Exhibit 10.13
J. ROGER FAHERTY
LELAND H. NOLAN
DONALD MCDONALD
C/O DIRECTRIX, INC.
536 BROADWAY, 6TH FLOOR
NEW YORK, NEW YORK 10012
July 21, 1998
DIRECTRIX, INC.
536 Broadway
New York, New York 10012
RE: REVOLVING LOAN COMMITMENT
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Ladies and Gentlemen:
We are pleased to advise you that J. Roger Faherty, Leland H. Nolan and Donald
McDonald (the "Lenders") have agreed to provide the following committed
revolving line of credit for general corporate purposes ("Credit Facility") for
Directrix, Inc., a to-be-formed Delaware corporation ("Borrower"). The Lenders'
commitment shall be deemed effective on the Closing Date (as that term is
defined in the Agreement and Plan of Merger ("Merger Agreement") between Playboy
Enterprises, Inc. ("PEI"), Spice Entertainment Companies, Inc. ("Spice"), New
Playboy, Inc., Playboy Acquisition Corp., and Spice Acquisition Corp.), is
specifically subject to the terms and conditions provided for herein and shall
terminate on the Maturity Date (as defined below). This Agreement, together
with the Loan Agreement, Revolving Credit Note, each Facility Document (as such
terms are defined below) and any other agreements, instruments and documents
related to any of the foregoing are collectively referred to as the "Facility
Documents."
1. LOAN COMMITMENT. The Credit Facility will be in the maximum principal
amount of $1.5 million (the "Committed Amount"). The Borrower may use any
borrowed amount under the Credit Facility (each an "Extension of Credit" and
collectively, the Extensions of Credit") for general corporate purposes and may
borrow, repay, reborrow or reutilize Extensions of Credit while the Credit
Facility is available and prior to the Maturity Date, as it may see fit.
1.1 This Credit Facility shall terminate and each Extension of
Credit shall be due and payable, together with any accrued interest on the date
that is the second anniversary of the Closing Date (the "Maturity Date") or
earlier as provided for in Section 9 below. The first Extension of Credit will
be available on the Closing Date.
1.2 Interest on each Extension of Credit shall accrue daily at the
rate of 11% per annum ("Base Rate") determined on the basis of the actual
calendar days elapsed and a 365 day year. Any amounts that have become due and
payable in accordance with this Agreement, any Facility Document or otherwise
and remain unpaid shall accrue interest thereafter until
payment in full is made at an interest rate per annum equal to 2% above the Base
Rate ("Default Rate"), shall be determined on the basis of the actual calendar
days elapsed and a 365 day year, and shall be payable upon the Lenders' demand
therefor.
1.3 When the Borrower desires to obtain an Extension of Credit, a
duly authorized officer of the Borrower shall so advise the Lenders in writing.
Each request shall specify the amount of the proposed Extension of Credit and
the Borrower's account to which the proceeds shall be paid. Once all of the
conditions precedent set forth in Sections 7 and/or 8 have been satisfied, the
Lenders shall credit the specified Borrower account with the amount of the
Extension of Credit.
1.4 The Borrower and Lenders shall execute a Loan and Security
Agreement ("Loan Agreement") to reflect the terms of the Credit Facility. A
note (the "Revolving Credit Note") shall evidence the Extensions of Credit. The
Borrower shall expressly authorize the Lenders to record, from time to time,
each Extension of Credit under this Agreement on schedules attached to the
Revolving Credit Note.
2. PREPAYMENTS. Borrower shall have the right at any time to prepay all
or a portion of the Extensions of Credit without penalty or premium. Borrower
shall be required to make mandatory prepayments of the Credit Facility in an
amount equal to (a) the net cash proceeds if Borrower or one of its subsidiaries
disposes of any material portion of its property or assets, (b) the net cash
proceeds received from any merger, recapitalizations or joint venture
transaction, or any debt or equity issuance, or (c) the aggregate amount of
Extensions of Credit outstanding upon a change in control of the Borrower.
3. COLLATERAL. Borrower shall grant the Lenders a first priority
perfected security interest in all of Borrower's and its subsidiaries' assets,
including, accounts receivable, equipment, intellectual property, general
intangibles, and including all proceeds and replacements of, accessions to, and
substitutions for the foregoing assets and interests in property, subject only
to any existing liens on such assets in favor of Vendor Capital Group and IBM
Credit Corporation.
4. GUARANTEES. Each of Borrower's subsidiaries, as deemed appropriate by
Lenders, shall guarantee the Credit Facility ("Guaranty Document"). Borrower
shall pledge the stock of each such subsidiary to Lenders.
