playboy Mansion, does not exceed $10,000,000 in any fiscal year and (d) the
Borrower and its subsidiaries may make investments expressly permitted by
Section 6.04. Notwithstanding anything to the contrary in this Section 6.05, the
Company may consummate the Playboy Merger, the Spice Merger, the Stock Transfer
and the Xxxxxxx Xxxxxxxxxxxxx Transaction.
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Restricted Subsidiaries to Pay Dividends. (a) Declare or pay, directly or
indirectly, any dividend or make any other distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination thereof,
with respect to any shares of its capital stock (other than in additional shares
of its capital stock) or directly or indirectly redeem, purchase, retire or
otherwise acquire for value (or permit any Restricted Subsidiary to purchase or
acquire) any shares of any class of its capital stock or set aside any amount
for any such purpose; provided, however, that (i) any subsidiary of PHI may
declare and pay dividends or make other distributions ratably on its Equity
Interests and (ii) PHI may declare and pay
86
dividends to the Company in the amounts and at the times required to permit the
Company to pay income and franchise taxes and other expenses incidental to the
activities permitted under Section 6.08(a).
(b) Permit any Restricted Subsidiary of the Borrower, directly or indirectly,
to create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such subsidiary to (i) pay any
dividends or make any other distributions on its Equity Interests or (ii) make
or repay any loans or advances to the Borrower or to any other subsidiary of the
Borrower (other than restrictions subordinating Indebtedness permitted under
Section 6.01(d) to the Obligations).
SECTION 6.07. Transactions with Affiliates. Sell or transfer any property or
assets to, or purchase or acquire any property or assets from, or otherwise
engage in any other transactions with, any of its Affiliates (other than PHI or
any Subsidiary), except that the Company or any Subsidiary may engage in any of
the foregoing transactions in the ordinary course of business at prices and on
terms and conditions not less favorable to the Company, the Borrower or such
Subsidiary than could be obtained on an arm's-length basis from an unrelated
third party.
SECTION 6.08. Business of the Company and Restricted Subsidiaries. (a) In the
case of the Company after the Stock Transfer, own any assets or any Equity
Interests or Rights in any person other than PHI, or engage at any time in any
business or business activity other than the ownership of all the Equity
Interests in PHI and business activities incidental thereto.
(b) In the case of PHI or any other Restricted Subsidiary, (i) engage at any
time in any business or business activity other than businesses in which it is
engaged on the date hereof and business activities reasonably related thereto or
(ii) expend more than $7,500,000 to procure assets, properties or contract
rights to be used in gaming operations or activities related thereto.
SECTION 6.09. Amendment of Material Agreements. Amend, modify or waive in any
material respect the Xxxxxxx Xxxxxxxxxxxxx Agreements (other than by execution
of the Superceeding Agreements referred to in the definition of "Xxxxxxx
Xxxxxxxxxxxxx Agreements" in Section 1.01) or any agreement governing Material
Indebtedness if any such amendment, modification or waiver, taken together with
any related amendments, modifications or waivers, could reasonably be expected
to result in a Material Adverse Effect or to be materially adverse to the rights
or interests of the Lenders (including by reducing the amount of any prepayment
required to be made hereunder), or permit the terms of such Superceeding
Agreements to depart from the terms of the Playboy TV International, LLC
Agreement Outline referred to in the definition of "Xxxxxxx Xxxxxxxxxxxxx
Agreements"
87
in Section 1.01 in any respect that could reasonably be expected to result in a
Material Adverse Effect or to be materially adverse to the rights or interests
of the Lenders (including by reducing the amount of any prepayment required to
be made hereunder).
SECTION 6.10. Prepayments, Redemptions and Repurchases of Debt. Make any
payment, whether in cash, property, securities or a combination thereof in
respect of, or pay, or offer or commit to pay, or otherwise directly or
indirectly redeem, repurchase, retire or otherwise acquire for consideration or
defease, any Indebtedness for borrowed money or Capital Lease Obligation (other
than Indebtedness under the Loan Documents and intercompany Indebtedness) of the
Company or any of the Restricted Subsidiaries, or set apart any sum for the
aforesaid purposes, except that the Company and the Restricted Subsidiaries may
make scheduled or mandatory payments of principal, interest or Capital Lease
Obligations as and when due (to the extent not prohibited by applicable
subordination provisions).
SECTION 6.11. Collateral and Guarantee Requirements; Ownership of Domestic
Subsidiaries. (a) Take any action that would result in the Collateral
Requirement or the Guarantee Requirement not being satisfied.
(b) Permit any Domestic Subsidiary to be owned directly or indirectly, in
whole or in part, by any Foreign Subsidiary.
SECTION 6.12. Fiscal Year. Change the end of its fiscal year from December 31
to any other date.
