Exhibit 4.1 (a)
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PEI HOLDINGS, INC.
as Issuer,
and the Guarantors party hereto
and
Bank One, N.A.
as Trustee
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Indenture
Dated as of March 11, 2003
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11% Senior Secured Notes due 2010
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CROSS REFERENCE TABLE
TIA Sections Indenture Sections
------------ ------------------
ss. 310(a)..................................................................7.10
(b)............................................................7.03, 7.08
ss. 311.....................................................................7.03
ss. 312(a).................................................................12.02
(b).................................................................12.02
ss. 313(a)..................................................................7.06
(c)............................................................7.05, 7.06
(d)..................................................................7.06
ss. 314....................................................................10.02
(a)..................................................................4.17
(b)..................................................................4.18
ss. 315(a)..................................................................7.02
(b)..................................................................7.02
(c)..................................................................7.02
(d)..................................................................7.02
ss. 316(a)................................................2.05, 6.02, 6.04, 6.05
ss. 316(b)...........................................................6.07, 10.05
ss. 316(c).................................................................12.02
ss. 317(a)(1)...............................................................6.08
(a)(2)...............................................................6.09
(b)..................................................................2.03
ss. 318 ...................................................................12.01
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RECITALS
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.....................................................2
SECTION 1.02. Rules of Construction..........................................31
ARTICLE 2
THE NOTES
SECTION 2.01. Form, Dating and Denominations.................................31
SECTION 2.02. Execution and Authentication; Exchange Notes; Additional
Notes.......................................................33
SECTION 2.03. Registrar, Paying Agent and Authenticating Agent; Paying
Agent to Hold Money in Trust................................34
SECTION 2.04. Replacement Notes..............................................34
SECTION 2.05. Outstanding Notes..............................................35
SECTION 2.06. Temporary Notes................................................35
SECTION 2.07. Cancellation...................................................36
SECTION 2.08. CUSIP and CINS Numbers.........................................36
SECTION 2.09. Registration, Transfer and Exchange............................36
SECTION 2.10. Restrictions on Transfer and Exchange..........................39
SECTION 2.11. Temporary Offshore Global Notes................................41
ARTICLE 3
REDEMPTION; OFFER TO PURCHASE
SECTION 3.01. Optional Redemption............................................42
SECTION 3.02. Redemption with Proceeds of Equity Offering....................43
SECTION 3.03. Method and Effect of Redemption................................43
SECTION 3.04. Offer to Purchase..............................................44
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Notes...............................................46
SECTION 4.02. Maintenance of Office or Agency................................47
SECTION 4.03. Existence......................................................47
SECTION 4.04. [Intentionally omitted.].......................................48
SECTION 4.05. Maintenance of Properties and Insurance........................48
SECTION 4.06. Limitation on Incurrence of Indebtedness and Issuance of
Preferred Stock.............................................48
SECTION 4.07. Limitation on Restricted Payments..............................51
SECTION 4.08. Limitation on Liens............................................55
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SECTION 4.09. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries...........................55
SECTION 4.10. Limitation on Issuances and Sales of Equity Interests in
Restricted Subsidiaries.....................................57
SECTION 4.11. Additional Note Guarantees.....................................58
SECTION 4.12. Repurchase of Notes upon a Change of Control...................58
SECTION 4.13. Limitation on Asset Sales......................................60
SECTION 4.14. Transactions with Affiliates...................................62
SECTION 4.15. Business Activities............................................64
SECTION 4.16. Designation of Restricted and Unrestricted Subsidiaries........64
SECTION 4.17. Financial Reports..............................................66
SECTION 4.18. Reports to Trustee.............................................67
SECTION 4.19. Impairment of Security Interest; Further Assurances............68
ARTICLE 5
CONSOLIDATION, MERGER OR SALE OF ASSETS
SECTION 5.01. Consolidation, Merger or Sale of Assets of the Company.........68
SECTION 5.02. Consolidation, Merger or Sale of Assets of Playboy.............70
SECTION 5.03. Consolidation, Merger or Sale of Assets of Subsidiary
Guarantors..................................................71
ARTICLE 6
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default..............................................72
SECTION 6.02. Acceleration...................................................74
SECTION 6.03. Other Remedies.................................................74
SECTION 6.04. Waiver of Past Defaults........................................74
SECTION 6.05. Control by Majority............................................74
SECTION 6.06. Limitation on Suits............................................75
SECTION 6.07. Rights of Holders to Receive Payment...........................75
SECTION 6.08. Collection Suit by Trustee.....................................75
SECTION 6.09. Trustee May File Proofs of Claim...............................76
SECTION 6.10. Priorities.....................................................76
SECTION 6.11. Restoration of Rights and Remedies.............................76
SECTION 6.12. Undertaking for Costs..........................................77
SECTION 6.13. Rights and Remedies Cumulative.................................77
SECTION 6.14. Delay or Omission Not Waiver...................................77
SECTION 6.15. Waiver of Stay, Extension or Usury Laws........................77
ARTICLE 7
THE TRUSTEE
SECTION 7.01. General........................................................78
SECTION 7.02. Certain Rights of Trustee......................................78
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SECTION 7.03. Individual Rights of Trustee...................................79
SECTION 7.04. Trustee's Disclaimer...........................................80
SECTION 7.05. Notice of Default..............................................80
SECTION 7.06. Reports by Trustee to Holders..................................80
SECTION 7.07. Compensation and Indemnity.....................................80
SECTION 7.08. Replacement of Trustee.........................................81
SECTION 7.09. Successor Trustee by Merger....................................82
SECTION 7.10. Eligibility....................................................82
SECTION 7.11. Money Held in Trust............................................83
ARTICLE 8
DEFEASANCE AND DISCHARGE
SECTION 8.01. Discharge of Company's Obligations.............................83
SECTION 8.02. Legal Defeasance...............................................84
SECTION 8.03. Covenant Defeasance............................................85
SECTION 8.04. Application of Trust Money.....................................86
SECTION 8.05. Repayment to Company...........................................86
SECTION 8.06. Reinstatement..................................................87
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Amendments Without Consent of Holders..........................87
SECTION 9.02. Amendments With Consent of Holders.............................90
SECTION 9.03. Effect of Consent..............................................92
SECTION 9.04. Trustee's Rights and Obligations...............................92
SECTION 9.05. Conformity with Trust Indenture Act............................93
SECTION 9.06. Payments for Consents..........................................93
ARTICLE 10
SECURITY ARRANGEMENTS
SECTION 10.01. Security......................................................93
SECTION 10.02. Release of Collateral upon Sale of Assets.....................93
SECTION 10.03. Release of Collateral upon Release of Guarantee...............95
SECTION 10.04. Release upon Payment or Defeasance............................95
SECTION 10.05. Suits with Respect to Collateral..............................96
SECTION 10.06. Limitation on Duty of Trustee with Respect to the
Collateral.................................................96
ARTICLE 11
GUARANTEES
SECTION 11.01. The Guarantees................................................97
SECTION 11.02. Guarantee Unconditional.......................................97
SECTION 11.03. Discharge; Reinstatement......................................98
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SECTION 11.04. Waiver by the Guarantors......................................98
SECTION 11.05. Subrogation and Contribution..................................98
SECTION 11.06. Stay of Acceleration..........................................98
SECTION 11.07. Limitation on Amount of Guarantee.............................98
SECTION 11.08. Execution and Delivery of Guarantee...........................99
SECTION 11.09. Release of Guarantee..........................................99
SECTION 11.10. State Law Provisions..........................................99
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act of 1939..................................101
SECTION 12.02. Noteholder Communications; Noteholder Actions................101
SECTION 12.03. Notices......................................................102
SECTION 12.04. Certificate and Opinion as to Conditions Precedent...........102
SECTION 12.05. Statements Required in Certificate or Opinion................103
SECTION 12.06. Payment Date Other Than a Business Day.......................103
SECTION 12.07. Governing Law................................................103
SECTION 12.08. No Adverse Interpretation of Other Agreements................103
SECTION 12.09. Successors...................................................104
SECTION 12.10. Duplicate Originals..........................................104
SECTION 12.11. Separability.................................................104
SECTION 12.12. Table of Contents and Headings...............................104
SECTION 12.13. No Liability of Directors, Officers, Employees,
Incorporators, Members and Stockholders...................104
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EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Supplemental Indenture
EXHIBIT C Restricted Legend
EXHIBIT D DTC Legend
EXHIBIT E Regulation S Certificate
EXHIBIT F Rule 144A Certificate
EXHIBIT G Institutional Accredited Investor Certificate
EXHIBIT H Certificate of Beneficial Ownership
EXHIBIT I Temporary Offshore Global Note Legend
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INDENTURE, dated as of March 11, 2003, between PEI Holdings, Inc., a
Delaware corporation, as the Company, the Guarantors party hereto and Bank One,
N.A., a national banking association, as Trustee.
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of up to $115,000,000 aggregate principal
amount of the Company's 11% Senior Secured Notes due 2010 and Exchange Notes to
be issued in exchange therefor as provided herein (together with, if and when
issued, any Additional Notes and Exchange Notes issued in exchange therefor as
provided herein, the "Notes"). All things necessary to make this Indenture a
valid agreement of the Company, in accordance with its terms, have been done,
and the Company has done all things necessary to make the Notes, when executed
by the Company and authenticated and delivered by the Trustee and duly issued by
the Company, the valid obligations of the Company as hereinafter provided.
In addition, the Guarantors party hereto have duly authorized the
execution and delivery of this Indenture as guarantors of the Notes. All things
necessary to make this Indenture a valid agreement of each Guarantor, in
accordance with its terms, have been done, and each Guarantor has done all
things necessary to make the Note Guarantee of such Guarantor, when the Notes
are executed by the Company and authenticated and delivered by the Trustee and
duly issued by the Company, the valid obligations of such Guarantor as
hereinafter provided.
This Indenture is subject to, and will be governed by, the provisions of
the Trust Indenture Act that are required to be a part of and govern indentures
qualified under the Trust Indenture Act.
THIS INDENTURE WITNESSETH
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, the parties hereto covenant and agree, for the equal and
proportionate benefit of all Holders, as follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, whether or not such Indebtedness is incurred in connection with,
or in contemplation of, such other Person merging with or into, or
becoming a Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person, (to the extent of the fair market value of such
asset where the Indebtedness so secured is not the Indebtedness of such
Person), or Indebtedness otherwise assumed by such specified Person in
connection with an acquisition of assets from any other Person.
"Additional Notes" means any Notes issued under this Indenture in addition
to the Original Notes, including any Exchange Notes issued in exchange for such
Additional Notes, having the same terms in all respects as the Original Notes
except that interest will accrue on the Additional Notes from their date of
issuance.
"Administrative Agent" means Bank of America, N.A., as administrative
agent under the Credit Agreement or a successor agent or administrative agent.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise (it being understood that Playboy TV -- Latin America,
LLC is not an Affiliate of Playboy on the date of this Indenture as a result of
its ownership and governance structure as in effect on the date of this
Indenture). For purposes of this definition, the terms "controlling,"
"controlled by" and "under common control with" shall have correlative meanings.
"Agent" means any Registrar, Paying Agent or Authenticating Agent.
"Agent Member" means a member of, or a participant in, the Depositary.
2
"Asset Sale" means (1) the sale, lease, conveyance or other disposition of
any assets or rights including by way of merger or consolidation; provided that
the sale, conveyance or other disposition of all or substantially all of the
assets of Playboy or the Company will be governed by Section 4.12 and/or Article
5 and not by the provisions of Section 4.13; and (2) the issuance of Equity
Interests by any of Playboy's Restricted Subsidiaries or the sale by Playboy or
any of its Restricted Subsidiaries of Equity Interests in any of its Restricted
Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) any single transaction or series of related transactions that
involves assets having a fair market value of less than $1.0 million;
(2) a transfer of assets between or among Playboy and its Restricted
Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary to
Playboy or to another Restricted Subsidiary of Playboy;
(4) an issuance of Common Stock of ▇▇▇▇▇▇▇.▇▇▇ to holders of
▇▇▇▇▇▇▇.▇▇▇ Series A Preferred Stock or pursuant to the exercise of
warrants outstanding on the date of this Indenture, in each case, as
required by the terms thereof as in effect on the date of this Indenture;
(5) the sale, lease or license of assets or rights in the ordinary
course of business consistent with past practice;
(6) the sale of obsolete or worn-out assets;
(7) the surrender or waiver of contract rights or settlement,
release or surrender of a contract, tort or other litigation claim in the
ordinary course of business;
(8) the granting of Liens not prohibited by this Indenture;
(9) the sale or other disposition of cash or Cash Equivalents or
other marketable securities (other than any marketable securities issued
by any Subsidiary of Playboy);
(10) any sale or other disposition of Equity Interests in or
Indebtedness or other securities of an Unrestricted Subsidiary; and
(11) a Restricted Payment or Permitted Investment that is not
prohibited by Section 4.07.
3
"Asset Sale Offer" has the meaning assigned to such term in Section
4.13(d).
"Attributable Debt" means, in respect of a sale and leaseback transaction,
at the time of determination, (i) in the case of a capital lease, the Capital
Lease Obligation in respect thereof, or (ii) in all other cases, the present
value of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction,
including any period for which such lease has been extended or may, at the
option of the lessor, be extended. Such present value shall be calculated using
a discount rate equal to the rate of interest implicit in such transaction,
determined in accordance with GAAP.
"Authenticating Agent" refers to a Person engaged to authenticate the
Notes in the stead of the Trustee.
"Bankruptcy Default" has the meaning assigned to such term in Section
6.01.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
"Board of Directors" means:
(1) with respect to a corporation, the board of directors of the
corporation;
(2) with respect to a partnership, the board of directors of the
general partner of the partnership; and
(3) with respect to any other Person, the board or committee of such
Person serving a similar function.
Unless the context otherwise provides, "Board of Directors" refers to the Board
of Directors of Playboy.
"Board Resolution" means a resolution duly adopted by the Board of
Directors which is certified by the Secretary or an Assistant Secretary of
Playboy and remains in full force and effect as of the date of its
certification.
4
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in The City of New York or in the city where the
Corporate Trust Office of the Trustee is located are authorized by law to close.
"Califa Agreement" means the Asset Purchase Agreement, dated as of June
29, 2001, among Playboy, Califa Entertainment Group, Inc., V.O.D., Inc., ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Califa Obligation" means any obligation of Playboy, the Company or any
Restricted Subsidiary pursuant to or arising in connection with the Califa
Agreement or any related agreement, in each case, as amended from time to time.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person; provided that the foregoing expressly
excludes any deferred compensation, phantom equity or similar benefit
plan.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged
in support thereof) having maturities of not more than one year from the
date of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank
5
deposits, in each case, with any domestic commercial bank having capital
and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of
"B" or better;
(4) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from
▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's Rating Services and
in each case maturing within one year after the date of acquisition; and
(6) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (1) through
(5) of this definition.
"Certificate of Beneficial Ownership" means a certificate substantially in
the form of Exhibit H.
"Certificated Note" means a Note in registered individual form without
interest coupons.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the
properties or assets of Playboy and its Restricted Subsidiaries, taken as
a whole, to any "person" (as that term is used in Section 13(d)(3) of the
Exchange Act);
(2) the adoption of a plan relating to the liquidation or
dissolution of the Company or Playboy;
(3) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), other than the Principal and his
Related Parties, becomes the Beneficial Owner, directly or indirectly, of
50% or more of the voting power of all classes of Voting Stock of Playboy,
provided that the Principal and his Related Parties are the Beneficial
Owner of less than 50% of the total voting power of all classes of Voting
Stock of Playboy;
(4) the first day on which a majority of the members of the board of
directors of Playboy are not Continuing Directors;
6
(5) the Company or Playboy consolidates with, or merges with or
into, any Person, or any Person consolidates with, or merges with or into
the Company or Playboy, in any such event pursuant to a transaction in
which any of the outstanding Voting Stock of the Company or Playboy or
such other Person is converted into or exchanged for cash, securities or
other property, other than any such transaction where the Voting Stock of
the Company or Playboy outstanding immediately prior to such transaction
is converted into or exchanged for (or continues as) Voting Stock (other
than Disqualified Stock) of the surviving or transferee Person
constituting a majority of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to
such issuance);
(6) the Principal and his Related Parities and Affiliates are, or
become, the Beneficial Owners, directly or indirectly, of more than 90% of
the total capital stock of Playboy; or
(7) Playboy ceases to own directly or indirectly 100% of the Equity
Interests of the Company other than the ▇▇▇▇▇▇ Securities.
"Clearstream" means Clearstream Banking Luxembourg S.A. and its
successors.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means any and all assets and rights and interest in or to the
property of the Company and each Guarantor, whether real or personal, tangible
or intangible, in which a Lien is granted or purported to be granted pursuant to
the Security Documents.
"Collateral Requirement" means the requirement that:
(1) all documents and instruments, including Uniform Commercial Code
financing statements and Mortgages, required by law to be filed,
registered or recorded to create the Liens intended to be created by the
Security Documents and perfect or record such Liens as valid Liens with
the priority set forth in the Security Documents and the Intercreditor
Agreement, free of any other Liens except for Permitted Liens, shall have
been filed, registered or recorded; and
(2) the Trustee shall have received, with respect to each Mortgaged
Property, counterparts of a Mortgage duly executed and delivered by the
record owner of such Mortgaged Property, a lender's title insurance policy
insuring the lien of each Mortgage, an existing survey of the Mortgaged
Property and the Opinions of Counsel required pursuant to Section 4.18(c).
7
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" means Capital Stock not entitled to any preference on
dividends or distributions, upon liquidation or otherwise.
"Company" means the party named as such in the first paragraph of this
Indenture or any successor obligor under this Indenture and the Notes pursuant
to Section 5.01.
"Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus
(without duplication):
(1) provision for taxes based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income; plus
(2) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether or not paid or accrued and whether
or not capitalized (including, without limitation, to the extent properly
characterized as interest expense in accordance with GAAP, amortization of
debt issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net of the effect
of all payments made or received pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated
Net Income, provided that any amount of interest of a Restricted
Subsidiary, if the net income of such Restricted Subsidiary is excluded in
the calculation of Consolidated Net Income shall be excluded; plus
(3) non-cash imputed interest expense on the deferred acquisition
price of assets to the extent that such expense was deducted in computing
such Consolidated Net Income; plus
(4) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses (excluding
any such non-cash expense, to the extent that it represents an accrual of
or
8
reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period; provided that this
exclusion shall not apply to restructuring reserves and the accretion of
the liquidation preference and mandatory redemption price on the
▇▇▇▇▇▇▇.▇▇▇ Series A Preferred Stock pursuant to the terms thereof as in
effect on the date of this Indenture) of such Person and its Subsidiaries
for such period to the extent that such depreciation, amortization and
other non-cash expenses were deducted in computing such Consolidated Net
Income; minus
(5) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue consistent with past practice;
minus
(6) investments in programming; minus
(7) cash expenses that relate to restructuring reserves other than
restructuring reserves taken on or prior to December 31, 2002;
in each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash expenses
of, a Restricted Subsidiary of Playboy shall be added to Consolidated Net Income
to compute Consolidated Cash Flow of Playboy only to the extent that a
corresponding amount would be permitted at the date of determination to be
dividended to Playboy by such Restricted Subsidiary without prior governmental
approval (that has not been obtained), and without direct or indirect
restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the Net Income of any Person that is not a Restricted Subsidiary
or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions
paid in cash to the specified Person or a Restricted Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the
9
terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded; and
(4) the cumulative effect of a change in accounting principles shall
be excluded.
"Continuing Directors" means, with respect to any specified Person, as of
any date of determination, any member of the board of directors of who
(1) was a member of such board of directors on the date of this
Indenture; or
(2) was nominated for election or elected to such board of directors
with the approval of (a) a majority of the Continuing Directors who were
members of such board at the time of such nomination or election or (b)
the Principal or a Related Party of the Principal.
"Corporate Trust Office" means the office of the Trustee at which this
Indenture is principally administered, which at the date of this Indenture is
located at ▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration, except that for purposes of Section 4.02, it shall mean the
office of the Trustee located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Covenant Defeasance" has the meaning assigned to such term in Section
8.03.
"Credit Agreement" means that certain Credit Agreement, dated as of the
date hereof, among the Company, each lender from time to time party thereto and
the Administrative Agent providing for revolving credit borrowing and letters of
credit, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, replaced or refinanced from time to time.
"Credit Facilities" means one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit and any Hedging Obligations owing
to the lenders
10
thereunder and their affiliates, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"date of this Indenture" means March 11, 2003.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Depositary" means the depositary of each Global Note, which will
initially be DTC.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures (excluding any maturity as the result of the
redemption thereof at the option of the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature, except to the extent
that such Capital Stock is (either mandatorily or at the option of the issuer
thereof) redeemable solely with, or exchangeable solely for, any Equity
Interests of Playboy that are not Disqualified Stock; provided, however, that
only the portion of Capital Stock or other security which so matures, is
mandatorily redeemable or is so redeemable at the option of the holder prior to
such date will be deemed to be Disqualified Stock; provided further that, if
such Capital Stock or other security is issued to any employee or to any plan
for the benefit of employees of Playboy or its Subsidiaries or by any such plan
to such employees, such Capital Stock or other security will not constitute
Disqualified Stock solely because it may be required to be repurchased by
Playboy or any of its Subsidiaries in order to satisfy applicable statutory or
regulatory obligations as a result of such employee's termination, death or
disability. Notwithstanding the preceding sentence, any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
change of control or an asset sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.07.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary that was
formed under the laws of the United States or any state thereof or the District
of Columbia or that Guarantees or otherwise provides direct credit support for
any Indebtedness of Playboy or the Company.
"DTC" means The Depository Trust Company, a New York corporation, and its
successors.
11
"DTC Legend" means the legend set forth in Exhibit D.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means an offer and sale of Equity Interests (other than
Disqualified Stock) of Playboy for cash (other than offers and sales relating to
any employee benefit plan of Playboy).
"Euroclear" means Euroclear Bank S.A./N.V., and its successors or assigns,
as operator of the Euroclear System.
"Event of Default" has the meaning assigned to such term in Section 6.01.
"Excess Proceeds" has the meaning assigned to such term in Section 4.13.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Notes" means the Notes issued pursuant to this Indenture in
exchange for, and in an aggregate principal amount equal to, the Initial Notes
or any Initial Additional Notes in compliance with the terms of a Registration
Rights Agreement and containing terms substantially identical to the Initial
Notes or any Initial Additional Notes (except that (i) such Exchange Notes will
be registered under the Securities Act and will not be subject to transfer
restrictions or bear the Restricted Legend, and (ii) the provisions relating to
Liquidated Damages will be eliminated).
"Exchange Offer" means an offer by the Company to the Holders of the
Initial Notes or any Initial Additional Notes to exchange outstanding Notes for
Exchange Notes, as provided for in a Registration Rights Agreement.
"Exchange Offer Registration Statement" means the Exchange Offer
Registration Statement as defined in a Registration Rights Agreement.
"Existing Indebtedness" means the aggregate principal amount of
Indebtedness of Playboy and its Subsidiaries (other than Indebtedness under the
Credit Agreement) in existence on the date of this Indenture, until such amounts
are repaid.
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued, including, without
12
limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect
to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings,
and net of the effect of all payments made or received pursuant to Hedging
Obligations; provided that (a) any amount of interest of a Restricted
Subsidiary, if the net income of such Restricted Subsidiary is excluded in
the calculation of Net Income, and (b) non-cash imputed interest expense
on the deferred acquisition price of assets to the extent that the
obligation represented by such imputed interest is either required to be
or at the option of Playboy or such Restricted Subsidiary, as the case may
be, may be satisfied solely through the issuance of Equity Interests of
Playboy that are not Disqualified Stock shall be excluded; plus
(2) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured
by a Lien on assets of such Person or one of its Restricted Subsidiaries,
whether or not such Guarantee or Lien is called upon; plus
(4) the product of (a) all dividends, whether paid or accrued and
whether or not in cash, on any series of Disqualified Stock or preferred
stock of such Person or any of its Restricted Subsidiaries, other than (i)
dividends on Equity Interests paid solely in Equity Interests of Playboy
(other than Disqualified Stock), (ii) dividends paid to Playboy or any of
its Restricted Subsidiaries, (iii) dividends and the accretion of the
liquidation preference and mandatory redemption price on the ▇▇▇▇▇▇▇.▇▇▇
Series A Preferred Stock pursuant to the terms thereof as in effect on the
date of this indenture and (iv) dividends on the ▇▇▇▇▇▇ Securities
permitted pursuant to Section 4.07(b)(9), times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the
then current combined federal, state and local statutory tax rate of such
Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
"Foreign Subsidiary" means any Restricted Subsidiary of Playboy other than
a Domestic Restricted Subsidiary.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
13
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.
"Global Note" means a Note in registered global form without interest
coupons.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantors" means:
(1) Playboy and
(2) each direct or indirect Domestic Restricted Subsidiary of
Playboy that executes a Note Guarantee in accordance with the provisions
of this Indenture,
and their respective successors and assigns unless and until such Guarantors are
released from the Note Guarantees pursuant to this Indenture.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates, currency exchange rates or
commodity prices.
"▇▇▇▇▇▇ Securities" means (i) preferred stock of the Company with an
aggregate liquidation preference of $26,735,490.69 issued in exchange for
promissory notes of ▇▇▇▇▇▇▇.▇▇▇ outstanding on the date of this Indenture and
(ii) Equity Securities of Playboy (other than Disqualified Stock) issued in
exchange therefor.
