THIS JUNIOR SUBORDINATED UNSECURED PROMISSORY NOTE (THIS "SUBORDINATED NOTE")
WAS ORIGINALLY ISSUED ON JULY 1, 1999, AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, OTHERWISE DISPOSED OF OR OFFERED FOR SALE IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE OR OTHER SECURITIES LAW OR AN EXEMPTION FROM SUCH REGISTRATION
AND EXCEPT IN COMPLIANCE WITH SECTION 11 HEREOF.
MUZAK LLC
15% JUNIOR SUBORDINATED UNSECURED PROMISSORY NOTE DUE 2007
July 1, 1999 $3,000,000
MUZAK LLC, a Delaware limited liability company (the
"Company"), for value received, hereby promises to pay, in immediately available
funds, to the Subordinated Payee (as defined herein), the principal amount of
Three Million Dollars ($3,000,000) (such amount, the "Original Principal
Amount"), on June 30, 2007 (the "Maturity Date") together with interest thereon
calculated from the date hereof in accordance with the provisions contained
herein. The initial Subordinated Payee is MEM Holdings, LLC.
I. PAYMENT OF PRINCIPAL. Subject to the provisions of Section 10:
A. SCHEDULED PAYMENT. The Company will pay the entire unpaid principal amount of
this Subordinated Note on the Maturity Date.
A. OPTIONAL PREPAYMENT. The Company may prepay the principal amount of this
Subordinated Note, in whole or in part (together with all interest accrued
thereon), at any time and from time to time, without premium or penalty.
I. INTEREST. Subject to the provisions of Section 10, interest will accrue at
the rate of fifteen percent (15%) per annum (computed on the basis of a 360-day
year and the actual number of days elapsed in any year) on the unpaid principal
amount of this Subordinated Note outstanding from time to time during the
applicable
period, and will be payable on the Maturity Date. Prior to the Maturity Date,
any accrued interest which is not paid as of any March 31, June 30, September 30
or December 31 (each, an "Interest Accumulation Date") will thereafter bear
interest at the rate of fifteen percent (15%) per annum (computed on the basis
of a 365/366-day year and the actual number of days elapsed in any year) until
such interest is paid or extinguished.
I. EVENTS OF DEFAULT.
A. DEFINITION. An "Event of Default" will be deemed to have occurred if:
1. the Company fails to pay any amount of the principal of this Subordinated
Note within ten Business Days after the date such principal amount becomes due
and payable pursuant to the terms of this Subordinated Note, whether or not such
payment shall be prohibited by Section 10; or
1. the Company makes an assignment for the benefit of creditors; or an order,
judgment or decree is entered by a court of competent jurisdiction adjudicating
the Company bankrupt or insolvent; or the Company petitions or applies to any
tribunal for the appointment of a custodian, trustee, receiver or liquidator of
the Company; or any such petition or application is filed against the Company
and such petition or application is not dismissed within 90 days.
A. CONSEQUENCES OF EVENTS OF DEFAULT.
1. Except as provided in (b)(ii) below, and subject to the provisions of Section
10, if any Event of Default has occurred and is continuing, then, at any time
after the Subordinated Payee has given five days prior written notice to any
holder of Senior Indebtedness (as herein defined), the Subordinated Payee may
declare (by written notice delivered to the Company) all or any portion of the
outstanding principal amount of this Subordinated Note (together with all
accrued interest thereon) to be immediately due and payable and may demand
immediate payment of all or any portion of the outstanding principal amount of
this Subordinated Note and interest thereon.
1. If an Event of Default under (a)(ii) above has occurred, the outstanding
principal amount of this Subordinated Note (together with all accrued interest
thereon) shall become due and payable without any action by the Subordinated
Payee, and, subject to the provisions of Section 10, the Subordinated Payee may
demand immediate payment of the outstanding principal amount of this
Subordinated Note and interest thereon.
I. DEFINITIONS. For purposes of this Subordinated Note, the following
capitalized terms have the following meaning.
"Business Day" means any day other than a Saturday, Sunday or
a legal holiday under the laws of the State of New York.