SECTION 6.13. Annual Consolidated EBITDA. Permit Consolidated EBITDA for any
period of four consecutive fiscal quarters ending on a date set forth below to
be less than the amount set forth below opposite such date:
Date Amount
---- ------
June 30, 1999 $44,000,000
September 30, 1999 $47,000,000
December 31, 1999 $47,000,000
March 31, 2000 $48,500,000
June 30, 2000 $50,000,000
September 30, 2000 $53,500,000
December 31, 2000 $57,000,000
March 31, 2001 $59,250,000
June 30, 2001 $61,500,000
September 30, 2001 $66,750,000
88
December 31, 2001 $72,000,000
March 31, 2002 $73,200,000
June 30, 2002 $74,400,000
September 30, 2002 $77,200,000
December 31, 2002 $80,000,000
March 31, 2003 $81,500,000
June 30, 2003 $83,000,000
September 30, 2003 $86,500,000
December 31, 2003 $90,000,000
March 31, 2004 $91,500,000
June 30, 2004 $93,000,000
September 30, 2004 $96,500,000
December 31, 2004 $100,000,000
March 31, 2005 $101,500,000
June 30, 2005 $103,000,000
September 30, 2005 $106,500,000
December 31, 2005 and each fiscal
quarter end thereafter $110,000,000
SECTION 6.14. Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio at any time during any period beginning on a date set forth below and
ending on the day immediately preceding the next such date to be in excess of
the ratio set forth below opposite such initial date below:
Date Ratio
---- -----
September 30, 1999 5.900 to 1.00
December 31, 1999 5.900 to 1.00
March 31, 2000 5.900 to 1.00
June 30, 2000 4.950 to 1.00
September 30, 2000 4.950 to 1.00
December 31, 2000 4.000 to 1.00
March 31, 2001 4.000 to 1.00
June 30, 2001 3.375 to 1.00
September 30, 2001 3.375 to 1.00
December 31, 2001 2.750 to 1.00
March 31, 2002 2.750 to 1.00
June 30, 2002 2.625 to 1.00
89
September 30, 2002 2.625 to 1.00
December 31, 2002 and each fiscal
quarter end thereafter 2.500 to 1.00
SECTION 6.15. Consolidated Interest Expense Coverage Ratio. Permit the
Consolidated Interest Expense Coverage Ratio for any four-fiscal-quarter period
(or such lesser number of fiscal quarters as shall have elapsed since March 31,
1999) ending on any date set forth below to be less than the ratio set forth
below opposite such date below:
Date Ratio
---- -----
September 30, 1999 2.00 to 1.00
December 31, 1999 2.00 to 1.00
March 31, 2000 2.00 to 1.00
June 30, 2000 2.50 to 1.00
September 30, 2000 2.50 to 1.00
December 31, 2000 3.00 to 1.00
March 31, 2001 3.00 to 1.00
June 30, 2001 3.25 to 1.00
September 30, 2001 3.25 to 1.00
December 31, 2001 and each fiscal
quarter end thereafter 3.50 to 1.00
SECTION 6.16. Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any four-fiscal-quarter period (or
such lesser number of fiscal quarters as shall have elapsed since March 31,
1999) ending on any date set forth below to be less than the ratio set forth
below opposite such date below:
Date Ratio
---- -----
September 30, 1999 1.10 to 1.00
December 31, 1999 1.10 to 1.00
March 31, 2000 1.10 to 1.00
June 30, 2000 1.10 to 1.00
September 30, 2000 1.10 to 1.00
December 31, 2000 1.10 to 1.00
March 31, 2001 1.10 to 1.00
June 30, 2001 1.15 to 1.00
September 30, 2001 1.15 to 1.00
December 31, 2001 and each fiscal
quarter end thereafter 1.20 to 1.00
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SECTION 6.17. Capital Expenditures. Permit the aggregate amount of Capital
Expenditures (other than (a) expenditures of insurance or condemnation proceeds
for the repair or replacement of assets that have been damaged, destroyed or
taken by condemnation, (b) expenditures of the proceeds of sales of property,
plant and equipment to acquire additional property, plant and equipment used for
the same purpose and (c) permitted Acquisitions) made by the Company and the
Restricted Subsidiaries in any fiscal year to exceed $4,000,000.
ARTICLE VII
Events of Default
In case of the happening of any of the following events ("Events of Default"):
(a) any representation or warranty made or deemed made in or in connection
with any Loan Document or the Borrowings or issuances of Letters of Credit
hereunder, or any representation, warranty, statement or information made,
deemed made or furnished in connection with or pursuant to any Loan Document,
shall prove to have been false or misleading in any material respect when so
made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any Loan or
any reimbursement with respect to any L/C Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any Loan or L/C
Disbursement or of any Fee or any other amount (other than an amount referred
to in (b) above) due under any Loan Document, when and as the same shall
become due and payable, and such default shall continue unremedied for a
period of five days;
(d) default shall be made in the due observance or performance by the
Company or any of the Subsidiaries of any covenant, condition or agreement
contained in Section 5.01(a) insofar as it relates to the existence of the
Borrower, 5.04, 5.07 or 5.11 or in Article VI;
(e) default shall be made in the due observance or performance by the
Company or any of the Restricted Subsidiaries of any covenant, condition or
agree ment contained in any Loan Document (other than those specified in (b),
(c) or (d)
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above) and such default shall continue unremedied for a period of 30 days
after notice thereof from the Administrative Agent or any Lender to the
Borrower;
(f) (i) the Company or any of the Restricted Subsidiaries shall fail to pay
any principal or interest, regardless of amount, due in respect of any
Material Indebtedness when and as the same shall become due and payable, (ii)
the Company or any of the Restricted Subsidiaries shall fail to observe or
perform any other term, covenant, condition or agreement contained in any
agreement or instrument evidencing or governing any such Material
Indebtedness, or any other event or condition shall occur, if the effect of
any failure or other event or condition referred to in this clause (ii) shall
be to cause, or to permit the holder or holders of such Material Indebtedness
or a trustee on its or their behalf to cause, such Material Indebtedness to
become due or to be required to be repurchased, redeemed or defeased prior to
its stated maturity, or (iii) the Company or any of the Restricted
Subsidiaries shall fail to observe or perform any term, covenant, condition or
agreement contained in any of the Xxxxxxx Xxxxxxxxxxxxx Agreements, if the
effect of any failure or other event or condition referred to in this clause
(iii) shall be to cause or permit Bloomfield Mercantile Inc. or its successors
or assigns, or any of their respective Affiliates, to exercise any rights or
remedies under the Xxxxxxx Xxxxxxxxxxxxx Agreements that could reasonably be
expected to result in a Material Adverse Effect;
(g) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of the Company or any of the Restricted Subsidiaries, or of a