"Holder" or "Noteholder" means the registered holder of any Note.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(1) in respect of borrowed money;
14
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof),
excluding letters of credit securing obligations other than obligations
described in clauses (1), (2), (4) and (6) of this paragraph and entered
into in the ordinary course of business of such Person, to the extent such
letters of credit are not drawn upon, or if drawn upon, to the extent such
drawing is reimbursed no later than the third business day following
receipt by such Person of a demand for reimbursement;
(3) in respect of banker's acceptances;
(4) representing Capital Lease Obligations or Attributable Debt;
(5) representing the balance deferred and unpaid of the purchase
price of any property or services, except any such balance that
constitutes an accrued expense or trade payable, which purchase price is
due more than six months after the date of placing such property in
service or taking delivery and title or the completing of such services
excluding any obligation to the extent that it is either required to be or
at the option of such Person may be satisfied solely through the issuance
of Equity Interests of Playboy that are not Disqualified Stock; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP.
In addition, the term "Indebtedness" includes
(1) all Indebtedness of others secured by a Lien on any asset of the
specified Person whether or not such Indebtedness is assumed by the
specified Person, provided that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset as of the date of
determination and (B) the amount of such Indebtedness, and, to the extent
not otherwise included, the Guarantee by the specified Person of any
Indebtedness of any other Person;
(2) obligations of such Person and its Restricted Subsidiaries to
repay Disqualified Stock; and
(3) the liquidation preference of all preferred stock of any of such
Person's Restricted Subsidiaries other than the ▇▇▇▇▇▇▇.▇▇▇ Series A
Preferred Stock and the ▇▇▇▇▇▇ Securities.
15
The amount of any Indebtedness outstanding as of any date shall be:
(1) with respect to any contingent obligation included as
Indebtedness, the maximum liability upon the occurrence of the contingency
giving rise to the obligation;
(2) with respect to any Hedging Obligation, the net amount payable
if such Hedging Obligation terminated at that time due to default by such
Person;
(3) the accreted value thereof, in the case of any Indebtedness
issued with original issue discount; and
(4) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.
"Indenture" means this indenture, as amended or supplemented from time to
time.
"Initial Additional Notes" means Additional Notes issued in an offering
not registered under the Securities Act and any Notes issued in replacement
thereof, but not including any Exchange Notes issued in exchange therefor.
"Initial Notes" means the Notes issued on the Issue Date and any Notes
issued in replacement thereof, but not including any Exchange Notes issued in
exchange therefor.
"Initial Purchasers" means Banc of America Securities LLC and Lazard
Freres & Co. LLC.
"Institutional Accredited Investor Certificate" means a certificate
substantially in the form of Exhibit G hereto.
"Intercreditor Agreement" means the Intercreditor Agreement of even date
herewith among the Administrative Agent, the Trustee, Playboy, the Company and
Playboy's Domestic Restricted Subsidiaries in existence as of the date hereof.
"interest", in respect of the Notes, unless the context otherwise
requires, refers to interest and Liquidated Damages, if any.
"Interest Payment Date" means each March 15 and September 15 of each year,
commencing September 15, 2003.
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons, including Affiliates, in the forms
of
16
loans, including Guarantees or other obligations, advances or capital
contributions (excluding commission, travel and similar advances to officers,
employees, customers and suppliers made consistent with past practices),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Restricted Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Restricted Subsidiary not sold or disposed of in an amount determined as
provided in Section 4.07(c). The acquisition by the Company or any Restricted
Subsidiary of the Company of a Person that holds an Investment in a third Person
shall be deemed to be an Investment by the Company or such Restricted Subsidiary
in such third Person in an amount equal to the fair market value of the
Investment held by the acquired Person in such third Person in an amount
determined as provided in Section 4.07(c).
"Issue Date" means the date on which the Original Notes are originally
issued under this Indenture.
"Legal Defeasance" has the meaning assigned to such term in Section 8.02.
"Leverage Ratio" means, on any date (the "transaction date"), the ratio of
(x) the sum of consolidated Indebtedness of Playboy and its
Restricted Subsidiaries to
(y) the aggregate amount of Consolidated Cash Flow of Playboy for
the four fiscal quarters immediately prior to the transaction date for
which internal financial statements are available (the "reference
period").
In making the foregoing calculation,
(1) any Indebtedness, Disqualified Stock or preferred stock to be
repaid or redeemed on the transaction date will be excluded; and
(2) pro forma effect (determined in accordance with Regulation S-X
under the Securities Act) will be given to
(A) the creation, designation or redesignation of Restricted
Subsidiaries and Unrestricted Subsidiaries,
17
(B) the acquisition or disposition of companies, divisions or
lines of businesses by Playboy and its Restricted Subsidiaries,
including any acquisition or disposition of a company, division or
line of business since the beginning of the reference period by a
Person that became a Restricted Subsidiary after the beginning of
the reference period, and
(C) the discontinuation of any discontinued operations
that have occurred since the beginning of the reference period as if such
events had occurred, and, in the case of any disposition, the proceeds
thereof applied, on the first day of the reference period. To the extent
that pro forma effect is to be given to an acquisition or disposition of a
company, division or line of business, the pro forma calculation will be
based upon the most recent four full fiscal quarters for which the
relevant financial information is available.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidated Damages" means all liquidated damages owed to the Holders
pursuant to a Registration Rights Agreement.
"Mortgaged Property" means all "Mortgaged Property" and/or "Trust
Property" as defined in any Mortgage and subject to any such Mortgage.
"Mortgages" means, collectively, (i) the Secured Priority Deed and Trust
with Assignment of Rents, Security Agreement and fixture filing dated as of the
Issue Date from Playboy Enterprises International, Inc., a Delaware corporation,
to Fidelity National Title Insurance Company for the benefit of the Trustee with
respect to ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and (ii) any
additional mortgage, deed of trust or similar instrument entered into by the
Company or any Guarantor from time to time after the Issue Date to provide a
security interest for the benefit of the Trustee and the Holders of the Notes.
"Net Income" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes
on such gain or loss, realized in connection with: (a) any Asset Sale; or
18
(b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain or loss, together with any related
provision for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate proceeds in cash or Cash Equivalents
received by Playboy or any of its Restricted Subsidiaries in respect of any
Asset Sale, including, without limitation, any cash or Cash Equivalents received
upon the sale or other disposition of any non-cash consideration received in any
Asset Sale, net of the direct costs relating to such Asset Sale, including,
without limitation, legal, accounting and investment banking fees, and sales
commissions, and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof, in each case, after taking into account any
available tax credits or deductions and any tax sharing arrangements, and
amounts required to be applied to the repayment of Indebtedness secured by a
Lien on the asset or assets that were the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither Playboy nor any of its Restricted
Subsidiaries (a) provides credit support of any kind, including any
undertaking, agreement or instrument that would constitute Indebtedness,
(b) is directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender;
(2) no default with respect to which, including any rights that the
holders thereof may have to take enforcement action against an
Unrestricted Subsidiary, would permit upon notice, lapse of time or both
any holder of any Indebtedness of Playboy or any of its Restricted
Subsidiaries to declare a default on such Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity;
and
(3) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of Playboy or any of its
Restricted Subsidiaries.
"Non-U.S. Person" means a Person that is not a U.S. person, as defined in
Regulation S.
"Note Guarantee" means the Guarantee of the Notes by a Guarantor pursuant
to this Indenture.
"Notes" has the meaning assigned to such term in the Recitals.
19
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offer to Purchase" has the meaning assigned to such term in Section 3.04.
"Officer" means the chairman of the Board of Directors, the president or
chief executive officer, any executive vice president, any senior vice
president, any vice president, the chief financial officer, the treasurer or any
assistant treasurer, or the secretary or any assistant secretary, of the
Company.
"Officers' Certificate" means a certificate signed in the name of the
Company (i) by the chairman of the Board of Directors, the president or chief
executive officer, any executive vice president, any senior vice president, or
any vice president and (ii) by the chief financial officer, the treasurer or any
assistant treasurer or the secretary or any assistant secretary.
"Offshore Global Note" means a Global Note representing Notes offered and
sold in offshore transactions in reliance on Regulation S.
"Opinion of Counsel" means a written opinion signed by legal counsel, who
may be an employee of or counsel to Playboy or any of its Subsidiaries and who,
in the case of any such opinion required to be delivered to the Trustee which is
provided by outside counsel, is reasonably acceptable to the Trustee.
"Original Notes" means the Initial Notes and any Exchange Notes issued in
exchange therefor.
"Paying Agent" refers to a Person engaged to perform the obligations of
the Trustee in respect of payments made or funds held hereunder in respect of
the Notes.
"Permanent Offshore Global Note" means an Offshore Global Note that does
not bear the Temporary Offshore Global Note Legend.
"Permitted Business" means any business conducted or proposed to be
conducted (as described in the offering memorandum dated March 6, 2003 relating
to the Notes) by Playboy, the Company and their Restricted Subsidiaries on the
date of this Indenture and other businesses reasonably related, complementary or
ancillary thereto.
"Permitted Investments" means:
(1) any Investment in Playboy, the Company or a Restricted
Subsidiary of Playboy;
20
(2) any Investment in Cash Equivalents and, in the case of any
Subsidiary of Playboy that was not formed under the laws of the United
States or any state thereof or the District of Columbia, Investments in
short-term instruments substantially similar to Cash Equivalents and
customarily used in the country in which such Subsidiary is located;
(3) any Investment by Playboy or any Restricted Subsidiary of
Playboy in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of Playboy and
a Guarantor; or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or
is liquidated into, Playboy, the Company, a Wholly-Owned Restricted
Subsidiary of Playboy that is a Guarantor or ▇▇▇▇▇▇▇.▇▇▇ or any of
its Wholly-Owned Restricted Subsidiaries;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.13;
(5) any Investment made solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of Playboy;
(6) Hedging Obligations;
(7) any Investments made solely to fund Playboy's 1997 deferred
compensation plan for non-employee directors or any successor plan
approved by the Board of Directors of Playboy;
(8) any Investments received in satisfaction of judgments,
settlements of debt or compromises of obligations incurred in the ordinary
course of business, including pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of any trade
creditor, customer or joint venture partner;
(9) receivables owing to Playboy, the Company or any Restricted
Subsidiary of the Company if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade
terms; provided that such trade terms may include such concessionary trade
terms as Playboy, the Company or such Restricted Subsidiary deems
reasonable under the circumstances;
21
(10) Investments in joint ventures to which Playboy, the Company or
a Restricted Subsidiary is party on the date of this Indenture, in an
aggregate amount not to exceed $2.5 million;
(11) Investments in a Person received solely in exchange for (a)
licenses to intellectual property (other than an exclusive license or
licenses to use in the United States or a majority of states or states
incorporating a majority of the population of the United States thereof
(i) the Playboy name or Rabbit Head Design for all or substantially all of
its current uses, (ii) all or substantially all of the video and film
library owned by Playboy and its Subsidiaries for all or substantially all
of its current uses or (iii) all or substantially all of the image library
owned by Playboy and its Subsidiaries for all or substantially all of its
current uses) or (b) other property (excluding cash or Cash Equivalents)
in an aggregate amount in the case of clause (b) not to exceed $5.0
million;
(12) Investments deemed to have been made as a result of the
acquisition of a Person that at the time of such acquisition held
instruments constituting Investments that were not acquired in
contemplation of the acquisition of such Person; and
(13) other Investments in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (13) since the date of
this Indenture, not to exceed $5.0 million.
"Permitted Liens" means:
(1) Liens on the assets (other than Primary Collateral) of the
Company and any Guarantor securing Obligations under or with respect to
Credit Facilities (including interest, fees, costs and expenses and
including Hedging Obligations owing to the lenders thereunder and their
Affiliates), provided that the aggregate principal amount of such
Obligations (excluding interest, fees, costs and expenses thereon) so
secured does not exceed $30 million;
(2) Liens securing the Notes or any Note Guarantee;
(3) Liens in favor of the Company or any Guarantor;
(4) Liens on property or assets of a Person existing at the time
such Person is acquired by, merged with or into or consolidated with
Playboy or any of its Restricted Subsidiaries; provided that such Liens
were not entered into in contemplation of such merger or consolidation and
do
22
not extend to any assets other than those of the Person merged into or
consolidated with Playboy or the Restricted Subsidiary;
(5) Liens on property or assets existing at the time of acquisition
thereof by Playboy or any of its Restricted Subsidiaries, provided that
such Liens were not entered into in contemplation of such acquisition and
do not extend to any property other than the property or assets so
acquired;
(6) Liens existing on the date of this Indenture;
(7) any attachment or judgment Lien not constituting an Event of
Default;
(8) Liens upon real or personal property acquired after the date of
this Indenture; provided that (a) such Lien is created solely for the
purpose of securing Indebtedness incurred to finance all or any part of
the purchase price or cost of construction or improvement of the property
or assets subject thereto and such Lien is created prior to, at the time
of or within 12 months after the later of the acquisition, completion of
construction or commencement of full operation of such property or assets
or to refinance any such Indebtedness previously so secured; (b) the
principal amount of the Indebtedness secured by such Lien does not exceed
100% of such cost; and (c) such Lien must not extend to or cover any
property or assets other than such item of property or assets and any
improvements on such item;
(9) Liens on the assets of the Company and any Guarantor securing
Indebtedness permitted by Section 4.06 which Liens (x) do not extend to
any assets other than the Collateral and (y) rank equally in right of
payment with or are junior to the Liens securing the Notes; provided that
any Liens on the Primary Collateral securing Obligations under or with
respect to the Credit Facilities must be junior to the Liens securing the
Notes;
(10) Liens of taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in
good faith by appropriate proceedings and subject to appropriate reserves
in conformity with GAAP;
(11) Liens incurred in the ordinary course of business not securing
Indebtedness and not in the aggregate materially detracting from the value
of the properties or their use in the operation of the business of Playboy
and its Restricted Subsidiaries;
(12) Liens incurred in the ordinary course of business of Playboy or
any Restricted Subsidiary of Playboy with respect to obligations that do
not exceed $10.0 million at any one time outstanding;
23
(13) extensions, renewals or replacements of any Liens referred to
in clauses (4), (5), (6) or (8) of this definition in connection with the
refinancing of the obligations secured thereby, provided that such Lien
does not extend to any other property and, except as contemplated by the
definition of "Permitted Refinancing Indebtedness," the amount secured by
such Lien is not increased;
(14) Liens, bonds and deposits to secure the performance of
statutory obligations, bids, trade contracts and leases, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in
the ordinary course of business (including bonds in connection with
sweepstakes);
(15) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customer duties in connection with the
importation of goods and other similar Liens arising in the ordinary
course of business;
(16) leases and subleases granted to third Persons not materially
interfering with the ordinary course of business of Playboy and its
Restricted Subsidiaries taken as a whole;
(17) Liens incurred or pledges or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security laws or regulations;
(18) deposits made in the ordinary course of business to secure
liability to insurance carriers;
(19) licensing agreements for use of intellectual property entered
into in the ordinary course of business;
(20) Liens arising from Uniform Commercial Code financing statement
filings regarding operating leases entered into by Playboy and its
Restricted Subsidiaries in the ordinary course of business;
(21) Liens securing Hedging Obligations entered into for the purpose
of managing interest rate risk with respect to the Credit Facilities or
the Notes which are otherwise permitted under this Indenture;
(22) any Lien arising as a result of the sale of an option pursuant
to Section 4.14(b)(4);
(23) Liens on any item of Product or rights in Product to the extent
securing residuals, deferments or participations payable by Playboy or any
24
Restricted Subsidiary of Playboy relating exclusively to such items of
Product or rights in Product; and
(24) Liens on any asset relating to any item of Product or rights in
Product acquired by Playboy or any of its Restricted 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 the Lien is and will remain confined to the same Product
or rights in Product so acquired.
"Permitted Refinancing Indebtedness" means any Indebtedness of Playboy or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of Playboy or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount
(or accreted value, if applicable) of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest thereon and the amount of any reasonably determined premium
necessary to accomplish such refinancing and such reasonable expenses
incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of
payment to, the Notes on terms at least as favorable to the holders of
Notes as those contained in the documentation governing the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by Playboy, the Company or
by the Restricted Subsidiary that is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
25
"Person" means an individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Playboy" means Playboy Enterprises, Inc., a Delaware corporation, or any
successor obligor under this Indenture and its Guarantee pursuant to Section
5.02.
"▇▇▇▇▇▇▇.▇▇▇" means ▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation.
"Playboy Mansion" means the property located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
"Pledge Agreements" means, collectively, each pledge agreement now or
hereafter delivered by Playboy or any of its Restricted Subsidiaries, whereby
such Person pledges to the Trustee, as security for such Person's Obligations
under the Notes and for such Person's liabilities under any applicable Note
Guarantee, 100% of such Person's interests in the Equity Interests of each
Domestic Restricted Subsidiary or 65% of such Person's interests in the Equity
Interests of each first-tier Subsidiary that is a Foreign Subsidiary.
"Primary Collateral" means all Trademarks (as defined in the Security
Documents) owned as of the date of this Indenture or hereafter acquired by the
Company or any of the Guarantors.
"Principal" means ▇▇▇▇ ▇. ▇▇▇▇▇▇ or the ▇▇▇▇ ▇. ▇▇▇▇▇▇ 1991 Trust, acting
by its trustees, or in the event of ▇▇▇▇ ▇. ▇▇▇▇▇▇'▇ death, the ▇▇▇▇ ▇. ▇▇▇▇▇▇
1991 Trust and its successor trusts, acting by their trustees; the estate of
▇▇▇▇ ▇. ▇▇▇▇▇▇, acting by its personal representatives; the ▇▇▇▇ ▇. ▇▇▇▇▇▇
Foundation, acting by its directors; the beneficiaries of the ▇▇▇▇ ▇. ▇▇▇▇▇▇
1991 Trust and its successor trusts; the beneficiaries of the estate of ▇▇▇▇ ▇.
▇▇▇▇▇▇; or the heirs at law or descendants of ▇▇▇▇ ▇. ▇▇▇▇▇▇ or trusts created
for their benefit.
"principal" of any Debt means the principal amount of such Debt, (or if
such Debt was issued with original issue discount, the face amount of such Debt
less the remaining unamortized portion of the original issue discount of such
Debt), together with, unless the context otherwise indicates, any premium then
payable on such Debt.
"Product" means 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 Playboy
or any Restricted Subsidiary of Playboy has any proprietary or financial
interest including merchandising rights related thereto.
"Register" has the meaning assigned to such term in Section 2.09.
26
"Registrar" means a Person engaged to maintain the Register.
"Registration Rights Agreement" means (i) the Registration Rights
Agreement dated on or about the Issue Date by and among the Company, Playboy,
the Subsidiary Guarantors listed on the signature pages thereof and the Initial
Purchasers with respect to the Initial Notes, and (ii) with respect to any
Additional Notes, any registration rights agreements between the Company and the
other parties thereto relating to rights given by the Company to the purchasers
of Additional Notes to register such Additional Notes or exchange them for Notes
registered under the Securities Act.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the March 1 or September 1 (whether or not a Business Day) next
preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificate" means a certificate substantially in the form
of Exhibit E hereto.
"Related Party" means:
(1) any controlling stockholder, partner, member, 80% (or more)
owned Subsidiary, or spouse, descendant, or beneficiary of any Principal;
or
(2) the ▇▇▇▇ ▇. ▇▇▇▇▇▇ 1991 Trust and its successor trusts, acting
by their trustees; the ▇▇▇▇ ▇. ▇▇▇▇▇▇ Foundation; any other trust
established by a Principal for the primary benefit of the Principal or his
or her spouse, descendants, or heirs at law; any other charitable
foundation created by ▇▇▇▇ ▇. ▇▇▇▇▇▇; and any corporation, partnership,
limited liability company, or other entity, the stockholders, partners,
members, owners, or Persons beneficially holding an 80% or more
controlling interest of which consist of any one or more Principals and/or
such Persons referred to in the immediately preceding clause (1).
"Responsible Officer" means any officer assigned by the Trustee to
administer corporate trust matters and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his or her knowledge of, and familiarity with, the particular
subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Legend" means the legend set forth in Exhibit C.
27
"Restricted Payment" has the meaning assigned to such term in Section
4.07.
"Restricted Period" means the relevant 40-day distribution compliance
period as defined in Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary, it being understood that the
Company shall be a Restricted Subsidiary of Playboy at all times that it is a
Subsidiary of Playboy.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Certificate" means (i) a certificate substantially in the form
of Exhibit F hereto or (ii) a written certification addressed to the Company and
the Trustee to the effect that the Person making such certification (x) is
acquiring such Note (or beneficial interest) for its own account or one or more
accounts with respect to which it exercises sole investment discretion and that
it and each such account is a qualified institutional buyer within the meaning
of Rule 144A, (y) is aware that the transfer to it or exchange, as applicable,
is being made in reliance upon the exemption from the provisions of Section 5 of
the Securities Act provided by Rule 144A, and (z) acknowledges that it has
received such information regarding the Company as it has requested pursuant to
Rule 144A(d)(4) or has determined not to request such information.
"Securities Act" means the Securities Act of 1933.
"Security Agreements" means, collectively, each security agreement now or
hereafter executed by Playboy and any of its Domestic Restricted Subsidiaries
pursuant to which such Person grants to the Trustee, as security for the
Obligations hereunder or under the Notes, a Lien on substantially all of its
personal property.
"Security Documents" means the Security Agreements, the Pledge Agreements,
the Mortgages and all other agreements, instruments and documents now or
hereafter executed and delivered in connection with this Indenture pursuant to
which Liens are granted or purported to be granted to the Trustee in Collateral
securing all or part of the Obligations hereunder or under the Notes, each at
the time of its execution in form and substance reasonably satisfactory to the
Trustee.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in a Registration Rights Agreement.
"Significant Restricted Subsidiary" means any Restricted Subsidiary that
would, or group of Restricted Subsidiaries that would, taken together, be a
"significant subsidiary" as defined in Rule 1-02(w)(1) or (2) of Regulation S-X
28
promulgated under the Securities Act, as such regulation is in effect on the
date of this Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means each Guarantor, other than Playboy.
Temporary Offshore Global Note" means an Offshore Global Note that bears
the Temporary Offshore Global Note Legend.
"Temporary Offshore Global Note Legend" means the legend set forth in
Exhibit I.
"Trustee" means the party named as trustee in the first paragraph of this
Indenture or any successor trustee under this Indenture pursuant to Article 7.
"Trust Indenture Act" means the Trust Indenture Act of 1939.
"U.S. Global Note" means a Global Note that bears the Restricted Legend
representing Notes offered and sold in reliance on Rule 144A.
"U.S. Government Obligations" means obligations issued or directly and
fully guaranteed or insured by the United States of America or by any agent or
instrumentality thereof, provided that the full faith and credit of the United
States of America is pledged in support thereof.
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"Unrestricted Subsidiary" means any Subsidiary of Playboy that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with Playboy or any of its Restricted Subsidiaries unless
the terms of any such agreement, contract, arrangement or understanding
are no less favorable to Playboy or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of
Playboy or such Restricted Subsidiary;
(3) is a Person with respect to which neither Playboy nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of Playboy or any of its Restricted
Subsidiaries; and
(5) has at least one director on its Board of Directors that is not
a director or executive officer of Playboy or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director
or executive officer of Playboy or any of its Restricted Subsidiaries.
Any designation of a Restricted Subsidiary of Playboy as an Unrestricted
Subsidiary shall be evidenced to the trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07. If, at any time, any
Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of Playboy
as of such date and, if such Indebtedness is not permitted to be incurred as of
such date under Section 4.06, the Company shall be in default of such Section.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
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(1) the sum of the products obtained by multiplying (a) the amount
of each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment; by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.02. Rules of Construction. Unless the context otherwise requires
or except as otherwise expressly provided,
(1) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(2) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Section, Article or
other subdivision;
(3) all references to Recitals, Sections or Articles or Exhibits
refer to Recitals, Sections or Articles or Exhibits of or to this
Indenture unless otherwise indicated;
(4) references to agreements or instruments, or to statutes or
regulations, are to such agreements or instruments, or statutes or
regulations, as amended from time to time (or to successor statutes and
regulations); and
(5) in the event that a transaction meets the criteria of more than
one category of permitted transactions or listed exceptions the Company
may classify such transaction as it, in its sole discretion, determines.
ARTICLE 2
THE NOTES
SECTION 2.01. Form, Dating and Denominations. (a) The Notes and the
Trustee's certificate of authentication will be substantially in the form
attached as Exhibit A. The terms and provisions contained in the form of the
Notes annexed as Exhibit A constitute, and are hereby expressly made, a part of
this Indenture.
31
The Notes may have notations, legends or endorsements required by law, rules of
or agreements with national securities exchanges to which the Company is
subject, or usage. Each Note will be dated the date of its authentication. The
Notes will be issuable in denominations of $1,000 in principal amount and any
multiple of $1,000 in excess thereof.
(b) (1) Except as otherwise provided in Section 2.01(c), Section
2.10(b)(3), (b)(5), or (c) or Section 2.09(b)(4), each Initial Note or Initial
Additional Note (other than a Permanent Offshore Note) will bear the Restricted
Legend on the face thereof.
(2) Each Global Note, whether or not an Initial Note or Additional
Note, will bear the DTC Legend on the face thereof.
(3) Each Temporary Offshore Global Note will bear the Temporary
Offshore Global Note Legend on the face thereof.
(4) Initial Notes offered and sold in reliance on Regulation S will
be issued as provided in Section 2.11(a).
(5) Initial Notes offered and sold in reliance on any exception
under the Securities Act other than Regulation S and Rule 144A will be
issued, and upon the request of the Company to the Trustee, Initial Notes
offered and sold in reliance on Rule 144A may be issued, in the form of
Certificated Notes.