5. FINANCIAL COVENANTS. Lender and Borrower agree to negotiate in good
faith certain affirmative and negative covenants (including net revenues,
EBITDA, net worth and working capital) consistent with an asset-based loan
facility of this type and based on Borrower's results of operations for its
first fiscal year to be included in the Loan Agreement. Borrower will become
subject to the financial covenants commencing one year after the Closing Date.
6. GRANT OF WARRANTS. In consideration of the Lenders' commitment to
provide the Credit Facility, Borrower will grant to the Lenders an aggregate of
45,000 warrants ("Lender Warrants") to acquire Borrower Common Stock, to be
apportioned among the Lenders in accordance with the percentages set forth in
Section 10 or as the Lenders shall mutually agree. The Lender Warrants shall
entitle the holder thereof to purchase at any time prior to 10 years
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July 21, 1998
Page 3
after the Closing Date Borrower Common Stock at an exercise price of $.01 per
share. In addition each of the Lenders will have the right to one demand and
piggyback rights to register the Lender Warrants and the Borrower Common Stock
issuable upon exercise of the Lender Warrants
7. CONDITIONS PRECEDENT. Prior to making the initial Extension of Credit
to the Borrower and on or prior to the Closing Date, the Lenders shall have
received each of the following agreements, instruments and other documents
executed by Borrower and in form and substance reasonably satisfactory to the
Lenders and/or the following actions shall have occurred:
7.1 The Loan Agreement and Revolving Credit Note;
7.2 Such security agreements, financing statements, stock pledge
agreements, guaranty agreements and other agreements and/or documentation to
reflect the liens and security interests in the collateral as contemplated by
Section 3 and the subsidiary guarantees as contemplated by Section 4;
7.3 The Lender Warrants;
7.4 Certified copies of the Borrower's articles of incorporation,
bylaws, other organizational documents and a certified copy of resolutions of
the Borrower's board of directors authorizing the entering into the Credit
Facility;
7.5 A certified copy of an incumbency certificate of the Borrower
certifying that the officers executing and delivering the Facility Documents on
behalf of the Borrower are duly elected Borrower officers with authority to bind
the Borrower with respect to such Facility Documents and the transactions
contemplated thereby and authorizing those Borrower officers authorized to
request Extensions of Credits;
7.6 Payment of all of the Lenders' legal and other professional
fees in connection with the transactions contemplated by this Agreement; and
7.7 All other resolutions, authorizations, approvals, powers,
consents, licenses and documents as may be necessary or otherwise required by
the Lenders.
8. CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT. In addition to the
conditions precedent specified in Section 7 with respect to the initial
Extension of Credit hereunder, prior
Directrix, Inc.
July 21, 1998
Page 4
to making any Extension of Credit to the Borrower hereunder, the Lenders shall
be satisfied that each of the following conditions are met:
8.1 The amount of the requested Extension of Credit, together with
all other Extensions of Credit outstanding, shall not exceed the Committed
Amount; and
8.2 When Lenders make an Extension of Credit and after giving
effect thereto, no Event of Default (as defined in Section 9) or any event or
circumstance which, with the giving of notice or the lapse of time or both,
would constitute an Event of Default has occurred or is continuing under any of
the Facility Documents.
9. EVENTS OF DEFAULT AND REMEDIES. The occurrence of any of the
following events or conditions shall constitute an event of default (an "Event
of Default") with respect to Borrower under this Agreement:
9.1 Any amounts due under the Credit Facility are not paid within 5
days after the due date thereof;
9.2 Any event of default occurs and is continuing with respect to
any of the Facility Documents or (ii) the failure or refusal of the Borrower to
properly perform, observe or comply with any condition, obligation, covenant or
agreement (other than an obligation specified in Section 9.1) to be performed,
observed or complied with by the Borrower in any of the Facility Documents, and
such failure or refusal continues for a period of 30 days, or for such lesser
period as provided for in any of Facility Documents, after written notice
thereof from the Lenders;
9.3 The Borrower or any subsidiary party to the Guaranty Documents
(i) is dissolved (other than pursuant to a consolidation, amalgamation or
merger); (ii) becomes insolvent or is unable to pay its debts or fails or admits
in writing its inability generally to pay its debts as they become due; (iii)
makes a general assignment, arrangement or composition with or for the benefit
of its creditors; (iv) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting creditors' rights,
or a petition is presented for its winding-up or liquidation which is not
dismissed, discharged, stayed or restrained within 30 days of the institution or
presentation thereof; (v) has a resolution passed for its winding-up, official
management or liquidation (other than pursuant to a consolidation, amalgamation
or merger); (vi) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official for it or for all or substantially all its assets;
(vii) has a distress, execution, attachment, sequestration or other legal
process
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July 21, 1998
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levied, enforced or sued on or against all or substantially all its assets and
such process is not dismissed, discharged, stayed or restrained, in each case
within 30 days thereafter; (viii) causes or is subject to any event with respect
to it which, under the applicable laws of any jurisdiction, has an analogous
effect to any of the events specified in clauses (i) to (vii) (inclusive); or
(ix) takes any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the foregoing acts.
Upon the occurrence and during the continuance of an Event of Default, the
Lenders will have the option, upon notice to the Borrower, of taking one or more
of the following actions: (i) declaring any or all unpaid Extensions of Credit,
together with unpaid accrued interest thereon, and any or all other amounts
payable to the Lenders under the Facility Documents or otherwise to be
immediately due and payable and/or (ii) terminating immediately any unutilized
Committed Amount and/or terminating the Lenders' obligation to provide any
additional Extensions of Credit and/or (iii) exercising its rights and remedies
against any collateral or any other person or entity pursuant to any Facility
Documents; provided, however, that if an Event of Default specified in clause
(iii) shall occur, no such notice need be given by the Lenders to the Borrower.
10. APPORTIONMENT OF LOAN COMMITMENT; APPOINTMENT OF LEAD LENDER. Each of
the Lenders aggress to provide the following percentages of each Extension of
Credit made under the Credit Facility:
Faherty 60.00%
Nolan 26.67%
McDonald 13.33%.
10.1 The Lenders hereby appoint Roger Faherty to act as the lead
Lender ("Lead Lender"). In his capacity as the Lead Lender, Mr. Faherty is
hereby authorized to act on behalf of all of the Lenders and receive all notices
and communications addressed to the Lenders. The Lenders may replace Mr.
Faherty as Lead Lender. If they do, the Lenders shall provide Borrower with
written notice of the new Lead Lender.
11. POSSIBLE REPLACEMENT OF CREDIT FACILITY. The parties acknowledge that
Borrower may attempt to secure alternate financing prior to the Closing Date.
If Borrower is successful in obtaining alternate financing and does not utilize
the Credit Facility provided for herein, Borrower shall give Lenders written
notice thereof and shall be obligated to grant to the Lenders on the Closing
Date one-half of the number of Lender Warrants provided for in Section 6.
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July 21, 1998
Page 6
12. GENERAL PROVISIONS.
12.1 COUNTERPARTS. This Agreement may be executed in one or more
counterpart copies. Each counterpart copy shall constitute an agreement and all
of the counterpart copies shall constitute one fully executed agreement. This
Agreement may be executed on facsimile counterparts. The signature of any party
to any counterpart shall be deemed a signature to, and may be appended to, any
other counterpart.
12.2 ASSIGNMENT. This Agreement may not be assigned without the
other parties' prior written consent, such consent not to be unreasonably
withheld. The Lenders shall have the right to assign their rights and
obligations hereunder provided (I) such assignee is owned by the assigning
Lender, (ii) the assignee agrees to assume the assigning Lender's obligations
hereunder and (iii) the assigning Lender unconditionally guarantees the
assignee's obligations hereunder.
12.3 GOVERNING LAW. New York State law shall govern this Agreement
and all of the Facility Documents. All parties agree that any litigation,
action or proceeding relating to this Loan Commitment shall be heard only in the
US District Court for the Southern District of New York or in a New York State
Court in New York City.
12.4 WAIVER OF JURY TRIAL. The Borrower hereby irrevocably waives
all right to trial by jury in any suit, action or proceeding arising out of or
relating to this Agreement or any of the other Facility Documents.
12.5 NOTICES. All notices or other formal communications under this
Loan Commitment must be in writing. They may be sent by personal delivery,
facsimile, prepaid recognized overnight air express delivery or prepaid
certified mail, return receipt requested . The parties' current addresses are
as stated on the first page of this Loan Commitment. The notices and other
formal communications should be sent to the attention of the following persons:
(a) DIRECTRIX: Attention: Chairman,
Facsimile number 212-941-7846; and
(b) LENDERS: J. Roger Faherty
Facsimile No. 212-941-7846.
12.6 HEADINGS, ETC. Paragraph headings are for convenience only.
If any provision of this Loan Commitment is prohibited or unenforceable in any
jurisdiction, the
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July 21, 1998
Page 7
provision shall, as to that jurisdiction only, be ineffective to the extent of
the prohibition or unenforcability without invalidating the remaining
provisions.
12.7 ENTIRE AGREEMENT. This Agreement and the other Facility
Documents constitute the entire agreement and understanding of the parties with
respect to the subject matter hereof and thereof and supersedes all oral
communication and prior writings with respect thereto.
If the foregoing correctly reflects your understanding of the matters described
herein, please sign below and return a fully executed copy to us.
DIRECTRIX, INC.
By: /s/
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John Sharpe,
Vice President & Chief Financial Officer
LENDERS
/s/
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J. Roger Faherty
/s/
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Leland H. Nolan
/s/
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Donald J. McDonald