substantial part of the property or assets of the Company or a Restricted
Subsidiary, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Company or any of the Restricted Subsidiaries or for a substantial part of the
property or assets of the Company or a Restricted Subsidiary or (iii) the
winding-up or liquidation of the Company or any of the Restricted
Subsidiaries; and such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing shall
be entered;
(h) the Company or any of the Restricted Subsidiaries shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
(g) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator,
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conservator or similar official for the Company or any of the Restricted
Subsidiaries or for a substantial part of the property or assets of the
Company or any of the Restricted Subsidiaries, (iv) file an answer admitting
the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors, (vi)
become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of effecting
any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate amount
in excess of $5,000,000 in the aggregate shall be rendered against the
Company, any of the Restricted Subsidiaries or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days during
which execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to levy upon assets or properties of the
Company or any of the Restricted Subsidiaries to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other such ERISA Events, could
reasonably be expected to result in liability of the Company, PHI and their
ERISA Affiliates which in the judgment of the Required Lenders could
reasonably be expected to have a Material Adverse Effect;
(k) any Guarantee purported to be created hereunder or under the Subsidiary
Guarantee Agreement shall cease to be, or shall be asserted by any Loan Party
not to be, a valid and enforceable Guarantee of the Obligations (except as
otherwise expressly provided in this Agreement or such Subsidiary Guarantee
Agreement), or any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by any Loan Party not to be,
a valid, perfected, first priority (except as otherwise expressly provided in
this Agreement or such Security Document) security interest in the securities,
assets or properties covered thereby; or
(l) there shall have occurred a Change in Control,
then, and in every such event (other than an event with respect to the Company
or PHI described in paragraph (g) or (h) above), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
forthwith the Commitments and (ii) declare the Loans then outstanding to be
forthwith due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of the Borrower accrued
hereunder and
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under any other Loan Document, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in any
other Loan Document to the contrary notwithstanding; and in any event with
respect to the Company or PHI described in paragraph (g) or (h) above, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower and the other Loan Parties accrued
hereunder and under any other Loan Document, shall automatically become due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrower, anything contained
herein or in any other Loan Document to the contrary notwithstanding.
ARTICLE VIII. THE AGENTS
In order to expedite the transactions contemplated by this Agreement, CSFB
is hereby appointed to act as Administrative Agent and Collateral Agent on
behalf of the Lenders and the Issuing Bank (for purposes of this Article VIII,
the Administrative Agent and the Collateral Agent are referred to collectively
as the "Agents"). Each of the Lenders, each assignee of any such Lender and the
Issuing Bank hereby irrevocably authorizes the Agents to take such actions on
behalf of such Lender or assignee or the Issuing Bank and to exercise such
powers as are specifically delegated to the Agents by the terms and provisions
hereof and of the other Loan Documents, together with such actions and powers as
are reasonably incidental thereto. The Administrative Agent is hereby expressly
authorized by the Lenders and the Issuing Bank, without hereby limiting any
implied authority, (a) to receive on behalf of the Lenders and the Issuing Bank
all payments of principal of and interest on the Loans, all payments in respect
of L/C Disbursements and all other amounts due to the Lenders hereunder, and
promptly to distribute to each Lender or the Issuing Bank its proper share of
each payment so received; (b) to give notice on behalf of each of the Lenders to
the Borrower of any Event of Default specified in this Agreement of which the
Administrative Agent has actual knowledge acquired in connection with its agency
hereunder; and (c) to distribute to each Lender copies of all notices, financial
statements and other materials delivered by the Company and PHI or any other
Loan Party pursuant to this Agreement or the other Loan Documents as received by
the Administrative Agent. Without limiting the generality of the foregoing, the
Agents are hereby expressly authorized to release any Guarantor from its
obligations hereunder and under the other Loan Documents and release the
Security Interest in any Collateral, in the event that all the capital stock of
the Guarantor, or such Collateral, shall be sold, transferred or otherwise
disposed of to a person that is not an Affiliate of the Borrower in a
transaction permitted by Section 6.05 hereof, and to execute any and all
documents (including releases) with respect
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to the Collateral and the rights of the Secured Parties with respect thereto, in
each case as contemplated by and in accordance with the provisions of this
Agreement and the other Loan Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower or any other Loan Party of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agents shall not be responsible
to the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents, instruments or
agreements. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
instructions and any action or inaction pursuant thereto shall be binding on all
the Lenders. Each Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Agents nor any of their respective directors, officers,
employees or agents shall have any responsibility to the Company or any other
Loan Party on account of the failure of or delay in performance or breach by any
Lender or the Issuing Bank of any of its obligations hereunder or to any Lender
or the Issuing Bank on account of the failure of or delay in performance or
breach by any other Lender or the Issuing Bank or the Company or any other Loan
Party of any of their respective obligations hereunder or under any other Loan
Document or in connection herewith or therewith. Each of the Agents may execute