(6) Exchange Notes will be issued, subject to Section 2.09(b), in
the form of one or more Global Notes.
(c) (1) If the Company determines (upon the advice of counsel and such
other certifications and evidence as the Company may reasonably require) that a
Note is eligible for resale pursuant to Rule 144(k) under the Securities Act (or
a successor provision) and that the Restricted Legend is no longer necessary or
appropriate in order to ensure that subsequent transfers of the Note (or a
beneficial interest therein) are effected in compliance with the Securities Act,
or
(2) after an Initial Note or any Initial Additional Note is (x) sold
pursuant to an effective registration statement under the Securities Act,
pursuant to a Registration Rights Agreement or otherwise, or (y) is
validly tendered for exchange into an Exchange Note pursuant to an
Exchange Offer,
the Company may instruct the Trustee to cancel the Note and issue to the Holder
thereof (or to its transferee) a new Note of like tenor and amount, registered
in the name of the Holder thereof (or its transferee), that does not bear the
Restricted Legend, and the Trustee will comply with such instruction.
32
(d) By its acceptance of any Note bearing the Restricted Legend (or any
beneficial interest in such a Note), each Holder thereof and each owner of a
beneficial interest therein acknowledges the restrictions on transfer of such
Note (and any such beneficial interest) set forth in this Indenture and in the
Restricted Legend and agrees that it will transfer such Note (and any such
beneficial interest) only in accordance with this Indenture and such legend.
SECTION 2.02. Execution and Authentication; Exchange Notes; Additional
Notes. (a) An Officer shall execute the Notes for the Company by facsimile or
manual signature in the name and on behalf of the Company. If an Officer whose
signature is on a Note no longer holds that office at the time the Note is
authenticated, the Note will still be valid.
(b) A Note will not be valid until the Trustee manually signs the
certificate of authentication on the Note, with the signature conclusive
evidence that the Note has been authenticated under this Indenture.
(c) At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Notes executed by the Company to the
Trustee for authentication. The Trustee will authenticate and deliver
(i) Initial Notes for original issue in the aggregate principal
amount not to exceed $115,000,000,
(ii) Initial Additional Notes from time to time for original issue
in aggregate principal amounts specified by the Company, and
(iii) Exchange Notes from time to time for issue in exchange for a
like principal amount of Initial Notes or Initial Additional Notes
after the following conditions have been met:
(1) Receipt by the Trustee of an Officers' Certificate specifying
(A) the amount of Notes to be authenticated and the date on
which the Notes are to be authenticated,
(B) whether the Notes are to be Initial Notes or Additional
Notes or Exchange Notes,
(C) in the case of Initial Additional Notes, that the issuance
of such Notes does not contravene any provision of Article 4,
(D) whether the Notes are to be issued as one or more Global
Notes or Certificated Notes, and
33
(E) other information the Company may determine to include or
the Trustee may reasonably request.
(2) In the case of Initial Additional Notes, receipt by the Trustee
of an Opinion of Counsel confirming that the Holders of the outstanding
Notes will be subject to federal income tax in the same amounts, in the
same manner and at the same times as would have been the case if such
Additional Notes were not issued.
(3) In the case of Exchange Notes, effectiveness of an Exchange
Offer Registration Statement and consummation of the exchange offer
thereunder (and receipt by the Trustee of an Officers' Certificate to that
effect). Initial Notes or Initial Additional Notes exchanged for Exchange
Notes will be cancelled by the Trustee.
SECTION 2.03. Registrar, Paying Agent and Authenticating Agent; Paying
Agent to Hold Money in Trust. (a) The Company may appoint one or more Registrars
and one or more Paying Agents, and the Trustee may appoint an Authenticating
Agent, in which case each reference in this Indenture to the Trustee in respect
of the obligations of the Trustee to be performed by that Agent will be deemed
to be references to the Agent. The Company may act as Registrar or (except for
purposes of Article 8) Paying Agent. In each case the Company and the Trustee
will enter into an appropriate agreement with the Agent implementing the
provisions of this Indenture relating to the obligations of the Trustee to be
performed by the Agent and the related rights. The Company initially appoints
the Trustee as Registrar and Paying Agent.
(b) The Company will require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of the
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of and interest on the Notes and will promptly notify the Trustee of
any default by the Company in making any such payment. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee and
account for any funds disbursed, and the Trustee may at any time during the
continuance of any payment default, upon written request to a Paying Agent,
require the Paying Agent to pay all money held by it to the Trustee and to
account for any funds disbursed. Upon doing so, the Paying Agent will have no
further liability for the money so paid over to the Trustee.
SECTION 2.04. Replacement Notes. If a mutilated Note is surrendered to the
Trustee or if a Holder claims that its Note has been lost, destroyed or
wrongfully taken, the Company will issue and the Trustee will authenticate a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding. Every replacement Note is an additional
obligation of the Company and entitled to the benefits of this Indenture. If
required by the Trustee or the Company, an indemnity must be furnished that is
34
sufficient in the judgment of both the Trustee and the Company to protect the
Company and the Trustee from any loss they may suffer if a Note is replaced. The
Company may charge the Holder for the expenses of the Company and the Trustee in
replacing a Note. In case the mutilated, lost, destroyed or wrongfully taken
Note has become or is about to become due and payable, the Company in its
discretion may pay the Note instead of issuing a replacement Note.
SECTION 2.05. Outstanding Notes. (a) Notes outstanding at any time are all
Notes that have been authenticated by the Trustee except for
(1) Notes cancelled by the Trustee or delivered to it for
cancellation;
(2) any Note which has been replaced pursuant to Section 2.04 unless
and until the Trustee and the Company receive proof satisfactory to them
that the replaced Note is held by a bona fide purchaser; and
(3) on or after the maturity date or any redemption date or date for
purchase of the Notes pursuant to an Offer to Purchase, those Notes
payable or to be redeemed or purchased on that date for which the Trustee
(or Paying Agent, other than the Company or an Affiliate of the Company)
holds money sufficient to pay all amounts then due.
(b) A Note does not cease to be outstanding because the Company or one of
its Affiliates holds the Note, provided that in determining whether the Holders
of the requisite principal amount of the outstanding Notes have given or taken
any request, demand, authorization, direction, notice, consent, waiver or other
action hereunder, Notes owned by the Company or any Affiliate of the Company
will be disregarded and deemed not to be outstanding, (it being understood that
in determining whether the Trustee is protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Notes which the Trustee knows to be so owned will be so
disregarded). Notes so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any Affiliate of the Company.
SECTION 2.06. Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare and the Trustee will authenticate temporary
Notes. Temporary Notes will be substantially in the form of definitive Notes but
may have insertions, substitutions, omissions and other variations determined to
be appropriate by the Officer executing the temporary Notes, as evidenced by the
execution of the temporary Notes. If temporary Notes are issued, the Company
will cause definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes will be exchangeable for
definitive Notes upon surrender of the temporary Notes at the office or agency
of
35
the Company designated for the purpose pursuant to Section 4.02, without charge
to the Holder. Upon surrender for cancellation of any temporary Notes the
Company will execute and the Trustee will authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes will be entitled to the
same benefits under this Indenture as definitive Notes.
SECTION 2.07. Cancellation. The Company at any time may deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold. Any Registrar or the Paying
Agent will forward to the Trustee any Notes surrendered to it for transfer,
exchange or payment. The Trustee will cancel all Notes surrendered for transfer,
exchange, payment or cancellation and dispose of them in accordance with its
normal procedures or the written instructions of the Company. The Company may
not issue new Notes to replace Notes it has paid in full or delivered to the
Trustee for cancellation.
SECTION 2.08. CUSIP and CINS Numbers. The Company in issuing the Notes may
use "CUSIP" and "CINS" numbers, and the Trustee will use CUSIP numbers or CINS
numbers in notices of redemption or exchange or in Offers to Purchase as a
convenience to Holders, the notice to state that no representation is made as to
the correctness of such numbers either as printed on the Notes or as contained
in any notice of redemption or exchange or Offer to Purchase. The Company will
promptly notify the Trustee of any change in the CUSIP or CINS numbers.
SECTION 2.09. Registration, Transfer and Exchange. (a) The Notes will be
issued in registered form only, without coupons, and the Company shall cause the
Trustee to maintain a register (the "Register") of the Notes, for registering
the record ownership of the Notes by the Holders and transfers and exchanges of
the Notes.
(b) (1) Each Global Note will be registered in the name of the Depositary
or its nominee and, so long as DTC is serving as the Depositary thereof, will
bear the DTC Legend.
(2) Each Global Note will be delivered to the Trustee as custodian
for the Depositary. Transfers of a Global Note (but not a beneficial
interest therein) will be limited to transfers thereof in whole, but not
in part, to the Depositary, its successors or their respective nominees,
except (1) as set forth in Section 2.09(b)(4) and (2) transfers of
portions thereof in the form of Certificated Notes may be made upon
request of an Agent Member (for itself or on behalf of a beneficial owner)
by written notice given to the Trustee by or on behalf of the Depositary
in accordance
36
with customary procedures of the Depositary and in compliance with this
Section and Section 2.10.
(3) Agent Members will have no rights under this Indenture with
respect to any Global Note held on their behalf by the Depositary, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner and Holder of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, the
Depositary or its nominee may grant proxies and otherwise authorize any
Person (including any Agent Member and any Person that holds a beneficial
interest in a Global Note through an Agent Member) to take any action
which a Holder is entitled to take under this Indenture or the Notes, and
nothing herein will impair, as between the Depositary and its Agent
Members, the operation of customary practices governing the exercise of
the rights of a holder of any security.
(4) If (x) the Depositary notifies the Company that it is unwilling
or unable to continue as Depositary for a Global Note and a successor
depositary is not appointed by the Company within 90 days of the notice or
(y) an Event of Default has occurred and is continuing and the Trustee has
received a request from the Depositary, the Trustee will promptly exchange
each beneficial interest in the Global Note for one or more Certificated
Notes in authorized denominations having an equal aggregate principal
amount registered in the name of the owner of such beneficial interest, as
identified to the Trustee by the Depositary, and thereupon the Global Note
will be deemed canceled. If such Note does not bear the Restricted Legend,
then the Certificated Notes issued in exchange therefor will not bear the
Restricted Legend. If such Note bears the Restricted Legend, then the
Certificated Notes issued in exchange therefor will bear the Restricted
Legend, provided that any Holder of any such Certificated Note issued in
exchange for a beneficial interest in a Temporary Offshore Global Note
will have the right upon presentation to the Trustee of a duly completed
Certificate of Beneficial Ownership after the Restricted Period to
exchange such Certificated Note for a Certificated Note of like tenor and
amount that does not bear the Restricted Legend, registered in the name of
such Holder.
(c) Each Certificated Note will be registered in the name of the holder
thereof or its nominee.
(d) A Holder may transfer a Note (or a beneficial interest therein) to
another Person or exchange a Note (or a beneficial interest therein) for another
Note or Notes of any authorized denomination by presenting to the Trustee a
written request therefor stating the name of the proposed transferee or
requesting such an exchange, accompanied by any certification, opinion or other
document
37
required by Section 2.10. The Trustee will promptly register any transfer or
exchange that meets the requirements of this Section by noting the same in the
register maintained by the Trustee for the purpose; provided that
(x) no transfer or exchange will be effective until it is registered
in such register and
(y) the Trustee will not be required (i) to issue, register the
transfer of or exchange any Note for a period of 15 days before a
selection of Notes to be redeemed or purchased pursuant to an Offer to
Purchase, (ii) to register the transfer of or exchange any Note so
selected for redemption or purchase in whole or in part, except, in the
case of a partial redemption or purchase, that portion of any Note not
being redeemed or purchased, or (iii) if a redemption or a purchase
pursuant to an Offer to Purchase is to occur after a Regular Record Date
but on or before the corresponding Interest Payment Date, to register the
transfer of or exchange any Note on or after the Regular Record Date and
before the date of redemption or purchase. Prior to the registration of
any transfer, the Company, the Trustee and their agents will treat the
Person in whose name the Note is registered as the owner and Holder
thereof for all purposes (whether or not the Note is overdue), and will
not be affected by notice to the contrary.
From time to time the Company will execute and the Trustee will
authenticate additional Notes as necessary in order to permit the registration
of a transfer or exchange in accordance with this Section.
No service charge will be imposed in connection with any transfer or
exchange of any Note, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than a transfer tax or other similar governmental charge
payable upon exchange pursuant to subsection (b)(4)).
(e) (1) Global Note to Global Note. If a beneficial interest in a Global
Note is transferred or exchanged for a beneficial interest in another Global
Note, the Trustee will (x) record a decrease in the principal amount of the
Global Note being transferred or exchanged equal to the principal amount of such
transfer or exchange and (y) record a like increase in the principal amount of
the other Global Note. Any beneficial interest in one Global Note that is
transferred to a Person who takes delivery in the form of an interest in another
Global Note, or exchanged for an interest in another Global Note, will, upon
transfer or exchange, cease to be an interest in such Global Note and become an
interest in the other Global Note and, accordingly, will thereafter be subject
to all transfer and exchange restrictions, if any, and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
38
(2) Global Note to Certificated Note. If a beneficial interest in a
Global Note is transferred or exchanged for a Certificated Note, the
Trustee will (x) record a decrease in the principal amount of such Global
Note equal to the principal amount of such transfer or exchange and (y)
deliver one or more new Certificated Notes in authorized denominations
having an equal aggregate principal amount to the transferee (in the case
of a transfer) or the owner of such beneficial interest (in the case of an
exchange), registered in the name of such transferee or owner, as
applicable.
(3) Certificated Note to Global Note. If a Certificated Note is
transferred or exchanged for a beneficial interest in a Global Note, the
Trustee will (x) cancel such Certificated Note, (y) record an increase in
the principal amount of such Global Note equal to the principal amount of
such transfer or exchange and (z) in the event that such transfer or
exchange involves less than the entire principal amount of the canceled
Certificated Note, deliver to the Holder thereof one or more new
Certificated Notes in authorized denominations having an aggregate
principal amount equal to the untransferred or unexchanged portion of the
canceled Certificated Note, registered in the name of the Holder thereof.
(4) Certificated Note to Certificated Note. If a Certificated Note
is transferred or exchanged for another Certificated Note, the Trustee
will (x) cancel the Certificated Note being transferred or exchanged, (y)
deliver one or more new Certificated Notes in authorized denominations
having an aggregate principal amount equal to the principal amount of such
transfer or exchange to the transferee (in the case of a transfer) or the
Holder of the canceled Certificated Note (in the case of an exchange),
registered in the name of such transferee or Holder, as applicable, and
(z) if such transfer or exchange involves less than the entire principal
amount of the canceled Certificated Note, deliver to the Holder thereof
one or more Certificated Notes in authorized denominations having an
aggregate principal amount equal to the untransferred or unexchanged
portion of the canceled Certificated Note, registered in the name of the
Holder thereof.
SECTION 2.10. Restrictions on Transfer and Exchange. (a) The transfer or
exchange of any Note (or a beneficial interest therein) may only be made in
accordance with this Section and Section 2.09 and, in the case of a Global Note
(or a beneficial interest therein), the applicable rules and procedures of the
Depositary. The Trustee shall refuse to register any requested transfer or
exchange that does not comply with the preceding sentence.
(b) Subject to paragraph (c), the transfer or exchange of any Note (or a
beneficial interest therein) of the type set forth in column A below for a Note
(or a beneficial interest therein) of the type set forth opposite in column B
below may
39
only be made in compliance with the certification requirements (if any)
described in the clause of this paragraph set forth opposite in column C below.
A B C
U.S. Global Note U.S. Global Note (1)
U.S. Global Note Offshore Global Note (2)
U.S. Global Note Certificated Note (3)
Offshore Global Note U.S. Global Note (4)
Offshore Global Note Offshore Global Note (1)
Offshore Global Note Certificated Note (5)
Certificated Note U.S. Global Note (4)
Certificated Note Offshore Global Note (2)
Certificated Note Certificated Note (3)
(1) No certification is required.
(2) The Person requesting the transfer or exchange must deliver or
cause to be delivered to the Trustee a duly completed Regulation S
Certificate; provided that if the requested transfer or exchange is made
by the Holder of a Certificated Note that does not bear the Restricted
Legend, then no certification is required.
(3) The Person requesting the transfer or exchange must deliver or
cause to be delivered to the Trustee (x) a duly completed Rule 144A
Certificate, (y) a duly completed Regulation S Certificate or (z) a duly
completed Institutional Accredited Investor Certificate, and/or an Opinion
of Counsel and such other certifications and evidence as the Company may
reasonably require in order to determine that the proposed transfer or
exchange is being made in compliance with the Securities Act and any
applicable securities laws of any state of the United States; provided
that if the requested transfer or exchange is made by the Holder of a
Certificated Note that does not bear the Restricted Legend, then no
certification is required. In the event that (i) the requested transfer or
exchange takes place after the Restricted Period and a duly completed
Regulation S Certificate is delivered to the Trustee or (ii) a
Certificated Note that does not bear the Restricted Legend is surrendered
for transfer or exchange, upon transfer or exchange the Trustee will
deliver a Certificated Note that does not bear the Restricted Legend.
(4) The Person requesting the transfer or exchange must deliver or
cause to be delivered to the Trustee a duly completed Rule 144A
Certificate.
(5) Notwithstanding anything to the contrary contained herein, no
such exchange is permitted if the requested exchange involves a beneficial
interest in a Temporary Offshore Global Note. If the requested
40
transfer involves a beneficial interest in a Temporary Offshore Global
Note, the Person requesting the transfer must deliver or cause to be
delivered to the Trustee (x) a duly completed Rule 144A Certificate or (y)
a duly completed Institutional Accredited Investor Certificate and/or an
Opinion of Counsel and such other certifications and evidence as the
Company may reasonably require in order to determine that the proposed
transfer is being made in compliance with the Securities Act and any
applicable securities laws of any state of the United States. If the
requested transfer or exchange involves a beneficial interest in a
Permanent Offshore Global Note, no certification is required and the
Trustee will deliver a Certificated Note that does not bear the Restricted
Legend.
(c) No certification is required in connection with any transfer or
exchange of any Note (or a beneficial interest therein)
(1) after such Note is eligible for resale pursuant to Rule 144(k)
under the Securities Act (or a successor provision); provided that the
Company has provided the Trustee with an Officer's Certificate to that
effect, and the Company may require from any Person requesting a transfer
or exchange in reliance upon this clause (1) an opinion of counsel and any
other reasonable certifications and evidence in order to support such
certificate; or
(2) (x) sold pursuant to an effective registration statement,
pursuant to the Registration Rights Agreement or otherwise or (y) which is
validly tendered for exchange into an Exchange Note pursuant to an
Exchange Offer.
Any Certificated Note delivered in reliance upon this paragraph will not
bear the Restricted Legend.
(d) The Trustee will retain copies of all certificates, opinions and other
documents received in connection with the transfer or exchange of a Note (or a
beneficial interest therein), and the Company will have the right to inspect and
make copies thereof at any reasonable time upon written notice to the Trustee.
SECTION 2.11. Temporary Offshore Global Notes. (a) Each Note originally
sold by the Initial Purchasers in reliance upon Regulation S will be evidenced
by one or more Offshore Global Notes that bear the Temporary Offshore Global
Note Legend.
(b) An owner of a beneficial interest in a Temporary Offshore Global Note
(or a Person acting on behalf of such an owner) may provide to the Trustee (and
the Trustee will accept) a duly completed Certificate of Beneficial Ownership at
any time after the Restricted Period (it being understood that the
41
Trustee will not accept any such certificate during the Restricted Period).
Promptly after acceptance of a Certificate of Beneficial Ownership with respect
to such a beneficial interest, the Trustee will cause such beneficial interest
to be exchanged for an equivalent beneficial interest in a Permanent Offshore
Global Note, and will (x) permanently reduce the principal amount of such
Temporary Offshore Global Note by the amount of such beneficial interest and (y)
increase the principal amount of such Permanent Offshore Global Note by the
amount of such beneficial interest.
(c) Notwithstanding anything to the contrary contained herein, beneficial
interests in a Temporary Offshore Global Note may be held through the Depositary
only through Euroclear and Clearstream and their respective direct and indirect
participants.
(d) Notwithstanding paragraph (b), if after the Restricted Period any
Initial Purchaser owns a beneficial interest in a Temporary Offshore Global
Note, such Initial Purchaser may, upon written request to the Trustee
accompanied by a certification as to its status as an Initial Purchaser,
exchange such beneficial interest for an equivalent beneficial interest in a
Permanent Offshore Global Note, and the Trustee will comply with such request
and will (x) permanently reduce the principal amount of such Temporary Offshore
Global Note by the amount of such beneficial interest and (y) increase the
principal amount of such Permanent Offshore Global Note by the amount of such
beneficial interest.
ARTICLE 3
REDEMPTION; OFFER TO PURCHASE
SECTION 3.01. Optional Redemption. At any time and from time to time on or
after March 15, 2007, the Company may redeem the Notes, in whole or in part, at
a redemption price (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest on the Notes redeemed to the applicable
redemption date:
12-month period
commencing
March 15
in Year Percentage
------------------- ----------
2007 105.50%
2008 102.75%
2009 and thereafter 100.00%
Except pursuant to Section 3.02, the Notes will not be redeemable at the
Company's option prior to March 15, 2007.
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SECTION 3.02. Redemption with Proceeds of Equity Offering. At any time
prior to March 15, 2006, the Company may, on any one or more occasions, redeem,
in whole or in part, up to 35% of the aggregate principle amount of the Notes
(including Additional Notes, if any) at a redemption price of 111.00% of the
principal amount of the Notes redeemed, plus accrued and unpaid interest on the
Notes redeemed to the applicable redemption date with the net cash proceeds of
one or more Equity Offerings, provided that
(a) not less than 65% of the aggregate principal amount of the Notes
(including Additional Notes, if any, and excluding Notes held by Playboy and its
Subsidiaries) remains outstanding immediately thereafter;
(b) in each case the redemption takes place not later than 90 days after
the closing of the related Equity Offering; and
(c) any such redemption shall be for at least $20 million aggregate
principal amount of Notes.
SECTION 3.03. Method and Effect of Redemption. (a) If the Company elects
to redeem Notes, it must notify the Trustee of the redemption date and the
principal amount of Notes to be redeemed by delivering an Officers' Certificate
at least 45 days before the redemption date (unless a shorter period is
satisfactory to the Trustee). If fewer than all of the Notes are to be redeemed
at any time, the Officers' Certificate must also specify a record date not less
than 15 days after the date of the notice of redemption is given to the Trustee,
and the Trustee will select the Notes to be redeemed (1) if the Notes are
listed, in compliance with the requirements of the principal national securities
exchange on which the Notes are listed, or (2) if the Notes are not so listed,
on a pro rata basis, by lot or by such method as the Trustee in its sole
discretion shall deem fair and appropriate, in denominations of $1,000 principal
amount and multiples thereof. No Notes of $1,000 or less shall be redeemed in
part. The Trustee will notify the Company promptly of the Notes or portions of
Notes to be called for redemption. Notice of redemption must be sent by first
class mail by the Company or, at the Company's request, by the Trustee in the
name and at the expense of the Company, to each Holder whose Notes are to be
redeemed at such Holder's registered address at least 30 days but not more than
60 days before the redemption date. Notices of redemption may not be
conditional.
(b) The notice of redemption will identify the Notes to be redeemed and
will include or state the following:
(1) the redemption date;
(2) the redemption price, including the portion thereof representing
any accrued interest;
43
(3) the place or places where Notes are to be surrendered for
redemption;
(4) that Notes called for redemption must be so surrendered in order
to collect the redemption price;
(5) that, on the redemption date, the redemption price will become
due and payable on Notes called for redemption, and interest on Notes
called for redemption will cease to accrue on and after the redemption
date;
(6) if any Note is redeemed in part, the portion of the principal
amount thereof to be redeemed and that, on and after the redemption date,
upon surrender of such Note, new Notes equal in principal amount to the
unredeemed portion will be issued; and
(7) that, if any Note contains a CUSIP or CINS number, no
representation is being made as to the correctness of the CUSIP or CINS
number either as printed on the Notes or as contained in the notice of
redemption and that the Holder should rely only on the other
identification numbers printed on the Notes.
(c) Notes called for redemption become due and payable at the redemption
price on the redemption date, and upon surrender of the Notes called for
redemption, the Company shall redeem such Notes at the redemption price. On and
after the redemption date, interest ceases to accrue on Notes or portions
thereof called for redemption. Upon surrender of any Note redeemed in part, a
new Note in principal amount equal to the unredeemed portion of the original
Note will be issued in the name of the Holder thereof upon cancellation of the
original Note.
SECTION 3.04. Offer to Purchase. (a) An "Offer to Purchase" means an offer
by the Company to purchase Notes as required by this Indenture. An Offer to
Purchase must be made by written offer (the "offer") sent to the Holders. The
Company will notify the Trustee at least 15 days (or such shorter period as is
acceptable to the Trustee) prior to sending the offer to Holders of its
obligation to make an Offer to Purchase, and the offer will be sent by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company.