"Credit Agreement" means that certain Credit and Guaranty
Agreement, dated as of March 18, 1999, among the Company, Muzak Holdings LLC,
certain subsidiaries of the Company, various lenders from time to time party
thereto, Goldman Sachs Credit Partners L.P. ("GSCP"), as syndication agent,
Canadian Imperial Bank of Commerce, as administrative agent, and GSCP and CIBC
Oppenheimer Corp., as co-lead arrangers, as well as any related notes,
guarantees, security or pledge agreements, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
restated, supplemented, modified, renewed, refunded, restructured, replaced or
refinanced (whether in one or more credit agreements, loan agreements or similar
agreements providing for loans or advances to the Company or any of its
subsidiaries), in whole or in part, from time to time, whether or not with the
same lenders or agents and irrespective of any changes in the terms and
conditions thereof, including, without limitation, changes in the borrowers or
guarantors.
"Credit Party" has the meaning specified in the Credit
Agreement.
"Distribution of Assets" means any distribution of assets of
the Company of any kind or character, including without limitation (a) a
payment, purchase or other acquisition or retirement for cash, property or
securities or (b) by way of cancellation, forgiveness or offset of the
indebtedness evidenced by this Subordinated Note against any indebtedness owed
by the Subordinated Payee of this Subordinated Note to the Company or (c)
payable or deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of this Subordinated Note.
"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, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Senior Indebtedness" means all principal, premium (if any),
interest (including interest accruing on or after the filing of any Proceeding
(as defined herein) relating to the Company or any Credit Party whether or not a
claim for post-filing interest is allowed or allowable in any such Proceedings),
fees, commissions, charges, expenses (including but not limited to expenses in
connection with claims and litigation), damages, penalties, claims,
reimbursement or indemnity obligations, guarantees and all other amounts or
obligations payable (collectively, "Obligations") (i) under or in respect of the
Credit Agreement including, without limitation, all obligations of the Company
or any Credit Party in respect of interest rate agreements and hedging
obligations with any lender party to the Credit Agreement (or any affiliate of
any such lender), or (ii) any Obligations of the Company or its subsidiaries
which is not expressly PARI PASSU with or subordinated to this Subordinated
Note, and, in each case, all renewals, extensions or refinancings thereof.
"Subordinated Payee" means MEM Holdings, LLC, or any Permitted
Transferee (as defined herein); provided, that any Subordinated Payee shall
cease to be a
Subordinated Payee once such Subordinated Payee ceases to own any right to any
principal amount of this Subordinated Note.
A "distribution" may consist of cash, securities or other
property, by set-off or otherwise.
I. CANCELLATION. After all principal and accrued interest at any time owed on
this Subordinated Note have been paid in full, this Subordinated Note will be
surrendered to the Company for cancellation and will not be reissued.
I. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive headings of the several
Sections of this Subordinated Note are inserted for convenience only and do not
constitute a part of this Subordinated Note. This Subordinated Note will be
governed by the internal law of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
New York or any other jurisdiction) that would cause the application of law of
any jurisdiction other than the State of New York.
I. BUSINESS DAYS. If any payment is due, or any time period for giving notice or
taking action expires, on a day which is not a Business Day, then the payment
will be due and payable on, and the time period will automatically be extended
to, the next Business Day immediately following such day which is not a Business
Day, and interest will continue to accrue at the required rate under this
Subordinated Note until any such payment is made.
I. GENERAL. This Subordinated Note and the Credit Agreement constitute the
entire agreement among the parties with respect to the subject matter hereof;
supersede any and all prior understandings relating to such subject matter; and
will be binding upon and inure to the benefit of the parties and their
respective successors and assigns.