any and all duties hereunder by or through agents or employees and shall be enti
tled to rely upon the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that no Agent shall be under any duty to
take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as provided
below, any Agent may resign at any time by notifying the Lenders and the
Borrower in writing. Upon any such resignation, the Required Lenders shall have
the right to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor
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Agent which shall be a bank with an office in New York, New York, having a
combined capital and surplus of at least $500,000,000 or an Affiliate of any
such bank. Upon the acceptance of any appointment as Agent hereunder by a
successor bank, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent and the retiring
Agent shall be discharged from its duties and obligations hereunder. After the
Agent's resignation hereunder, the provisions of this Article and Section 10.05
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Company or any of the
Subsidiaries or other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the amount of
its pro rata share (based on the amount of its Loans and available commitments
hereunder) of any expenses incurred for the benefit of the Lenders by the
Agents, including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, that shall not have been reimbursed
by the Borrower and (b) to indemnify and hold harmless each Agent and any of its
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, taxes, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against it in its capacity as Agent or any of them in any way
relating to or arising out of this Agreement or any other Loan Document or
action taken or omitted by it or any of them under this Agreement or any other
Loan Document, to the extent the same shall not have been reimbursed by the
Borrower or any other Loan Party; provided that no Lender shall be liable to an
Agent or any such other indemnified person for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Agent or any of its directors, officers,
employees or agents. Each Revolving Credit Lender agrees to reimburse each of
the Issuing Bank and its directors, officers, employees and agents, in each
case, to the same extent and subject to the same limitations as provided above
for the Agents.
Each Lender acknowledges that it has, independently and without reliance
upon the Agents or any other Lender and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Agents or any other Lender and based on such
documents and information as it shall from time to
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time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement or any other Loan Document, any
related agreement or any document furnished hereunder or thereunder.
ARTICLE IX. GUARANTEE
To induce the Lenders to make the Loans and the Issuing Bank to issue
Letters of Credit, (a) the Company, after it shall have been released from its
obligations as the initial Borrower hereunder as contemplated by Section 10.17,
and (b) PHI, until such time as it shall effectively have assumed the
obligations of the Borrower hereunder as contemplated by Section 10.17, hereby
unconditionally and irrevocably guarantees, as a primary obligor and not merely
as a surety, the due and punctual payment and performance of all the
Obligations. Each and every default in payment of the principal of and premium,
if any, or interest on any Obligation shall give rise to a separate cause of
action hereunder, and separate suits may be brought hereunder as each cause of
action arises.
Each of the Company and PHI waives presentation to, demand of payment from
and protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of this Guarantee and notice of protest for nonpayment and all other
formalities. The obligations of the Company and PHI hereunder shall not be
discharged or impaired or otherwise affected by (a) the failure or delay of any
Secured Party to assert any claim or demand or to enforce any right or remedy
against any Loan Party under the provisions of any Loan Document or otherwise;
(b) any extension or renewal of any of the Obligations; (c) any rescission,
waiver, amendment or modification of, or any release from, any of the terms or
provisions of any Loan Document, any guarantee or any other agreement or
instrument; (d) the release of (or the failure to perfect a security interest
in) any security held by any Secured Party for the performance of the
Obligations or any of them; (e) the failure or delay of any Secured Party to
exercise any right or remedy against any other guarantor of the Obligations; (f)
the failure of any Secured Party to assert any claim or demand or to enforce any
remedy under any Loan Document, any guarantee or any other agreement or
instrument; (g) any default, failure or delay, wilful or otherwise, in the
performance of the Obligations; or (h) any other act, omission or delay to do
any other act which may or might in any manner or to any extent vary the risk of
the Company or otherwise operate as a discharge of the Company or PHI as a
matter of law or equity or which would impair or eliminate any right of the
Company or PHI to subrogation.
Each of the Company and PHI further agrees that this Guarantee constitutes
a guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by any Secured Party to any security held for
payment of the Obligations or to any balance of any deposit account or credit on
the books of any Secured Party in favor of the Borrower or any other person.
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The obligations of the Company and PHI hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense (other than the defense of payment in full of the
Obligations) or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise.
Each of the Company and PHI further agrees that this Guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment, or any part thereof, on any Obligation is rescinded or must
otherwise be restored by any Secured Party upon the bankruptcy or reorganization
of the Borrower or otherwise.
In furtherance of the foregoing and not in limitation of any other right
which any Secured Party may have at law or in equity against the Company or PHI
by virtue hereof, upon the failure of the Borrower to pay any Obligation when
and as the same shall become due, whether at maturity, by acceleration, after
notice of prepayment or otherwise, each of the Company and PHI hereby promises
to and will, upon receipt of written demand by any Lender, forthwith pay, or
cause to be paid, to the Administrative Agent for distribution to the Secured
Parties in cash an amount equal to the sum of (i) the unpaid principal amount of
such Obligations then due, (ii) accrued and unpaid interest and fees on such
Obligations and (iii) all other monetary Obligations then due.