(b) The offer must include or state the following as to the terms of the
Offer to Purchase:
(1) the provision of this Indenture pursuant to which the Offer to
Purchase is being made;
44
(2) the aggregate principal amount of the outstanding Notes offered
to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such amount has been
determined pursuant to this Indenture) (the "purchase amount");
(3) the purchase price, including the portion thereof representing
accrued interest;
(4) an expiration date (the "expiration date") not less than 30 days
or more than 60 days after the date of the offer, and a settlement date
for purchase (the "purchase date") not more than five Business Days after
the expiration date;
(5) that a Holder may tender all or any portion of its Notes,
subject to the requirement that any portion of a Note tendered must be in
a multiple of $1,000 principal amount;
(6) the place or places where Notes are to be surrendered for tender
pursuant to the Offer to Purchase;
(7) that each Holder electing to tender a Note pursuant to the offer
will be required to surrender such Note at the place or places specified
in the offer prior to the close of business on the expiration date (such
Note being, if the Company or the Trustee so requires, duly endorsed or
accompanied by a duly executed written instrument of transfer);
(8) that interest on any Note not tendered, or tendered but not
purchased by the Company pursuant to the Offer to Purchase, will continue
to accrue;
(9) that on the purchase date the purchase price will become due and
payable on each Note accepted for purchase, and interest on Notes
purchased will cease to accrue on and after the purchase date;
(10) that Holders are entitled to withdraw Notes tendered by giving
notice, which must be received by the Company or the Trustee not later
than the close of business on the expiration date, setting forth the name
of the Holder, the principal amount of the tendered Notes, the certificate
number of the tendered Notes and a statement that the Holder is
withdrawing all or a portion of the tender;
(11) that (i) if Notes in an aggregate principal amount less than or
equal to the purchase amount are duly tendered and not withdrawn pursuant
to the Offer to Purchase, the Company will purchase all such Notes, and
(ii) if the Offer to Purchase is for less than all of the
45
outstanding Notes and Notes in an aggregate principal amount in excess of
the purchase amount are tendered and not withdrawn pursuant to the offer,
the Company will purchase Notes having an aggregate principal amount equal
to the purchase amount (1) if the Notes are listed, in compliance with the
requirements of the principal national securities exchange on which the
Notes are listed, or (2) if the Notes are not so listed, on a pro rata
basis, with adjustments so that only Notes in multiples of $1,000
principal amount will be purchased;
(12) that, if any Note is purchased in part, new Notes equal in
principal amount to the unpurchased portion of the Note will be issued;
and
(13) that, if any Note contains a CUSIP or CINS number, no
representation is being made as to the correctness of the CUSIP or CINS
number either as printed on the Notes or as contained in the offer and
that the Holder should rely only on the other identification numbers
printed on the Notes.
(c) Prior to the purchase date, the Company will accept tendered Notes for
purchase as required by the Offer to Purchase and deliver to the Trustee all
Notes so accepted together with an Officers' Certificate specifying which Notes
have been accepted for purchase. On the purchase date, the purchase price will
become due and payable on each Note accepted for purchase, and interest on Notes
purchased will cease to accrue on and after the purchase date. The Trustee will
promptly return to Holders any Notes not accepted for purchase and send to
Holders new Notes equal in principal amount to any unpurchased portion of any
Notes accepted for purchase in part.
(d) The Company will comply with Rule 14e-1 under the Exchange Act and all
other applicable laws in making any Offer to Purchase, and the above procedures
will be deemed modified as necessary to permit such compliance.
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Notes. (a) The Company agrees to pay the
principal of and interest on the Notes on the dates and in the manner provided
in the Notes and this Indenture. Not later than 9:00 A.M. (New York City time)
on the due date of any principal of or interest on any Notes, or any redemption
or purchase price of the Notes, the Company will deposit with the Trustee (or
Paying Agent) money in immediately available funds sufficient to pay such
amounts, provided that if the Company or any Affiliate of the Company is acting
as Paying Agent, it will, on or before each due date, segregate and hold in a
separate trust fund for the benefit of the Holders a sum of money sufficient to
pay such amounts
46
until paid to such Holders or otherwise disposed of as provided in this
Indenture. In each case the Company will promptly notify the Trustee of its
compliance with this paragraph.
(b) An installment of principal or interest will be considered paid on the
date due if the Trustee (or Paying Agent, other than the Company or any
Affiliate of the Company) holds on that date money designated for and sufficient
to pay the installment. If the Company or any Affiliate of the Company acts as
Paying Agent, an installment of principal or interest will be considered paid on
the due date only if paid to the Holders.
(c) The Company agrees to pay interest on overdue principal, and overdue
installments of interest at the rate per annum specified in the Notes.
(d) Payments in respect of the Notes represented by the Global Notes are
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders of the Global Notes. With respect to Certificated
Notes, the Company will make all payments by wire transfer of immediately
available funds to the accounts specified by the Holders thereof or, if no such
account is specified, by mailing a check to each Holder's registered address.
SECTION 4.02. Maintenance of Office or Agency. The Company will maintain
in the Borough of Manhattan, the City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company hereby
initially designates the Corporate Trust Office of the Trustee as such office of
the Company. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company fails to maintain any such required office or agency or fails
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served to the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be surrendered or presented for any of such
purposes and may from time to time rescind such designations. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
SECTION 4.03. Existence. Playboy will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence and the
existence of each of its Restricted Subsidiaries in accordance with their
respective organizational documents, and the material rights, licenses and
franchises of the Company and each Restricted Subsidiary, provided that Playboy
is not required to preserve any such right, license or franchise, or the
existence of any Restricted Subsidiary, if the maintenance or preservation
thereof is no longer desirable in the
47
conduct of the business of Playboy and its Restricted Subsidiaries taken as a
whole; and provided further that this Section does not prohibit any transaction
otherwise permitted by Section 4.13 or Article 5.
SECTION 4.04. [Intentionally omitted.]
SECTION 4.05. Maintenance of Properties and Insurance. (a) Playboy will
cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries to be maintained and kept in good
condition, repair and working order as in the judgment of Playboy may be
necessary so that the business of Playboy and its Restricted Subsidiaries may be
properly and advantageously conducted at all times; provided that nothing in
this Section prevents Playboy or any of its Restricted Subsidiaries from
discontinuing the use, operation or maintenance of any of such properties or
disposing of any of them, if such discontinuance or disposal is, in the judgment
of Playboy, desirable in the conduct of the business of Playboy and its
Restricted Subsidiaries taken as a whole.
(b) Playboy will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
liability insurance, with reputable insurers, in such amounts, with such
deductibles and by such methods as are customary for corporations similarly
situated in the industry in which Playboy and its Restricted Subsidiaries are
then conducting business.
SECTION 4.06. Limitation on Incurrence of Indebtedness and Issuance of
Preferred Stock.
(a) Playboy will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and Playboy will not, and will not permit any of its Restricted
Subsidiaries to, issue any Disqualified Stock and will not permit any of its
Restricted Subsidiaries to issue any preferred stock; provided, however, that
the Company and any Guarantor may incur Indebtedness (including Acquired Debt)
or issue Disqualified Stock, if, after giving effect to such incurrence, the
Leverage Ratio for Playboy's most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the date
on which such additional Indebtedness is incurred would have been no greater
than 5.0 to 1.0 but greater than zero.
(b) Clause (a) of this Section will not prohibit the incurrence of any of
the following items of Indebtedness (collectively, "Permitted Debt"):
48
(1) the incurrence by the Company or any Guarantor of Indebtedness
under Credit Facilities (and the incurrence by the Guarantors of
guarantees thereof); provided that the aggregate principal amount at any
one time outstanding thereunder including, without limitation, Hedging
Obligations owing to the lenders thereunder and their affiliates (with
letters of credit being deemed to have a principal amount equal to the
maximum potential liability of Playboy and its Restricted Subsidiaries
thereunder) does not exceed $30 million plus interest, fees, costs and
expenses, less the aggregate amount of all Net Proceeds of Asset Sales
applied by Playboy or any of its Restricted Subsidiaries to repay any
Indebtedness under Credit Facilities (and, in the case of any revolving
credit Indebtedness under a Credit Facility, to effect a corresponding
commitment reduction thereunder) pursuant to Section 4.13;
(2) the incurrence by Playboy or any Restricted Subsidiary of the
Existing Indebtedness other than Indebtedness described under clauses (6),
(7), (8), (10) or (14) of this Section 4.06(b);
(3) the incurrence by the Company and the Guarantors of Indebtedness
represented by the Notes (excluding any Additional Notes) and the related
Note Guarantees to be issued on the date of this Indenture and the
Exchange Notes (excluding any Additional Notes) and the related Note
Guarantees to be issued pursuant to the Registration Rights Agreement;
(4) the incurrence by Playboy or any of its Restricted Subsidiaries
of Indebtedness represented by Capital Lease Obligations or Attributable
Debt, mortgage financings or purchase money obligations, in each case,
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment used in the business of Playboy or such Restricted Subsidiary,
in an aggregate principal amount, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (4), not to exceed $2.5 million at any
time outstanding;
(5) the incurrence by Playboy or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted to be incurred under Section
4.06(a) or clauses (2), (3), (4), (5), (11) or (13) of this Section
4.06(b);
(6) the incurrence by Playboy or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among Playboy and any of its
Restricted Subsidiaries; provided, however, that:
49
(A) if the Company or any Guarantor is the obligor on such
Indebtedness, such Indebtedness must be expressly subordinated to
the prior payment in full in cash of all Obligations with respect to
the Notes, in the case of the Company, or the Note Guarantee, in the
case of a Guarantor; and
(B) (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a
Person other than Playboy or a Restricted Subsidiary thereof and
(ii) any sale or other transfer of any such Indebtedness to a Person
that is not either Playboy or a Restricted Subsidiary thereof, shall
be deemed, in each case, to constitute an incurrence of such
Indebtedness by Playboy or such Restricted Subsidiary, as the case
may be, that was not permitted by this clause (6);
(7) the incurrence by Playboy or any of its Restricted Subsidiaries
of Hedging Obligations that are incurred in the normal course of business
and not for speculative purposes;
(8) the incurrence by Playboy or any of its Restricted Subsidiaries
of Indebtedness with respect to letters of credit and bankers' acceptances
issued in the ordinary course of business and not supporting Indebtedness,
including letters of credit in respect of workmen's compensation claims or
self-insurance or supporting performance, bid, surety, appeal and similar
bonds or indemnification, adjustment of purchase price or similar
obligations incurred in connection with the disposition of any business or
assets (other than a Guarantee of Indebtedness of the Person acquiring any
such business or assets); provided that the Indebtedness is not reflected
on Playboy's consolidated balance sheet as a liability;
(9) Indebtedness of Playboy or any of its Restricted Subsidiaries,
to the extent the net proceeds thereof are promptly deposited to defease
the Notes;
(10) the guarantee by the Company or any of the Guarantors of
Indebtedness of Playboy or any of its Restricted Subsidiaries that was
permitted to be incurred by another provision of this covenant;
(11) Acquired Debt, provided that such Indebtedness is not incurred
in connection with, or in contemplation of, such other Person merging with
or into, or becoming a Subsidiary of Playboy and, after giving effect to
the Incurrence thereof, Playboy could Incur at least $1.00 of Indebtedness
under the Leverage Ratio first set forth above;
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(12) the incurrence by Foreign Subsidiaries of Indebtedness in an
aggregate principal amount at any time outstanding not to exceed $2.0
million;
(13) the incurrence by the Company or any Guarantor of additional
Indebtedness in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (13), not to exceed $10.0 million; and
(14) the issuance of the ▇▇▇▇▇▇ Securities.
For purposes of determining compliance with this Section 4.06, in the
event that any proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (14) of Section
4.06(b), or is entitled to be incurred pursuant to Section 4.06(a), the Company
will be permitted to classify such item of Indebtedness on the date of its
incurrence, or to later reclassify such item of Indebtedness, in any manner that
complies with this Section 4.06. Indebtedness under Credit Facilities
outstanding on the date on which Notes are first issued and authenticated under
this Indenture shall be deemed to have been incurred on such date in reliance on
the exception provided by clauses (1) or (2) of Section 4.06(b).
The accrual of interest, the accretion or amortization of original issue
discount and the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms will not be deemed to be an
incurrence of Indebtedness for purposes of this Section 4.06; provided, in each
such case, that the amount thereof is included in Fixed Charges of Playboy as
accrued. The payment of dividends on Disqualified Stock or preferred stock in
the form of additional shares of the same class of Disqualified Stock or
preferred stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock or preferred stock for purposes of this Section
4.06; provided, in each such case, that the amount thereof is included in Fixed
Charges of Playboy as accrued to the extent required by the definition thereof.
SECTION 4.07. Limitation on Restricted Payments.
(a) Playboy will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of Playboy's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment
in connection with any merger or consolidation involving Playboy or any of
its Restricted Subsidiaries) or to the direct or indirect holders of
Playboy's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than
51
(a) dividends, payments or distributions payable in Equity Interests of
Playboy (other than Disqualified Stock) and (b) dividends or distributions
payable to Playboy or any of its Restricted Subsidiaries);
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving Playboy or any of its Subsidiaries) any Equity
Interests of Playboy, any direct or indirect parent of Playboy or any
Subsidiary of Playboy (other than a Restricted Subsidiary of Playboy) held
by a Person other than Playboy or one of its Restricted Subsidiaries;
(3) make any voluntary or optional payment on or with respect to, or
voluntarily or optionally purchase, redeem, defease or otherwise acquire
or retire any Indebtedness that is subordinated to the Notes or the Note
Guarantees;
(4) make any payment on or with respect to any Califa Obligation
other than (i) payments consisting of Equity Interests (other than
Disqualified Stock) of Playboy and (ii) payments on or with respect to
Califa Obligations that are, pursuant to the terms of the Califa Agreement
as in effect as of the date of this Indenture, (A) due during the year
ended December 31, 2003, (B) due during the year ended December 31, 2004
or (C) required to be paid in cash; or
(5) make any Restricted Investment;
(all such payments and other actions set forth in clauses (1) through (5) above
being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(A) no Default or Event of Default shall have occurred and be
continuing; and
(B) Playboy would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Leverage Ratio test set forth in Section 4.06(a); and
(C) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by Playboy and its Restricted
Subsidiaries on or after the date of this Indenture (excluding Restricted
Payments permitted by clauses (2), (3), (4), (5) and (9) of Section
4.07(b)), is less than the sum, without duplication, of:
52
(i) (x) 100% of the Consolidated Cash Flow of Playboy for the
period (or, if such Consolidated Cash Flow for such period is a
deficit, less 100% of such deficit), taken as one accounting period,
from the beginning of the first fiscal quarter commencing after the
date of this Indenture to the end of Playboy's most recently ended
fiscal quarter for which internal financial statements are available
at the time of the Restricted Payment, less (y) 150% of cumulative
Fixed Charges for the portion of such period ending on or prior to
December 31, 2004 and 160% of cumulative Fixed Charges for the
portion of such period ending after such date; plus
(ii) 100% of the aggregate net cash proceeds received by
Playboy since the date of this Indenture from the issue or sale of
Equity Interests of Playboy, other than Disqualified Stock, or from
the issuance and sale of convertible or exchangeable Disqualified
Stock or convertible or exchangeable debt securities of Playboy that
have been converted into or exchanged for such Equity Interests,
other than Equity Interests or Disqualified Stock or debt securities
sold to a Subsidiary of Playboy; plus
(iii) the cash return after the date of this Indenture (not
included in Consolidated Cash Flows) with respect to any Restricted
Investment that was made after the date of this Indenture that is
sold for cash or otherwise liquidated or repaid for cash; plus
(iv) to the extent that any Unrestricted Subsidiary is
redesignated as a Restricted Subsidiary after the date of this
Indenture, the fair market value of such Subsidiary as of the date
of such redesignation.
(b) Section 4.07(a) will not prohibit, so long as no Default has occurred
and is continuing or would be caused thereby in the case of clauses (6), (9) and
(10):
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of this Indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of (a) any principal or interest on the ▇▇▇▇▇▇ Securities, (b)
any subordinated Indebtedness of the Company or any Guarantor or (c) any
Equity Interests of Playboy or any of its Restricted Subsidiaries in
exchange for, or out of the net cash proceeds from the substantially
concurrent sale or issuance (other than to a Subsidiary of Playboy) of, or
otherwise in exchange for, Equity Interests of Playboy (other than
Disqualified Stock);
53
provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (C)(ii) of Section 4.07(a);
(3) the conversion of ▇▇▇▇▇▇▇.▇▇▇ Series A Preferred Stock into
▇▇▇▇▇▇▇.▇▇▇ Common Stock pursuant to the terms thereof as in effect on the
date of this Indenture;
(4) the defeasance, redemption, repurchase or other acquisition,
with the net cash proceeds from an incurrence of Permitted Refinancing
Indebtedness, of subordinated Indebtedness of the Company or any
Guarantor;
(5) the payment of any dividend by a Restricted Subsidiary of
Playboy to the holders of its common Equity Interests on a pro rata basis;
(6) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of Playboy or any Restricted Subsidiary
of Playboy held by (a) any member of Playboy's (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement or (b) any employee benefit plan for
employees, directors or former directors, provided that the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests shall not exceed $250,000 in any twelve-month period, with any
unused portion available for future periods;
(7) repurchases of Capital Stock deemed to occur upon the exercise
of stock options if such Capital Stock represents a portion of the
exercise price thereof;
(8) the mandatory redemption of any of the shares of ▇▇▇▇▇▇▇.▇▇▇
Series A Preferred Stock held by ACTV, Inc. as of the date of this
Indenture at the option of the holder thereof pursuant to the terms
thereof as in effect on the date of this Indenture;
(9) the payment of dividends on the ▇▇▇▇▇▇ Securities pursuant to
the terms thereof as contemplated by the Exchange Agreement dated March
11, 2003 by and among ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇.▇▇▇, the Company and
Playboy; and
(10) any other Restricted Payments in an amount not to exceed $2.5
million in the aggregate.
(c) The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued to or by Playboy or such
Restricted Subsidiary,
54
as the case may be, pursuant to the Restricted Payment. The fair market value of
any assets or securities that are required to be valued by this covenant shall
be determined by the Board of Directors whose resolution with respect thereto
shall be delivered to the trustee. The Board of Directors' determination must be
based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if the fair market value exceeds
$5.0 million. Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, together with a copy
of any fairness opinion or appraisal required by this Indenture. In determining
whether any Restricted Payment is permitted by this Section 4.07, the Company
may allocate all or any portion of such Restricted Payment among the categories
described in clauses (1) through (10) of Section 4.07(b) or among such
categories and the types of Restricted Payments set forth in Section 4.07(a);
provided that at the time of such allocation, all such Restricted Payments, or
allocated portions thereof, would be permitted under this Section 4.07.
SECTION 4.08. Limitation on Liens. Playboy will not, and will not permit
any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause
or suffer to exist or become effective any Lien of any kind (other than
Permitted Liens) upon any of their property or assets, now owned or hereafter
acquired.
SECTION 4.09. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.
(a) Except as provided in paragraph (b), Playboy will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, create or
permit to exist or become effective any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital
Stock to Playboy or any of its Restricted Subsidiaries, or with respect to
any other interest or participation in, or measured by, its profits, or
pay any indebtedness owed to Playboy or any of its Restricted
Subsidiaries;
(2) make loans or advances to Playboy or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to Playboy or any of
its Restricted Subsidiaries.
(b) Clause (a) above will not apply to encumbrances or restrictions
existing under or by reason of:
(1) Existing Indebtedness or other agreements as in effect on the
date of this Indenture and any amendments, modifications, restatements,
55
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or refinancings
are not materially more restrictive, taken as a whole, than those
contained in such Existing Indebtedness or other agreements, as
applicable, as in effect on the date of this Indenture;
(2) the Credit Agreement as in effect on the date of this Indenture
and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are no more
restrictive, taken as a whole, than those contained in the Credit
Agreement, as in effect on the date of this Indenture;
(3) this Indenture, the Notes, the Note Guarantees and the Security
Documents;
(4) applicable law or any rule, regulation or order;
(5) any instrument governing Indebtedness or Capital Stock of a
Person acquired by Playboy or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired, provided that, in
the case of Indebtedness, such Indebtedness was permitted by the terms of
this Indenture to be incurred;
(6) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices;
(7) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so acquired of
the nature described in clause (3) of the preceding paragraph;
(8) any agreement for the sale or other disposition of all or
substantially all of the Capital Stock or assets of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(9) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are not materially more restrictive, taken as a
whole, than those contained in the agreements governing the Indebtedness
being refinanced;
56
(10) any instrument governing Indebtedness of Foreign Restricted
Subsidiaries incurred pursuant to Section 4.06(b)(12);
(11) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, asset sale agreements,
stock sale agreements and other similar agreements entered into in the
ordinary course of business;
(12) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business;
(13) Permitted Liens securing Indebtedness that limit the right of
the debtor to dispose of the assets subject to such Lien;
(14) any instrument governing Indebtedness of any Guarantor; and
(15) at any time when any ▇▇▇▇▇▇ Securities of the Company are
outstanding, any restriction contained in the certificate of incorporation
of the Company for the benefit of such securities.
SECTION 4.10. Limitation on Issuances and Sales of Equity Interests in
Restricted Subsidiaries.
(a) Playboy will not, and will not permit any of its Restricted
Subsidiaries to, issue, transfer, convey, sell, lease or otherwise dispose of
any Equity Interests in any Restricted Subsidiary of Playboy to any Person
(other than Playboy or a Wholly Owned Restricted Subsidiary of Playboy), unless:
(1) such issuance, transfer, conveyance, sale, lease or other
disposition is of all the Equity Interests in such Restricted Subsidiary,
and the cash Net Proceeds from such transfer, conveyance, sale, lease or
other disposition are applied in accordance with Section 4.13;
(2) if, immediately after giving effect to such issuance, transfer,
conveyance, sale, lease or other disposition, such Restricted Subsidiary
would no longer constitute a Restricted Subsidiary and any Investment in
such Person remaining after giving effect to such issuance or sale would
have been permitted to be made under Section 4.07 if made on the date of
such issuance or sale.
(3) the sale or issuance is of Capital Stock representing directors
qualifying shares or Capital Stock required by law to be held by a Person
other than Playboy or a Restricted Subsidiary; or
(4) such issuance is of the ▇▇▇▇▇▇ Securities.
57
(b) Notwithstanding the foregoing, ▇▇▇▇▇▇▇.▇▇▇ may issue ▇▇▇▇▇▇▇.▇▇▇
Series A Preferred Stock and Common Stock to holders of ▇▇▇▇▇▇▇.▇▇▇ Series A
Preferred Stock as required by the terms thereof as in effect on the date of
this Indenture.
SECTION 4.11. Additional Note Guarantees.
(a) If Playboy or any of its Restricted Subsidiaries acquires or creates
another Domestic Restricted Subsidiary on or after the date of this Indenture,
then that newly acquired or created Domestic Restricted Subsidiary shall become
a Guarantor, execute a supplemental indenture, become party to such Security
Documents and deliver to the Trustee such documents as are reasonably necessary
( as determined pursuant to an Officers' Certificate) to grant to the Trustee
(and permit the Trustee to perfect) a Lien on all assets and rights and
interests in the property, real or personal, tangible or intangible, of such
Person (to the same extent contemplated by the Security Documents in effect on
the date of this Indenture) and deliver an Opinion of Counsel to the Trustee, to
the effect that the supplemental indenture has been duly authorized, executed
and delivered by the Restricted Subsidiary and constitutes a valid and binding
obligation of the Restricted Subsidiary, enforceable against the Restricted
Subsidiary in accordance with its terms (subject to customary exceptions),
within 20 Business Days of the date on which it was acquired or created.
(b) In the event ▇▇▇▇▇▇▇.▇▇▇ becomes a Wholly Owned Restricted Subsidiary
after the date of this Indenture, ▇▇▇▇▇▇▇.▇▇▇ and each of its Domestic
Restricted Subsidiaries shall become a Guarantor, execute a supplemental
indenture, become party to such Security Documents and deliver to the Trustee
such documents as are reasonably necessary to grant to the Trustee (and permit
the Trustee to perfect) a Lien on all assets and rights and interests in the
property, real or personal, tangible or intangible, of such Person (to the same
extent contemplated by the Security Documents in effect on the date of this
Indenture) and deliver an Opinion of Counsel to the Trustee, to the effect that
the supplemental indenture has been duly authorized, executed and delivered by
▇▇▇▇▇▇▇.▇▇▇ and each of its Domestic Restricted Subsidiaries and constitutes a
valid and binding obligation of the Restricted Subsidiary, enforceable against
the Restricted Subsidiary in accordance with its terms (subject to customary
exceptions), within 20 Business Days of the date it became a Wholly Owned
Restricted Subsidiary.
SECTION 4.12. Repurchase of Notes upon a Change of Control.
(a) Within 30 days following any Change of Control, the Company shall mail
a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase (the "Change of
Control Offer") Notes on the Change of Control Payment Date specified in the
notice, which date shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed, pursuant to the procedures described in the
notice.
58
Pursuant to the Change of Control Offer, each Holder of Notes will have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of that Holder's Notes on the terms set forth
herein. In the Change of Control Offer, the Company will offer a payment in cash
(the "Change of Control Payment") equal to 101% of the aggregate principal
amount of Notes repurchased plus accrued and unpaid interest and Liquidated
Damages, if any, thereon, to the date of purchase (the "Change of Control
Payment Date").
(b) The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.12, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this Section 4.12 by virtue of such conflict.
(c) On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so tendered;
and
(3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by the
Company.
(d) The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple of $1,000. Unless the Company
defaults on the Change of Control Payment, any Note accepted for payment will
cease to accrue interest on and after the Change of Control Payment Date.
(e) The Company will not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in clauses (a) through (d) of this Section 4.12 and purchases
59
all Notes validly tendered and not withdrawn under such Change of Control Offer.
SECTION 4.13. Limitation on Asset Sales.