I. WAIVER OF JURY TRIAL. THE COMPANY (AND, BY ITS ACCEPTANCE OF THIS
SUBORDINATED NOTE, THE SUBORDINATED PAYEE HEREOF) HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS SUBORDINATED NOTE OR THE
VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
I. SUBORDINATION.
A. EXTENT OF SUBORDINATION. The Company covenants and agrees, and the
Subordinated Payee by accepting this Subordinated Note covenants and agrees,
that (1) the indebtedness evidenced by this Subordinated Note, including, but
not limited to, the payment of principal of, premium, if any, and interest on,
this Subordinated Note, and any other payment Obligation of the Company in
respect of this Subordinated Note (including any obligation to repurchase this
Subordinated Note), is subordinated and junior in right of payment, to the
extent and in the manner provided in this Section 10, to the prior indefeasible
payment and satisfaction in full in cash of all Senior Indebtedness (whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed) and (2) the subordination is for the benefit of and shall be
enforceable by all holders of Senior Indebtedness. Until the Senior Indebtedness
shall have been indefeasibly paid in full in cash, (A) no payment or
distribution on account of principal of, or premium or interest on, or any other
Obligation with respect to, this Subordinated Note or any judgment with respect
hereto (and no payment or distribution on account of the purchase or redemption
or other acquisition of this Subordinated Note) shall be made by or on behalf of
the Company or any other Credit Party and (B) the Subordinated Payee may not (x)
demand, collect or receive any payment or distribution on account of principal
of, or premium or interest on, or any other Obligation with respect to, this
Subordinated Note, (y) accelerate the Maturity Date or the maturity of all or
any portion of the subordinated indebtedness or other Obligations owed pursuant
to this Subordinated Note or (z) seek any other remedy allowed at law or in
equity to collect or enforce on all or any portion of the subordinated
indebtedness or other Obligations owed pursuant to this Subordinated Note.
1. In the event that the Subordinated Payee receives any payment or distribution
with respect to this Subordinated Note at a time when such payment or
distribution is prohibited by this Section 10, such payment or distribution
shall be held by the Subordinated Payee, in trust for the benefit of, and shall
be immediately paid forthwith over or delivered and transferred to, the holders
of Senior Indebtedness (PRO RATA to such holders on the basis of the respective
amounts of Senior Indebtedness held by such holders) or their representative as
their respective interests may appear to the extent necessary to pay all Senior
Indebtedness in full, in cash. In the event of the failure of the Subordinated
Payee to endorse or assign such payment or distribution, each holder of Senior
Indebtedness is hereby irrevocably authorized to endorse or assign the same.
1. Upon any Distribution of Assets of the Company or upon any dissolution,
winding up, liquidation or reorganization of the Company, whether in bankruptcy,
insolvency, reorganization, arrangement or receivership proceedings or other
similar proceeding, or upon any assignment for the benefit of creditors or any
other marshaling of the assets and liabilities of the Company, whether voluntary
or involuntary or otherwise (each, a "Proceeding"):
(i) holders of Senior Indebtedness shall first be entitled to receive
indefeasible payment in full in cash of such Senior Indebtedness (whenever
arising and including interest after the commencement of any such Proceeding at
the rate specified in the Senior Indebtedness, whether or not a claim for such
interest would be allowed in such Proceeding) before the Subordinated Payee
shall be entitled to receive any payment on account of any Obligation with
respect to this Subordinated Note, whether as principal, interest or otherwise;
and
(i) any payment by, or on behalf of, or Distribution of Assets of, the Company
of any kind or character, whether in cash, property or securities, to which the
Subordinated Payee would be entitled except for the provisions of this Section
10 shall be paid or delivered by the Person making such payment or distribution
(whether the Company, a trustee in bankruptcy, a receiver, custodian or
liquidating trustee or other Person) directly to holders of Senior Indebtedness
as their interests may appear, until the indefeasible payment in full in cash of
all Senior Indebtedness.
1. The Company will not give, or permit to be given, and the Subordinated Payee
will not receive, accept or demand, (i) any security of any nature whatsoever
for any indebtedness evidenced by this Subordinated Note, whether principal or
interest, on any property or assets, whether now existing or hereafter acquired,
of the Company or any subsidiary thereof or (ii) any guarantee, of any nature
whatsoever, by the Company or any subsidiary thereof, of any indebtedness
evidenced by of this Subordinated Note, whether principal or interest.
1. The Subordinated Payee agrees not to file, or to join with any other
creditors of the Company or any Credit Party in filing, any petition commencing
any Proceeding. The Subordinated Payee further agrees, to the fullest extent
permitted under applicable law, that it will not cause the Company or any Credit
Party to file any petition commencing any Proceeding until all Senior
Indebtedness has been indefeasibly paid in full in cash.
