Exhibit 10.5

 

INVESTOR RIGHTS AGREEMENT

 

by and among

 

PLAYBOY GROUP, INC.

 

(F/K/A MOUNTAIN CREST ACQUISITION CORP)

 

and

 

RT-ICON HOLDINGS LLC

 

_________________________________

Dated [•]
__________________________________

 

 

 

 

 

ARTICLE I INTRODUCTORY MATTERS 1 1.1 Defined Terms 1 1.2 Construction 3 ARTICLE
II BOARD OF DIRECTORS 4 2.1 Election of Directors 4 2.2 Committee Membership 5
2.3 Chair of the Board 5 2.4 Size of Board 6 2.5 Amendments to the Charter and
Bylaws 6 2.6 RT-Designee Expense Reimbursement 6 ARTICLE III INFORMATION 6 3.1
Sharing of Information 6 ARTICLE IV GENERAL PROVISIONS 7 4.1 Termination 7 4.2
Notices 7 4.3 Amendment; Waiver 7 4.4 Further Assurances 7 4.5 Assignment 8 4.6
Third Parties 8 4.7 Governing Law 8 4.8 Jurisdiction; Waiver of Jury Trial 8 4.9
Specific Performance 8 4.10 Entire Agreement 8 4.11 Severability 9 4.12 Table of
Contents, Headings and Captions 9 4.13 Counterparts 9 4.14 Effectiveness 9

 

 i 

 

 

INVESTOR RIGHTS AGREEMENT

 

This Investor Rights Agreement is entered into on [•] by and among Playboy
Group, Inc. (formerly known as Mountain Crest Acquisition Corp), a Delaware
corporation (the “Company”), and RT-Icon Holdings LLC, a Delaware limited
liability company (“RT-Icon”).

 

RECITALS:

 

WHEREAS, the Company and the other parties named therein have entered into an
Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which the
Company will acquire Playboy Enterprises, Inc. (“Playboy”), on the terms and
subject to the conditions set forth therein (the “Acquisition”);

 

WHEREAS, pursuant to the Merger Agreement, RT-Icon will be entitled to receive,
as partial consideration for the equity interests of Playboy purchased in the
Acquisition, a specified number of shares of the Common Stock of the Company
equal to RT-Icon’s Merger Consideration (as defined in the Merger Agreement);
and

 

WHEREAS, in connection with the Acquisition and pursuant to Section 8.1(g) of
the Merger Agreement, the Company and RT-Icon desire to enter into this
Agreement setting forth certain rights and obligations with respect to the
nomination of directors to the board of directors of the Company (the “Board”)
and other matters relating to the Board from and after the Effective Date.

 

NOW, THEREFORE, the parties agree as follows:

 

ARTICLE I

INTRODUCTORY MATTERS

 

1.1              Defined Terms. In addition to the terms defined elsewhere
herein, the following terms have the following meanings when used herein with
initial capital letters:

 

“Affiliate” means a Person that directly, or indirectly through one or more
intermediaries, Controls, or is Controlled by, or is under common Control with,
another Person. In respect of RT, “Affiliate” shall mean any Person that,
directly or indirectly, is Controlled by RT, Controls RT, or is under common
Control with RT, and shall include any principal, member, director, partner,
stockholder, officer, employee or other representative of any of the foregoing
(other than the Company and any entity that is Controlled by the Company).

 

“Agreement” means this Investor Rights Agreement, as the same may be amended,
supplemented, restated and/or otherwise modified from time to time in accordance
with the terms hereof.

 

“beneficially own” has the meaning set forth in Rule 13d-3 promulgated under the
Exchange Act.

 

“Board” means the board of directors of the Company.

 

 

 

 

“Business Day” means a day other than a Saturday, Sunday, federal or New York
State holiday or other day on which commercial banks in New York City are
authorized or required by law to close.

 

“Bylaws” means the Amended and Restated Bylaws of the Company, as the same may
be amended and/or restated from time to time.

 

“Charter” means the Amended and Restated Certificate of Incorporation of the
Company, as the same may be amended and/or restated from time to time.

 

“Common Stock” means the voting shares of common stock, par value $0.01 per
share, of the Company, having the terms set forth in the Charter, and any other
capital stock of the Company into which such stock is reclassified or
reconstituted and any other common stock of the Company.