(a) Playboy will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) Playboy (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to
the fair market value of the assets or Equity Interests issued or sold or
otherwise disposed of;
(2) such fair market value is determined by the Board of Directors
and, if the fair market value is in excess of $2.5 million, evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee; and
(3) at least 75% of the consideration therefor received by Playboy
or such Restricted Subsidiary is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following shall be deemed to
be cash:
(A) any liabilities (as shown on Playboy's most recent
consolidated balance sheet), of Playboy or any Restricted Subsidiary
(other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes or any Note Guarantee) that are
assumed by the transferee of any such assets pursuant to a customary
written novation agreement that releases Playboy or such Restricted
Subsidiary from further liability; and
(B) any securities, notes or other obligations received by
Playboy or any such Restricted Subsidiary from such transferee that
are converted by Playboy or such Restricted Subsidiary into cash or
Cash Equivalents within 90 days of receipt (to the extent of the
cash received in that conversion);
provided, that the 75% requirement referred to above in this clause (3)
will not apply to any Asset Sale in which the cash portion of such
consideration received therefor on an after tax basis, determined in
accordance with this clause (3), is equal to or greater than what the
after tax net proceeds would have been had such transaction complied with
the 75% requirement.
(b) Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may, at its option and to the extent it selects, apply such
Net Proceeds:
60
(1) to permanently repay Indebtedness incurred under the Credit
Agreement that is secured by the Collateral and, if the Indebtedness
repaid is revolving credit Indebtedness, to correspondingly reduce
commitments with respect thereto;
(2) to acquire all or substantially all of the assets of, or a
majority of the Voting Stock of, another Person that thereupon becomes a
Restricted Subsidiary engaged in a Permitted Business; provided that the
assets (including Voting Stock) acquired with the Net Proceeds thereof are
pledged as Collateral under the Security Documents substantially
simultaneously with such acquisition in accordance with the requirements
of this Indenture;
(3) to make a capital expenditure in or that is used or useful in a
Permitted Business (to the extent such capital expenditure is capitalized
on Playboy's consolidated balance sheet in accordance with GAAP);
(4) to acquire other long-term assets in or that are used or useful
in a Permitted Business; or
(5) any combination of the foregoing;
provided that the Company may not apply more than 50% of the net proceeds from
any Asset Sale involving the sale of the Playboy Mansion pursuant to clause (2),
(3), (4) or (5) of this Section 4.13(b).
(c) Pending the final application of any such Net Proceeds, the Company
may temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture. Notwithstanding
the foregoing, the Company and the Guarantors may not apply any of the net
proceeds from any Asset Sale involving all or substantially all of Playboy's and
its Subsidiaries' interest in the Playboy or Rabbit Head Design trademarks
pursuant to any of the clauses above, but shall be required to make an Asset
Sale Offer with such proceeds.
(d) Any Net Proceeds from Asset Sales that are not applied or invested as
provided in clause (c) will constitute "Excess Proceeds." When the aggregate
amount of Excess Proceeds exceeds $10.0 million, the Company shall make an offer
to all Holders of Notes and all Holders of other Indebtedness that is pari passu
with the Notes and secured by Collateral to purchase the maximum principal
amount of Notes and such other pari passu Indebtedness that may be purchased out
of the Excess Proceeds (an "Asset Sale Offer"). The offer price in any Asset
Sale Offer will be equal to 100% of principal amount plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase, and will be
payable in cash. If any Excess Proceeds remain after consummation of an Asset
Sale Offer, the Company may use such Excess Proceeds for any purpose not
otherwise
61
prohibited by this Indenture. If the aggregate principal amount of Notes and
such other pari passu Indebtedness tendered into such Asset Sale Offer exceeds
the amount of Excess Proceeds, the Trustee shall select the Notes and such other
pari passu Indebtedness to be purchased on a pro rata basis based on the
principal amount of Notes and such other pari passu Indebtedness tendered. Upon
completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
(e) The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 4.13, the Company will comply with the applicable securities laws
and regulations and will not be deemed to have breached its obligations under
this Section 4.13 by virtue of such conflict.
SECTION 4.14. Transactions with Affiliates.
(a) Subject to clause (b) of this Section 4.14, Playboy will not, and will
not permit any of its Restricted Subsidiaries to, make any payment to, or sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each, an "Affiliate Transaction"),
unless:
(1) such Affiliate Transaction is on terms that are no less
favorable to Playboy or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by Playboy or such
Restricted Subsidiary with an unrelated Person; and
(2) the Company delivers to the Trustee:
(A) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in
excess of $1.0 million, a resolution of the Board of Directors set
forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with this Section 4.14 and that such Affiliate
Transaction has been approved by a majority of the disinterested
members of the Board of Directors; and
(B) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in
excess of $5.0 million, an opinion as to the fairness to Playboy or
such Restricted Subsidiary of such Affiliate Transaction from a
62
financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
(b) The following items shall not be deemed to be Affiliate Transactions
and, therefore, will not be subject to the provisions of clause (a) of this
Section 4.14.
(1) transactions between or among Playboy and/or its Restricted
Subsidiaries;
(2) transactions or payments pursuant to any employee, officer or
director compensation or benefit plans or arrangements entered into in the
ordinary course of business to Persons who are not otherwise Affiliates of
Playboy or any of its Restricted Subsidiaries;
(3) advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course
of business, and in any case in an aggregate amount outstanding not
exceeding $2.0 million at any time;
(4) sale of an option to a Principal pursuant to which a Principal
or Related Party has the right to purchase the Playboy Mansion and items
of personal property located at the Playboy Mansion, if
(A) the exercise price thereof is determined
(i) in accordance with the provisions of clause (a) of
this Section 4.14,
(ii) pursuant to another third-party appraisal process
approved by a majority of the independent directors of Playboy
or
(iii) pursuant to a right of first refusal mechanism and
equal to or greater than the amount of a bona fide offer made
by a Person that is not an Affiliate of Playboy or any of its
Restricted Subsidiaries, which offer has been approved by a
majority of the independent directors of Playboy;
provided, however, that following the occurrence of a Default or
Event of Default or a default or event of default under the Credit
Agreement, the right of such Principal or Related Party to exercise
such option (or to close the purchase, if the occurrence took place
after the exercise of such option) shall be based only upon a
third-party appraisal process approved by a majority of the
independent directors of Playboy; and
63
(B) following the occurrence of a Default or Event of Default
or a default or event of default under the Credit Agreement, such
option expires after the 30-day period immediately following the
delivery to such Principal or Related Party of a notice from the
agent under the Credit Agreement or the Trustee and, if such
Principal or Related Party exercises such option during the 30-day
period, such Principal or Related Party shall have an additional 90
days after the exercise of the option to complete the purchase of
the Playboy Mansion;
(5) Restricted Payments that are permitted by Section 4.07; and
(6) transactions pursuant to the Playboy Mansion West Lease
Agreement between Playboy and ▇▇▇▇ ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Securities, as
amended, modified or replaced from time to time so long as the amended,
modified or new agreements, taken as a whole, are no less favorable to
Playboy and its Restricted Subsidiaries than those in effect on the date
of this Indenture.
SECTION 4.15. Business Activities. Playboy will not, and will not permit
any of its Restricted Subsidiaries to, engage in any business other than
Permitted Businesses, except to such extent as would not be material to Playboy
and its Restricted Subsidiaries taken as a whole.
SECTION 4.16. Designation of Restricted and Unrestricted Subsidiaries.
(a) Subject to clauses (b) and (c) of this Section 4.16, the Board of
Directors may designate any Restricted Subsidiary to be an Unrestricted
Subsidiary if that designation would not cause a Default; provided that in no
event shall
(1) the business currently operated by ▇▇▇▇▇▇▇.▇▇▇ and its
Subsidiaries be transferred to or held by an Unrestricted Subsidiary or
(2) the Company be designated as an Unrestricted Subsidiary.
(b) If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate fair market value of all outstanding Investments owned
by Playboy and its Restricted Subsidiaries in the Subsidiary so designated will
be deemed to be an Investment made as of the time of such designation and that
designation will only be permitted if such Investment would be permitted at that
time and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary.
(c) Any designation pursuant to this Section 4.16 shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of Playboy of any
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outstanding Indebtedness of such Unrestricted Subsidiary, and such designation
shall only be permitted if
(1) such Indebtedness is permitted under Section 4.06, calculated on
a pro forma basis as if such designation had occurred at the beginning of
the four-quarter reference period; and
(2) no Default or Event of Default would have occurred and be
continuing following such designation.
(d) (1) A Subsidiary previously designated an Unrestricted Subsidiary
which at any time fails to meet the qualifications set forth in paragraph (a)
will be deemed to become at that time a Restricted Subsidiary, subject to the
consequences set forth in paragraph (f).
(2) The Board of Directors may designate an Unrestricted Subsidiary
to be a Restricted Subsidiary if the designation would not cause a
Default.
(e) Upon a Restricted Subsidiary becoming an Unrestricted Subsidiary,
(1) all existing Investments of the Company and the Restricted
Subsidiaries therein (valued at the Company's proportional share of the
fair market value of its assets less liabilities) will be deemed made at
that time;
(2) all existing Capital Stock or Debt of the Company or a
Restricted Subsidiary held by it will be deemed Incurred at that time, and
all Liens on property of the Company or a Restricted Subsidiary held by it
will be deemed incurred at that time;
(3) all existing transactions between it and the Company or any
Restricted Subsidiary will be deemed entered into at that time;
(4) it is released at that time from its Note Guarantee, if any; and
(5) it will cease to be subject to the provisions of this Indenture
as a Restricted Subsidiary.
(f) Upon an Unrestricted Subsidiary becoming, or being deemed to become, a
Restricted Subsidiary,
(1) all of its Debt and Disqualified or Preferred Stock will be
deemed Incurred at that time for purposes of Section 4.06, but will not be
65
considered the sale or issuance of Equity Interests for purposes of
Section 4.10 or Section 4.13;
(2) Investments therein previously charged under Section 4.07 will
be credited thereunder;
(3) it may be required to issue a Note Guarantee pursuant to Section
4.11; and
(4) it will thenceforward be subject to the provisions of this
Indenture as a Restricted Subsidiary.
(g) Any designation by the Board of Directors of a Subsidiary as a
Restricted Subsidiary or Unrestricted Subsidiary will be evidenced to the
Trustee by promptly filing with the Trustee a copy of the Board Resolution
giving effect to the designation and an Officer's Certificate certifying that
the designation complied with the foregoing provisions.
SECTION 4.17. Financial Reports. (a) Whether or not required by the
Commission, so long as any Notes are outstanding, Playboy will furnish to the
Holders of Notes, within the time periods specified in the Commission's rules
and regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if Playboy were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and, with respect to the annual information only, a report
on the annual financial statements by Playboy's certified independent
accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if Playboy were required to file such reports.
In addition, whether or not required by the Commission, Playboy will file
a copy of all of the information and reports referred to in clauses (1) and (2)
above with the Commission for public availability within the time periods
specified in the Commission's rules and regulations (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request.
(b) For so long as any of the Notes remain outstanding and constitute
"restricted securities" under Rule 144, the Company will furnish to the Holders
of the Notes, securities analysts and prospective investors, upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, it being understood that so long as the requirements of Rule
12h-5
66
under the Exchange Act are satisfied, filings by Playboy with the Commission
will satisfy such requirement.
(c) All obligors on the Notes will comply with Section 314(a) of the Trust
Indenture Act.
(d) Delivery of these reports and information to the Trustee is for
informational purposes only and the Trustee's receipt of them will not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.18. Reports to Trustee.
(a) The Company will deliver to the Trustee within 120 days after the end
of each fiscal year a certificate from the principal executive, financial or
accounting officer of the Company stating that the officer has conducted or
supervised a review of the activities of the Company and its Restricted
Subsidiaries and their performance under this Indenture and that, based upon
such review, the Company has fulfilled its obligations hereunder or, if there
has been a Default, specifying the Default and its nature and status.
(b) The Company will deliver to the Trustee, as soon as practicable and in
any event within 30 days after the Company becomes aware of any Default or Event
of Default, an Officers' Certificate setting forth the details of the Default or
Event of Default, and the action which the Company proposes to take with respect
thereto.
(c) The Company shall furnish to the Trustee:
(i) promptly after the execution and delivery of this Indenture, an
Opinion of Counsel either stating that, in the opinion of such counsel,
this Indenture has been properly recorded and filed so as to make
effective the Liens intended to be created thereby, and reciting the
details of such action, or stating that in the opinion of such counsel no
such action is necessary to make such Liens effective; and
(ii) within three months after each anniversary of the date of this
Indenture, an Opinion of Counsel, dated as of such date, either stating
that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and re-filing of the
Security Documents, financing statements, continuation statements or other
instruments or documents as is necessary to maintain the Lien of the
Security Documents and reciting the details of such action, or stating
that, in the opinion of such counsel, no such action is necessary to
maintain
67
such Lien, to the extent such opinion is required by Section 314(b) of the
Trust Indenture Act.
(d) The Company will notify the Trustee when any Notes are listed on any
national securities exchange and of any delisting.
SECTION 4.19. Impairment of Security Interest; Further Assurances. (a)
Neither Playboy nor any of its Restricted Subsidiaries will take any action, or
knowingly or negligently omit to take any action, which action or omission might
or would have the result of materially impairing the security interest with
respect to the Collateral for the benefit of the Trustee and the Noteholders in
contravention of the provisions of this Indenture.
(b) Playboy and each of its Restricted Subsidiaries will execute and
deliver any and all further documents, financing statements, agreements and
instruments, and take all such further actions (including the filing and
recording of financing statements, fixture filings, mortgages, deeds of trust
and other documents), that may be required under any applicable law, or that the
Trustee may reasonably request, to cause the Collateral Requirement to be and
remain satisfied, all at the Company's expense.
ARTICLE 5
CONSOLIDATION, MERGER OR SALE OF ASSETS
SECTION 5.01. Consolidation, Merger or Sale of Assets of the Company.
(a) The Company will not directly or indirectly (1) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company, in one or more
related transactions, to another Person; unless:
(A) either:
(i) the Company is the surviving corporation; or
(ii) the Person formed by or surviving any such consolidation
or merger (if other than the Company) or to which such sale,
assignment, transfer, conveyance or other disposition shall have
been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia;
(B) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the Person to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
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assumes all the obligations of the Company under the Notes, this
Indenture, the Security Documents and the Registration Rights Agreement
pursuant to agreements reasonably satisfactory to the Trustee;
(C) immediately after such transaction no Default or Event of
Default exists;
(D) Playboy will, on the date of such transaction after giving pro
forma effect thereto and any related financing transactions as if the same
had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Leverage Ratio test set forth in Section 4.06(a);
(E) immediately after such transaction, Playboy will own 100% of the
equity interests of the Company (or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or the Person to
which such sale, assignment, transfer, conveyance or other disposition
shall have been made), excluding the ▇▇▇▇▇▇ Securities; and
(F) the Trustee is provided with an Officers' Certificate and an
Opinion of Counsel to the effect that all conditions precedent in this
Section 5.01 have been performed or met.
(b) The Company may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person.
For purposes of this covenant, the sale, assignment, transfer, conveyance
or other disposition (including by way of merger or consolidation) of all or
substantially all of the properties and assets of one or more Subsidiaries of
the Company, which property or assets, if held by the Company instead of such
Subsidiaries, would constitute all or substantially all of the properties and
assets of the Company on a consolidated basis, will be deemed to be the transfer
of all or substantially all of the properties and assets of the Company.
(c) Upon any consolidation or merger, or any sale, assignment, transfer,
conveyance or other disposition by the Company (other than by lease) of all or
substantially all of the properties and assets of the Company and its Restricted
Subsidiaries taken as a whole, in accordance with this Section 5.01, the
successor corporation formed by such consolidation or into which the Company is
merged or to which such transfer is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
and the Notes. In the event of any such transfer (other than a transfer of less
than all of the properties and assets of the Company and its Subsidiaries, taken
as a whole), the predecessor Company shall be released and discharged from all
liabilities and
69
obligations in respect of the Notes and this Indenture, and the predecessor
Company may be dissolved, wound up or liquidated at any time thereafter.
SECTION 5.02. Consolidation, Merger or Sale of Assets of Playboy.
(a) Playboy may not, directly or indirectly:
(1) consolidate or merge with or into another Person (whether or not
Playboy is the surviving corporation); or
(2) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of Playboy, in one or more
related transactions, to another Person; unless:
(A) either:
(i) Playboy is the surviving corporation; or
(ii) the Person formed by or surviving any such consolidation
or merger (if other than Playboy) or to which such sale, assignment,
transfer, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia;
(B) the Person formed by or surviving any such consolidation or
merger (if other than Playboy) or the Person to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
assumes all the obligations of Playboy under its Guarantee, this Indenture
and the Registration Rights Agreement pursuant to agreements reasonably
satisfactory to the Trustee;
(C) immediately after such transaction no Default or Event of
Default exists;
(D) Playboy or the Person formed by or surviving any such
consolidation or merger (if other than Playboy) or the Person to which
such sale, assignment, transfer, conveyance or other disposition shall
have been made will, on the date of such transaction after giving pro
forma effect thereto and any related financing transactions as if the same
had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Leverage Ratio test set forth in Section 4.06(a);
(E) immediately after such transaction, Playboy or the Person formed
by or surviving any such consolidation or merger (if other than
70
Playboy) or the Person to which such sale, assignment, transfer,
conveyance or other disposition shall have been made will own 100% of the
equity interests of the Company other than the ▇▇▇▇▇▇ Securities; and
(F) the Trustee is provided with an Officers' Certificate and an
Opinion of Counsel to the effect that all conditions precedent in this
Section 5.02 have been performed or met.
(b) Playboy may not, directly or indirectly, lease all or substantially
all of its properties or assets, in one or more related transactions, to any
other Person.
For purposes of this covenant, the sale, assignment, transfer, conveyance
or other disposition (including by way of merger or consolidation) of all or
substantially all of the properties and assets of one or more Subsidiaries of
Playboy, which property or assets, if held by Playboy instead of such
Subsidiaries, would constitute all or substantially all of the properties and
assets of Playboy on a consolidated basis, will be deemed to be the transfer of
all or substantially all of the properties and assets of Playboy.
(c) Upon any consolidation or merger, or any sale, assignment, transfer,
conveyance or other disposition by Playboy (other than by lease) of all or
substantially all of the properties and assets of Playboy, in accordance with
this Section 5.02, the successor corporation formed by such consolidation or
into which Playboy is merged or to which such transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, Playboy under
this Indenture and its Guarantee. In the event of any such transfer (other than
a transfer of less than all of the properties and assets of Playboy and its
Subsidiaries, taken as a whole), the predecessor Playboy shall be released and
discharged from all liabilities and obligations in respect of this Indenture and
its Guarantee, and the predecessor Playboy may be dissolved, wound up or
liquidated at any time thereafter.
SECTION 5.03. Consolidation, Merger or Sale of Assets of Subsidiary
Guarantors.
(a) Each Subsidiary Guarantor will not, directly or indirectly:
(1) consolidate or merge with or into another Person, other than the
Company, Playboy or another Subsidiary Guarantor or
(2) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of such Guarantor, in one or
more related transactions, to another Person other than to the Company,
Playboy or another Subsidiary Guarantor, unless:
71
(A) immediately after giving effect to that transaction, no Default
or Event of Default has occurred and is continuing;
(B) either:
(i) such Subsidiary Guarantor is the surviving Person or the
Person acquiring the property in any such sale or disposition or the
Person formed by or surviving any such consolidation or merger
assumes all the obligations of that Subsidiary Guarantor under this
Indenture, its Note Guarantee, the Registration Rights Agreement and
the Security Documents pursuant to a supplemental indenture or other
agreements reasonably satisfactory to the trustee; or
(ii) such sale or other disposition, including the application
of the Net Proceeds therefrom, complies with this Indenture; and
(C) the Trustee is provided with an Officers' Certificate and an
Opinion of Counsel to the effect that all conditions precedent in this
Section 5.03 have been performed or met.
ARTICLE 6
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
Each of the following is an "Event of Default":
(1) default for 30 consecutive days in the payment when due of
interest on, or Liquidated Damages with respect to, the Notes;
(2) default in payment when due of the principal of, or premium, if
any, on the Notes;
(3) failure by Playboy or any of its Restricted Subsidiaries to make
a Change of Control Offer or thereafter accept and pay for Notes validly
tendered as required by Section 4.12 or 4.13 or to comply with Article 5;
(4) failure by Playboy or any of its Restricted Subsidiaries for 60
days after notice to comply in any material respect with any of the other
agreements in this Indenture or the Security Documents;
(5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced
72
any Indebtedness for money borrowed by Playboy or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Playboy or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of this Indenture, if that default:
(A) is caused by a failure to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such
default (a "Payment Default"); or
(B) results in the acceleration of such Indebtedness prior to
its express maturity,
and, in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which there
has been a Payment Default or the maturity of which has been so
accelerated, aggregates $7.5 million or more;
(6) failure by Playboy or any of its Restricted Subsidiaries to pay
final judgments aggregating in excess of $7.5 million, excluding amounts
covered by insurance under applicable policies, which judgments are not
paid, discharged or stayed for a period of 60 days;
(7) except as permitted by this Indenture, any Note Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor, or
any Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Note Guarantee;
(8) the Liens created by the Security Documents shall at any time
not constitute a valid and perfected Lien on any material portion of the
Collateral intended to be covered thereby (to the extent perfection by
filing, registration, recordation or possession is required by this
Indenture or the Security Documents), or, except for expiration in
accordance with its terms or amendment, modification, waiver, termination
or release in accordance with the terms of this Indenture, any of the
Security Documents shall for whatever reason be terminated or cease to be
in full force and effect, if in either case, such default continues for 30
days after notice, or the enforceability thereof shall be contested by the
Company or any Guarantor; and
(9) (A) an involuntary case or other proceeding is commenced against
Playboy or any of its Significant Restricted Subsidiaries with respect to
it or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
73
substantial part of its property, and such involuntary case or other
proceeding remains undismissed and unstayed for a period of 60 days; or an
order for relief is entered against Playboy or any of its Significant
Restricted Subsidiaries under the federal bankruptcy laws as now or
hereafter in effect; or (B) Playboy or any of its Significant Restricted
Subsidiaries (i) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case under
any such law, (ii) consents to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of Playboy or any of its Significant Restricted
Subsidiaries or for all or substantially all of the property and assets of
Playboy or any of its Significant Restricted Subsidiaries or (iii) effects
any general assignment for the benefit of creditors (an event of default
specified in this clause (9) a "Bankruptcy Default")
SECTION 6.02. Acceleration.
In the case of an Event of Default arising from a Bankruptcy Default with
respect to the Company or Playboy, all outstanding Notes will become due and
payable immediately without further action or notice. If any other Event of
Default occurs and is continuing, the Trustee may, and the Trustee at the
request of the Holders of at least 25% in principal amount of the then
outstanding Notes shall, declare all the Notes to be due and payable. Upon such
a declaration, the principal of and interest on the Notes shall be immediately
due and payable.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue, in its own name or as trustee of an express
trust, any available remedy by proceeding at law or in equity to collect the
payment of principal of and interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture. The Trustee may maintain a
proceeding even if it does not possess any of the Notes or does not produce any
of them in the proceeding.
SECTION 6.04. Waiver of Past Defaults. Except as otherwise provided in
Sections 6.02, 6.07 and 9.02, the Holders of a majority in principal amount of
the outstanding Notes may, by notice to the Trustee, waive any existing Default
or Event of Default and its consequences. Upon such waiver, the Default or Event
of Default will cease to exist, and any Event of Default arising therefrom will
be deemed to have been cured, but no such waiver will extend to any subsequent
or other Default or impair any right consequent thereon.
SECTION 6.05. Control by Majority. The Holders of a majority in aggregate
principal amount of the outstanding Notes may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. However, the Trustee
74
may refuse to follow any direction that conflicts with law or this Indenture or
any of the Security Documents, that may involve the Trustee in personal
liability, or that the Trustee determines in good faith may be unduly
prejudicial to the rights of Holders of Notes not joining in the giving of such
direction, and may take any other action it deems proper that is not
inconsistent with any such direction received from Holders of Notes.
SECTION 6.06. Limitation on Suits. A Holder may not institute any
proceeding, judicial or otherwise, with respect to this Indenture, the Notes or
any of the Security Documents, or for the appointment of a receiver or trustee,
or for any other remedy under this Indenture or the Notes, unless:
(1) the Holder has previously given to the Trustee written notice of
a continuing Event of Default;
(2) Holders of at least 25% in aggregate principal amount of
outstanding Notes have made written request to the Trustee to institute
proceedings in respect of the Event of Default in its own name as Trustee
under this Indenture;
(3) Holders have offered to the Trustee indemnity reasonably
satisfactory to the Trustee against any costs, liabilities or expenses to
be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Notes have not given the
Trustee a direction that is inconsistent with such written request.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
anything to the contrary in this Indenture, the right of a Holder of a Note to
receive payment of principal of or interest on its Note on or after the Stated
Maturities thereof, or to bring suit for the enforcement of any such payment on
or after such respective dates, may not be impaired or affected without the
consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default in
payment of principal or interest specified in clause (1) or (2) of Section 6.01
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust for the whole amount of principal and accrued
interest remaining unpaid, together with interest on overdue principal and
overdue installments of interest, in each case at the rate specified in the
Notes, and such further amount as is sufficient to cover the costs and expenses
of collection,
75
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel and any other amounts due the Trustee
hereunder.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee hereunder) and the Holders
allowed in any judicial proceedings relating to the Company or any Guarantor or
their respective creditors or property, and is entitled and empowered to
collect, receive and distribute any money, securities or other property payable
or deliverable upon conversion or exchange of the Notes or upon any such claims.
Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, if the Trustee consents to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel, and any other amounts due the
Trustee hereunder. Nothing in this Indenture will be deemed to empower the
Trustee to authorize or consent to, or accept or adopt on behalf of any Holder,
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant to
this Article 6, or upon collection of any amounts pursuant to any Security
Document, it shall, subject to the terms of the Intercreditor Agreement, pay out
the money in the following order:
First: to the Trustee for all amounts under Section 7.07;
Second: to Holders for amounts then due and unpaid for principal of
and interest on the Notes, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal
and interest, respectively; and
Third: to the Company or any other obligors on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon written notice to the Company, may fix a record date and
payment date for any payment to Holders pursuant to this Section.
SECTION 6.11. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted a proceeding to enforce any right or remedy under this
Indenture and the proceeding has been discontinued or abandoned for any reason,
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or has been determined adversely to the Trustee or to the Holder, then, subject
to any determination in the proceeding, the Company, any Guarantors, the Trustee
and the Holders will be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Company, any
Guarantors, the Trustee and the Holders will continue as though no such
proceeding had been instituted.
SECTION 6.12. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the costs of the suit, and
the court may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by the Company or any Guarantor, a
suit by a Holder pursuant to Section 6.07 to enforce payment of principal of or
interest on any Note on the respective due dates, or a suit by Holders of more
than 10% in principal amount of the outstanding Notes.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise provided
with respect to the replacement or payment of lost, destroyed or wrongfully
taken Notes in Section 2.04, no right or remedy conferred or reserved to the
Trustee or to the Holders under this Indenture is intended to be exclusive of
any other right or remedy, and all such rights and remedies are, to the extent
permitted by law, cumulative and in addition to every other right and remedy
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or exercise of any right or remedy hereunder, or otherwise, will not
prevent the concurrent assertion or exercise of any other right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder to exercise any right or remedy accruing upon any Event
of Default will impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article 6 or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
SECTION 6.15. Waiver of Stay, Extension or Usury Laws. The Company and
each Guarantor covenants, to the extent that it may lawfully do so, that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury law or other
law that would prohibit or forgive the Company or the Guarantor from paying all
or any portion of the principal of, or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the performance of this Indenture. The Company and each
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Guarantor hereby expressly waives, to the extent that it may lawfully do so, all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE 7
THE TRUSTEE
SECTION 7.01. General. (a) The duties and responsibilities of the Trustee
are as provided by the Trust Indenture Act and as set forth herein. Whether or
not expressly so provided, every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee is
subject to this Article.
(b) Except during the continuance of an Event of Default, the Trustee need
perform only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations will be read into this
Indenture against the Trustee. In case an Event of Default has occurred and is
continuing, the Trustee shall exercise those rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct.
SECTION 7.02. Certain Rights of Trustee. Subject to Trust Indenture Act
Sections 315(a) through (d):
(1) In the absence of bad faith on its part, the Trustee may rely,
and will be protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document, but, in
the case of any document which is specifically required to be furnished to
the Trustee pursuant to any provision hereof, the Trustee shall examine
the document to determine whether it conforms to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein). The Trustee, in
its discretion, may make further inquiry or investigation into such facts
or matters as it sees fit.
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(2) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate and/or an Opinion of Counsel conforming to
Section 12.05 and the Trustee will not be liable for any action it takes
or omits to take in good faith in reliance on the certificate or opinion.
(3) The Trustee may act through its attorneys and agents and will
not be responsible for the misconduct or negligence of any agent appointed
with due care.
(4) The Trustee will be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders, unless such Holders have offered to the
Trustee reasonable security or indemnity against any loss, liability or
expense that might be incurred by it in compliance with such request or
direction.
(5) The Trustee will not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its
rights or powers or for any action it takes or omits to take in accordance
with the direction of the Holders in accordance with Section 6.05 relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture provided, however, that the Trustee's
conduct does not constitute willful misconduct or negligence.
(6) The Trustee may consult with counsel, and the written advice of
such counsel or any Opinion of Counsel will be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(7) No provision of this Indenture will require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of its duties hereunder, or in the exercise of its rights
or powers, unless it receives indemnity satisfactory to it against any
loss, liability or expense.
SECTION 7.03. Individual Rights of Trustee. The Trustee, in its individual
or any other capacity, may become the owner or pledgee of Notes and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not the Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Trust Indenture Act Sections 310(b) and 311.
For purposes of Trust Indenture Act Section 311(b)(4) and (6):
(a) "cash transaction" means any transaction in which full payment
for goods or securities sold is made within seven days after
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delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, ▇▇▇▇ of exchange,
acceptance or obligation which is made, drawn, negotiated or incurred for
the purpose of financing the purchase, processing, manufacturing,
shipment, storage or sale of goods, wares or merchandise and which is
secured by documents evidencing title to, possession of, or a lien upon,
the goods, wares or merchandise or the receivables or proceeds arising
from the sale of the goods, wares or merchandise previously constituting
the security, provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship arising from
the making, drawing, negotiating or incurring of the draft, ▇▇▇▇ of
exchange, acceptance or obligation.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the Notes,
(ii) is not accountable for the Company's use or application of the proceeds
from the Notes and (iii) is not responsible for any statement in the Notes other
than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default occurs and is continuing
and is known to a Responsible Officer of the Trustee, the Trustee will send
notice of the Default to each Holder within 90 days after it occurs, unless the
Default has been cured; provided that, except in the case of a default in the
payment of the principal of or interest on any Note, the Trustee may withhold
the notice if and so long as the board of directors, the executive committee, a
trust committee of directors or one or more Responsible Officers of the Trustee
in good faith determines that withholding the notice is in the interest of the
Holders. Notice to Holders under this Section will be given in the manner and to
the extent provided in Trust Indenture Act Section 313(c).
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each May
15, beginning with May 15, 2003, the Trustee will mail to each Holder, as
provided in Trust Indenture Act Section 313(c), a brief report dated as of such
May 15, if required by Trust Indenture Act Section 313(a), and file such reports
with each stock exchange upon which its Notes are listed and with the Commission
as required by Trust Indenture Act Section 313(d).
SECTION 7.07. Compensation and Indemnity. (a) The Company will pay the
Trustee compensation as agreed upon in writing for its services. The
compensation of the Trustee is not limited by any law on compensation of a
Trustee of an express trust. The Company will reimburse the Trustee upon request
for all reasonable expenses, disbursements and advances incurred or made by the
Trustee, including the reasonable compensation and expenses of the Trustee's
agents and counsel.
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(b) The Company will indemnify the Trustee for, and hold it harmless
against, any loss or liability or expense incurred by it without negligence or
bad faith on its part arising out of or in connection with the acceptance or
administration of this Indenture and its duties under this Indenture and the
Notes, including the costs and expenses of defending itself against any claim or
liability and of complying with any process served upon it or any of its
officers in connection with the exercise or performance of any of its powers or
duties under this Indenture and the Notes. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. The Company shall defend
the claim and the Trustee shall provide reasonable cooperation in the defense.
The Trustee may have separate counsel and the Company shall pay the fees and
expenses of such counsel, provided that the Company shall not be required to pay
such fees and expenses if it assumes the Trustee's defense and, in the
reasonable judgment of outside counsel to the Trustee, there is no conflict of
interest between the Company and the Trustee in connection with such defense.
The Company need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Trustee through the Trustee's own willful
misconduct, negligence or bad faith.
(c) To secure the Company's payment obligations in this Section 7.07, the
Trustee will have a lien prior to the Notes on all money or property held or
collected by the Trustee, in its capacity as Trustee, except money or property
held in trust to pay principal of, and interest on, particular Notes. Any
compensation or expense incurred by the Trustee after a default is intended to
constitute an expense of administration under any then applicable bankruptcy or
insolvency law, to the extent permitted by law. The provisions of this Section
7.07 shall survive the satisfaction and discharge of this Indenture and the
resignation or removal of the Trustee.
SECTION 7.08. Replacement of Trustee. (a) (1) The Trustee may resign at
any time by written notice to the Company.
(2) The Holders of a majority in principal amount of the outstanding
Notes may remove the Trustee by written notice to the Trustee.
(3) If the Trustee is no longer eligible under Section 7.10 or in
the circumstances described in Trust Indenture Act Section 310(b), any
Holder that satisfies the requirements of Trust Indenture Act Section
310(b) may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(4) The Company may remove the Trustee if: (i) the Trustee is no
longer eligible under Section 7.10; (ii) the Trustee is adjudged a
bankrupt or an insolvent; (iii) a receiver or other public officer takes
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charge of the Trustee or its property; or (iv) the Trustee becomes
incapable of acting.
A resignation or removal of the Trustee and appointment of a successor Trustee
will become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
(b) If the Trustee has been removed by the Holders, Holders of a majority
in principal amount of the Notes may appoint a successor Trustee with the
consent of the Company. Otherwise, if the Trustee resigns or is removed, or if a
vacancy exists in the office of Trustee for any reason, the Company will
promptly appoint a successor Trustee. If the successor Trustee does not deliver
its written acceptance within 30 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Company or the Holders of a majority in
principal amount of the outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) Upon delivery by the successor Trustee of a written acceptance of its
appointment to the retiring Trustee and to the Company, (i) the retiring Trustee
will transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.07, (ii) the resignation or
removal of the retiring Trustee will become effective, and (iii) the successor
Trustee will have all the rights, powers and duties of the Trustee under this
Indenture. Upon request of any successor Trustee, the Company will execute any
and all instruments for fully and vesting in and confirming to the successor
Trustee all such rights, powers and trusts. The successor Trustee will give
notice of any resignation and any removal of the Trustee and each appointment of
a successor Trustee to all Holders, and include in the notice the name of the
successor Trustee and the address of its Corporate Trust Office.
(d) Notwithstanding replacement of the Trustee pursuant to this Section,
the Company's obligations under Section 7.07 will continue for the benefit of
the retiring Trustee.
(e) The Trustee agrees to give the notices provided for in, and otherwise
comply with, Trust Indenture Act Section 310(b).
SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all of its
corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act will be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee in
this Indenture.
SECTION 7.10. Eligibility. This Indenture must always have a Trustee that
satisfies the requirements of Trust Indenture Act Section 310(a) and has a
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combined capital and surplus of at least $25,000,000 as set forth in its most
recent published annual report of condition.
SECTION 7.11. Money Held in Trust. The Trustee will not be liable for
interest on any money received by it except as it may agree with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law and except for money held in trust under
Article 8.
ARTICLE 8
DEFEASANCE AND DISCHARGE
SECTION 8.01. Discharge of Company's Obligations. (a) Subject to paragraph
(b), this Indenture shall cease to be of further effect as to all Notes and Note
Guarantees issued hereunder, and the Trustee shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when:
(1) either:
(A) all Notes that have been authenticated (except lost,
stolen or destroyed Notes that have been replaced or paid and Notes
for whose payment money has theretofore been deposited in trust and
thereafter repaid to the Company) have been delivered to the Trustee
for cancellation; or
(B) all Notes that have not been delivered to the Trustee for
cancellation have become due and payable by reason of the making of
a notice of redemption or otherwise or will become due and payable
within one year and the Company or any Guarantor has irrevocably
deposited or caused to be deposited with the Trustee as trust funds
in trust solely for the benefit of the Holders, cash in U.S.
dollars, non-callable U.S. Government Obligations, or a combination
thereof, in such amounts as will be sufficient without consideration
of any reinvestment of interest, to pay and discharge the entire
Indebtedness on the Notes not delivered to the trustee for
cancellation for principal, premium and Liquidated Damages, if any,
and accrued interest to the date of maturity or redemption;
(2) no Default or Event of Default has occurred and is continuing on
the date of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which the Company or any Guarantor
is a party or by which the Company or any Guarantor is bound;
(3) the Company or any Guarantor has paid or caused to be paid all
sums payable by it under this Indenture;
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(4) the Company has delivered irrevocable instructions to the
Trustee to apply the deposited money toward the payment of the Notes at
maturity or the redemption date, as the case may be; and
(5) The Company has delivered an Officers' Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
(b) After satisfying the conditions in Section 8.01(a)(1)(A), only the
Company's obligations under Section 7.07 will survive. After satisfying the
conditions in Section 8.01(a)(1)(B), only the Company's obligations in Article 2
and Sections 4.01, 4.02, 7.07, 7.08, 8.05 and 8.06 will survive. In either case,
the Trustee upon request will acknowledge in writing the discharge of the
Company's and the Guarantors' obligations under the Notes, the Note Guarantees
and this Indenture other than the surviving obligations specified in this
Section 8.01(b).
SECTION 8.02. Legal Defeasance. After the 91st day following the deposit
referred to in clause (1) below, the Company will be deemed to have paid and
will be discharged from its obligations in respect of the Notes and this
Indenture, other than its obligations in Article 2 and Sections 4.01, 4.02,
7.07, 7.08, 8.05 and 8.06, and each Guarantor's obligations under its Note
Guarantee will terminate, provided the following conditions have been satisfied
(hereinafter "Legal Defeasance"):
(1) the Company has irrevocably deposited with the Trustee, in
trust, for the benefit of the Holders of the Notes, cash in U.S. dollars,
non-callable U.S. Government Obligations, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal
of, or interest and premium and Liquidated Damages, if any, on the
outstanding Notes on the Stated Maturity or on the applicable redemption
date, as the case may be, and the Company has specified whether the Notes
are being defeased to maturity or to a particular redemption date;
(2) the Company has delivered to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee confirming that
(a) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or
(b) since the date of this Indenture, there has been a change
in the applicable federal income tax law,
in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result
of
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such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(3) no Default has occurred and is continuing either (a) on the date
of such deposit or (b) insofar as Bankruptcy Defaults are concerned, at
any time in the period ending on the 91st day after the date of the
deposit;
(4) the Legal Defeasance will not result in a breach or violation
of, or constitute a default under, any material agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(5) the Company has delivered to the Trustee an Opinion of Counsel
to the effect that, assuming no intervening bankruptcy of the Company or
any Guarantor between the date of deposit and the 91st day following the
deposit and assuming that no Holder is an "insider" of the Company under
applicable bankruptcy law, after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(6) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of Notes over the other creditors of the Company
with the intent of defeating, hindering, delaying or defrauding creditors
of the Company or others; and
(7) the Company must deliver to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
relating to the Legal Defeasance have been complied with.
SECTION 8.03. Covenant Defeasance. After the 91st day following the
deposit referred to in clause (1) of Section 8.02, the Company's and the
Guarantors' obligations set forth in Sections 4.06 through 4.16, inclusive,
5.01(a)(D) and 5.02(a)(D), will terminate, and clauses (3), (4), (5), (6), (7)
and (8) of Section 6.01 will no longer constitute Events of Default, provided
the following conditions have been satisfied (hereinafter, "Covenant
Defeasance"):
(1) The Company has complied with clauses (1), (3), (5) and (6) of
Section 8.02;
(2) the Company has delivered to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for
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federal income tax purposes as a result of the defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would otherwise have been the case.
(3) the Covenant Defeasance will not result in a breach or violation
of, or constitute a default under, any material agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound; and
(4) the Company must deliver to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
relating to the Legal Defeasance have been complied with.
Except as specifically stated above, none of the Company's obligations
under this Indenture will be discharged.
SECTION 8.04. Application of Trust Money. Subject to Section 8.05, the
Trustee will hold in trust the cash or U.S. Government Obligations deposited
with it pursuant to Section 8.01, 8.02 or 8.03, and apply the deposited cash and
the proceeds from deposited U.S. Government Obligations to the payment of
principal of and interest on the Notes in accordance with the Notes and this
Indenture, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine. Such money and U.S.
Government Obligations need not be segregated from other funds except to the
extent required by law.
SECTION 8.05. Repayment to Company. Subject to Sections 7.07, 8.01, 8.02
and 8.03, the Trustee or Paying Agent will promptly pay to the Company upon
request at any time and from time to time any cash or U.S. Government
Obligations held by the Trustee or Paying Agent as provided in Section 8.04
which are in excess of the amount thereof that would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance, and
the Trustee or Paying Agent will thereupon be relieved from all liability with
respect to such money. The Trustee and the Paying Agent will pay to the Company
upon request any cash and U.S. Government Obligations (including the proceeds
thereof) held for payment with respect to the Notes that remains unclaimed for
two years, provided that before making such payment the Trustee and the Paying
Agent may at the expense of the Company publish once in a newspaper of general
circulation in New York City, or send to each Holder entitled to such cash and
U.S. Government Obligations (including the proceeds thereof), notice that the
money remains unclaimed and that after a date specified in the notice (at least
30 days after the date of the publication or notice) any remaining unclaimed
balance of cash and U.S. Government Obligations (including the proceeds thereof)
will be repaid to the Company. After payment to the Company, Holders entitled to
payment with respect to the Notes or the Note Guarantees must look solely to the
Company for payment, unless applicable law
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designates another Person, and all liability of the Trustee and the Paying Agent
with respect to such money will cease.
SECTION 8.06. Reinstatement. If and for so long as the Trustee or Paying
Agent is unable to apply any cash or U.S. Government Obligations held in trust
pursuant to Section 8.01, 8.02 or 8.03 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
and the Guarantors' obligations under this Indenture and the Notes will be
reinstated as though no deposit in trust had been made pursuant to Section 8.01,
8.02 or 8.03, until such time as the Trustee or Paying Agent is permitted to
apply such cash and U.S. Government Obligations in accordance with Sections
8.01, 8.02 and 8.03, as the case may be. If the Company makes any payment of
principal of or interest on any Notes following the reinstatement of its
obligations, the Company will be subrogated to the rights of the Holders of such
Notes to receive such payment from the cash or U.S. Government Obligations held
in trust.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Amendments Without Consent of Holders.
(a) The Company and the Trustee may amend or supplement this Indenture,
the Notes, the Security Documents or the Intercreditor Agreement without notice
to or the consent of any Noteholder to
(1) cure any ambiguity, defect or inconsistency in this Indenture,
the Notes, the Security Documents or the Intercreditor Agreement,
including conforming this Indenture to the description of the Notes in the
offering memorandum relating to the Notes;
(2) provide for uncertificated Notes in addition to or in place of
Certificated Notes;
(3) provide for the assumption of the Company's or any Guarantor's
obligations to Holders of Notes in the case of a merger or consolidation
or sale of all or substantially all of the Company's or such Guarantor's
assets;
(4) evidence and provide for the acceptance of appointment of a
successor Trustee;
(5) provide for the issuance of Additional Notes in accordance with
this Indenture;
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(6) provide for the issuance of a Note Guarantee with respect to the
Notes;
(7) make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the
legal rights under this Indenture of any such Holder; or
(8) comply with requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the Trust Indenture
Act.
(b) (A) The Trustee shall (and is hereby authorized to) amend or
supplement the Intercreditor Agreement or any of the Security Documents or enter
into one or more additional or replacement security documents or intercreditor
agreements, or amend or supplement one or more additional or replacement
security documents or intercreditor agreements (collectively, the "Intercreditor
Documentation") upon receipt of an Officers' Certificate stating that such
amendments, supplements, replacements or additional Intercreditor Documentation
is necessary to give effect to the granting of a Permitted Lien:
(i) ranking senior to the Liens securing the Notes or any Note
Guarantee ("Note Lien") to the extent contemplated by the Intercreditor
Agreement or any Intercreditor Documentation reflecting identical terms,
provided such senior Liens are permitted either by paragraph (1) or by
paragraph (12) of the definition of "Permitted Liens" (and the terms of
Section 3.7 of the Intercreditor Agreement, or comparable terms in any
Intercreditor Documentation, shall be given effect in connection
therewith) ("Priority Liens");
(ii) ranking equally and ratably with the Liens securing the Notes,
provided such equal and ratable Liens are permitted by any of paragraph
(1) or paragraph (9) or paragraph (12) of the definition of "Permitted
Liens" (and such other contractual adjustments as shall be necessary to
establish such equal and ratable status shall be effected) ("Parity
Liens"); or
(iii) ranking junior to the Liens Securing the Notes, provided such
junior Liens are permitted by any of paragraph (1) or paragraph (9) or
paragraph (12) of the definition of "Permitted Liens" ("Subordinated
Liens");
provided that the Trustee shall not be required to execute any such document on
terms which, in the Trustee's reasonable opinion, would expose the Trustee to or
create any liability for which the Trustee is not, in its sole discretion,
adequately compensated or indemnified; provided further that no such amendment,
supplement or additional agreement shall adversely affect the rights of the
holders
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of the Notes in any other respect with respect to the Collateral. Prior to the
execution and delivery by the Trustee of any such amendment, supplement or
additional agreement, the Trustee shall be entitled to receive an Officers'
Certificate from the Company, in a form reasonably satisfactory to it, which
shall designate whether the Permitted Lien shall be a Priority Lien, a Parity
Lien or a Subordinated Lien and shall include (where appropriate) calculations
establishing that such Permitted Lien is permitted by the terms of this
Indenture and an Opinion of Counsel stating that such amendments, supplements or
additional agreements are authorized or permitted by this Indenture and comply
with this Section 9.01(b). The Trustee shall be fully protected in relying on
any such Officers' Certificate and Opinion of Counsel, subject to Sections 7.01
and 7.02 of this Indenture.
For the avoidance of doubt, the Trustee and each Noteholder by accepting a
Note agrees that (i) the Note Liens and the Parity Liens on any Collateral
(other than Primary Collateral) are, as set forth in the Intercreditor Agreement
or any Intercreditor Documentation, subordinate in ranking to all present and
future Priority Liens, (ii) the Note Liens upon any and all Collateral shall be
of equal ranking with all Parity Liens, (iii) the Note Liens will be senior in
ranking to all Subordinated Liens and (iv) any Person holding a Parity Lien (or
a collateral agent on its behalf) shall be granted a perfected security interest
in all Collateral pursuant to security documents on terms comparable to those
granted to the Trustee and any such person shall have the independent right to
take action with respect to Collateral pursuant to Intercreditor Documentation
on terms comparable to those granted to the Trustee under the Intercreditor
Agreement, mutatis mutandis.
(B) Notwithstanding (i) anything to the contrary contained in the
Intercreditor Documentation or any document or agreement evidencing or
controlling the terms of the Indebtedness in respect of Liens, (ii) the time,
order or method of attachment of the Note Liens, the Priority Liens, the Parity
Liens or the Subordinated Liens, (iii) the time or order of filing or recording
of financing statements or other documents filed or recorded to perfect any Lien
upon any Collateral, (iv) the time of taking possession or control over any
Collateral, (v) the rules for determining priority under the Uniform Commercial
Code or any other law governing relative priorities of secured creditors, (vi)
that any Priority Lien may not have been perfected or (vii) any other
circumstance of any kind or nature whatsoever, consistent with the foregoing:
(1) The Note Liens and the Parity Liens will in all circumstances be
subordinate in ranking to all Priority Liens, whenever granted upon any present
or future Collateral (other than Primary Collateral);
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(2) The Note Liens will in all circumstances be of equal ranking with all
Parity Liens, whenever granted with respect to any Indebtedness secured by
Parity Liens;
(3) The Note Liens will in all circumstances be senior to all Indebtedness
Secured by Subordinated Liens, whenever granted on any present or future
Collateral.
The provisions set forth in this Section 9.01(b)(B) are intended to be
effective among the holders of Note Liens, Priority Liens, Parity Liens and
Subordinated Liens notwithstanding the Trustee's failure or refusal to execute
any amendment, supplement, replacement or additional Intercreditor Documentation
otherwise complying with Section 9.01(b)(A), and the holders of such Liens shall
be entitled to rely upon the terms set forth in this Section 9.01(b)(B) as a
third party beneficiary.
(C) Each Noteholder, by accepting a Note, agrees that (i) no consent of
the Holders of the Notes is required in connection with effectuating any of the
foregoing, including, without limitation, in connection with the Trustee's
actions related to the execution, delivery and performance of any and all
amendments, supplements, replacements or additional Intercreditor Documentation
consistent with the terms set forth above, and to the terms of such amended,
supplemented, replacement or additional Intercreditor Documentation set forth in
this Section 9.01(b), and (ii) the Trustee shall have no liability in connection
with actions taken in furtherance of the foregoing, subject to Section 7.01(c)
of this Indenture.
SECTION 9.02. Amendments With Consent of Holders. (a) Except as otherwise
provided in Sections 6.02, 6.04 and 6.07 or clause (b) of this Section 9.02, the
Company and the Trustee may amend this Indenture, the Notes, the Security
Documents or the Intercreditor Agreement with the written consent of the Holders
of at least a majority in principal amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes), and any existing Default or
compliance with any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes).
(b) Notwithstanding the provisions of paragraph (a), without the consent
of each Holder affected, an amendment or waiver may not (with respect to any
Notes held by a non-consenting Holder)
(1) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
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(2) reduce the principal of or change the fixed maturity of any Note
or alter the provisions, or waive any payment, with respect to the
redemption of the Notes (provided that this clause (2) does not apply to
amendment or waiver of the provisions of Section 4.12 or Section 4.13,
amendments and waivers with respect to which are subject to Section
9.02(c), below);
(3) reduce the rate of or change the time for payment of interest on
any Note;
(4) waive a Default or Event of Default in the payment of principal
of, or interest or premium, or Liquidated Damages, if any, on the Notes
(except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and a waiver
of the payment Default that resulted from such acceleration);
(5) make any Note payable in money other than U.S. dollars;
(6) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of, or interest or premium or Liquidated Damages, if
any, on the Notes;
(7) impair the right to institute suit for the enforcement of any
payment on or with respect to the Notes or the Note Guarantees;
(8) except as otherwise permitted under Article 5, consent to the
assignment or transfer by the Company or any Guarantor of any of their
rights or obligations under this Indenture (it being understood that
amendments or waivers of Section 5.01(a)(D) may be made with the consent
of the Holders of at least a majority in outstanding principal amount of
the Notes); or
(9) make any change in the preceding amendment and waiver
provisions,
(c) The Company, the Guarantors and the Trustee may not amend or
supplement this Indenture to change or modify the obligation of the Company to
make and consummate an Asset Sale Offer with respect to any Asset Sale in
accordance with Section 4.13 or the obligation of the Company to make and
consummate a Change of Control Offer in the event of a Change of Control in
accordance with Section 4.12, including, in each case changing or modifying any
definition relating thereto, or grant any waiver of the foregoing provisions,
without the consent of Holders of at least 66 2/3% of the outstanding principal
amount of the Notes.