1. To the extent any payment of or distribution in respect of Senior
Indebtedness (whether by or on behalf of the Company or any Credit Party, as
proceeds of security or enforcement of any right of setoff or otherwise) is
declared to be fraudulent or preferential, set aside or required to be paid to
any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or
similar law, then if such payment or distribution is recovered by, or paid over
to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person, the Senior Indebtedness or part thereof originally intended to
be satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred. To the extent the obligation to repay the Senior Indebtedness
is declared to be fraudulent, invalid or otherwise set aside under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then
the obligation so declared fraudulent, invalid or otherwise set aside (and all
other amounts that would come due with respect thereto had such obligation not
been so affected) shall be deemed to be
reinstated and outstanding as Senior Indebtedness for all purposes hereof as if
such declaration, invalidity or setting aside had not occurred.
1. The holders of the Senior Indebtedness shall be entitled pro rata in
accordance with the priorities then existing among such holders to vote all
claims of the Subordinated Payee in respect of this Subordinated Note in
connection with a Proceeding. Notwithstanding the foregoing, in the event that
the holders of the Senior Indebtedness shall allow the Subordinated Payee to
retain the right to vote and otherwise act in a Proceeding (including, without
limitation, the right to vote to accept or reject any plan of partial or
complete liquidation, reorganization, arrangement, composition or extension),
the Subordinated Payee shall not vote with respect to any such plan or take any
other action in any way so as to contest (x) the validity of any liens or
security interests granted to, or for the benefit of, the holders of the Senior
Indebtedness, (y) the relative rights and duties of the holders of the Senior
Indebtedness established in the Credit Agreement with respect to such liens and
security interests or (z) the enforceability of the Credit Agreement or these
subordination provisions.
1. In connection with any Proceeding, the Subordinated Payee irrevocably
authorizes the holders of the Senior Indebtedness or any of them, to demand, sue
for, collect and receive all payments and distributions to the extent required
in this Section 10(a), to give acquittance therefor and to take such other
actions as such holders of the Senior Indebtedness may deem necessary or
advisable for the enforcement of these subordination provisions. The
Subordinated Payee further agrees duly and promptly to take such action as may
be requested at any time or from time to time by the holders of the Senior
Indebtedness, to file appropriate proofs of claim in respect of the Subordinated
Note and to execute and deliver such powers of attorney, assignments or proofs
of claim or other instruments as may be requested by the holders of the Senior
Indebtedness, all as may be necessary or advisable to enable such holders of the
Senior Indebtedness to enforce any and all claims upon or in respect of this
Subordinated Note and to receive any and all payments or distributions to the
extent required in this Section 10(a).
A. WAIVERS AND CONSENTS.
1. The Subordinated Payee waives the right to compel that any collateral or any
other property of the Company or the property of any guarantor of any Senior
Indebtedness or any other Person be applied in any particular order to discharge
such Senior Indebtedness. The Subordinated Payee expressly waives the right to
require holders of Senior Indebtedness to proceed against the Company, any
collateral or any guarantor of any Senior Indebtedness or any other Person, or
to pursue any other remedy in any such holder's power which the Subordinated
Payee cannot pursue and which would lighten the Subordinated Payee's burden,
notwithstanding that the failure of any holder of Senior Indebtedness to do so
may thereby prejudice the Subordinated Payee. The Subordinated Payee agrees that
it shall not be discharged, exonerated or have its obligations hereunder to any
holder of Senior Indebtedness reduced by any such holder's delay in proceeding
against or enforcing any remedy against the Company, any collateral or any
guarantor of any Senior Indebtedness or any other Person; by any holder of
Senior Indebtedness releasing the Company, any collateral or any guarantor of
any Senior Indebtedness or any other Person from all or any part of such Senior
Indebtedness; or by the discharge of the Company, any collateral or any
guarantor of any Senior Indebtedness or any other Person by operation of law or
otherwise, with or without the intervention or omission of a holder of Senior
Indebtedness. Any holder's of Senior Indebtedness vote to accept or reject any
plan of reorganization relating to the Company, any collateral, or any guarantor
of such Senior Indebtedness or any other Person, or any holder's of Senior
Indebtedness receipt on account of all or part of any Senior Indebtedness of any
cash, property or securities distributed in any Proceeding, shall not discharge,
exonerate or reduce the obligations of the Subordinated Payee hereunder to any
holder of Senior Indebtedness.