 

“Company” has the meaning set forth in the Preamble.

 

“Control” (including its correlative meanings, “Controlled by” and “under common
Control with”) means possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies (whether through ownership
of securities or any partnership or other ownership interest, by contract or
otherwise) of a Person.

 

“Director” means any member of the Board.

 

“Effective Date” means the date the Company consummates the Acquisition.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder, as the same may be amended from
time to time.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

 

“Law” means any statute, law, regulation, ordinance, rule, injunction, order,
decree, governmental approval, directive, requirement, or other governmental
restriction or any similar form of decision of, or determination by, or any
interpretation or administration of any of the foregoing by, any Governmental
Authority.

 

“Permitted Assigns” means with respect to RT, a Transferee of shares of Common
Stock that agrees to become party to, and to be bound to the same extent as its
Transferor by the terms of, this Agreement.

 

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or other form of business organization, whether or
not regarded as a legal entity under applicable Law, or any Governmental
Authority or any department, agency or political subdivision thereof.

 

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“RT” means, collectively, RT-Icon, together with its Affiliates and its and
their successors and assigns (other than the Company and its Subsidiaries).

 

“RT Designee” has the meaning set forth in Section 2.1(c).

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which:
(i) if a corporation, a majority of the total voting power of shares of stock
entitled to vote in the election of directors, representatives or trustees
thereof is at the time owned or Controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof; or (ii) if a limited liability company, partnership, association or
other business entity, a majority of the total voting power of stock (or
equivalent ownership interest) of the limited liability company, partnership,
association or other business entity is at the time owned or Controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof. For purposes hereof, a Person or Persons shall be
deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or Control the
managing member, managing director or other governing body or general partner of
such limited liability company, partnership, association or other business
entity.

 

“Transfer” (including its correlative meanings, “Transferor”, “Transferee” and
“Transferred”) shall mean, with respect to any security, directly or indirectly,
to sell, contract to sell, give, distribute, assign, hypothecate, pledge,
encumber, grant a security interest in, offer, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend or otherwise transfer or dispose of any economic,
voting or other rights in or to such security. When used as a noun, “Transfer”
shall have such correlative meaning as the context may require.

 

1.2              Construction. Interpretation of this Agreement shall be
governed by the following rules of construction. Unless the context otherwise
requires: (a) references to the terms Article, Section, paragraph and Exhibit
are references to the Articles, Sections, paragraphs and Exhibits to this
Agreement unless otherwise specified; (b) the terms “hereof,” “herein,”
“hereby,” “hereto,” and derivative or similar words refer to this entire
Agreement, including Exhibits hereto; (c) references to “$” or “Dollars” shall
mean United States dollars; (d) the words “include,” “includes,” “including” and
words of similar import when used in this Agreement shall mean “including
without limitation,” unless otherwise specified; (e) the word “or” shall not be
exclusive; (f) references to “written” or “in writing” include in electronic
form; (g) provisions shall apply, when appropriate, to successive events and
transactions; (h) the headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement; (i) the parties have participated in the negotiation and
drafting of this Agreement and if an ambiguity or question of interpretation
should arise, this Agreement shall be construed as if drafted jointly by the
parties thereto and no presumption or burden of proof shall arise favoring or
burdening either party by virtue of the authorship of any of the provisions in
this Agreement; (j) a reference to any Person includes such Person’s permitted
successors and assigns; (k) references to “days” mean calendar days unless
Business Days are expressly specified; (l) the word “will” shall be construed to
have the same meaning and effect as the word “shall”; (m) the terms “party”,
“party hereto”, “parties” and “party hereto” shall mean a party to this
Agreement and the parties to this Agreement, as applicable, unless otherwise
specified; (n) with respect to the determination of any period of time, “from”
means “from and including”; and (o) any deadline or time period set forth in
this Agreement that by its terms ends on a day that is not a Business Day shall
be automatically extended to the next succeeding Business Day. Any agreement,
instrument or statute defined or referred to herein means such agreement,
instrument or statute as from time to time may be amended, supplemented,
restated or modified, including (in the case of agreements or instruments) by
waiver or consent and (in the case of statutes) by succession of comparable
successor statutes.