Upon payment by the Company or PHI of any sums to the Secured Parties
hereunder, all rights of the Company or PHI against the Borrower arising as a
result thereof shall in all respects be subordinate and junior in right of
payment to the prior indefeasible payment in full of all the Obligations and, if
any payment shall be made to the Company or PHI on account of such rights prior
to the indefeasible payment in full of all the Obligations, such payment shall
forthwith be paid to the Administrative Agent to be credited and applied against
the Obligations to the extent necessary to discharge such Obligations. Upon
payment by the Company or PHI of the sums to the Administrative Agent hereunder,
subject to the indefeasible payment in full of all the Obligations, the Company
or PHI, as the case may be, shall be subrogated to the rights of the Secured
Parties to receive payments of the Obligations.
Each of the Company and PHI waives notice of and hereby consents to any
agreements or arrangements whatsoever by the Secured Parties with any other
person pertaining to the Obligations, including agreements and arrangements for
payment, extension, subordination, composition, arrangement, discharge or
release of the whole or any part of the Obligations, or for the discharge or
surrender of any or all security, or for compromise, whether by way of
acceptance of part payment or otherwise, and the same shall in no way impair the
Company's or PHI's liability hereunder. Nothing shall discharge
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or satisfy the liability of the Company or PHI hereunder except the full
performance and payment of the Obligations.
Each reference herein to any Secured Party shall be deemed to include
their or its successors and assigns, in whose favor the provisions of this
Guarantee shall also inure.
ARTICLE X
Miscellaneous
SECTION 10.01. Notices. Notices and other communications provided for
herein and in the other Loan Documents shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Company, to it at 000 Xxxxx Xxxx Xxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000 Attention: Executive Vice President Finance & Operations and
Chief Financial Officer, with a copy to Executive Vice President Law &
Administration and General Counsel (Fax No. (000)-000-0000);
(b) if to PHI, to it at 000 Xxxxx Xxxx Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxx
00000 Attention: Executive Vice President Finance & Operations and Chief
Financial Officer, with a copy to Executive Vice President Law &
Administration and General Counsel (Fax No. (000)-000-0000);
(c) if to the Administrative Agent, to Credit Suisse First Boston,
Eleven Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention of Agency Group (Fax No.
(000) 000-0000); and
(d) if to a Lender, to it at its address (or telecopy number) set
forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which
such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 10.01 or in accordance with
the latest unrevoked direction from such party given
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in accordance with this Section 10.01; provided, that each notice under Article
II will be delivered by hand or overnight courier service or sent by telecopy.
SECTION 10.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Company, PHI and the other
Subsidiaries herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Lenders and the
Issuing Bank and shall survive the making by the Lenders of the Loans and the
issuance of Letters of Credit by the Issuing Bank, regardless of any
investigation made by the Lenders or the Issuing Bank or on their behalf, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any Fee or any other amount payable under this
Agreement or any other Loan Document is outstanding and unpaid or any Letter of
Credit is outstanding and so long as the Commitments have not been terminated.
The provisions of Sections 2.14, 2.16, 2.20, 10.05 and 10.16 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent, the Collateral Agent, any
Lender or the Issuing Bank.
SECTION 10.03. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Company, PHI and the Administrative Agent and
when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
SECTION 10.04. Successors and Assigns. (a) Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the permitted successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Company, PHI, the Administrative Agent,
the Issuing Bank or the Lenders that are contained in this Agreement shall bind
and inure to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of any or all of its Commitments and the Loans at the time owing to it);
provided, however, that (i) except in the case of an assignment to another
Lender or an Affiliate or Related Fund of the assigning Lender or another Lender
(x) the Borrower (unless an Event of Default shall have occurred and be
continuing for at least ten days) and the Administrative Agent (and, in the case
of any assignment of a Revolving Credit Commitment, the Issuing Bank) must give
their prior
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written consent to such assignment (which consent shall not be unreasonably
withheld or delayed) and (y) the amount of the Revolving Credit Commitment and
the Term Loan Commitment or outstanding Term Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 in the aggregate (or, if less, the
entire remaining amount of such Lender's Revolving Credit Commitment or
outstanding Term Loans) and (ii) the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire and
any tax form as required by the Internal Revenue Service or Section 2.20(e) of
this Agreement, if applicable. Upon acceptance and recording pursuant to
paragraph (e) of this Section 10.04 and payment, from and after the effective
date specified in each Assignment and Acceptance, which effective date shall be
at least five Business Days after the execution thereof, (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an 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 2.14, 2.16,
2.20 and 10.05, as well as to any Fees accrued for its account and not yet paid,
and to be bound by the provisions of Section 10.16).
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Term Loan Commitments and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Company or any of the Subsidiaries or
the performance or observance by the Company or any of the Subsidiaries of any
of its obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.03 and such other
documents and information as it has deemed
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appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Administrative Agent, the Collateral Agent, such assigning
Lender 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 this Agreement; (vi) such assignee appoints
and authorizes the Administrative Agent and the Collateral Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent and the Collateral Agent,
respectively, by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at one of its offices in The
City of New York a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the "Register"). The entries in the
Register shall be conclusive and the Company, PHI, the Administrative Agent, the
Issuing Bank, the Collateral Agent and the 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 and any Assignments and Acceptances delivered to the
Administrative Agent pursuant to this Section 10.04(d) shall be available for
inspection by the Borrower, the Issuing Bank, the Collateral Agent and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), a processing and recordation fee of $3,500 (which shall be
paid by the assigning Lender and such assignee as they may agree) and, if
required, the written consent of the Borrower, the Issuing Bank and the
Administrative Agent to such assignment, the Administrative Agent shall (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower,
Lenders and the Issuing Bank. No assignment shall be effective unless it has
been recorded in the Register as provided in this paragraph (e).