2. The rights under these subordination provisions of the holders of any Senior
Indebtedness as against the Subordinated Payee shall remain in full force and
effect without regard to, and shall not be impaired or affected by: (A) any act
or failure to act on the part of the Company; (B) any extension, renewal or
indulgence in respect of any payment or prepayment of Senior Indebtedness or any
part thereof or in respect of any other amount payable to any holder of Senior
Indebtedness; (C) any amendment, modification or waiver of, or addition or
supplement to, or deletion from, or compromise, release, consent or other action
in respect of, any of the terms of Senior Indebtedness or any other agreement
which may be made relating to Senior Indebtedness; (D) any exercise or
non-exercise by the holders of Senior Indebtedness of any right, power,
privilege or remedy under or in respect of the Senior Indebtedness or these
subordination provisions or any waiver of any such right, power, privilege or
remedy or of any default in respect of the Senior Indebtedness or these
subordination provisions, or any receipt by the holders of Senior Indebtedness
of any security, or any failure by such holder to perfect a security interest
in, or any release by such holder of, any security for the payment of the Senior
Indebtedness; (E) any merger or consolidation of the Company or any of its
subsidiaries into or with any other Person, or any sale, lease or transfer of
any or all of the assets of the Company or any of its subsidiaries to any other
Person; or (F) or
absence of any notice to, or knowledge by, the Subordinated Payee of the
existence or occurrence of any of the foregoing matters or events.
1. The Subordinated Payee waives all rights and defenses arising out of an
election of remedies by any holder of Senior Indebtedness, even though that
election of remedies, including without limitation any nonjudicial foreclosure
with respect to security for such Senior Indebtedness, has impaired the value of
the Subordinated Payee's rights of subrogation, reimbursement or contribution
against the Company or any guarantor of any Senior Indebtedness or any other
Person. The Subordinated Payee expressly waives any rights or defenses it may
have by reason of protection afforded to the Company or any guarantor of any
Senior Indebtedness or any other Person with respect to such Senior Indebtedness
pursuant to any anti-deficiency laws or other laws of similar import which limit
or discharge the principal debtor's indebtedness upon judicial or nonjudicial
foreclosure of real property or personal property collateral for any Senior
Indebtedness.
1. The Subordinated Payee agrees that, without the necessity of any reservation
of rights against it, and without notice to or further assent by it, any demand
for payment of any Senior Indebtedness made by a holder thereof may be rescinded
in whole or in part by such holder, and any Senior Indebtedness may be
continued, and such Senior Indebtedness, or the liability of the Company or any
of its subsidiaries or any other guarantor or any other party upon or for any
part thereof, or any collateral or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be renewed,
extended, modified, accelerated, compromised, waived, surrendered or released by
the holders of such Senior Indebtedness, in each case without notice to or
further assent by the Subordinated Payee and without impairing, abridging,
releasing or affecting the subordination provided for herein.
2. The Subordinated Payee waives any and all notice of the creation, renewal,
extension or accrual of any Senior Indebtedness and notice of or proof of
reliance by any holder of Senior Indebtedness upon the provisions of this
Section 10. Any Senior Indebtedness shall be deemed conclusively to have been
created, contracted or incurred and the consent given to create the obligations
of the Company in respect of this Subordinated Note in reliance upon the
provisions of this Section 10, and all dealings between the Company and any
holder of Senior Indebtedness shall be deemed to have been consummated in
reliance upon the provisions of this Section 10. The Subordinated Payee waives
notice of or proof of reliance on the provisions of this Section 10 and protest,
demand for payment and notice of default.