 

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ARTICLE II

BOARD OF DIRECTORS

 

2.1              Election of Directors.

 

(a)               Following the Effective Date, RT-Icon shall have the right,
but not the obligation, to nominate to the Board a number of designees equal to
(i) three Directors, so long as RT beneficially owns, in the aggregate, 50% or
more of the shares of Common Stock, (ii) two Directors, in the event that RT
beneficially owns, in the aggregate, 35% or more, but less than 50%, of the
shares of Common Stock and (iii) one Director, in the event that RT beneficially
owns, in the aggregate, 15% or more, but less than 35%, of the shares of Common
Stock. RT-Icon shall not have the right to nominate any designees to the Board
in the event that RT beneficially owns, in the aggregate, less than 15% of the
outstanding shares of Common Stock. In the event of any increase or decrease in
the size of the Board consistent with the requirements of Section 2.4 of this
Agreement, the number of Directors for which RT-Icon shall have the right to
nominate to the Board pursuant to this Section 2.1(a) shall be automatically
adjusted proportionately as closely as possible (rounding up to the next whole
Director where necessary) to reflect the proportionate rights of RT-Icon to
nominate Directors based on RT’s beneficial ownership of the shares of Common
Stock set forth in clauses (i), (ii), and (iii) above. The Board shall set forth
the determination of such changes consistent with this Section 2.1(a) in its
resolution or resolutions effectuating the change in size of the Board and such
terms shall automatically be incorporated herein without further action on
behalf of the parties hereto.

 

(b)               The Company agrees, to the fullest extent permitted by
applicable law, to take all necessary and desirable actions (subject to any
applicable stock exchange or listing requirements) to include in the slate of
nominees recommended by the Board for election at any meeting of stockholders
called for the purpose of electing directors the persons designated pursuant to
this Section 2.1 and to nominate and recommend each such individual to be
elected as a Director as provided herein, and to solicit proxies or consents in
favor thereof. The Company is entitled, solely for the purposes set forth in
this Section 2.1(b), to identify such individual as an RT Designee pursuant to
this Agreement.

 

(c)               In the event that RT-Icon has nominated fewer than the total
number of designees RT-Icon shall be entitled to nominate pursuant to
Section 2.1(a), RT-Icon shall have the right, at any time, to nominate such
additional designees to which it is entitled, in which case, the Company and the
Directors shall take all necessary corporate action, to the fullest extent
permitted by applicable law, to (x) enable RT-Icon to nominate and effect the
election or appointment of such additional individuals, whether by increasing
the size of the Board or otherwise, and (y) to effect the election or
appointment of such additional individuals nominated by RT-Icon to fill such
newly-created directorships or to fill any other existing vacancies. Each such
person whom RT actually nominates pursuant to this Section 2.1 and whom is
thereafter elected to the Board to serve as a Director shall be referred to
herein as an “RT Designee”.

 

 4 

 

 

(d)               In the event that a vacancy is created at any time by the
death, retirement or resignation of any RT Designee, the remaining Directors and
the Company shall, to the fullest extent permitted by applicable law, take all
actions necessary at any time and from time to time to cause the vacancy created
thereby to be filled by a new designee of RT-Icon, as soon as possible. Such new
designee will be chosen by a majority of the RT Designees on the Board at that
time or, if there are none, by RT-Icon.

 

2.2              Committee Membership. So long as RT beneficially owns, in the
aggregate, 35% or more of the shares of Common Stock, RT-Icon shall have the
right (but not the obligation) to designate one of the RT Designees to serve on
each of the Compensation Committee and the Corporate Governance and Nominating
and Committee. The Company shall take all necessary and desirable actions to
cause such RT Designee committee members to serve on the Compensation Committee
and the Corporate Governance and Nominating Committee, respectively, except to
the extent such membership would violate applicable federal securities laws or
the listing requirements of any national securities exchange on which the
Company’s securities are then listed.

 

2.3              Chair of the Board. So long as RT beneficially owns, in the
aggregate, 15% or more of the shares of Common Stock, the Company’s Chief
Executive Officer shall not be the Chair of the Board at the same time and
RT-Icon shall have the right to designate the Chair of the Board from among the
RT Designees.

