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Playboy TV International (2) LLC Agreement 12-28-2000
SECOND
AMENDMENT TO OPERATING AGREEMENT,
RELEASE OF
GUARANTY
AND CONSENT TO
TRANSFER
FOR
PLAYBOY TV
INTERNATIONAL, LLC
A DELAWARE LIMITED
LIABILITY COMPANY
This Second Amendment to Operating
Agreement, Release of Guaranty and
Consent
to Transfer (this "Amendment") is entered into as of December 28,
2000,
by
and among Playboy Entertainment Group, Inc., a Delaware corporation
("PEGI"),
Playboy
Enterprises International, Inc., a Delaware corporation ("PEII"),
Victoria
Springs Investments, Ltd., a British Virgin Islands corporation
("VSI"),
Hampstead Management Company, Ltd., a company organized under the laws
of
the British Virgin Islands ("Hampstead"), Carlton Investments LLC, a
Delaware
limited
liability company ("Carlton"), and Carlyle Investments LLC, a
Delaware
limited
liability company ("Carlyle"), and is made with respect to Playboy TV
International,
LLC, a Delaware limited liability company (the "Company").
A. PEGI and VSI entered into the
Operating Agreement the Company as of
August
31, 1999 and the First Amendment thereto as of September 24, 1999 (as
amended,
the "Agreement"; all capitalized terms not defined in this Amendment
will
have the respective meanings set forth in the Agreement).
B. Hampstead Management Company, Ltd., a
company organized under the laws
of
the British Virgin Islands and an Affiliate of VSI ("Hampstead"),
entered
into
a Guaranty dated as of August 31, 1999 in favor of PEGI, PEII and the
Company
pursuant to which Hampstead guaranteed the obligations of VSI under the
Agreement
and the Related Documents (the "Guaranty").
C. Carlton and Carlyle are indirectly
controlled by Persons that
collectively
control VSI and Hampstead, but are not under common control with
VSI
and Hampstead.
D.
VSI wishes to transfer its 80.1% interest in the Company to Carlton and
Carlyle
in equal shares and has requested PEGI's consent to such transfer
pursuant
to Section 9.1 of the Agreement.
E. PEGI is willing to give consent to
such transfer provided that Carlton
and
Carlyle assume the obligations of VSI under the Agreement and the Related
Documents,
are each deemed to be Affiliates of VSI for all purposes under the
Agreement
and the Related Documents, and collectively exercise the rights of VSI
under
the Agreement.
F. Hampstead wishes to transfer and cause
its subsidiaries to transfer all
or
substantially all of their respective assets to Carlton and Carlyle in equal
shares
and has requested that PEII, PEGI and the Company agree to release
Hampstead
from its obligations under the Guaranty.
<PAGE>
G. PEII, PEGI and the Company are willing
to release Hampstead from its
obligations
under the Guaranty provided that the proposed transfer of assets to
Carlton
and Carlyle is consummated and Carlton and Carlyle guaranty the
obligations
of the other on the same terms as the Guaranty.
H. The parties desire to adopt and
approve the following provisions and,
where
applicable, incorporate them into the Agreement, effective as of the date
of
the transfer of VSI's interest in the Company to Carlton and Carlyle (the
"Effective
Date").
NOW, THEREFORE, in consideration of the
foregoing and the mutual
agreements
contained herein, and intending to be legally bound, the parties
agree
as follows:
1. Consent to Transfer and Release of
Guaranty.
A. Pursuant to Section 9.1 of the
Agreement and subject to the terms of
this Amendment, PEGI consents to the
transfer from VSI to Carlton and
Carlyle of its 80.1% interest in PTVI in
equal shares and the admission of
each of Carlton and Carlyle as Members of
the Company with a Percentage
Interest of 40.05% each. Each of Carlton
and Carlyle hereby jointly and
severally assume and agree to perform and
discharge all of the obligations
and liabilities of VSI under the
Agreement and the Related Documents,
whether arsising
before or after the Effective Date. Each of Carlton and
Carlyle agree that each of them and their
respective Affiliates are deemed
to be (i)
Affiliates of VSI, and (ii) Affiliates of each other, in each
case for all purposes under the Agreement
and the Related Documents (and
any agreement or document in connection
therewith). In furtherance of the
foregoing, Carlyle and Carlton will be
deemed to be Affiliated Members and
VSI Members under the Agreement. Carlyle
and Carlton further agree that
they will take all actions collectively under
the Agremeent and Related
Documents, including the bringing of any
claim or exercising any remedy.
B. Subject to the terms of this
Agreement, PEII, PEGI and the Company
hereby release Hampstead from its
obligations under the Guaranty.
C. The forgoing consent and release is
subject to each of the following
conditions being true as of the Effective
Date: (a) Hampstead will have
transferred and caused its subsidiaries
to transfer all or substantially
all of their respective assets to Carlton
and Carlyle in equal shares; (b)
each of Carlton and Carlyle will have
executed and delivered a Guaranty in
favor of PEII, PEGI and the Company in
the form of Exhibit A.
2. Amendments to Agreement.
A.
Section 5.1.3 of the Agreement is amended and restated in its
entirety as follows:
"5.1.3 Voting. Except as
provided in Section 5.1.4 and in Section
5.3, all matters submitted to the
Management Committee will be
decided by a majority vote of the
Non-Independent Directors. The
Non-Independent Directors will have
voting power in proportion to
the ratio of Percentage Interests
held by the Manager appointing
them; provided, however,
Non-Independent Directors appointed by
<PAGE>
Affiliated Members will have voting
power in proportion to the
aggregate Percentage Interests held
by the Managers appointing them.
All Non-Independent Directors appointed by a Manager (or Managers,
if representing Affiliated Members)
will collectively exercise such
voting power and such Manager(s)
will designate one of its
Non-Independent Directors to vote
on behalf of all Non-Independent
Directors appointed by such
Manager(s) in the event of a
disagreement among the
Non-Independent Directors appointed by such
Manager(s)."
B.
Section 5.2.1 of the Agreement is amended and restated in its
entiretly
as follows:
"5.2.1 VSI and PEGI, together
with (or replaced by, as the case may
be) any Affiliates to which such
Member transfers all or a portion
of its Membership Interest in
compliance with the provisions of this
Agreement, will be referred to as
the "VSI Members" or the "PEGI
Members" respectively. For so
long as the VSI Members and the PEGI
Members are the only Members and
Managers, the Management Committee
will consist of nine members: three
Non-Independent Directors
selected collectively by the VSI
Members (the "VSI Directors"),
three Non-Independent Directors
selected by the PEGI Members (the
"PEGI Directors") and
three other Directors (each, an "Independent
Director") selected in
accordance with the following sentence. The
VSI Members (acting collectively)
and the PEGI Members (acting
collectively) will each select one
Independent Director, and the two
Independent Directors will select a
third Independent Director;
provided, however, that such third
Independent Director will be
mutually acceptable to both the VSI
Members (acting collectively)
and the PEGI Members (acting
collectively). To qualify as an
Independent Director, a person must
have, and continue to have, no
material business, financial or
familial relationship with any of
the VSI Members, the PEGI Members
or any of their respective
Affiliates or with any officer or
executive of any of them. Each of
VSI and PEGI identified its initial
Directors prior to the Funding
Date. Each member of the Management
Committee is referred to as a
"Director", and,
collectively, as the "Directors." A duly-admitted
Manager will have the right to
appoint at least one Non-Independent
Director (or such greater number as
the Management Committee may
determine); provided, however, that
no group of Affiliated Members
will have the right to appoint more
than that number of Directors
that could have been appointed by
that group's initial holder of the
Membership Interests. A director
need not be a resident of the State
of Delaware or a citizen of the
United States. To the fullest extent
permitted by law, no Director will
be deemed an agent or sub-agent
of the Company. Each Manager, by
execution of this Agreement, agrees
to, consents to, and acknowledges
the delegation of powers and
authority to such Directors and the
Management Committee within the
scope of such Director's and
Management Committee's authority as
provided herein. No Director will
have the authority in his capacity
as a Director to enter into any
Transaction on behalf of the
Company. The Independent Directors
will receive compensation as
determined from time to time by the
Management Committee and as
reflected in the applicable Annual
Budget.
<PAGE>
(a) At such time as either
the VSI Directors or the PEGI
Directors are no longer entitled to
exercise a veto on matters that
may be determined by the
Independent Directors pursuant to Section
5.3, the Independent Directors will
be dismissed from the Management
Committee.
C. The references to "VSI" and
"PEGI" in the first clause of Section 5.4.4
of the Agreement are hereby replaced with
references to "the VSI Members"
and the PEGI Members", respectively.
D. Except as otherwise provided herein,
all other terms and conditions of
the Agreement will remain in full force
and effect.
[Remainder of page
intentionally left blank]
<PAGE>
IN
WITNESS WHEREOF, the parties have caused their duly authorized officers to
execute
this Amendment as of the above date.
PLAYBOY
ENTERTAINMENT GROUP, INC.
By:/s/
Jeffrey M. Jenest
---------------------------------
Name: Jeffrey M. Jenest
Title: Executive Vice President
PLAYBOY
ENTERPRISES INTERNATIONAL, INC.
By: /s/
Howard Shapiro
---------------------------------
Name: Howard Shapiro
Title: Executive Vice
President
VICTORIA
SPRINGS INVESTMENTS LTD.
By: /s/
William T. Keon
---------------------------------
Name:
Title:
By: /s/
Jose Mizrahi
---------------------------------
Name:
HAMPSTEAD
MANAGEMENT COMPANY, LTD.
By: /s/
Jose Mizrahi
---------------------------------
Name:
Title:
By: /s/
Harris C. Caston
---------------------------------
Name: Harris C. Caston
Title: Attorney - in - Fact
<PAGE>
CARLTON
INVESTMENTS LLC
By: /s/
Cary M. Otazo
---------------------------------
Name: Cary M. Otazo
Title: Assistant Secretary
CARLYLE
INVESTMENTS LLC
By: /s/ Cary M. Otazo
---------------------------------
Name: Cary M. Otazo
Title: Assistant Secretary
Acknowledged
and Agreed:
PLAYBOY
TV INTERNATIONAL, LLC.
By:
/s/ William Fisher
---------------------------------
Name:
William Fisher
Title: President