A. WAIVER OF CLAIMS.
1. To the maximum extent permitted by law, the Subordinated Payee waives any
claim it might have against any holder of Senior Indebtedness with respect to,
or arising out of, any action or failure to act or any requirement of diligence
on the part of any holder of Senior Indebtedness or any requirement on the part
of any holder of Senior Indebtedness to mitigate damages resulting from any
default under such Senior Indebtedness or any error of judgment, negligence or
mistake or oversight whatsoever on the part of any holder of Senior Indebtedness
or its directors, officers, employees or agents with respect to any exercise of
rights or remedies under the agreements governing or relating to such Senior
Indebtedness.
1. The Subordinated Payee, for itself and on behalf of its successors and
assigns, hereby waives any and all now existing or hereafter arising rights it
may have to require any holder of Senior Indebtedness to marshal assets for the
benefit of the Subordinated Payee, or to otherwise direct or receive notice of
the timing, order or manner of any sale, collection or other enforcement of any
collateral. The holders of Senior Indebtedness are under no duty or obligation,
and the Subordinated Payee hereby waives any right it may have to compel any
holder of Senior Indebtedness, to pursue any guarantor or other Person who may
be liable for such Senior Indebtedness, or to enforce any lien or security
interest in any collateral.
1. The Subordinated Payee hereby waives and releases all rights which a
guarantor or surety with respect to any Senior Indebtedness could exercise.
1. The Subordinated Payee hereby waives any duty on the part of any holder of
Senior Indebtedness to disclose to it any fact known or hereafter known by such
holder relating to the operation or financial condition of the Company or any
guarantor of such Senior Indebtedness or their respective businesses.
1. The Subordinated Payee unconditionally waives (A) notice of any of the
matters referred to in Section 10(b) and this Section 10(c), (B) to the extent
permitted by law, all notices which may be required, whether by statute, rule of
law or otherwise, to preserve intact any rights of any holder of any Senior
Indebtedness against the Company, including, without limitation, any demand,
presentment and protest, proof of notice of nonpayment under any Senior
Indebtedness and notice of any failure on the part of the Company to perform and
comply with any covenant, agreement, term or condition of the Senior
Indebtedness, (C) any right to the enforcement, assertion or exercise by any
holder of any Senior Indebtedness of any right, power, privilege or remedy
conferred in such Senior Indebtedness or otherwise, and (D) any notice of any
sale, transfer or other disposition of any Senior Indebtedness by any holder
thereof.
A. RELATIVE RIGHTS. This Section 10 defines the relative rights of the
Subordinated Payee and holders of Senior Indebtedness. Nothing in this
Subordinated Note shall: (i) impair, as between the Company and the Subordinated
Payee, the obligation of the Company which is absolute and unconditional, to pay
principal of, premium, if any, and interest on this Subordinated Note in
accordance with its terms; or (ii) affect the relative rights of the
Subordinated Payee and creditors of the Company other than their rights in
relation to holders of Senior Indebtedness.
A. SUBROGATION. The Subordinated Payee shall not have any subrogation or other
rights as the holder of Senior Indebtedness, and the Subordinated Payee hereby
waives all such rights of subrogation and all rights of reimbursement or
indemnity whatsoever and all rights of recourse to any security for any Senior
Indebtedness, until such time as all the Senior Indebtedness shall be
indefeasibly paid in full in cash and all of the Obligations of the Credit
Parties under the Senior Indebtedness shall have been duly performed. From and
after the time at which all Senior Indebtedness has been indefeasibly paid in
full in cash, the rights of the Subordinated Payee shall be subrogated to all
rights of any holders of Senior Indebtedness to receive any further payments or
distributions applicable to the Senior Indebtedness until the subordinated
amounts due pursuant to the Subordinated Note shall have been indefeasibly paid
in full in cash, and for the purposes of such subrogation, no payment or
distribution received by the holders of Senior Indebtedness of cash, securities
or other property to which the Subordinated Payee would have been entitled
except for these subordination provisions shall, as between the Company and its
creditors other than the holders of Senior Indebtedness, on the one hand, and
the Subordinated Payee, on the other, be deemed to be a payment or distribution
by the Company to or on account of the Senior Indebtedness.
