Exhibit 99.1
SECOND AMENDMENT TO CREDIT AGREEMENT
September 15, 2004
PEI Holdings, Inc.
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Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement, dated as
of March 11, 2003, among PEI Holdings, Inc., a Delaware corporation
("Borrower"), the financial institutions from time to time a party thereto
("Lenders"), and Bank of America, N.A., as Agent for the Lenders ("Agent") (as
amended to date, the "Credit Agreement"). Unless otherwise defined herein,
capitalized terms used herein shall have the meanings provided to such terms
in the Credit Agreement.
Borrower has requested that Lenders agree to amend the Credit
Agreement in certain respects and Lenders have agreed to such amendments, on
the terms, and subject to the conditions, contained herein.
Therefore, Borrower and Lenders hereby agree as follows:
1. Amendment. Subject to the satisfaction of the conditions set forth
in Section 3 hereof, the Credit Agreement is hereby amended as follows:
(a) Schedule 2.01 of the Credit Agreement is amended and restated as
set forth on Exhibit A hereto.
(b) The definitions of the terms "Applicable Rate", "Liquidity Test"
and "Maturity Date" contained in Section 1.01 of the Credit Agreement are
amended and restated as follows:
"Applicable Rate" means, from time to time, the following
percentages per annum, based upon Playboy's Adjusted EBITDA (the
"Financial Covenant") as set forth in the most recent quarterly
Compliance Certificate received by Agent pursuant to Section 6.02(b):
Applicable Rate
IBOR Committed Base Rate
Pricing Loans and Letter of Committed
Level Financial Covenant Commitment Fee Credit Fees Loans
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1 Greater than $35,000,000 0.375% 1.50% .00%
2 Greater than $30,000,000, but 0.375% 2.00% .50%
less than or equal to
$35,000,000
3 Greater than $25,000,000, but 0.375% 2.25% .75%
less than or equal to
$30,000,000
4 Greater than $20,000,000, but 0.375% 2.50% 1.00%
less than or equal to
$25,000,000
5 Less than or equal to 0375% 3.00% 1.50%
$20,000,000
The Applicable Margin will be in effect from the first day
of the month following the delivery date of each quarterly Compliance
Certificate (an "Adjustment Date") until the first day of the month
following the delivery date of the next quarterly Compliance
Certificate. The Applicable Rate in effect from September 1, 2004
through November 5, 2004 shall be determined based upon Pricing Level
3. If no Compliance Certificate is delivered when due in accordance
with Section 6.02(b), the then-applicable Pricing Level will remain
in effect until actual delivery of such Compliance Certificate, at
which time the Pricing Level will be adjusted retroactive to the
applicable Adjustment Date.
"Liquidity Test" means that, after giving effect to the
payment subject to the Liquidity Test, the sum of (i) cash and Cash
Equivalents of Playboy and its Domestic Restricted Subsidiaries at
such time and (ii) the amount of Available Revolver at such time,
exceed $10,000,000.
"Maturity Date" means September 1, 2007.
(c) Section 6.09(c) of the Credit Agreement is amended by deleting
the amount "Seven Million Dollars ($7,000,000)" and replacing it with the
amount "Ten Million Dollars ($10,000,000)".
(d) Section 7.08 of the Credit Agreement is amended by deleting
clause (d) thereof and replacing it with the following phrase "(d) optional
prepayments in respect of the Senior Secured Note Debt at any time after April
11, 2006, so long as (i) no Event of Default is in existence at the time of
such payment and (ii) after making such payment, Borrower has satisfied the
Liquidity Test."
2. Scope. Except as amended hereby, the Credit Agreement remains
unchanged and in full force and effect.
3. Effectiveness. This Second Amendment to Credit Agreement shall be
effective as of September 1, 2004 when executed by Lenders and Agent and
agreed to by Borrower and returned to Agent, together with (i) payment to
Agent of an amendment fee equal to $75,000 for the ratable benefit of Lenders
and (ii) each of the documents set forth on Exhibit B hereto, all fully
executed.
4. Counterparts. This Second Amendment to Credit Agreement may be
executed in one or more counterparts, each of which shall constitute an
original, but all of which taken together shall be one and the same
instrument.
5. Governing Law. THIS SECOND AMENDMENT TO CREDIT AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE; PROVIDED THAT BORROWER, AGENT AND EACH LENDER SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
Very truly yours,
BANK OF AMERICA, N.A., as Agent
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Its ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
BANK OF AMERICA, N.A., as a Lender
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Its ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
VICE PRESIDENT
LASALLE BANK NATIONAL ASSOCIATION,
as a Lender
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Its ▇▇▇▇ ▇▇▇▇▇▇▇▇
VICE PRESIDENT
ACKNOWLEDGED AND AGREED TO
THIS 15 DAY OF SEPTEMBER, 2004:
PEI HOLDINGS, INC., as Borrower
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Its ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Treasurer
EXHIBIT A
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
Lender Commitment Pro Rata Share
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Bank of America, N.A. $15,000,000 50%
LaSalle Bank National Association $15,000,000 50%
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Total $30,000,000 100%
EXHIBIT B
Closing Deliveries
1. Reaffirmation by each Guarantor of its Guaranty of the Obligations.
2. Amended and Restated Note executed by Borrower in favor of each Lender.
3. Amendment to Deed of Trust covering the Playboy Mansion executed by
Playboy Enterprises International, Inc. ("PEII").
4. Date down endorsement to title insurance policy.
5. Certified articles of incorporation of each of Borrower and PEII.
6. Good standing certificates for each of Borrower and PEII in its state of
incorporation.
7. Certificate of Compliance with Senior Secured Note Indenture executed by
Borrower.
8. Opinion of counsel to Borrower and PEII.