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(d) Except as otherwise provided in this Indenture or the Security
Documents, without the consent of holders of at least 66 2/3% of the outstanding
principal amount of the Notes, no amendment may release any Guarantor from its
obligations under its Note Guarantee, change any Note Guarantee in any manner
that adversely affects the rights of any Holder of Notes under such Note
Guarantee in any material respect or release all or substantially of the
Collateral from the Liens created by the Security Documents.
(e) It is not necessary for Noteholders to approve the particular form of
any proposed amendment, supplement or waiver; it is sufficient if their consent
approves the substance thereof.
(f) An amendment, supplement or waiver under this Section 9.02 will become
effective on receipt by the Trustee of written consents from the Holders of the
requisite percentage in principal amount of the outstanding Notes. After an
amendment, supplement or waiver under this Section 9.02 becomes effective, the
Company will send to the Holders affected thereby a notice briefly describing
the amendment, supplement or waiver. The Company will send supplemental
indentures to Holders upon request. Any failure of the Company to send such
notice, or any defect therein, will not, however, in any way impair or affect
the validity of any such supplemental indenture or waiver.
SECTION 9.03. Effect of Consent. (a) After an amendment, supplement or
waiver becomes effective, it will bind every Holder unless it is of the type
requiring the consent of each Holder affected. If the amendment, supplement or
waiver is of the type requiring the consent of each Holder affected, the
amendment, supplement or waiver will bind each Holder that has consented to it
and every subsequent Holder of a Note that evidences the same debt as the Note
of the consenting Holder.
(b) If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder to deliver it to the Trustee so that the Trustee
may place an appropriate notation of the changed terms on the Note and return it
to the Holder, or exchange it for a new Note that reflects the changed terms.
The Trustee may also place an appropriate notation on any Note thereafter
authenticated. However, the effectiveness of the amendment, supplement or waiver
is not affected by any failure to annotate or exchange Notes in this fashion.
SECTION 9.04. Trustee's Rights and Obligations. The Trustee is entitled to
receive, and will be fully protected in relying upon, an Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article is authorized or permitted by this Indenture. If the
Trustee has received such an Opinion of Counsel, it shall sign the amendment,
supplement or waiver so long as the same does not adversely affect the rights of
the Trustee. The Trustee may, but is not obligated to, execute any amendment,
supplement or
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waiver that affects the Trustee's own rights, duties or immunities under this
Indenture.
SECTION 9.05. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act.
SECTION 9.06. Payments for Consents. Playboy will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to
be paid any consideration to or for the benefit of any Holder of Notes for or as
an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid and is paid to all Holders of the Notes that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
ARTICLE 10
SECURITY ARRANGEMENTS
SECTION 10.01. Security. (a) In order to secure the Obligations of the
Company under this Indenture, the Company will execute and deliver to the
Trustee on or prior to the Issue Date each Security Document to which it is or
is to be a party and create the Liens intended to be created thereunder, with
the priority set forth therein and in the Intercreditor Agreement, on the
Collateral. In order to secure the Obligations of each Guarantor under its Note
Guarantee and this Indenture, each Guarantor will execute and deliver to the
Trustee prior to the Issue Date each Security Document to which it is or is to
be a party and create the Liens intended to be created thereunder, with the
priority set forth therein and in the Intercreditor Agreement, on the
Collateral.
(b) The Company and the Guarantors shall comply with all covenants and
agreements contained in the Security Documents.
(c) Each Holder, by accepting a Note, agrees to all of the terms and
provisions of the Security Documents and the Intercreditor Agreement, as the
same may be amended from time to time pursuant to the provisions of the Security
Documents and the Intercreditor Agreement.
(d) As among the Holders, the Collateral as now or hereafter constituted
shall be held for the equal and ratable benefit of the Holders without
preference, priority or distinction of any thereof over any other by reason of
differences in time of issuance, sale or otherwise, as security for the
Obligations under this Indenture and the Notes.
SECTION 10.02. Release of Collateral upon Sale of Assets. (a) Upon the
sale, transfer or other disposition of any cash, accounts receivable, notes
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receivable or inventory ("Working Capital Assets") in the ordinary course of
business by the Company or any Guarantor to any Person other than Playboy or any
Restricted Subsidiary, or upon the making of any cash payments by the Company or
any Guarantor in the ordinary course of business to any person other than
Playboy or any Restricted Subsidiary, the Lien of this Indenture and the
Security Documents on any such cash, accounts receivable or inventory shall be
automatically released; provided that the sale, transfer or other disposition or
payment does not violate this Indenture, the Security Documents or the
Intercreditor Agreement. The Company shall deliver to the Trustee on each June
15 and December 15 a certificate to the effect that all such dispositions of
Working Capital Assets during the immediately preceding six-month period were in
the ordinary course of business and that the disposition and the application of
the proceeds thereof were in compliance with the provisions of this Indenture.
(b) Notwithstanding the foregoing, the Lien of this Indenture, the
Security Documents and the Intercreditor Agreement will not be released if any
sale, transfer or other disposition of Collateral is made as part of a
transaction that is governed by Section 5.01 or Section 5.02.
(c) [Intentionally omitted.]
(d) Upon the request of the Company to the Trustee pursuant to an
Officers' Certificate certifying that all conditions precedent hereunder have
been met and without the consent of any Holder, the Company and the Guarantors
will be entitled to the release of assets included in the Collateral from the
Liens securing the Notes and the Note Guarantees under any one or more of the
following circumstances:
(i) to enable Playboy or any Restricted Subsidiary to
consummate any sale, conveyance or other disposition of any assets
or rights (other than Working Capital Assets disposed of pursuant to
Section 10.02(a)) in compliance with Section 4.13 (or in a
transaction not subject to Section 4.13) to any Person other than
Playboy or a Restricted Subsidiary; provided that the Lien of this
Indenture and the Security Documents will not be released pursuant
to this Section 10.02(d)(i) if such sale, conveyance or other
disposition is made as part of a transaction governed by Section
5.01 or Section 5.02;
(ii) in respect of assets subject to a Permitted Lien pursuant
to clause (8), and clause (13) only as it relates to clause (8), of
the definition of Permitted Liens in Section 1.01;
(iii) pursuant to an amendment, waiver or supplement effected
in accordance with Article 9; and
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(iv) as otherwise permitted pursuant to the Security
Documents.
Any Officers' Certificate requesting a release of Collateral under Section
10.02(d)(i) shall state that the proposed sale, conveyance or other disposition
is in compliance with Section 4.13(a) and Section 4.13(b) or is exempt
therefrom.
(e) Any release of Collateral in accordance with the provisions of this
Indenture, the Security Documents and the Trust Indenture Act will not be deemed
to impair the security under this Indenture, and any engineer or appraiser may
rely on this Section 10.02(e) in delivering a certificate requesting release so
long as all other provisions of this Indenture and the Trust Indenture Act with
respect to such release have been complied with.
(f) The Trustee shall, upon any release of Collateral in accordance with
this Section 10.02, execute, deliver or acknowledge any necessary or proper
instruments of termination, satisfaction or release as shall reasonably be
requested by the Company or any Guarantor to evidence the release of such
Collateral.
(g) To the extent applicable and not otherwise provided herein or by an
exemption therefrom pursuant to relief from the Staff of the Commission, the
Company and each obligor on the Notes shall comply with Section 314(d) of the
Trust Indenture Act. Any certificate or opinion required by Section 314(d) of
the Trust Indenture Act may be made with respect to the Company by an Officer
and with respect to any Guarantor by an officer or managing member thereof,
except where Section 314(d) of the Trust Indenture Act requires that such
certificate or opinion be made by an independent engineer, appraiser or other
expert, in which case such engineer, appraiser or other expert shall be selected
by the Company or such Guarantor. The Trustee may, to the extent permitted by
Sections 7.01 and 7.02 and by Section 315 of the Trust Indenture Act,
conclusively rely on any such certificate or opinion
SECTION 10.03. Release of Collateral upon Release of Guarantee. Subject to
compliance with the Trust Indenture Act, in the event that any Guarantor is
released from its Guarantee in accordance with Section 11.09, then the Liens of
this Indenture and the Security Documents by such Guarantor shall be
automatically released and the Trustee shall execute all such instruments as
shall be requested by the Company to release all the Collateral as to which a
security interest has been granted pursuant to the Security Documents by such
Guarantor.
SECTION 10.04. Release upon Payment or Defeasance. In the event that (x)
(i) all of the Obligations under this Indenture, the Notes and the Security
Documents have been paid, (ii) the Notes have been discharged pursuant to
Section 8.01, (iii) the Notes have been legally defeased pursuant to Section
8.02 or (iv) the covenants of the Notes have been defeased pursuant to Section
8.03,
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and (y) the Company delivers an Officer's Certificate to that effect to the
Trustee, then the Liens of the Security Documents on the Collateral shall be
automatically released and the Trustee shall execute all such instruments as
shall be requested by the Company to release all the Collateral as to which a
security interest has been granted pursuant to this Indenture and the Security
Documents (other than any Collateral pledged as part of the trust required to
defease or discharge the Notes).
SECTION 10.05. Suits with Respect to Collateral. Each Holder agrees that
it shall not take or institute any actions or proceedings, judicial or
otherwise, for any right or remedy against the Company, any Guarantor or any
other obligor under this Indenture, any Note or other Security Documents
(including, without limitation, the exercise of any right of set-off, rights on
account of any banker's lien or similar claim or other rights of self-help), or
institute any actions or proceedings or otherwise commence any remedial
procedures, with respect to any Collateral, without the prior written consent of
the Trustee if and to the extent that the institution or prosecution thereof or
the entry of judgment thereon would, under applicable law, result in the
surrender, impairment, waiver or loss of the Lien of the Security Documents upon
any Collateral (and prior to taking any such action, a Holder shall be required
to deliver to the Trustee a written opinion of counsel to the effect that the
institution or prosecution of the action, or entry of judgment thereon, will not
result in the surrender, impairment, waiver or loss of the Lien of the Security
Documents upon any Collateral). In no event shall the Trustee commence any
foreclosure action with respect to the Playboy Mansion until the Administrative
Agent, any agent in connection with any other Credit Facility or the Trustee has
provided the Option Notice (as defined in the Credit Agreement as in effect on
the date hereof, or such other Credit Facility, provided that the definition
thereof is no less favorable to Noteholders than the definition in the Credit
Agreement as in effect on the date hereof) to the Company and any Principal or
Related Party entitled to exercise the option described in Section 4.14(b)(4) as
provided in Section 7.05 of the Credit Agreement or in such other Credit
Facility, and such Principal or Related Party has had an opportunity to exercise
such option as provided by the terms of the Credit Agreement or such other
Credit Facility.
SECTION 10.06. Limitation on Duty of Trustee with Respect to the
Collateral. The powers conferred on the Trustee hereunder with respect to the
Collateral are solely to protect its and the Holders' interest in the Collateral
and shall not impose any duty on it to exercise any such powers, except as
specifically required by this Indenture and subject to Section 7.01 hereof. It
is expressly agreed that the Trustee shall have no responsibility for initiating
any action to preserve rights against any parties with respect to any
Collateral, except as expressly provided in this Indenture.
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ARTICLE 11
GUARANTEES
SECTION 11.01. The Guarantees. Subject to the provisions of this Article
11, each Guarantor hereby fully and unconditionally guarantees, jointly and
severally, on a senior secured basis, the full and punctual payment when due
(whether at Stated Maturity, upon redemption, purchase pursuant to a Change of
Control Offer or acceleration, or otherwise) of the principal of, premium, if
any, and interest on, and all other amounts payable under, each Note, and the
full and punctual payment when due of all other amounts payable by the Company
under this Indenture. Upon failure by the Company to pay punctually any such
amount when due, each Guarantor shall forthwith on demand pay the amount not so
paid at the place and in the manner specified in this Indenture.
SECTION 11.02. Guarantee Unconditional. The obligations of each Guarantor
hereunder are unconditional and absolute and, without limiting the generality of
the foregoing, will not be released, discharged or otherwise affected by
(1) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company under this Indenture
or any Note, by operation of law or otherwise;
(2) any modification or amendment of or supplement to this Indenture
or any Note;
(3) any change in the corporate existence, structure or ownership of
the Company, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Company or its assets or any resulting
release or discharge of any obligation of the Company contained in this
Indenture or any Note;
(4) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Company, the Trustee or any
other Person, whether in connection with this Indenture or any unrelated
transactions, provided that nothing herein prevents the assertion of any
such claim by separate suit or compulsory counterclaim;
(5) any invalidity or unenforceability relating to or against the
Company for any reason of this Indenture or any Note, or any provision of
applicable law or regulation purporting to prohibit the payment by the
Company of the principal of or interest on any Note or any other amount
payable by the Company under this Indenture; or
(6) any other act or omission to act or delay of any kind by the
Company, the Trustee or any other Person or any other circumstance
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whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of or defense to such
Guarantor's obligations hereunder.
Each Subsidiary Guarantor, by its execution hereof, acknowledges and
agrees that it receives substantial benefits from the Company and that
such Subsidiary Guarantor is providing its Note Guarantee for good and
valuable consideration, including, without limitation, such substantial
benefits and services.
SECTION 11.03. Discharge; Reinstatement. Each Guarantor's obligations
hereunder will remain in full force and effect until the principal of, premium,
if any, and interest on the Notes and all other amounts payable by the Company
under this Indenture have been paid in full. If at any time any payment of the
principal of, premium, if any, or interest on any Note or any other amount
payable by the Company under this Indenture is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of the
Company or otherwise, each Guarantor's obligations hereunder with respect to
such payment will be reinstated as though such payment had been due but not made
at such time.
SECTION 11.04. Waiver by the Guarantors. Each Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Company or any other Person.
SECTION 11.05. Subrogation and Contribution. Upon making any payment with
respect to any obligation of the Company under this Article 11, the Guarantor
making such payment will be subrogated to the rights of the payee against the
Company with respect to such obligation, provided that the Guarantor may not
enforce either any right of subrogation or any right to receive payment in the
nature of contribution or otherwise from any other Guarantor with respect to
such payment so long as any amount payable by the Company hereunder or under the
Notes remains unpaid.
SECTION 11.06. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Company under this Indenture or the Notes
is stayed upon the insolvency, bankruptcy or reorganization of the Company, all
such amounts otherwise subject to acceleration under the terms of this Indenture
are nonetheless payable by the Guarantors hereunder forthwith on demand by the
Trustee or the Holders.
SECTION 11.07. Limitation on Amount of Guarantee. Notwithstanding anything
to the contrary in this Article 11, each Guarantor, and by its acceptance of
Notes, each Holder, hereby confirms that it is the intention of all such parties
that the Note Guarantee of such Guarantor not constitute a fraudulent conveyance
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under applicable fraudulent conveyance provisions of the United States
Bankruptcy Code or any comparable provision of state law. To effectuate that
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of each Guarantor under its Note Guarantee are limited to
the maximum amount that would not render the Guarantor's obligations subject to
avoidance under applicable fraudulent conveyance provisions of the United States
Bankruptcy Code or any comparable provision of state law.
SECTION 11.08. Execution and Delivery of Guarantee. The execution by each
Guarantor of this Indenture (or a supplemental indenture in the form of Exhibit
B) evidences the Note Guarantee of such Guarantor, whether or not the person
signing as an officer of the Guarantor still holds that office at the time of
authentication of any Note. The delivery of any Note by the Trustee after
authentication constitutes due delivery of the Note Guarantee set forth in this
Indenture on behalf of each Guarantor.
SECTION 11.09. Release of Guarantee. The Note Guarantee of a Subsidiary
Guarantor will be released
(a) in connection with any sale of all of the Capital Stock of a
Subsidiary Guarantor to a Person that is not (either before or after
giving effect to such transaction) Playboy or a Subsidiary of Playboy, if
the sale of all such Capital Stock of that Subsidiary Guarantor complies
with Section 4.13;
(b) if Playboy properly designates any Restricted Subsidiary that is
a Subsidiary Guarantor as an Unrestricted Subsidiary; or
(c) if such Subsidiary Guarantor disposes of all of its assets in
compliance with Section 4.13 and then liquidates or dissolves.
Upon delivery by the Company to the Trustee of an Officers' Certificate
and an Opinion of Counsel to the foregoing effect, the Trustee will execute any
documents reasonably required in order to evidence the release of the Guarantor
from its obligations under its Note Guarantee.
SECTION 11.10. State Law Provisions. Without limiting the generality,
scope or meaning of any of the foregoing or any other provision of this
Indenture, each Guarantor:
(a) acknowledges that Section 2856 of the California Civil Code
authorizes and validates waivers of a guarantor's rights of subrogation
and reimbursement and certain other rights and defenses available to such
Guarantor under California law;
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(b) waives all rights of subrogation, reimbursement,
indemnification, and contribution and all other rights and defenses that
are or may become available by reason of Sections 2787 to 2855, inclusive,
of the California Civil Code;
(c) waives all rights and defenses arising out of an election of
remedies by the Trustee, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed such Guarantor's rights of subrogation and
reimbursement against the Company by the operation of Section 580d of the
California Code of Civil Procedure or otherwise;
(d) waives all rights and defenses that such Guarantor may have
because the Company's debt is secured by real property, which means, among
other things, that:
(i) the Trustee may collect from such Guarantor without first
foreclosing on any real or personal property collateral pledged by
the Company; and
(ii) if the Trustee forecloses on any real property collateral
pledged by the Company:
(A) the amount of the debt may be reduced only by the
price for which that collateral is sold at the foreclosure
sale, even if the collateral is worth more than the sale
price; and
(B) the Trustee may collect from such Guarantor even if
the Trustee, by foreclosing on the real property collateral,
has destroyed any right such Guarantor may have to collect
from the Company;
(e) waives the protections of Nevada's one action rule or NRS
40.430;
(f) waives all rights and defenses, if any, now or hereafter arising
under the laws of the State of Illinois, which are the same as or similar
to the rights and defenses waived as described above.
These waivers and acknowledgments constitute an unconditional and
irrevocable waiver of any rights and defenses any Guarantor may have because the
Company's debt is secured by real property. These rights and defenses include,
but are not limited to, any rights or defenses based upon Sections 580a, 580b,
580d, or 726 of the California Code of Civil Procedure.
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ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act of 1939. This Indenture shall
incorporate and be governed by the provisions of the Trust Indenture Act that
are required to be part of and to govern indentures qualified under the Trust
Indenture Act.
SECTION 12.02. Noteholder Communications; Noteholder Actions. (a) The
rights of Holders to communicate with other Holders with respect to this
Indenture or the Notes are as provided by the Trust Indenture Act, and the
Company, the Guarantors and the Trustee shall comply with the requirements of
Trust Indenture Act Sections 312(a) and 312(b). Neither the Company nor any
Guarantor nor the Trustee will be held accountable by reason of any disclosure
of information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
(b) (1) Any request, demand, authorization, direction, notice, consent to
amendment, supplement or waiver or other action provided by this Indenture to be
given or taken by a Holder (an "act") may be evidenced by an instrument signed
by the Holder delivered to the Trustee. The fact and date of the execution of
the instrument, or the authority of the person executing it, may be proved in
any manner that the Trustee deems sufficient.
(2) The Trustee may make reasonable rules for action by or at a
meeting of Holders, which will be binding on all the Holders.
(c) Any act by the Holder of any Note binds that Holder and every
subsequent Holder of a Note that evidences the same debt as the Note of the
acting Holder, even if no notation thereof appears on the Note. Subject to
paragraph (d) of this Section 12.02, a Holder may revoke an act as to its Notes,
but only if the Trustee receives the notice of revocation before the date the
amendment or waiver or other consequence of the act becomes effective.
(d) The Company may, but is not obligated to, fix a record date (which
need not be within the time limits otherwise prescribed by Trust Indenture Act
Section 316(c)) for the purpose of determining the Holders entitled to act with
respect to any amendment or waiver or in any other regard, except that during
the continuance of an Event of Default, only the Trustee may set a record date
as to notices of default, any declaration or acceleration or any other remedies
or other consequences of the Event of Default. If a record date is fixed, those
Persons that were Holders at such record date and only those Persons will be
entitled to act, or to revoke any previous act, whether or not those Persons
continue to be Holders after the record date. No act will be valid or effective
for more than 90 days after the record date.
101
SECTION 12.03. Notices. (a) Any notice or communication to the Company
will be deemed given if in writing (i) when delivered in person or (ii) five
days after mailing when mailed by first class mail, or (iii) when sent by
facsimile transmission, with transmission confirmed. Notices or communications
to a Guarantor will be deemed given if given to the Company. Any notice to the
Trustee will be effective only upon receipt. In each case the notice or
communication should be addressed as follows:
if to the Company or any Guarantor:
PEI Holdings, Inc.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
if to the Trustee:
Bank One, N.A.
1 Bank One Plaza
Mail Code IL10430
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Global Corporate Trust Services/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
The Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
(b) Except as otherwise expressly provided with respect to published
notices, any notice or communication to a Holder will be deemed given when
mailed to the Holder at its address as it appears on the Register by first class
mail or, as to any Global Note registered in the name of DTC or its nominee, as
agreed by the Company, the Trustee and DTC. Copies of any notice or
communication to a Holder, if given by the Company, will be mailed to the
Trustee at the same time. Defect in mailing a notice or communication to any
particular Holder will not affect its sufficiency with respect to other Holders.
(c) Where this Indenture provides for notice, the notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and the waiver will be the equivalent of the notice. Waivers of
notice by Holders must be filed with the Trustee, but such filing is not a
condition precedent to the validity of any action taken in reliance upon such
waivers.
SECTION 12.04. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company will furnish to the Trustee:
102
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that all such conditions precedent
have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture must include:
(1) a statement that each person signing the certificate or opinion
has read the covenant or condition and the related definitions;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in the
certificate or opinion are based;
(3) a statement that, in the opinion of each such person, that
person has made such examination or investigation as is necessary to
enable the person to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with,
provided that an Opinion of Counsel may rely on an Officers' Certificate or
certificates of public officials with respect to matters of fact.
SECTION 12.06. Payment Date Other Than a Business Day. If any payment with
respect to a payment of any principal of, premium, if any, or interest on any
Note (including any payment to be made on any date fixed for redemption or
purchase of any Note) is due on a day which is not a Business Day, then the
payment need not be made on such date, but may be made on the next Business Day
with the same force and effect as if made on such date, and no interest will
accrue for the intervening period.
SECTION 12.07. Governing Law. This Indenture, including any Note
Guarantees, and the Notes shall be governed by, and construed in accordance
with, the internal laws of the State of New York applicable to agreements made
and to be performed in such state.
SECTION 12.08. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture or loan or debt
agreement of the Company, Playboy or any Subsidiary of the Company, and no such
indenture or loan or debt agreement may be used to interpret this Indenture.
103
SECTION 12.09. Successors . All agreements of the Company or any Guarantor
in this Indenture and the Notes will bind its successors. All agreements of the
Trustee in this Indenture will bind the Trustee's successor.
SECTION 12.10. Duplicate Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
SECTION 12.11. Separability. In case any provision in this Indenture or in
the Notes is invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions will not in any way be affected or
impaired thereby.
SECTION 12.12. Table of Contents and Headings. The Table of Contents,
Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part of this Indenture and in no way modify or restrict any of the
terms and provisions of this Indenture.
SECTION 12.13. No Liability of Directors, Officers, Employees,
Incorporators, Members and Stockholders. No director, officer, employee,
incorporator, member or stockholder of the Company or any Guarantor, as such,
shall have any liability for any obligations of the Company or the Guarantors
under the Notes, any Note Guarantee or this Indenture or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each Holder
of Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes.
104
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
PEI HOLDINGS, INC.
as Issuer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
BANK ONE, N.A.
as Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
PLAYBOY ENTERPRISES, INC.
as Guarantor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President,
Treasurer
ADULTVISION COMMUNICATIONS, INC.
AFTER DARK VIDEO, INC.
AL ENTERTAINMENT, INC.
ALTA LOMA DISTRIBUTION, INC.
ALTA LOMA ENTERTAINMENT, INC.
IMPULSE PRODUCTIONS, INC.
INDIGO ENTERTAINMENT, INC.
ITASCA HOLDINGS, INC.
LAKE SHORE PRESS, INC.
LIFESTYLE BRANDS, LTD.
MYSTIQUE FILMS, INC.
PLAYBOY GAMING NEVADA, I NC.
PLAYBOY GAMING UK, LTD.
PLAYBOY CLUB OF HOLLYWOOD, INC.
PLAYBOY CLUB OF NEW YORK, INC.
PLAYBOY CLUBS INTERNATIONAL, INC.
PLAYBOY CRUISE GAMING, INC.
PLAYBOY GAMING INTERNATIONAL, LTD.
PLAYBOY OF ▇▇▇▇▇, INC.
PLAYBOY JAPAN, INC.
PLAYBOY MODELS, INC.
PLAYBOY PREFERRED, INC.
PLAYBOY ENTERTAINMENT GROUP, INC.
PRECIOUS FILMS, INC.
PLAYBOY PROPERTIES, INC.
PLAYBOY OF SUSSEX, INC.
STEELTON, INC.
TELECOM INTERNATIONAL, INC.
WOMEN PRODUCTIONS, INC.
SPECIAL EDITIONS, LTD.
CPV PRODUCTIONS, INC.
CYBERSPICE, INC.
SPICE ENTERTAINMENT, INC.
SPICE DIRECT, INC.
SPICE NETWORKS, INC.
SPICE PRODUCTIONS, INC.
SPICE INTERNATIONAL, INC.
MH PICTURES, INC.
PLAYBOY SHOWS, INC.
PLANET PLAYBOY, INC.
PLANET SPICE, INC.
as Guarantors
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
PLAYBOY ENTERPRISES INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President,
Treasurer
SPICE HOT ENTERTAINMENT, INC.
SPICE PLATINUM ENTERTAINMENT, INC.
as Guarantors
By: /s/ ▇▇▇▇▇ ▇. English
-----------------------------------
Name: ▇▇▇▇▇ ▇. English
Title: President
PLAYBOY TV INTERNATIONAL, LLC
By: Playboy Entertainment Group, Inc., its
Sole Member
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
CLARIDGE ORGANIZATION, LLC
CHELSEA COURT HOLDINGS, LLC
CANDLELIGHT MANAGEMENT, LLC
By: Playboy TV International, LLC,
its Sole Member
By: Playboy Entertainment Group,
Inc., its Sole Member
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
EXHIBIT A
[FACE OF NOTE]
PEI HOLDINGS, INC.
11% Senior Secured Note due 2010
[CUSIP] [CINS] _______________
No. $_______________
PEI HOLDINGS, INC., a Delaware corporation (the "Company", which term
includes any successor under the Indenture hereinafter referred to), for value
received, promises to pay to ____________________, or its registered assigns,
the principal sum of ____________ DOLLARS ($______) [or such other amount as
indicated on the Schedule of Exchange of Notes attached hereto] on March 15,
2010.
Interest Rate: 11% per annum.
Interest Payment Dates: March 15 and September 15, commencing September
15, 2003.
Regular Record Dates: March 1 and September 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which will for all purposes have the same effect as if
set forth at this place.
A-1
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by a duly authorized officer.
Date: PEI HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
A-2
This is one of the 11% Senior Secured Notes due 2010 described in the
Indenture referred to in this Note.
Bank One, N.A., as Trustee
By:
----------------------------------
Authorized Signatory
A-3
[REVERSE SIDE OF NOTE]
PEI HOLDINGS, INC.
11% Senior Secured Note due 2010
1. Principal and Interest.
The Company promises to pay the principal of this Note on March 15, 2010.
The Company promises to pay interest on the principal amount of this Note
on each interest payment date, as set forth on the face of this Note, at the
rate of 11% per annum from March 11, 2003 until maturity [and shall pay the
Liquidated Damages, if any, payable pursuant to the Registration Rights
Agreement referred to below.](1)
Interest [and Liquidated Damages, if any](1), will be payable semiannually
(to the holders of record of the Notes at the close of business on the March 1
or September 1 immediately preceding the interest payment date) on each interest
payment date, commencing September 15, 2003.
[The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement, dated as of March 11, 2003, by and among the Company, Playboy
Enterprises, Inc., the Subsidiary Guarantors listed on the signature pages
thereof, Banc of America Securities LLC and Lazard Freres & Co. LLC (the
"Registration Rights Agreement"). In the event of a Registration Default (as
defined in the Registration Rights Agreement), the Company will be obligated to
pay liquidated damages to the Holder of this Note with respect to the first
90-day period immediately following the occurrence of the first Registration
Default in an amount equal to $.05 per week per $1,000 principal amount of this
Note. The amount of the liquidated damages will increase by an additional $.05
per week per $1,000 principal amount of Notes with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of liquidated damages for all Registration Defaults of $.25 per week per
$1,000 principal amount of Notes.](1)
Interest on this Note will accrue from the most recent date to which
interest has been paid on this Note [or the Note surrendered in exchange for
this Note] (or, if there is no existing default in the payment of interest and
if this Note is authenticated between a regular record date and the next
interest payment date, from such interest payment date) or, if no interest has
been paid, from the Issue
----------
(1) Initial Notes only; modify as necessary for Additional Notes.
A-4
Date. Interest will be computed in the basis of a 360-day year of twelve 30-day
months.
The Company will pay interest on overdue principal, premium, if any, and
interest at a rate per annum that is 1% in excess of 11%. Interest not paid when
due and any interest on principal, premium or interest not paid when due will be
paid to the Persons that are Holders on a special record date, which will be the
15th day preceding the date fixed by the Company for the payment of such
interest, whether or not such day is a Business Day. At least 15 days before a
special record date, the Company will send to each Holder and to the Trustee a
notice that sets forth the special record date, the payment date and the amount
of interest to be paid.
2. Indenture; Note Guarantee.
This is one of the Notes issued under an Indenture dated as of March 11,
2003 (as amended from time to time, the "Indenture"), among the Company, the
Guarantors party thereto and Bank One, N.A., as Trustee. Capitalized terms used
herein are used as defined in the Indenture unless otherwise indicated. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act. The Notes are subject to
all such terms, and Holders are referred to the Indenture and the Trust
Indenture Act for a statement of all such terms. To the extent permitted by
applicable law, in the event of any inconsistency between the terms of this Note
and the terms of the Indenture, the terms of the Indenture will control.
The Notes are secured obligations of the Company. The Indenture limits the
original aggregate principal amount of the Notes to $115,000,000, but Additional
Notes may be issued pursuant to the Indenture, and the originally issued Notes
and all such Additional Notes vote together for all purposes as a single class.
This Note is guaranteed, on a senior secured basis, as set forth in the
Indenture.
3. Redemption and Repurchase; Discharge Prior to Redemption or Maturity.
This Note is subject to optional redemption, and may be the subject of an
Offer to Purchase, as further described in the Indenture. There is no sinking
fund or mandatory redemption applicable to this Note.
If the Company deposits with the Trustee money or U.S. Government
Obligations sufficient to pay the then outstanding principal of, premium, if
any, and accrued interest on the Notes to redemption or maturity, the Company
may in certain circumstances be discharged from the Indenture and the Notes or
may be discharged from certain of its obligations under certain provisions of
the Indenture.
A-5
4. Registered Form; Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 principal amount and any multiple of $1,000 in excess thereof. A Holder
may register the transfer or exchange of Notes in accordance with the Indenture.
The Trustee may require a Holder to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. Pursuant to the Indenture, there are certain periods during which
the Trustee will not be required to issue, register the transfer of or exchange
any Note or certain portions of a Note.
5. Defaults and Remedies.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Notes may declare all the Notes to be due and payable. If a bankruptcy or
insolvency default with respect to the Company occurs and is continuing, the
Notes automatically become due and payable. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Notes. Subject to certain limitations, Holders of a majority in principal amount
of the Notes then outstanding may direct the Trustee in its exercise of
remedies.
6. Amendment and Waiver.
Subject to certain exceptions, the Indenture and the Notes may be amended,
or default may be waived, with the consent of the Holders of a majority in
principal amount of the outstanding Notes. Without notice to or the consent of
any Holder, the Company and the Trustee may amend or supplement the Indenture or
the Notes to, among other things, cure any ambiguity, defect or inconsistency.
7. Authentication.
This Note is not valid until the Trustee (or Authenticating Agent) signs
the certificate of authentication on the other side of this Note.
8. Governing Law.
This Note shall be governed by, and construed in accordance with, the laws
of the State of New York.
9. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
A-6
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A/ (= Uniform Gifts to Minors
Act).
The Company will furnish a copy of the Indenture to any Holder upon
written request and without charge.
A-7
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
--------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
--------------------------------------------------------------------------------
attorney to transfer said Note on the books of the Company with full power of
substitution in the premises.
A-8
[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES BEARING A RESTRICTED
LEGEND]
In connection with any transfer of this Note occurring prior to
______________, the undersigned confirms that such transfer is made without
utilizing any general solicitation or general advertising and further as
follows:
Check One
|_| (1) This Note is being transferred to a "qualified institutional buyer" in
compliance with Rule 144A under the Securities Act of 1933, as amended and
certification in the form of Exhibit F to the Indenture is being furnished
herewith.
|_| (2) This Note is being transferred to a Non-U.S. Person in compliance with
the exemption from registration under the Securities Act of 1933, as amended,
provided by Regulation S thereunder, and certification in the form of Exhibit E
to the Indenture is being furnished herewith.
or
|_| (3) This Note is being transferred other than in accordance with (1) or (2)
above and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee is not obligated to
register this Note in the name of any Person other than the Holder hereof unless
and until the conditions to any such transfer of registration set forth herein
and in the Indenture have been satisfied.
Date:
------------------------------ ----------------------------------------
Seller
By
-------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
A-9
Signature Guarantee:(5)
----------------------------------
By
------------------------------------
To be executed by an executive officer
----------
(5) Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Association
Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
A-10
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have all of this Note purchased by the Company pursuant to
Section 4.12 or 4.13 of the Indenture, check the box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.12 or 4.13 of the Indenture, state the amount (in original
principal amount) below:
$_____________________.
Date:____________
Your Signature:__________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:(1)_____________________________
----------
(1) Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Trustee, which requirements include
membership or participation in the Securities Transfer Association
Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Trustee in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
A-11
SCHEDULE OF EXCHANGES OF NOTES
The following exchanges of a part of this Global Note for Physical Notes or a
part of another Global Note have been made:
Principal amount of
this Global Note
Amount of decrease Amount of increase following such Signature of
in principal amount in principal amount decrease (or authorized officer of
Date of Exchange of this Global Note of this Global Note increase) Trustee
---------------- ------------------- ------------------- ------------------- ---------------------
A-12
EXHIBIT B
SUPPLEMENTAL INDENTURE
dated as of __________, ____
among
PEI HOLDINGS, INC.,
The Guarantor(s) Party Hereto
and
BANK ONE, N.A.,
as Trustee
----------------------
11% Senior Secured Notes due 2010
THIS SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), entered into
as of __________, ____, among PEI HOLDINGS, INC., a Delaware corporation (the
"Company"), [insert each Guarantor executing this Supplemental Indenture and its
jurisdiction of incorporation] (each an "Undersigned") and Bank One, N.A., as
trustee (the "Trustee").
RECITALS
WHEREAS, the Company, the Guarantors party thereto and the Trustee entered
into the Indenture, dated as of March 11, 2003 (the "Indenture"), relating to
the Company's 11% Senior Secured Notes due 2010 (the "Notes");
WHEREAS, as a condition to the Trustee entering into the Indenture and the
purchase of the Notes by the Holders, the Company agreed pursuant to the
Indenture to cause any newly acquired or created Domestic Restricted
Subsidiaries to provide Guarantees.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and intending to be legally bound, the parties to this
Supplemental Indenture hereby agree as follows:
SECTION 1. Capitalized terms used herein and not otherwise defined herein
are used as defined in the Indenture.
SECTION 2. Each Undersigned, by its execution of this Supplemental
Indenture, acknowledges and agrees that it receives substantial benefits from
the Company and that such Undersigned is providing its Guarantee for good and
valuable consideration, including, without limitation, such substantial benefits
and services and, accordingly, such Undersigned agrees to be a Guarantor under
the Indenture and to be bound by the terms of the Indenture applicable to
Guarantors, including, but not limited to, Article 11 thereof.
SECTION 3. This Supplemental Indenture shall be governed by and construed
in accordance with the laws of the State of New York.
SECTION 4. This Supplemental Indenture may be signed in various
counterparts which together will constitute one and the same instrument.
SECTION 5. This Supplemental Indenture is an amendment supplemental to the
Indenture and the Indenture and this Supplemental Indenture will henceforth be
read together.
B-1
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
PEI HOLDINGS, INC., as Issuer
By:
----------------------------------
Name:
Title:
[GUARANTOR]
By:
----------------------------------
Name:
Title:
Bank One, N.A., as Trustee
By:
----------------------------------
Name:
Title:
B-2
EXHIBIT C
RESTRICTED LEGEND
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER
(1) REPRESENTS THAT
(A) IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A "QUALIFIED
INSTITUTIONAL BUYER" (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES
ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH
SUCH ACCOUNT,
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (WITHIN THE MEANING
OF RULE 501(a) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR
(C) IT IS NOT A U.S. PERSON (WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT) AND IS PURCHASING THE NOTES IN AN OFFSHORE
TRANSACTION PURSUANT TO REGULATION S UNDER THE SECURITIES ACT; AND
(2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL,
PLEDGE OR OTHERWISE TRANSFER THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN, EXCEPT
IN ACCORDANCE WITH THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES AND ONLY
(A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE
UNDER THE SECURITIES ACT,
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT,
C-1
(D) IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT,
(E) IN A PRINCIPAL AMOUNT OF NOT LESS THAN $250,000, TO AN
INSTITUTIONAL ACCREDITED INVESTOR (WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER,
DELIVERS TO THE TRUSTEE A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM
OF WHICH MAY BE OBTAINED FROM THE TRUSTEE) RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS NOTE, OR
(F) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(C) ABOVE OR
(2)(D) ABOVE, A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE
OBTAINED FROM THE TRUSTEE) MUST BE DELIVERED TO THE TRUSTEE. PRIOR TO THE
REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) OR (F) ABOVE, THE COMPANY
RESERVES THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS,
CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO
DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE
AS TO THE AVAILABILITY OF ANY RULE 144 EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
C-2
EXHIBIT D
DTC LEGEND
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS A BENEFICIAL INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS IN WHOLE, BUT NOT
IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO
ON THE REVERSE HEREOF.
D-1
EXHIBIT E
Regulation S Certificate
_________, ____
Bank One, N.A.
▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: PEI Holdings, Inc.
11% Senior Secured Notes due 2010 (the "Notes")
Issued under the Indenture (the "Indenture") dated
as of March 11, 2003 relating to the Notes
Ladies and Gentlemen:
Terms are used in this Certificate as used in Regulation S ("Regulation
S") under the Securities Act of 1933, as amended (the "Securities Act"), except
as otherwise stated herein.
[CHECK A OR B AS APPLICABLE.]
|_| A. This Certificate relates to our proposed transfer of $____
principal amount of Notes issued under the Indenture. We hereby
certify as follows:
1. The offer and sale of the Notes was not and will not be
made to a person in the United States (unless such
person is excluded from the definition of "U.S. person"
pursuant to Rule 902(k)(2)(vi) or the account held by it
for which it is acting is excluded from the definition
of "U.S. person" pursuant to Rule 902(k)(2)(i) under the
circumstances described in Rule 902(h)(3)) and such
offer and sale was not and will not be specifically
targeted at an identifiable group of U.S. citizens
abroad.
2. Unless the circumstances described in the parenthetical
in paragraph 1 above are applicable, either (a) at the
time the buy order was originated, the buyer was outside
the United States or we and any person acting on our
behalf reasonably believed that the buyer was outside
the United States or (b) the transaction was executed
in, on or through the facilities
E-1
of a designated offshore securities market, and neither
we nor any person acting on our behalf knows that the
transaction was pre-arranged with a buyer in the United
States.
3. Neither we, any of our affiliates, nor any person acting
on our or their behalf has made any directed selling
efforts in the United States with respect to the Notes.
4. The proposed transfer of Notes is not part of a plan or
scheme to evade the registration requirements of the
Securities Act.
5. If we are a dealer or a person receiving a selling
concession, fee or other remuneration in respect of the
Notes, and the proposed transfer takes place during the
Restricted Period (as defined in the Indenture), or we
are an officer or director of the Company or an Initial
Purchaser (as defined in the Indenture), we certify that
the proposed transfer is being made in accordance with
the provisions of Rule 904(b) of Regulation S.
|_| B. This Certificate relates to our proposed exchange of $____
principal amount of Notes issued under the Indenture for an equal
principal amount of Notes to be held by us. We hereby certify as
follows:
1. At the time the offer and sale of the Notes was made to
us, either (i) we were not in the United States or (ii)
we were excluded from the definition of "U.S. person"
pursuant to Rule 902(k)(2)(vi) or the account held by us
for which we were acting was excluded from the
definition of "U.S. person" pursuant to Rule
902(k)(2)(i) under the circumstances described in Rule
902(h)(3); and we were not a member of an identifiable
group of U.S. citizens abroad.
2. Unless the circumstances described in paragraph 1(ii)
above are applicable, either (a) at the time our buy
order was originated, we were outside the United States
or (b) the transaction was executed in, on or through
the facilities of a designated offshore securities
market and we did not pre-arrange the transaction in the
United States.
3. The proposed exchange of Notes is not part of a plan or
scheme to evade the registration requirements of the
Securities Act.
E-2
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[NAME OF SELLER (FOR TRANSFERS) OR
OWNER (FOR EXCHANGES)]
By:
----------------------------------
Name:
Title:
Address:
Date: _________________
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
_________, ____
Bank One, N.A.
▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: PEI Holdings, Inc.
11% Senior Secured Notes due 2010 (the "Notes")
Issued under the Indenture (the "Indenture") dated
as of March 11, 2003 relating to the Notes
Ladies and Gentlemen:
TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED.
This Certificate relates to:
[CHECK A OR B AS APPLICABLE.]
|_| A. Our proposed purchase of $____ principal amount of Notes issued
under the Indenture.
|_| B. Our proposed exchange of $____ principal amount of Notes issued
under the Indenture for an equal principal amount of Notes to be
held by us.
We and, if applicable, each account for which we are acting in the
aggregate owned and invested more than $100,000,000 in securities of issuers
that are not affiliated with us (or such accounts, if applicable), as of
_________, 20__, which is a date on or since close of our most recent fiscal
year. We and, if applicable, each account for which we are acting, are a
qualified institutional buyer within the meaning of Rule 144A ("Rule 144A")
under the Securities Act of 1933, as amended (the "Securities Act"). If we are
acting on behalf of an account, we exercise sole investment discretion with
respect to such account. We are aware that the transfer of Notes to us, or such
exchange, as applicable, is being made in reliance upon the exemption from the
provisions of Section 5 of the Securities Act provided by Rule 144A. Prior to
the date of this Certificate we have received such information regarding the
Company as we have requested pursuant to Rule 144A(d)(4) or have determined not
to request such information.
F-1
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[NAME OF PURCHASER (FOR TRANSFERS)
OR OWNER (FOR EXCHANGES)]
By:
----------------------------------
Name:
Title:
Address:
Date: _________________
F-2
EXHIBIT G
Institutional Accredited Investor Certificate
Bank One, N.A.
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: PEI Holdings, Inc.
11% Senior Secured Notes due 2010 (the "Notes")
Issued under the Indenture (the "Indenture") dated
as of March 11, 2003 relating to the Notes
Ladies and Gentlemen:
This Certificate relates to:
[CHECK A OR B AS APPLICABLE.]
|_| A. Our proposed purchase of $____ principal amount of Notes issued
under the Indenture.
|_| B. Our proposed exchange of $____ principal amount of Notes issued
under the Indenture for an equal principal amount of Notes to be
held by us.
We hereby confirm that:
1. We are an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933, as amended (the "Securities Act") (an
"Institutional Accredited Investor").
2. Any acquisition of Notes by us will be for our own account or
for the account of one or more other Institutional Accredited
Investors as to which we exercise sole investment discretion.
3. We have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits
and risks of an investment in the Notes and we and any
accounts for which we are acting are able to bear the economic
risks of and an entire loss of our or their investment in the
Notes.
G-1
4. We are not acquiring the Notes with a view to any distribution
thereof in a transaction that would violate the Securities Act
or the securities laws of any State of the United States or
any other applicable jurisdiction; provided that the
disposition of our property and the property of any accounts
for which we are acting as fiduciary will remain at all times
within our and their control.
5. We acknowledge that the Notes have not been registered under
the Securities Act and that the Notes may not be offered or
sold within the United States or to or for the benefit of U.S.
persons except as set forth below.
6. The principal amount of Notes to which this Certificate
relates is at least equal to $250,000.
We agree for the benefit of the Company, on our own behalf and on behalf
of each account for which we are acting, that such Notes may be offered, sold,
pledged or otherwise transferred only in accordance with the Securities Act and
any applicable securities laws of any State of the United States and only (a) to
the Company, (b) pursuant to a registration statement which has become effective
under the Securities Act, (c) to a qualified institutional buyer in compliance
with Rule 144A under the Securities Act, (d) in an offshore transaction in
compliance with Rule 904 of Regulation S under the Securities Act, (e) in a
principal amount of not less than $250,000, to an Institutional Accredited
Investor that, prior to such transfer, delivers to the Trustee a duly completed
and signed certificate (the form of which may be obtained from the Trustee)
relating to the restrictions on transfer of the Notes or (f) pursuant to an
exemption from registration provided by Rule 144 under the Securities Act or any
other available exemption from the registration requirements of the Securities
Act.
Prior to the registration of any transfer in accordance with (c) or (d)
above, we acknowledge that a duly completed and signed certificate (the form of
which may be obtained from the Trustee) must be delivered to the Trustee. Prior
to the registration of any transfer in accordance with (e) or (f) above, we
acknowledge that the Company reserves the right to require the delivery of such
legal opinions, certifications or other evidence as may reasonably be required
in order to determine that the proposed transfer is being made in compliance
with the Securities Act and applicable state securities laws. We acknowledge
that no representation is made as to the availability of any Rule 144 exemption
from the registration requirements of the Securities Act.
We understand that the Trustee will not be required to accept for
registration of transfer any Notes acquired by us, except upon presentation of
evidence satisfactory to the Company and the Trustee that the foregoing
restrictions on transfer have been complied with. We further understand that the
Notes acquired by us will be in the form of definitive physical certificates and
that
G-2
such certificates will bear a legend reflecting the substance of the preceding
paragraph. We further agree to provide to any person acquiring any of the Notes
from us a notice advising such person that resales of the Notes are restricted
as stated herein and that certificates representing the Notes will bear a legend
to that effect.
We agree to notify you promptly in writing if any of our acknowledgments,
representations or agreements herein ceases to be accurate and complete.
We represent to you that we have full power to make the foregoing
acknowledgments, representations and agreements on our own behalf and on behalf
of any account for which we are acting.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[NAME OF PURCHASER (FOR TRANSFERS)
OR OWNER (FOR EXCHANGES)]
By:
----------------------------------
Name:
Title:
Address:
Date: _________________
G-3
Upon transfer, the Notes would be registered in the name of the new
beneficial owner as follows:
By: __________________________________
Date: ________________________________
Taxpayer ID number: __________________
G-4
EXHIBIT H
[COMPLETE FORM I OR FORM II AS APPLICABLE.]
[FORM I]
Certificate of Beneficial Ownership
To: Bank One, N.A.
▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration OR
[Euroclear Bank S.A./N.V., as operator of the Euroclear System] OR
[Clearstream Banking SA]
Re: PEI Holdings, Inc.
11% Senior Secured Notes due 2010 (the "Notes")
Issued under the Indenture (the "Indenture") dated
as of March 11, 2003 relating to the Notes
Ladies and Gentlemen:
We are the beneficial owner of $____ principal amount of Notes issued
under the Indenture and represented by a Temporary Offshore Global Note (as
defined in the Indenture).
We hereby certify as follows:
[CHECK A OR B AS APPLICABLE.]
|_| A. We are a non-U.S. person (within the meaning of Regulation S under
the Securities Act of 1933, as amended).
|_| B. We are a U.S. person (within the meaning of Regulation S under the
Securities Act of 1933, as amended) that purchased the Notes in a
transaction that did not require registration under the Securities
Act of 1933, as amended.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
H-1
Very truly yours,
[NAME OF BENEFICIAL OWNER]
By:
----------------------------------
Name:
Title:
Address:
Date: _________________
[FORM II]
Certificate of Beneficial Ownership
To: Bank One, N.A.
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: PEI Holdings, Inc.
11% Senior Secured Notes due 2010 (the "Notes")
Issued under the Indenture (the "Indenture") dated
as of March 11, 2003 relating to the Notes
Ladies and Gentlemen:
This is to certify that based solely on certifications we have received in
writing, by tested telex or by electronic transmission from member organizations
("Member Organizations") appearing in our records as persons being entitled to a
portion of the principal amount of Notes represented by a Temporary Offshore
Global Note issued under the above-referenced Indenture, that as of the date
hereof, $____ principal amount of Notes represented by the Temporary Offshore
Global Note being submitted herewith for exchange is beneficially owned by
persons that are either (i) non-U.S. persons (within the meaning of Regulation S
under the Securities Act of 1933, as amended) or (ii) U.S. persons that
purchased the Notes in a transaction that did not require registration under the
Securities Act of 1933, as amended.
We further certify that (i) we are not submitting herewith for exchange
any portion of such Temporary Offshore Global Note excepted in such Member
Organization certifications and (ii) as of the date hereof we have not received
any notification from any Member Organization to the effect that the statements
made by such Member Organization with respect to any portion of such Temporary
H-2
Offshore Global Note submitted herewith for exchange are no longer true and
cannot be relied upon as of the date hereof.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Yours faithfully,
[EUROCLEAR BANK S.A./N.V., as
operator of the Euroclear System]
OR
[CLEARSTREAM BANKING SA]
By:
--------------------------------
Name:
Title:
Address:
Date: _________________
H-3
EXHIBIT I
THIS NOTE IS A TEMPORARY GLOBAL NOTE. PRIOR TO THE EXPIRATION OF THE RESTRICTED
PERIOD APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY ANY
PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S. PERSON THAT PURCHASED SUCH
INTEREST IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). BENEFICIAL INTERESTS HEREIN ARE NOT
EXCHANGEABLE FOR PHYSICAL NOTES OTHER THAN A PERMANENT GLOBAL NOTE IN ACCORDANCE
WITH THE TERMS OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. TERMS IN THIS
LEGEND ARE USED AS USED IN REGULATION S UNDER THE SECURITIES ACT.