 

2.4              Size of Board. As of the Effective Date, the Board shall have
established by resolution that the total number of Directors constituting the
Board on the Effective Date shall be five. So long as RT beneficially owns, in
the aggregate, 35% or more of the shares of Common Stock, any increases or
decreases to the size of the Board will require approval by at least a majority
of the RT Designees then serving as Directors or, if no RT Designee is then
serving as a Director, the written approval of RT-Icon.

 

2.5              Amendments to the Charter and Bylaws.

 

(a)               So long as RT beneficially owns, in the aggregate, 50% or more
of the shares of Common Stock, the Board shall not take any action to cause the
Company to amend the provisions in the Charter or Bylaws:

 

(i)                 providing that Directors may be removed with or without
cause upon majority vote of the outstanding shares of Common Stock unless
otherwise set forth under the Voting Agreement (as defined in the Merger
Agreement);

 

(ii)              changing the size of the Board;

 

 5 

 

 

(iii)            providing for stockholder action by written consent when RT
beneficially owns, in the aggregate, 50% or more of the shares of Common Stock;
or

 

(iv)             providing for the ability to call special meetings of
stockholders when RT beneficially owns, in the aggregate, 50% or more of the
shares of Common Stock.

 

2.6              RT-Designee Expense Reimbursement. The Company shall pay the
reasonable out-of-pocket expenses incurred by each RT Designee in connection
with performing his or her duties as a member of the Board or any committee
thereof, including the reasonable out-of-pocket expenses incurred by such person
for attending meetings of the Board or any committee thereof or meetings of any
board of directors or other similar managing body (and any committee thereof) of
any Subsidiary of the Company.

 

ARTICLE III

INFORMATION

 

3.1              Sharing of Information. Individuals associated with RT may from
time to time serve on the Board or the equivalent governing body of the
Company’s Subsidiaries. The Company, on its behalf and on behalf of its
Subsidiaries, recognizes that such individuals (i) shall from time to time
receive non-public information concerning the Company and its Subsidiaries, and
(ii) may (subject to the obligation to maintain the confidentiality of such
information) share such information with RT, RT’s direct and indirect investors
and other individuals associated with RT. Such sharing shall be for the dual
purpose of facilitating support to such individuals in their capacity as
Directors (or members of the governing body of any Subsidiary) and enabling RT
and its direct and indirect investors to better evaluate the Company’s
performance and prospects. The Company, on behalf of itself and its
Subsidiaries, hereby irrevocably consents to such sharing.

 

ARTICLE IV 

 

GENERAL PROVISIONS

 

4.1              Termination. This Agreement shall terminate on the earlier to
occur of (i) such time as RT no longer beneficially owns 15% or more of the
outstanding shares of Common Stock and (ii) the delivery of a written notice by
RT-Icon to the Company requesting that this Agreement terminate.

 

4.2              Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, sent by electronic
transmission or sent by reputable overnight courier service (charges prepaid) to
the Company at the address set forth below and to any other recipient at the
address indicated on the Company’s records, or at such address or to the
attention of such other Person as the recipient party has specified by prior
written notice to the sending party. Notices shall be deemed to have been given
hereunder when delivered personally, sent by electronic transmission or upon
actual delivery by reputable overnight courier service (as indicated in such
courier service’s records).

 

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If to the Company:

Playboy Group, Inc. (f/k/a Mountain Crest Acquisition Corp.)
10960 Wilshire Blvd., Suite 2200
Los Angeles, CA 90024
Attention: Chris Riley, General Counsel
Email: criley@playboy.com

 

If to RT-Icon:

RT-Icon Holdings LLC
c/o Rizvi Traverse Management, LLC

260 East Brown Street, Suite 380
Birmingham, MI 48009
Attention: Audrey P. DiMarzo
Email: Audrey.DiMarzo@rizvitraverse.com

4.3              Amendment; Waiver. This Agreement may be amended, supplemented
or otherwise modified only by a written instrument executed by the Company and
the other parties hereto. Neither the failure nor delay on the part of any party
hereto to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege, nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of right, remedy, power or privilege with respect to any
other occurrence. No waiver shall be effective unless it is in writing and is
signed by the party asserted to have granted such waiver.