A. AUTHORIZATION TO EFFECT SUBORDINATION. The Subordinated Payee by its
acceptance of this Subordinated Note authorizes and directs the holders of
Senior Indebtedness to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Section (including, without
limitation, to demand, sue for, collect and receive all payments and
distributions), and appoints the holders of Senior Indebtedness to act as their
attorney-in-fact for any and all such purposes, including, upon the occurrence
of any Proceeding as set forth in Section 10(a).
I. TRANSFERABILITY AND ASSIGNMENT. A Subordinated Payee may not transfer, sell,
pledge, convey, assign or otherwise dispose of ("Transfer") this Subordinated
Note to any other Person without (a) the prior written consent of the Company's
Board of Directors, (b) first delivering to the Company (i) an opinion of
counsel reasonably acceptable in form and substance to the Company (which
counsel must be reasonably acceptable to the Company) that registration under
the Securities Act, or any state or other securities law is not required in
connection with such Transfer and (ii) a written joinder to this Subordinated
Note by the proposed transferee pursuant to which such proposed transferee shall
agree to be bound by the provisions of this Subordinated Note, including Section
10 and (c) so long as any Senior Indebtedness remains outstanding, the prior
written consent of the holders of Senior Indebtedness or
any representative of such holders authorized to give a consent to such joinder
and such transferee. Any transferee executing and delivering such a joinder and
thereafter acquiring this Subordinated Note in accordance with the preceding
sentence shall be referred to herein as a "Permitted Transferee". Any Transfer
or attempted Transfer of this Subordinated Note in violation of any provision of
this Subordinated Note shall be null and void, and the Company shall not record
such Transfer on its books or treat any purported transferee of this
Subordinated Note as the owner of this Subordinated Note for any purpose.
I. COUNTERPARTS. This Subordinated Note may be executed in separate counterparts
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
I. USURY LAWS. It is the intention of the Company and the Subordinated Payee to
conform strictly to all applicable usury laws now or hereafter in force, and any
interest payable under this Subordinated Note shall be subject to reduction to
the amount not in excess of the maximum legal amount allowed under the
applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters. If the maturity of this Subordinated Note is
accelerated by reason of an election by the holder hereof resulting from an
Event of Default, voluntary prepayment by the Company or otherwise, then earned
interest may never include more than the maximum amount permitted by law,
computed from the date hereof until payment, and any interest in excess of the
maximum amount permitted by law shall be canceled automatically and, if
theretofore paid, shall at the option of the Subordinated Payee either be
rebated to the Company or credited on the principal amount of this Subordinated
Note, or if this Subordinated Note has been paid, then the excess shall be
rebated to the Company. The aggregate of all interest (whether designated as
interest, service charges, points or otherwise) contracted for, chargeable, or
receivable under this Subordinated Note shall under no circumstances exceed the
maximum legal rate upon the unpaid principal balance of this Subordinated Note
remaining unpaid from time to time. If such interest does exceed the maximum
legal rate, it shall be deemed a mistake and such excess shall be canceled
automatically and, if theretofore paid, rebated to the Company or credited on
the principal amount of this Subordinated Note, or if this Subordinated Note has
been repaid, then such excess shall be rebated to the Company.
I. NO STRICT CONSTRUCTION. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.
I. AMENDMENTS; WAIVERS. So long as any Senior Indebtedness remains outstanding,
no amendment or modification to or waiver of any provisions of, or the
definitions of any terms appearing in, Section 10, or to or of any other
provision of this Subordinated Note may be made that affects the rights of any
holder of Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness, or any representative of such holders authorized to give a
consent, consent to such amendment, modification or waiver; provided, however,
that this Subordinated Note may be amended to increase the Original Principal
Amount by an additional amount not to exceed $5,000,000 without the consent of
the holders of Senior Indebtedness.
IN WITNESS WHEREOF, the Company has executed and delivered this Junior
Subordinated Unsecured Promissory Note on the date specified above.
MUZAK LLC
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By:
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Name: Royce Yudkoff
Title: Vice President
Accepted and Agreed to:
MEM HOLDINGS, LLC
By:
Name: Peni Garber
Title: Executive Vice President