(f) Each Lender may, without the consent of the Borrower, the Issuing Bank
or the Administrative Agent, sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided, however, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain
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solely responsible to the other parties hereto for the performance of such
obligations, (iii) the participating banks or other entities shall be entitled
to the benefit of the cost protection provisions contained in Sections 2.14,
2.16 and 2.20, and shall be bound by the confidentiality provisions contained in
Section 10.16, to the same extent as is such Lender and (iv) the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to the Loans or L/C
Disbursements and to approve any amendment, modification or waiver of any
provision of this Agreement (other than amendments, modifications or waivers
decreasing any fees payable hereunder or the amount of principal of or the rate
at which interest is payable on the Loans subject to such participation,
extending any scheduled principal payment date or date fixed for the payment of
interest on such Loans, increasing or extending the Commitments subject to such
participation or releasing all or substantially all the Guarantors or the
Collateral). All amounts payable by the Borrower to any Lender hereunder in
respect of any Loan and the applicability of the cost protection provisions
contained in Sections 2.14, 2.16 and 2.20 shall be determined as if such Lender
had not sold or agreed to sell any participation in such Loan, and as if such
Lender were funding the participated portion of such Loan in the same way that
it is funding the portion of such Loan in which no participation has been sold.
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Company or PHI furnished to such
Lender by or on behalf of the Company or PHI; provided that, prior to any such
disclosure of non-public information, each such assignee or participant or
proposed assignee or participant shall execute an agreement whereby such
assignee or participant shall agree (subject to customary exceptions) to
preserve the confidentiality of such confidential information on terms no less
restrictive than those applicable to the Lenders pursuant to Section 10.16.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank to secure extensions of credit by
such Federal Reserve Bank to such Lender; provided that no such assignment shall
release a Lender from any of its obligations hereunder or substitute any such
Bank for such Lender as a party hereto. In order to facilitate such an
assignment to a Federal Reserve Bank, the Borrower shall, at the request of the
assigning Lender, duly execute and deliver to the assigning Lender a promissory
note or notes evidencing the Loans made to the Borrower by the assigning Lender
hereunder.
(i) Notwithstanding anything to the contrary contained herein, any Lender
(a "Granting Lender") may grant to a special purpose funding vehicle (an "SPC"),
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent
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and the Borrower, the option to provide to the Borrower all or any part of any
Loan that such Granting Lender would otherwise be obligated to make to the
Borrower pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects
not to exercise such option or otherwise fails to provide all or any part of
such Loan, the Granting Lender shall be obligated to make such Loan pursuant to
the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and as if, such Loan were
made by such Granting Lender. Each party hereto hereby agrees that no SPC shall
be liable for any indemnity or similar payment obligation under this Agreement
(all liability for which shall remain with the Granting Lender). In furtherance
of the foregoing, each party hereto hereby agrees (which agreement shall survive
the termination of this Agreement) that, prior to the date that is one year and
one day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against, or join any other
person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any State thereof. In addition, notwithstanding anything to the
contrary in this Section 10.04, any SPC may (i) with notice to, but without the
prior written consent of, the Borrower and the Administrative Agent and without
paying any processing fee therefor, assign all or a portion of its interests in
any Loans to the Granting Lender or to any financial institutions (consented to
by the Borrower and the Administrative Agent) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans and (ii) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or provider
of any surety, guarantee or credit or liquidity enhancement to such SPC. As this
Section applies to any particular SPC, this section may not be amended without
the written consent of such SPC.
(j) Except as provided in Section 10.17, the Borrower shall not assign or
delegate any of its rights or duties hereunder without the prior written consent
of the Administrative Agent, the Issuing Bank and each Lender, and any such
attempted assignment without such consent shall be null and void.
(k) In the event that S&P, Xxxxx'x and Xxxxxxxx'x BankWatch (or
InsuranceWatch Ratings Service, in the case of Lenders that are insurance
companies (or Best's Insurance Reports, if such insurance company is not rated
by Insurance Watch Ratings Service)) shall, after the date that any Lender
becomes a Revolving Credit Lender, downgrade the long-term certificate deposit
ratings of such Lender, and the resulting ratings shall be below BBB-, Baa3 and
C (or BB, in the case of a Lender that is an insurance company (or B, in the
case of an insurance company not rated by InsuranceWatch Ratings Service)), then
the Issuing Bank shall have the right, but not the obligation, at its own
expense, upon notice to such Lender and the Administrative Agent, to replace
such Lender with an assignee (in accordance with and subject to the restrictions
contained in
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paragraph (b) above), and such Lender hereby agrees to transfer and assign
without recourse (in accordance with and subject to the restrictions contained
in paragraph (b) above) all its interests, rights and obligations in respect of
its Revolving Credit Commitment to such assignee; provided, however, that (i) no
such assignment shall conflict with any law, rule and regulation or order of any
Governmental Authority and (ii) the Issuing Bank or such assignee, as the case
may be, shall pay to such Lender in immediately available funds on the date of
such assignment the principal of and interest accrued to the date of payment on
the Loans made by such Lender hereunder and all other amounts accrued for such
Lender's account or owed to it hereunder or under any other Loan Document.
SECTION 10.05. Expenses; Indemnity. (a) The Borrower agrees to pay upon
request all out-of-pocket expenses incurred by the Administrative Agent, the
Collateral Agent and the Issuing Bank in connection with the syndication of the
credit facilities provided for herein and the preparation and administration of
this Agreement and the other Loan Documents or in connection with any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby or thereby contemplated shall be
consummated) or incurred by the Administrative Agent, the Collateral Agent or
any Lender in connection with the enforcement (including in connection with the
negotiation of any restructuring or "work out" (whether or not consummated) of
the Obligations) or protection of its rights in connection with this Agreement
and the other Loan Documents or in connection with the Loans made or Letters of
Credit issued hereunder, including the fees, charges and disbursements of
Cravath, Swaine & Xxxxx, counsel for the Administrative Agent and the Collateral
Agent, local real estate counsel, if any, retained by the Collateral Agent in
connection with the Mortgages and, in connection with any such enforcement or
protection, the fees, charges and disbursements of any other counsel for the
Administrative Agent, the Collateral Agent or any Lender.
(b) The Borrower agrees to indemnify the Administrative Agent, the
Collateral Agent, each Lender and the Issuing Bank, each Affiliate of any of the
foregoing persons and each of their respective directors, officers, employees,
agents and controlling persons (each such person being called an "Indemnitee")
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated thereby, the performance by the parties thereto of their
respective obligations thereunder or the consummation of the Transactions and
the other transactions contemplated thereby, (ii) the use of the proceeds of the
Loans or issuance of Letters of Credit, (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto, or (iv) any actual or alleged presence or Release
of Hazardous Materials on any property owned, leased or operated by
105
the Borrower or any of the Subsidiaries, or any Environmental Claim arising out
of the actions or properties of the Borrower or the Subsidiaries; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses have resulted from
the gross negligence or wilful misconduct of such Indemnitee.
(c) The provisions of this Section 10.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the expiration of any Letter of
Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Administrative Agent, the Collateral Agent, any Lender or the Issuing
Bank. All amounts due under this Section 10.05 shall be payable on written
demand therefor.
SECTION 10.06. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and the Issuing Bank is hereby authorized at any
time and from time to time, except to the extent prohibited by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender or the Issuing Bank, as the case may be, to or for the credit or the
account of the Company or PHI against any of and all the obligations of the
Company or PHI now or hereafter existing under this Agreement and other Loan
Documents held by such Lender, irrespective of whether or not such Lender or the
Issuing Bank shall have made any demand under this Agreement or such other Loan
Document. The rights of each Lender and the Issuing Bank under this Section
10.06 are in addition to other rights and remedies (including other rights of
setoff) which such Lender or the Issuing Bank may have.
SECTION 10.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.08. Waivers; Amendment. (a) No failure or delay of the Company,
PHI, the Administrative Agent, the Collateral Agent, any Lender or the Issuing
Bank in
106
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Company,
PHI, the Administrative Agent, the Collateral Agent, the Issuing Bank and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Company, PHI or any other Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on the Company or PHI
in any case shall entitle the Company or PHI to any other or further notice or
demand in similar or other circumstances.
(b) None of this Agreement or any other Loan Document or any provision
hereof or thereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Company, PHI and the
Required Lenders (and, in the case of any other Loan Document, any other person
whose consent is required thereunder); provided, however, that no such agreement
shall (i) decrease the principal amount of, or extend the maturity of or any
scheduled principal payment date or date for the payment of any interest on any
Loan or any fees or any date for reimbursement of an L/C Disbursement, or waive
or excuse any such payment or any part thereof, amend or modify the provisions
of Section 2.09(c), 2.13 (a) or 10.05, amend or modify the definition of the
term "Revolving Credit Maturity Date", or decrease the rate of interest on any
Loan or L/C Disbursement or any fees, without the prior written consent of each
Lender affected thereby, (ii) change or extend the Commitment or decrease the
amount of or extend the date for payment of the Commitment Fees of any Lender
without the prior written consent of such Lender, (iii) amend or modify the
provisions of Section 2.17, 2.18 or 10.04(i), the provisions of this Section or
the definition of the term "Required Lenders" or release any Guarantors (other
than pursuant to a permitted sale or liquidation of a Subsidiary Guarantor) or
all or any substantial part of the Collateral without the prior written consent
of each Lender, (iv) except as provided in Section 2.13(l), waive or change the
allocation between Tranche A Term Loans and Tranche B Term Loans of any
prepayment pursuant to Section 2.12 or 2.13 without the prior written consent of
Lenders holding more than 50% of the aggregate outstanding principal amount of
the Tranche A Term Loans and more than 50% of the aggregate outstanding
principal amount of the Tranche B Term Loans or (v) amend Section 2.13(l)
without the prior written consent of the Lenders holding a majority of the
aggregate outstanding principal amount of the Tranche B Term Loans; provided
further that (i) no such agreement that by its terms adversely affects the
rights of the Revolving Credit Lenders, the Tranche A Lenders or the Tranche B
Lenders in a manner different from its effect on the other classes of Lenders
shall become effective unless approved by a majority in interest of each class
of Lenders so adversely affected and (ii)
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no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent, the Collateral Agent or the Issuing Bank hereunder
or under any other Loan Document without the prior written consent of the
Administrative Agent, the Collateral Agent or the Issuing Bank. Notwithstanding
the foregoing, if the Borrower shall request the release of any Collateral to be
sold as part of any Asset Sale and shall deliver to the Collateral Agent a
certificate to the effect that such Asset Sale and the disposition of the
proceeds thereof will comply with the terms of this Agreement, the Collateral
Agent, if satisfied that the applicable certificate is correct, shall, without
the consent of any Lender, execute and deliver all such instruments as may be
required to effect the release of such Collateral.