 

4.4              Further Assurances. The parties hereto shall sign such further
documents, cause such meetings to be held, resolutions passed, exercise their
votes and do and perform and cause to be done such further acts and things
necessary, proper or advisable in order to give full effect to this Agreement
and every provision hereof. To the fullest extent permitted by law, the Company
shall not directly or indirectly take any action that is intended to, or would
reasonably be expected to result in, RT-Icon being deprived of the rights
contemplated by this Agreement.

 

4.5              Assignment. This Agreement shall inure to the benefit of and be
binding on the parties hereto and their respective successors and Permitted
Assigns. This Agreement may not be assigned without the express prior written
consent of the other parties hereto, and any attempted assignment, without such
consents, shall be null and void; provided, however, that RT-Icon shall be
entitled to assign, in whole or in part, to any of its Permitted Assigns without
such prior written consent any of its rights hereunder.

 

4.6              Third Parties. Except as provided for in Section 3.1 with
respect to individuals associated with RT, this Agreement does not create any
rights, claims or benefits inuring to any person that is not a party hereto nor
create or establish any third party beneficiary hereto.

 

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4.7              Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflict of laws thereof.

 

4.8              Jurisdiction; Waiver of Jury Trial. In any judicial proceeding
involving any dispute, controversy or claim arising out of or relating to this
Agreement, each of the parties unconditionally accepts the jurisdiction and
venue of the Court of Chancery of the State of Delaware or, if the Court of
Chancery does not have subject matter jurisdiction over this matter, the
Superior Court of the State of Delaware (Complex Commercial Division), or if
jurisdiction over the matter is vested exclusively in federal courts, the United
States District Court for the District of Delaware, and the appellate courts to
which orders and judgments thereof may be appealed. In any such judicial
proceeding, the parties agree that in addition to any method for the service of
process permitted or required by such courts, to the fullest extent permitted by
law, service of process may be made by delivery provided pursuant to the
directions in Section 4.2. EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT.

 

4.9              Specific Performance. Each party hereto acknowledges and agrees
that in the event of any breach of this Agreement by any of them, the other
parties hereto would be irreparably harmed and could not be made whole by
monetary damages. Each party accordingly agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate and that
the parties, in addition to any other remedy to which they may be entitled at
law or in equity, shall be entitled to specific performance of this Agreement
without the posting of any bond.

 

4.10          Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof.
There are no agreements, representations, warranties, covenants or
understandings with respect to the subject matter hereof or thereof other than
those expressly set forth herein and therein. This Agreement supersedes all
other prior agreements and understandings between the parties with respect to
such subject matter.

 

4.11          Severability. If any provision of this Agreement, or the
application of such provision to any Person or circumstance or in any
jurisdiction, shall be held to be invalid or unenforceable to any extent,
(i) the remainder of this Agreement shall not be affected thereby, and each
other provision hereof shall be valid and enforceable to the fullest extent
permitted by law, (ii) as to such Person or circumstance or in such jurisdiction
such provision shall be reformed to be valid and enforceable to the fullest
extent permitted by law and (iii) the application of such provision to other
Persons or circumstances or in other jurisdictions shall not be affected
thereby.

 

4.12          Table of Contents, Headings and Captions. The table of contents,
headings, subheadings and captions contained in this Agreement are included for
convenience of reference only, and in no way define, limit or describe the scope
of this Agreement or the intent of any provision hereof.

 

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4.13          Counterparts. This Agreement and any amendment hereto may be
signed in any number of separate counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one Agreement (or
amendment, as applicable). Counterparts may be delivered via electronic mail
(including pdf or any electronic signature complying with the U.S. federal ESIGN
Act of 2000, e.g., www.docusign.com) or other transmission method and any
counterpart so delivered shall be deemed to have been duly and validly delivered
and be valid and effective for all purposes.

 

4.14          Effectiveness. This Agreement shall become effective upon the
Effective Date.

 

[Remainder Of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.

 

  Playboy Group, Inc.           By:    Name:
Title:  

 

 

 

 

 

 

 

  RT-ICON HOLDINGS LLC   By: RTM-ICON, LLC,
its Manager       By:    Name:
Title: