As filed with the Securities and Exchange Commission on December 27, 2001
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 27, 2001
PLAYBOY ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 001-14790 36-4249478
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(State or other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
680 NORTH LAKE SHORE DRIVE, CHICAGO, ILLINOIS 60611
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (312) 751-8000
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
Item 5. Other Events.
On December 27, 2001, Playboy.com ("Playboy.com"), a subsidiary of
Playboy Enterprises, Inc. (the "Company"), borrowed $5 million from Hugh M.
Hefner ("Mr. Hefner") pursuant to a promissory note (the "Note"), dated as
of December 17, 2001, issued by Playboy.com to Mr. Hefner. Under the Note,
Mr. Hefner has agreed to lend up to $10 million to Playboy.com from time to
time until December 31, 2002. Playboy.com will pay interest, each month in
cash, on the unpaid balance of the principal amount borrowed by Playboy.com
at an annual rate of nine percent (9.0%). All principal and interest
accrued and unpaid on the Note will become due and payable on August 10,
2006 (the "Maturity Date"). Playboy.com may prepay the Note in whole or in
part without penalty or premium at any time prior to the Maturity Date. In
addition, Mr. Hefner may, at any time, elect to convert all of the
outstanding principal and interest under the Note into shares of
Playboy.com's common stock at a per share price of $7.1097 (as equitably
adjusted for any stock dividends, combinations, splits or similar
transactions). The Note is attached hereto as Exhibit 10.1 and incorporated
herein by reference.
In conjunction with the issuance of the Note, Playboy Enterprises,
Inc. (the "Company") entered into an agreement (the "Agreement"), dated as
of December 17, 2001, with Mr. Hefner pursuant to which the Company has
agreed to give Mr. Hefner the right to surrender the Note to the Company
for shares of the Company's Class B common stock on or after the earliest
to occur of any Surrender Event, if the Note has not been repaid in full.
Under the Agreement, "Surrender Event" means any of the following: (a) the
Maturity Date; (b) the date on which the Company is no longer subject to
the terms (except for such terms that expressly survive the payment in full
of the obligations and termination of the commitments thereunder) of that
certain Credit Agreement, dated as of February 26, 1999, as amended from
time to time, by and among the Company, PEI Holdings, Inc., the financial
institutions from time to time party thereto and Credit Suisse First
Boston, as administrative agent, collateral agent and issuing bank (the
"Credit Agreement"); (c) the occurrence and continuation of an event of
default under the Note, including the dissolution of Playboy.com or any
vote in favor thereof by Playboy.com's Board of Directors or stockholders,
certain insolvency or bankruptcy events relating to Playboy.com,
Playboy.com's failure to pay principal and interest due and payable under
the Note and Playboy.com's non-performance of any material covenant or
condition under the Note which continues uncured for 15 days after written
notice of the default is provided to Playboy.com; (d) the dissolution of
the Company or any vote in favor thereof by the Company's Board of
Directors or stockholders; or (e) certain insolvency or bankruptcy events
relating to the Company. Notwithstanding the foregoing, the Note may not be
surrendered if the surrender of the Note or the issuance of the shares of
Class B common stock would be prohibited by the Credit Agreement.
In the event that Mr. Hefner elects to surrender the Note for
shares of the Company's Class B common stock in accordance with the
foregoing, the Company will issue to Mr. Hefner the number of shares equal
to the outstanding principal and interest on the Note divided by $19.90
(125% of the volume weighted average closing price of the Company's Class B
common stock (as equitably adjusted for any stock dividends, combinations,
splits or similar transactions) on the five trading days immediately prior
to the date of the Note).
The Agreement will expire on the first to occur of (a) the
surrender of the Note and the issuance of shares of Class B common stock as
contemplated by the Agreement; (b) the payment in full of the outstanding
principal and interest on the Note; and (c) the expiration of the statute
of limitations applicable to the collection of amounts owed under the Note
(the "Statute Lapse Date"), provided that, if the surrender of the Note or
issuance of shares under the Agreement is not permitted under the Credit
Agreement on the Statute Lapse Date, the Agreement will not terminate until
60 days after the date on which the Company provides written notice to Mr.
Hefner that such surrender and issuance is no longer prohibited under the
Credit Agreement. The Agreement is attached hereto as Exhibit 10.2 and
incorporated herein by reference.
Item 7(c). Exhibits.
Exhibit No. Description
10.1 Promissory Note, dated as of December 17, 2001,
issued by Playboy.com, Inc. to Hugh M. Hefner in the
principal amount of up to $10 million.
10.2 Agreement, dated as of December 17, 2001, by and
between Playboy Enterprises, Inc. and Hugh M. Hefner
relating to that certain Promissory Note, dated as of
December 17, 2001, issued by Playboy.com, Inc. to
Hugh M. Hefner in the principal amount of up to $10
million.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PLAYBOY ENTERPRISES, INC.
By: /s/ Howard Shapiro
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Name: Howard Shapiro
Title: Executive Vice President,
Law and Administration
(Authorized Officer)
Dated: December 27, 2001
EXHIBIT INDEX
Exhibit No. Description
10.1 Promissory Note, dated as of December 17,
2001, issued by Playboy.com, Inc. to Hugh M.
Hefner in the principal amount of up to $10
million.
10.2 Agreement, dated as of December 17, 2001, by
and between Playboy Enterprises, Inc. and
Hugh M. Hefner relating to that certain
Promissory Note, dated as of December 17,
2001, issued by Playboy.com, Inc. to Hugh M.
Hefner in the principal amount of up to $10
million.