SECTION 10.09. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement, together with all fees, charges and other
amounts which are treated as interest on such Loan or participation in such L/C
Disbursement under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan or participation in
accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this Section
10.09 shall be cumulated and the interest and Charges payable to such Lender in
respect of other Loans or participations or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount, together with
interest thereon at the Federal Funds Effective Rate to the date of repayment,
shall have been received by such Lender.
SECTION 10.10. Entire Agreement. This Agreement and the other Loan
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any other previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement and the
other Loan Documents. Nothing in this Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any party other than the
parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 10.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
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OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.11.
SECTION 10.12. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforce able provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 10.13. Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section 10.03.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 10.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 10.15. Jurisdiction; Consent to Service of Process. (a) Each of the
Company and PHI hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in the borough of
Manhattan in New York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender may otherwise
109
have to bring any action or proceeding relating to this Agreement or the other
Loan Documents against the Company, PHI or their properties in the courts of any
jurisdiction.
(b) Each of the Company and PHI hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 10.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
SECTION 10.16. Confidentiality. The Administrative Agent, the Collateral
Agent, the Issuing Bank and each of the Lenders agrees to keep confidential (and
to use its reasonable best efforts to cause its respective agents and
representatives to keep confidential) the Information (as defined below) and all
copies thereof, extracts therefrom and analyses or other materials based
thereon, except that the Administrative Agent, the Collateral Agent, the Issuing
Bank or any Lender shall be permitted to disclose Information (a) to such of its
respective officers, directors, employees, agents, affiliates and
representatives as need to know such Information in connection with the
performance of their duties related to the Loan Documents and the transactions
contemplated thereby or the legal and regulatory compliance requirements of the
Administrative Agent, the Collateral Agent, the Issuing Bank or such Lender, as
the case may be, (b) to the extent requested by any regulatory authority,
including the National Association of Insurance Commissioners or any successor
entity thereto, (c) to the extent otherwise required by applicable laws and
regulations or by any subpoena or similar legal process, (d) in connection with
any suit, action or proceeding relating to the enforcement of its rights
hereunder or under the other Loan Documents (e) to any direct or indirect
contractual counterparty in swap agreements or such contractual counterparty's
professional advisor (so long as such contractual counterparty or professional
advisor to such contractual counterparty agrees to be bound by the provisions of
this Section 10.16) or (f) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section 10.16 or (ii)
becomes available to the Administrative Agent, the Issuing Bank, any Lender or
the Collateral Agent on a nonconfidential basis from a source other than the
Borrower; provided, however, that the Administrative Agent, the Collateral
Agent, the Issuing Bank and/or any Lender, as the case may be, shall (to the
extent it may lawfully do so) provide the Borrower, to the extent practicable,
with advance notice of any disclosure of information referred to in clauses (c)
and (d) above. For the purposes of this Section, "Information" shall mean all
financial statements, certificates, reports, agreements and information
(including all analyses,
110
compilations and studies prepared by the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender based on any of the foregoing and
including any budget, programming and program scheduling information) that are
received from the Company or any Subsidiary and related to, the Company, the
Borrower or any Subsidiary, other than any of the foregoing that were available
to the Administrative Agent, the Collateral Agent, the Issuing Bank or any
Lender on a nonconfidential basis prior to its disclosure thereto by the Company
or any Subsidiary, and that are in the case of Information provided after the
date hereof, clearly identified at the time of delivery as confidential or of
such a nature that a prudent person would expect such Information to be
confidential. The provisions of this Section 10.16 shall remain operative and in
full force and effect regardless of the expiration and term of this Agreement.
SECTION 10.17. Assignment, Delegation and Assumption. On the Transfer Date,
upon the completion of the Stock Transfer, the Assigned Rights and Obligations
will automatically, without further act of the parties hereto and with immediate
effect be assigned and delegated by the Company to PHI and PHI will
automatically succeed to and assume all the Assigned Rights and Obligations (the
"Assignment and Assumption"). Upon the effectiveness of the Assignment and
Assumption the Company will be released from all of its obligations as the
initial Borrower under this Agreement (but not from its other obligations
hereunder, including its obligations as Guarantor under Article VIII of this
Agreement), and from and after such time PHI will for all purposes be the
Borrower hereunder and all references herein or in the other Loan Documents to
the "Borrower" will be deemed references to PHI, it being understood that
references herein and in the other Loan Documents to the "Company" will continue
to refer to the Company and not to PHI.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
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NEW PLAYBOY, INC.,
by
-----------------------------------
Name:
Title:
PEI HOLDINGS, INC.,
by
-----------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
individually and as Administrative
Agent, Collateral Agent and Issuing
Bank,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
